Client Engagement

Know Your Client and let them share in the experience

Know Your Client and Let Them Share in the Experience

The question we are most often asked is will my client want to participate in the Financial DNA Discovery Process? Our Wealth Advisors have had very few clients resist participating. The reality is people do enjoy learning about themselves. It can even help in their business and personal lives. It is liberating for them to know what their strengths are and struggles are from a validated process. The key point is that the client feels understood. Further, people love to talk about themselves. After all, that is their number one topic.

So, why not guide the discovery process and let them talk about themselves. If there is a barrier in an advisors mind about their client participating, it is usually just in their own mind.

The important point in getting the client to participate in the Financial DNA Discovery Process is to ensure it is introduced as a normal part of your service. Taking that further, connect it to your desire to provide them with a customized life-long service experience, set their goals and help them not make emotional decisions in reaction to events and markets.

If a client refuses to take the discovery; does that tell you something about the prospect or client? Having full transparency can enable your firm to grow and prosper. If you have a client that isnt willing to participate that says a lot about their behavior. If they trust you with their money, dont they trust you to know them better? You dont want to increase the risk in your firm, by not having transparency with your clients.

The process can start with Communication DNA Discovery; which only takes 2 -5 minutes and the rest of the steps can be progressively introduced over time.

We have many success stories using the discovery process. Click on this link to read about a recent successful client story.

If you are feeling any resistance yourself, then there is no harm in completing the process to find out and experience for yourself the power of the experience. You will feel liberated and want to ask questions!!

Learn more about Financial DNA Discovery or to start a trial click here.

 

Financial Advice is Becoming a Commodity

Financial Advice is Becoming a Commodity: Get on Board or Get Left Behind

It’s inevitable. Social media is taking over marketing. Further, the “robots” are also storm trooping the industry in how financial advice is provided and how investments are managed.

The reality is that many parts of the financial advice process and investment management are becoming a commodity. As a consequence, many in the financial advisory business could suffer as a consequence of this move away from the traditional view of financial advice.

However, you can take advantage of this shift to increase your practice. The key to success is to differentiate your service model from other financial advisors and the increasing array of online resources and systems. The number one strategy for financial advisors is right under your nose at the initial step of the financial advice process. That is to have a much deeper understanding of your client’s needs and related behavioral finance biases, and to directly involve the client in the discovery process to increase engagement. Inadequate 5 to 20 question assessments that address only risk’ won’t cut it anymore. Neither will guess who the client is. Clients should be given the opportunity to participate in the completion of a comprehensive process which then enables the advisor to comprehensively know their client and their life journey.

As the new landscape for advisors evolves, you don’t have to bemoan it. If you adapt, you can seize this as an opportunity to actually grow your business. Look at the areas of the advisory process that can and should be commoditized. Leverage these technical platforms so that you and your team spend less time on investment management. Educate them, not only on the technology and investments, but more importantly, on how their approach to finances, investments and money can move clients towards achieving their life goals. The key starting point is to holistically identify the client’s financial personality. Then use those insights to help clients manage their behavioral biases to prevent setbacks or missed opportunities and further grow their nest egg to achieve their goals.

It’s time for financial advisors to recognize that clients don’t have to be lost to the new world order of do-it-yourself’ financial planning. Those financial advisors who have long ago invested in building relationships based on knowing their clients, knowing the plans they have for their lives, knowing and being a part of strategizing their financial roadmap to achieve their goals will not lose clients and actually grow their business.

Here are 7 practical tips:

  1. Use an independently developed and robust questionnaire based discovery process with clients at the point of entry and at annual reviews with existing clients. This will give you a clear insight into what they want to do with their finances.
  2. Focus on goals-based life planning and the financial plan to achieve those goals.
  3. Take the mystery out of investing. Proactively build areas in your advisory process where clients can manage their investments for themselves. This will keep them connected with you as their ‘go-to guy.’ Be a source of knowledge for the client.
  4. Build trust. Get to know how much clients understand markets and then educate them around the gaps (this builds trust.) Knowing their communication style and how they want to work with you will build trust quicker.
  5. Focus on the relationship being a two-way partnership.
  6. Match advisor to a client based upon their financial personality and communication style. This is a key differentiator for success.
  7. Help clients to understand their behavior during market movements. Understanding behavioral finance should be bedside reading for every financial advisor.

