5 Tips for Behaviorally Driven Goals-Based Planning

5 Tips for Behaviorally Driven Goals-Based Planning

Times continue to change for financial advisors. Investor fears, lack of confidence and market uncertainty are provoking clients to demand better, more personalized advice from their advisors.

Financial advisors who have moved to a behaviorally driven goals-based planning process will be the winners.

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Since the global financial crisis and recession, clients are driving the industry.

The Client:

1. Unique; each has different wants and needs.
2. Each having cognitive biases, emotions, fears, anxieties, greed and excitement.
3. Thinks they are better informed in taking control of their finances.

And advisors are struggling to navigate client’s emotions, inconsistent thoughts, and biases while maintaining control of the advisory process.

The Financial Advisor:

1. Trying to understand client’s behavior and emotional decision making.
2. Engaging to uncover and understand a client’s life goals.
3. Applying an understanding of client behavior to their investment style.

So how can firms develop a scalable framework and service model for financial advisors to address the unique wants and needs of individual investors?

Goals based Planning, based on the following 5 step process.

1. Use a trusted financial behavioral process to uncover:

a. Client’s inherent approach to finances and wealth creation
b. Biases, that get in the way of solid decision-making
c. Quality Life Goals, like retirement and family wealth transfer

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2. Outcomes from the behavioral process to build a goal based plan that is clear and precise:

a. Enable both client and advisor to have a clearer understanding of the goals
b. Identify, for the advisor, the client’s likelihood of achieving the goals and then enable measurable steps to be added.
c. Goals set relative to feasibility and other life and family priorities.

3. Create measurable checks and balances to:

a. Articulate a vision for wealth creation
b. Understand how bias and emotion might impact their decision-making
c. Be accountable even when markets are unpredictable

4. To add further value to the advisory process, Financial advisors should also complete the behavioral process.

a. The advisors own naturally ingrained biases will be revealed and can be managed.
b. Produce long-term relationships with clients when matching character traits and communication styles.
c. Advice given based on life plans and dreams, rather than by pure performance of investments.

5. Deliver a greater level of communication and a deeper trust will be built.

a. Meetings are more effective with the focus on achieving goals as a way to increasing wealth and achieving quality of life.
b. Turbulent markets are easily navigated with awareness of how the client will respond and then, how to communicate accordingly.
c. Linking financial personality with communication style will deliver a significant step forward in the way of financial planning.

Developing goal-based plans is not a new concept. However, linking it with the key foundational process of uncovering inherent behaviors is. The two approaches together will deliver not only a more effective outcome for the client but will be an industry differentiator for the advisor.

Carol Pocklington

Carol Pocklington - Human Behavior Solutions Analyst

Carol is a member of our research and development team assisting in the development of our behavioral products.
She has worked with Hugh Massie since 2001 since the Financial DNA understanding concept was conceived.


Carol's DNA Natural Behavior Style is - Facilitator


Carol is a Facilitator. Facilitators are persistent, goal-oriented people who promote team effort in order to complete tasks. Facilitators lead by setting examples and by achieving goals. Their strong work ethic encourages others to excel and they have an excellent ability to deal calmly yet firmly with people using a facilitative style.

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