Behavioral Finance

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Financial Advisors under Scrutiny from the RoboPolice

Financial Advisors are already under the most intense scrutiny. Never have their every move, decision, interaction with clients been analyzed to this degree. And it’s going to get worse.

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Photo Cred: The Protection Booth Podcast

 

Regulatory authorities are now considering the use of artificial intelligence (AI) and machine learning tools to enforce regulatory compliance.

 

Writing for CNBC Ryan Browne discusses UK regulator use of A.I., machine-learning to enforce financial compliance. Further commenting… Experts believe it could drastically reduce the cost of regulatory compliance, currently estimated to be around $80 billion globally.

And referencing. A report published last October by the University of Hong Kong identified the RegTech industry as a field capable of addressing risk in “real time” and increasing the efficiency of compliance.

 

Whilst the financial industry worldwide has taken a big hit in terms of its questionable practices, I wonder if AI is a step too far? Financial Advisors, like many businesses, are already bogged down in regulatory red tape. This next level scrutiny could put significant pressure on them to perform.

 

DNA Behavior has been across these regulatory issues for some time now. They know the importance of having a person complete a process of self-discovery. They understand the significance of revealing natural and instinctive behavior risks, and how they provide the firm assurance, they Know the Client at the deepest level to mitigate compliance risks.

 

AI is limited, it provides prompts and signposting after the event. The DNA Behavior Discovery process uncovers behavioral biases, risk patterns, decision-making approach and reactionary market movement pressure points in advance. This insight gives financial advisors access to the personality of their clients. It helps advisors use independently validated behavioral data to transform their role to the Wealth Mentor by:

  1. Putting their clients at the center of the financial planning process.
  2. Matching their advisory teams, clients, goals, and solutions.
  3. Using customized communication at all stages of the client lifecycle.
  4. Building tailored portfolios.
  5. Behaviorally managing client emotions.
  6. Enhancing compliance and reducing complaints.

 

To learn more, please speak with one of our DNA Behavior Specialists (LiveChat), email inquiries@dnabehavior.com, or visit DNA Behavior

 

taking ownership

Taking Ownership Of Your Behavior

The more we understand our own personality and behavioral responses, the better able we are, both as individuals and teams, to work together effectively and avoid the blame game when things go wrong.

In his recent article, The Blame Game, Marc Corsini observes, When salespeople, professionals or executives are underperforming, they usually complain about others first.

Taking ownership of behavior

We all have our strengths and struggles. But those who understand and take responsibility for their behavior, will gain respect from others and have a healthy respect for themselves. Accepting personal responsibility is one of the most important factors in defining a person’s true character.

There is something liberating about being behaviorally aware. DNA Behavior’s Natural Behavior Discovery process offers significant insights into our “go to” behavior – our default reaction when under pressure, or when we make a mistake or lose focus among life events.

Sometimes, when we’re struggling or lose confidence, rather than asking for help, we blame others for our lack of performance or our mistakes. On occasion, we are the ones being blamed and fail to stand up to the accuser. But the reality is that such a response is immature. We need to take responsibility for our own behaviors and responses. Becoming behaviorally smart is as simple as completing a highly-validated psychometric questionnaire and receiving detailed personality insight, together with detailed information on how to build on our strengths and manage our struggles.

Further, becoming behaviorally smart through completing the DNA Behavior Natural Discovery process will also reveal other areas where it is important to take responsibility for our behavior. For example:

  1. How we lead others.
  2. How we communicate and wish to be communicated with.
  3. The environment within which we are more likely to flourish.
  4. How we perform on a consistent basis
  5. Our reaction to the financial markets when they fluctuate.
  6. How we approach decision making.
  7. How willing we are to take risk or not.
  8. Our biases (we all have them, but the key is knowing what they are and how to manage them).

In leadership, it’s likely that people will work more effectively if leaders understand them. Sounds simple! But without insight into personality, communication, strengths, and struggles, leaders can’t be successful.

When a leader is self-aware and has gained insights into how to manage others through understanding and managing behavior – success is the outcome.

To learn more, please speak with one of our DNA Behavior Specialists (LiveChat), email inquiries@dnabehavior.com, or visit DNA Behavior

 

facial recognition

Identity Hacked From Just Your Picture

Facial Recognition software tools marketed by businesses such as Faception and Decipher claim to be able to identify an individual’s personality and behavior. They state that from a photo they are able to determine if the person could be a terrorists or pedophile. Further, their claim is that photos can identify likely poker or bingo winners. Mattersight goes one step further and makes the same claims using both video facial recognition and voice. (Photo Credit: Shriver Claes/Penn State)

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The individuals categorized in this way have likely played no part in providing in-depth information about themselves. They will not have completed a validated and sophisticated discovery process. They simply had their photo taken.