Time to develop your value position as a financial advisor. Don’t get left behind in the commoditization of the traditional financial advice process. Embrace the exciting Behavioral Finance future.

Try Communication DNA or Financial DNA to see how you can become the Financial Advisor of the future.

President Obama

Behavioral Insight to Be Used to Serve the American People – Presidential Executive Order

It’s not every day the President of the United States makes a stand on using behavioral insight to improve service delivery.

The executive order targets Federal departments, but could just as easily read across to every service provider…The Executive Order formally establishes (Social and Behavioral Sciences Team) SBST and directs Federal agencies to integrate behavioral insights into their policies and programs

If as suggested, understanding behaviors enable providers to deliver more effective services to the American people, how then will financial advisors introduce this approach with their clients? It’s where people are probably at their most vulnerable when discussing their finances. It’s where people are liable to make ill-thought through decisions under pressure. It’s where people are likely to revert to inherent behavior and bias.

Francesca Gino, a professor at Harvard Business School (which is a faculty affiliate of the Behavioral Insights Group at Harvard Kennedy School), writing in the Harvard Business Review says of the Presidential Executive Order..

This order reflects the evidence that scholars across a variety of fields – from behavioral economics to psychology to behavioral decision research – have accumulated in recent years that people often fail to make rational choices. Across a wide range of contexts, we often make foolish decisions that go against our self-interest.

It’s a fair comment – people fail to make rational decisions in many areas of their life. Much work has been undertaken in terms of how people react and make financial decisions when under pressure. If financial advisors are to play their part in delivering this Presidential Executive Order, then understanding the core hardwired behavior of clients is foundational.

Clearly, since the Whitehouse announced the use of behavioral insight in delivering services, helping people make a better life and financial decisions are no longer just going to come from smart strategies, new innovative products, improving technology and better information. Rather, it will be driven by understanding the behavior of those people and how they make decisions. In the financial planning context, closing the gap between a clients’ true financial behavior and the rationality required to make sound investment decisions requires a deep understanding of their financial personality. Therefore, gaining objectively measurable, reliable and predictive behavioral insights about how a client will make financial decisions before providing a product or solution is critical. Further, applying those insights in a Behavioral Investment Policy Statement will provide advisors with a customized framework to guide their clients in making decisions and minimize the impact of emotions.

The Presidents Executive Order has wide-reaching impacts for service delivery in every area of business. It has brought to the forefront of American business the need to understand behaviors and how their customers/clients make decisions. Research in this area of behavioral science has been around for a very long time. But now is the time to put the research into action in every field of business, government, and life.

 

Image source: www.theblaze.com

How Team Matching Increases Client Engagement

How Team Matching Increases Client Engagement

For financial advisors, there is the unfortunate truth that nobody has created any identical clients, yet. If only there was a way to get the same client in your business, so you could handle all of your clients the exact same way. It’s also very difficult to find and hire the exact same type of person as additional advisors in an office to handle those same client personalities that aren’t there.

Since the world isn’t a perfect place and we rarely get to have any input on who comes in or out of our lives, we can at least now understand how to connect with those different clients who can be so wildly different. Further, we can better understand how to put different advisors within an advisory office in a position to match up with clients so they are a more natural fit and exponentially better client engagement.

When talking with new clients, I get more questions and apprehension on what this crazy looking matrix is and what it means. Quite simply, this image is the one of the easiest keys to read and understand who will be matched up most easily. If a new client (columns) is a Community Builder, but their advisor (rows) is an Initiator, will they be a good fit for each other? With one easy look at this matrix, you can see that they will not have an easy time connecting. But, if there is another advisor in that office who is an Engager, they will likely have an easier time matching their natural behaviors to each other.

