Behavioral Matching Matters

In working with financial services firms (including banks and insurance companies) all over the world I have found many are at different stages of searching for the right path to become more client centered. On this journey to the next level they all have the primary challenges of growing their revenues and managing the ever increasing compliance burden. In my conversations with executives, they would say that solving these challenges is contradictory.

The question then becomes what strategies can be deployed to simultaneously build greater relationships with clients (and thereby revenue) and at the same time enhance compliance? The tension between building a relationship culture which is revenue positive and enhancing the provision of compliant offerings can be solved with a human behavioral solution. When you boil it down both issues are deep down caused by human behavior. Harvard research in 2002 tracks 87% of all business issues down to human behavior. Most of it is the lack of interpersonal communication skills, not the competencies of the parties involved. Whilst it is easy to see relationships as driven by communication, so is compliance. Compliant offerings cannot be made without the right communication framework.


How information is framed will be very important to guiding clients into the right solution. For instance, some clients will need to hear a recommendation through the lens of their family stability rather than financial goals, and others will want benchmarks and specific data versus a summary of the key facts. Also, the bedside manner of advisors is critical as some clients will want logic and others a more empathetic conversation. Getting it wrong causes more emotion and the likelihood of increased litigation. Just look at the fact that research shows up to 80% of medical malpractice cases are caused by poor medical staff communication.?


So, imagine a world in 3 years where your firm through the one technology platform deploys online behavioral management solutions that are heavily rooted in validated behavioral science to:

1. Match the advisory team to each client (and their family members), thereby enabling communication with every client based on their unique terms, including the re-framing of key information and engaging them with a customized service experience in every interaction; and

2. Match the solutions delivered to every client based on their unique financial personality, thereby increasing decision-making confidence and also providing risk management for the firm.

3. Dynamically monitor the mood of every client as the market moves, and the continued suitability of the solutions the client is invested in. Put another way the approach of outfitting the client in a tailor made suit and providing customized life-long experiences will engage them and at the same time provide higher levels of corporate risk protection. Our research shows that such a behavioral matching approach can increase revenue by 23% a year and also substantially minimize the costs of litigation and fines. The key for the firm to implement such a matching approach is to make it a corporate imperative from the top down. The advisors and sales teams need to be engaged in the strategy that behavioral matching builds a relationship culture. The home office teams with the proactive input of the compliance team need to build robust technology processes which enable the real time monitoring of financial personality, solutions, in person meetings and email communications so that they are customized to the client and are also compliant.


What are the drivers which make it compelling to implement a behavioral matching approach happen now?

1. The need for financial services firms (including banks and insurance firms) to be completely client centered. Every dimension of their service must be “client first”, including the charging of fees. President Obama’s statements earlier this week on bad investment advice highlight the need is now.

2. The market competition for clients is very strong. The winners will offer a differentiated service which includes the provision of highly customized offerings. The focus on demographic based “persona” models are not enough as they do not provide personality insights which are more differentiated.

3. The regulatory environment over the last 5 years has got more strict in the requirements to offer suitable solutions. The trend is for the compliance intensity to increase exponentially in the next 5 years, with the requirement to document evidence of knowing client behavior at a much deeper level than ever before.


Over the last few years, the area of behavioral finance has moved from a research discussion to practical reality. Now, a behavioral finance approach can be implemented and if done properly it will provide a behavioral matching solution to the tense problems of building relationships and providing compliant offerings.

Hugh Massie

Hugh Massie - President and Founder of DNA Behavior International

Hugh Massie is a Behavioral Finance Strategist helping people and organizations worldwide "behavioralize money". His purpose is to guide people to be Behaviorally SMART for achieving greater financial empowerment so they can live with meaning and unlock their human potential.

Hugh liberates investors, advisors and organizational leaders with a unique blend of financial personality and economic insights to make improved life, financial and business decisions.In particular, he helps people become more self-aware so they do not make emotional decisions under pressure which sabotage their relationships and long-term horizon goals.

Hugh has over 60,000 hours of experience serving millions of investors with assets of $1 to $1 billion+ and the leaders of more than 2,500 businesses in 123 countries. (

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