I’ve watched movies portray how law enforcement uses facial recognition to identify/locate a person already in their data base, but to randomly take photos from which a personality and behavior can be determined? Seems like science fiction. It could also be argued – it is discriminatory. In their 2016 article, The Underlying Bias of Facial Recognition systems, Clare Garvie and Jonathan Frankle at the Center on Privacy & Technology at Georgetown Law, outline the potential issues of bias around facial-recognition software. They state that depending on how algorithms are trained, they could be more accurate when identifying white faces than African American ones.

Of course, there will always be a place in society for tools that keep us safe. Maybe facial recognition will one day play its part. But along with Big Data gathering, if one under scrutiny is not involved in the process and have not completed a validated questionnaire, there is no way a tool such as this can uncover a person’s personality.

Cetera Financial Group CEO Robert Moore believes that facial recognition software (referring to Decipher) will provide a faster and more accurate read of a client’s risk tolerance and financial behavior than any questionnaire ever could.

Some questions to consider:

1. How will facial recognition tools predict individual’s reaction under pressure?
2. How will they predict the degree to which they will tolerate risk?
3. How will they understand their communication style?
4. What will be revealed about the individual’s ability to build relationships?
5. Are they more likely to be a loner/reclusive or the life of the party?
6. How will facial recognition determine my approach to wealth creation?

None of these facets can be revealed through facial recognition. Some through Big Data, but ALL with a robust highly validated process such as DNA Behavior Natural Discovery.

I’m all for innovation and new technology. I’m part of it. Our DNA Behavior platform is the world’s only all-in-one cloud-based behavioral analytics platform to know, engage and grow both employees and clients using all the dimensions of a person’s personality.

But facial recognition cannot reveal the true me. Yesterday I had a tooth extraction, my face was very swollen. I wonder what a photo of me would have predicted? Further, think of twins, I have a few twins and indeed triplets in my world and, as a behavioral analyst, I can tell you that neither group has the same personality or behavior.
This is me, this is my personality. My face won’t reveal this.

 

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We all make judgments when first we meet someone – often based on appearance. We then get to know them, and on some occasions don’t like what we see – or vice versa.

 

As Pedro Domingos, a professor of computer science at the University of Washington, said to the Washington Post, Can I predict that you’re an axe murderer by looking at your face and therefore should I arrest you? You can see how this would be controversial.

Princeton psychology professor Alexander Todorov told the Washington Post, The evidence that there is accuracy in these judgments (referring specifically to Faception) is extremely weak.

 

In conclusion – you’ll get to know more about me through a robust questionnaire than taking my photo.

To learn more, please speak with one of our DNA Behavior Specialists (LiveChat), email inquiries@dnabehavior.com, or visit DNA Behavior

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Behaviorally Smart Data Mining – for Financial Advisors

The explosion of available information from social media, together with significant techniques for capturing this data, now provides financial advisors with a gold mine of information to help them identify and connect with clients.

Big Data gathering is only a starting point in terms of capturing user behavior. It delivers a glimpse of the client but leaves a significant gap and won’t offer enough insight to be able to advise or offer solutions to clients based upon their life goals.

DNA Behavior International fills the gap. With the use of behavioral psychological insights, revealed through a validated questionnaire, their powerful DNA behavioral intelligence, partnered with their Big Data Optimization program enriches firms employee and client data.

IBM in their Big Data and Analytics Hub ask these questions: Are you (financial advisor) generating targeted personalized offers for your clients? Do you know your customers and provide them with timely, relevant and optimized offers based on data-driven insights? By leveraging information about your clients’ behaviors, needs, and preferences, you can encourage high response rates from clients and enhanced relationships with them.

Client Insight for Wealth Management

When financial advisors use Big Data to enhance their service offering – what are they extracting from the data? How are they interpreting it? What is it saying about potential clients? Will clients be concerned that they are being advised based on their social media accounts alone?

Financial advisors who mine social media to serve client’s life events should know this does not reveal personality or bias. It doesn’t uncover decision making styles. It won’t predict a reaction to market mood. It won’t reveal influencing life events.

Advisors who are behaviorally smart understand there is a gap in Big Data mining. They know the importance of guiding clients with wisdom to self-discover who they are and their priorities to achieve financial wholeness. Financial DNA discovery delivers this self-discovery process. This strong, validated, structured approach reveals all dimensions of a client’s financial personality.
A partnership between behavioral analytics that reveal personality and big data offers financial advisors a significant key to identifying clients and delivering accurate advice.

As quickly as Big Data mining was the key to understanding customers now the added requirement is for financial advisors to be able to use cognitive and analytics to understand their clients.