For another illustration, please view the Behavioral Management Guide at the Financial DNA Sample Reports to find out how DNA Behaviors reports can help your teams client engagement strategies.

Banking Blog

Does Your Bank Truly Know What You Need?

A few weeks ago, Craig Moon who is a high net worth investor, received an unsolicited email from Renaissance Transactions Bank in New York requesting he invest in a new mutual fund investment opportunity. Apparently, the offer was being extended to all of the prospects and clients in the bank’s database who had previously filled out any kind of inquiry form.

Craig felt quite queasy in his stomach at receiving an unsolicited offer like this from a bank with whom he had no personal relationship. He had received similar emails from other banks before and gradually built up a lot of negative resistance to such approaches.

He couldn’t understand how a bank can make this offer when they hardly know anything about him. Craig’s experience in life taught him that if there is poor communication then the solution provider and what they offered could not be trusted. He wondered whether some of the banks were trying to get an edge on the consumer using faulty diesel-powered systems. After all, in the modern day age of Big Data research it would be reasonable to expect that a bank would at minimum use statistics and some casually built online surveys to roughly paint a persona of the prospect or client.

Craig reflected that given the recent stock market turbulence and increasing complexity of investing, this might be the time to find the right financial planning relationship.

 

Sales

The Land Grab by Banks for Owning the Client-Centered Financial Planning Space

While I was hearing Craig’s story at a seminar, I felt motivated to tell him that there was a fresh approach to banking and financial planning coming. No longer would banks and financial planning firms be playing the guessing game of what is suitable to offer a client and how to engage them.

I told him of an emerging trend of established banks out there starting to make a grab for the space of being the leading client-centered brand that put the interests of their clients first. In fact, this is what the regulators globally are requiring and the Obama Administration is pushing with the Fiduciary Standard, although it has not been happily embraced by all, yet. For a few years now, some of the banks had been re-branding themselves as client-centered but had no high-quality scientific process which required active client participation to demonstrate it. Craig became intrigued and asked more about what to look for from a bank who would potentially meet his wealth management needs.

I explained to Craig that what he should look for was a bank who adopts the approach of “understanding people before numbers” by discovering who the client is first and then collaboratively building a financial plan and investment policy statement which recognizes his complete financial personality. Craig said he had started to read about the idea of behavioral finance in the newspapers and investing magazines. I said that behavioral finance should be the foundation of the bank’s approach to customized communication and to the recommendations they make.

Ultimately, our conversation ended with me suggesting to Craig that he ask each of the banks and financial advisors he interviews:

  1. What formalized processes do they have to implement a behavioral finance approach which will help him achieve his goals?
  2. Further, have the processes they use been built and tested by a reputable and independent supplier of behavioral systems or have they been developed in-house to fulfill “tick-the-box” requirements?
    The Key Features of the Ideal Financial Planning System Powered by Behavioral Finance Insights

A few days later, at Craig’s request I gave him, in email format, a more specific list of the features that should be present in the financial planning service model to fit within the “new behavioral economy” age of financial planning:

  1. Clear organizational messaging: the “why” and the “mission” for delivering a service that helps clients live a quality of life based on who they uniquely are, in harmony and without regret. Put another way, helping every client in a customized way to “Live with Meaning.”
  2. Completion of an online activity at the banks very first touch point with the client: to discover the client’s communication style and the desired client service experience using a robust scientifically validated process.
  3. Customized first meeting experience with a relationship manager: someone who can naturally create the right environment for the client to share what they need and expect.
  4. Assignment of a wealth management team matched to the behavioral style of the client: to deliver a service that matches what the client wants -financial planning, investment management, philanthropy, family business etc.
  5. Completion of an in-depth online activity to comprehensively discover the client’s financial personality: the starting point – to reveal their natural instinctive behavioral style. This is not just a standard 5 to 20 question risk profile invented in the marketing department which can be manipulated and rarely tells the truth in down markets. Rather, a robust, scientifically validated process which objectively uncovers the client’s broader set of behavioral biases (including risk-taking) that strongly influence their decisions. Also, the financial personality reporting must be provided to the client for transparency with the comparison to the advisor.
  6. Completion of a goal-based questionnaire addressing balance across the key areas of life: to prioritize the needs and wants to be factored into the financial plan and investment portfolio design. Ideally, each of the client’s specific goals is addressed in the portfolio design.
  7. Real-time behavioral management of every client: during periods of market volatility on their unique terms. Use of online tooling to enable the client to monitor on a real-time basis their own “Market Mood” and patterns of behavior.
  8. Bank compliance processes: providing real-time monitoring of the recommendations made to each client with respect to their financial personality, financial capacity, and goals. The client should know that the bank will use exception reporting mechanisms to ensure their advisors keep the solutions offered within acceptable boundaries.
  9. Bi-annual review: conducted in person with the client or virtually using video.
  10. An advisory team that serves as the Wealth Mentor of the client: they need to adopt a coaching approach through asking powerful questions that transform the client’s thinking as they go through life transitions. Further, the firm and advisors demonstrate through this approach that the client is at the center of the relationship and not the bank’s fees.

Craig called me two weeks later and said that after extensive research and introductory phone calls he found many banks and financial advisors who said they delivered this service but actually did not. However, he was pleasantly surprised to find some leading banks and financial advisors were on this pathway. All of those firms on the right path were those using the Financial DNA behavioral finance platform developed by DNA Behavior International.

Craig made the decision to start working with the wealth management division of a solid US regional bank. He added that his research had revealed large banks and financial advisory firms in Canada, Australia, England and Europe moving this way.

I said to Craig, that as banks and financial advisors realize that relationship building is about customizing the communication with clients and the solutions offered, then they will win. Those who think relationships are only built on rates of return will fall far behind. Conversely, banks and financial advisors who act as a guide to clients in the financial planning process, rather than dominate them with transactions, will, within the next 3 years, grab significant market share, as well as, reduce the business risks of compliance.

Financial Advisors- Behavioral Finance is not Psychobabble

Financial Advisors: Behavioral Finance is Not Psychobabble

It’s no good screaming at your clients if they make dumb decisions. As a financial advisor, you need to stay on top of things. What’s your strategy to manage clients during market shifts? Some clients tend to make some very strange decisions when it comes to how they react to market movement and managing their money, not to mention taking advice from ‘friends‘.

If clients, for example, follow the herd and make irrational decisions regardless of the advice you give them, it will help you to understand behavioral finance to reveal core behavior and how to address it. If you don’t you will crash and burn as a financial advisor and be surprised by their actions and reactions.

Financial Advisors Behavioral Finance is not Psychobabble1

Source of photo: Google Images. Businesswoman_Stressed_MI600.jpg www.thinkadvisor.com600 338Search by image Emotional Decision-Making

Regardless of great financial advice, sometimes clients have a tendency to follow each other into precarious financial situations. They make foolish decisions and then expect the financial advisor to help them correct them.

Madison is a high income earning young professional. She leads a busy life and has just been promoted to a senior role meaning she has even less time to manage her money. She has always managed her finances successfully and has her own investment portfolio. She retains a financial advisor and makes it clear that she wants to continue to grow her portfolio but with low risk.

Madison is a very smart woman and somewhat reserved. In the busyness of her new position, she allows a group of outgoing vocal colleagues to persuade her to invest in a high-risk opportunity. Madison loses a significant amount of money.

As soon as the financial advisor is informed about this issue, she profiles Madison. She needs to understand how this smart intelligent woman could have been drawn into making such a foolish decision.

Having established Madison’s financial personality, the financial advisor is now able to provide Madison with insight into her decision-making behavior. Going forward, the financial advisor will be better able to manage Madison’s emotions and decision-making by customizing a financial plan to make improved long-term investment decisions.

Had the financial advisor known Madison’s financial personality up front, disaster could have been avoided.
Independent research shows that 93.6% of your role is the behavioral management of clients.
Source: Professor Meir Statman 2000.

Financial Advisors Behavioral Finance is not Psychobabble2