Gauthier Vincent head of Deloitte’s US Wealth management consulting business is quoted in the Financial Times: Tools that help manage interactions with clients will soon be able to analyze data such as a client’s social media activity to work out their investment goals and advisers are thinking. There’s a lot of info out there I would love to have to create rich profiles of prospects so I can increase the odds of success when I [contact] them.

Hugh Massie

Well said – but Big Data will only ever become a significant tool for financial advisors when it shares its platform with a financial personality discovery process such as Financial DNA.

To learn more, please speak with one of our DNA Behavior Specialists (LiveChat), email inquiries@dnabehavior.com, or visit DNA Behavior.

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Why Some Entrepreneurs Crash and Burn

The New York Times covers several aspects of the Uber CEO Travis Kalanick’s demise. It references the culture in the organization, speed of growth, shareholder concerns, and the aggressiveness of the leader.

In specific, it highlights Kalanick’s pattern of risk taking and references his lack of integrity. For example, the many years where Uber engaged in a worldwide program to deceive authorities in markets where its low-cost ride-hailing service was resisted by law enforcement or, in some instances, had been banned.

In other reads, Kalanick’s unhinged confidence and competitiveness are hailed as examples of what makes him such a brilliant entrepreneur. Yet he is prone to trash-talking and tantrums, further revealing that his position as a CEO/Manager is highly suspect.

These observations highlight the fact that he is not self-aware and will continue to simply get in the way of his own success. Had he been behaviorally smart, he would have known that while entrepreneurs clearly need the talent to start a business, they also need much more to grow into successful CEO/Managers.

Kalanick says this about himself, “I must fundamentally change as a leader and grow up.”

But when an entrepreneur has a pattern of risk-taking and lack of integrity then continues to present himself as bullet-proof, the behavior results in poor management. This is where genius can become insanity and entrepreneurship crosses over into illicit behavior.

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No single personality type makes up an entrepreneur – but there are wise steps that can be taken to manage the talents required to be a successful one. For example:

  • Managing creativity
  • Managing risk-taking
  • Developing innovation
  • Understanding personal EQ
  • Working with and through people

Highly innovative and creative individuals who see themselves as entrepreneurs (defined by Dictionary.com as those who identify a need—independent of product, service, industry or market) should take seriously the need to understand their personality before venturing into starting a business.

The DNA Behavior Natural Discovery Process is a highly-validated discovery platform that predicts behavioral responses through identifying personality traits, attitudes about money, risk tolerances, and behavioral biases. Independent research shows DNA Behavior’s behavioral intelligence solutions lead to:

  • Closing the 60% engagement black hole caused by the relationship gaps in employee and client interactions
  • Increasing the suitability of client solutions offered to 99.75%
  • Improved employee productivity by up to 40% and increased revenue by over 23% a year
  • Identifying the 5% of employees who are potentially rogue, costing 5% of revenue in losses per year

As Travis Kalanick mourns his ignominious fall from grace, one thing is for sure – when he starts a new venture (and he will) his first step should be to understand how to manage his behaviors. And maybe then he can begin to understand why he thought the number one commandment he set for Uber employees was – Always Be Hustlin. Not the smartest of values to build a business upon, but a very clear indicator of the person who birthed the phrase.

To learn more, please speak with one of our DNA Behavior Specialists (LiveChat), email inquiries@dnabehavior.com, or visit DNA Behavior.

donald trump

Trump Trauma, the Only Conversation in Town

Whether you are talking to your financial advisor, doctor, therapist, friend, partner or in line at the supermarket, somewhere the conversation will turn to President Trump.

Coping with significant change is difficult for most people. Then add a sense of disappointment in outcomes, and people feel unsettled.

When organizations make changes, the conversation around the coffee machine focuses on “What’s going on?”, “Are our jobs safe?”, And so on. We’ve all experienced this in some form or other. It’s somewhat different when there is a change of country leadership, the questions tend to be broader, “What’s going to happen to my investments?”, “Are we being led by a safe pair of hands?”, and so much more.

For most people change is never comfortable. It is, even more, trying to cope with if the change feels traumatic. Understanding our response to change is the first step to managing it. Everyone responds differently. Regardless of whether the change is in relationships, work environment or the Whitehouse, fear of the unknown can trap and even isolate us. We’re usually scared of change because were afraid of the unknown.

Soumya Karlamangla writing for the LA Times records that therapists are having a hard time talking to their patients when presented with concerns about Trump. At the most recent board meeting of the L.A. County Psychological Assn., therapists also discussed how to talk about Trump, especially with patients whose political beliefs might differ from their own. It turned into an hour long discussion that Hillary Goldsher, a therapist on the board, described as emotional, challenging, and difficult.

Thomas Coyle writing for the Financial Advisor IQ says in his article titled Talking to Clients about Trump, “for many financial advisors, U.S. President Donald Trump is a necessary topic of conversation with clients. It’s not that all FAs are especially eager to share their opinions of the White Houses latest tenant. Rather, advisors tell us, Trump is difficult to avoid in the context of long-term financial planning. They say the scope of his proposals, from renegotiating trade deals – to pushing for renewed infrastructure and reducing taxes – stands to impact portfolios whether these initiatives succeed, fail, or fizzle out.”

The US Presidential election is now over, Donald Trump won. Some will be excited about the outcome, others will be apprehensive. Whether we like it or not, it is what it is, and the question now is how to roll with the conversations taking place around us?

We all handle change in different ways. If we knew in advance how we are likely to react, we would navigate them much more effectively.

Those that embrace change will be excited, perhaps because they saw something of themselves in Donald Trump. They want to speak up and be provocative. Trump champions that for them. They want to throw society up in the air in the hopes that when it lands it will look different, be more caring, be fairer, be open to taking risks to achieve a better life for everyone. Trump champions that for them. Others will be having conversations about opportunities, taking risks, and becoming a great country again; their conversations will be about being a part of something different and unpredictable.

And how exciting to have someone who’s controversial? Speaks their mind? And Tweets!

But many people will be alarmed, disappointed, and maybe even fearful of a personality that seems larger than life. Some will be significantly concerned to seek therapy to talk about their fears; they may rush to their financial advisors to offload stock. They will find Trump’s outspokenness unsettling; they will be alarmed at the proposed speed of change.

Donald Trump is not the first to be controversial and certainly won’t be the last. President Theodore Roosevelt (in office 1901-1909) said that his office gave him a “bully pulpit” a powerful platform that lets him draw attention to key issues.

People who seek therapy and panic about their investments?are facing personal challenges for sure. This post-election distress is not to be laughed at. But for a while, these like-minded disappointed voters will group together and feed each other’s distress. But eventually, as is the way with human nature, they will begin to see the good stuff that impacts their lives, and the pendulum will begin to swing to a more balanced position.

Here are some pointers to managing a conversation about President Trump either with clients or anyone else who raises the conversation.

  • President Trump can cause a change in behaviors.
  • He has the ability to persuade and convince others.
  • He will stimulate conversation based on his vision.
  • He will set ambitious goals based on the vision and carry others along on the journey.
  • He will look for the quickest route to deliver success, and this might bring resistance from those whose decision making is more contemplative.
  • He will be prepared to take risks to achieve goals quickly and will understand, sometimes this will mean losses.

Yes, he can be emotional and impulsive and make decisions too quickly to get into an opportunity. Yes, he may act too early not recognizing a temporary downturn or slowdown is part of the growth journey; but President Trump needs to get to the bottom line quickly. Too much reliance on detail and the small print will frustrate him. However, learning how to pay attention to detail will be valuable to ensuring his enthusiasm is reigned in and that his spontaneity does not lead him into making poor choices.

He has the ability to draw people together, and can quickly harness appropriate skills and talents to implement plans and ideas. President Trump is able to channel diverse skill sets into delivering successful outcomes. As a multi-tasker, he needs to be presented with a range of opportunities to hold his attention. He needs information flow to be in a summary format with the bottom line clearly demonstrated.

We are all different, that’s what makes the world so fascinating. Personality is such an interesting topic. The way we communicate with each other, the way we deal with challenges (such as post-election trauma); our ability to take a risk; how we communicate with each other; how we manage our behaviors, all make for better conversations.

The DNA Behavior Natural Discovery process offers deep, accurate, highly validated insight into why we react the way we do in given environments. It delivers understanding on how to manage behavior gaps. As the world’s only all-in-one cloud-based behavioral analytics platform it reveals how to know, engage and grow every individual using all dimensions of a person’s personality traits.

I love what Jon Ten Haagen of Ten Haagen Financial Group in Huntington, N.Y., says in this quote, “my biggest Trump-related message to clients is turn off CNN and the talking heads because there is no interpreting what they are blabbing about. The man has not been in office for 100 days yet, he has a total of 1,459 days to accomplish what he wants to – or not.” Given the Trump administrations newness and the fact he’s a catalyst for controversy and pushback, Ten Haagen says, “clients should look at the economy and interest rates and consider what companies are doing and saying.”

Above all, Ten Haagen, who manages more than $30 million and is mostly paid with a trail, tells clients to look at the big picture and be diversified, advice he says holds true no matter who’s in the White House.

People tend to figure out what to do to feel secure again, financially, physically or psychologically. Understanding why we react or respond in the way we do is important and worth finding out more about.

To learn more, please speak with one of our DNA Behavior Specialists (LiveChat), email inquiries@dnabehavior.com, or visit DNA Behavior.