Communication

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Be-Fi for the DIYI (Behavioral Finance for the Do-It-Yourself Investor)

The oldest advice in the financial world: buy low, and sell high. And easy to follow too, right? Then how come we’re not all gazillionaires? That’s the Behavioral Finance $25,000 question.

First off, maybe a gazillion bucks isn’t everyone’s goal, but even moderate growth on savings over time in preparation for retirement shouldn’t mean we suffer losses over and over again along the way. So beyond market volatility, what are the factors for our repeated or short-sighted poor finance decisions?

Let me share a story.

Years ago I got a “hot stock tip” from a buddy, stop me if you’ve heard this one before. Between his recommendation and the historical value showing nothing but upward mobility, why not? Well, it hit. A solid 34% gain in just about a month. Amazing, right? I was so excited, I could barely wait to see what it would do next. And that’s the turning point. A couple of dips later, I still had a significant gain, but I was going to ride it all the way back up. It had to bounce back, right? That’s optimism bias. So to remove myself from further discouragement, I opted to not check it daily, even weekly. And in about the same amount of time of its rise to greatness, it dipped to pennies on the dollar below my initial buy-in. What happened? I got greedy? I didn’t set limits (gain or loss)? I got caught in the Herd-following bias. I was following the lead of the others instead of the hard facts, or following a set plan.

Well, I finally got around to telling my Financial Advisor. Even though she’s entrusted with my long-term savings plans, I’d not considered sharing my “fun experiment.” She took one look at the company’s performance and simply said “they’re awful, sell it while you still have something. And next time, check with me first”. Good advice, but not what I wanted to hear. So, I kept it anyway, even in light of overwhelming odds. That’s Overconfidence Bias.

It’s been almost 6 years of hanging onto to this one-time trading nightmare. At least, we weren’t “missing” the money, just sad to have seemingly blown the wad. On a positive note, I’m on the cusp of another big potential return. A rental house we bought at the bottom of the market and now, with a little elbow grease, is primed for resale. Bought, mind you, with our Financial Advisor’s full support. It’s our backup plan if we both lose our jobs and need to get out of our big, nice house quick. We could downsize finances in a hurry. Anyway, the silver lining, since I’ve held onto the dog of a stock, is to sell it when we sell the house and take the stock loss to offset the house profit. Not brain surgery, but in sync with our advisor’s input.

A nice story about Behavioral Bias and advisor communication, but let’s get back to the Financial Personality of a person who might seem to haphazardly buy high and sell low, when they meant to do otherwise, and how this affects long-term financial planning efforts.

Our Financial Personality covers both innate and learned behaviors in regards to our financial decisions. It also includes our behavioral biases, communication style, and Market Mood. So knowing one’s Financial Personality is the key to developing financial goals and then the plan to achieve them. This transparency in truly understanding ourselves helps us navigate volatile market events and stay on point for the greater good. Your Financial Advisor has assessment tools that can quantify your personality traits. There’s a self-guided version posted here (personal assessment) to try for yourself.

 

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Another integral part in working with your Financial Advisor, or any business colleague, friend neighbor or significant other, is communication. Recall that I included my advisor on the house purchase, but I only spoke with friends on the stock ordeal? Well, we all have our own communication style. And we tend to run in circles where our own style is fairly prevalent — learned from families and developed amongst friends. But in the business world, good communication is key to being understood, and understanding others. And we won’t always get to choose to (or from) whom we engage. So we have to learn to adapt (or be left behind). Wouldn’t you want a way to identify how you come across to others or how best for others to engage you? Well, there are assessment tools for this too. Again, here (communication style) is an assessment you can try, and even share with others.

It’s no coincidence that I included the interactions with my Financial Advisor as part of my financial thrill of victory and agony of defeat. She was and continues to be in my corner for staying on course and avoid making bad decisions when the terrain suddenly changes. And some mistakes have wholly been on my own. Now, this may not be the case for everyone, and that’s why we’re kicking off this discussion — to find the peaks and valleys of our financial journeys and help one another along the way. If you’re interested in seeking an advisor, or already have one, and want to share what’s being discussed here, please check out this advisor finder.

 

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Likewise, tune in for more Behavioral Finance for the DIY Investor over the next several weeks as we cover the many ways our Financial Personality, Behavioral Biases and Communication Styles affect, and are affected by, our relationships with our friends, family, Business and Financial Advisors.

So You Think You Are A Good Communicator

So You Think You Are A Good Communicator?

How many people who call themselves “good communicators” use the below logic to justify their claims:

  • “I know how to read people”
  • “I know people like them, they all work the same”
  • “I’m good at reading body language”
  • “I know this stuff so well I can teach it to anyone”

Would you describe yourself as a good communicator? Research shows that you will naturally connect with only 30% of the clients you meet. That leaves the overwhelming majority of people in the category of needing to adjust your behavior to meet their needs. But, how do you do that?

  • Does your client need concrete examples (Information) or just the big picture (Goal-Setting)
  • Will they want to know what other people are doing (Lifestyle) or do they want research to support a decision (Information)
  • Do they need help and support to get comfortable so that it feels like the right decision (Stability Style) or do they just need the rational bullet points (Goal-Setting)

While it is entirely possible for some people to really connect and engage with anyone they meet, they are the definition of “few and far between.” This brings up the question of “Why?” Through the use of behavioral science, you can better understand the natural tendencies of your clients, which will allow you to be a proactive manager of your clients’ needs. The use of a behavioral tool has also been proven to show a return of 150 bps to your AUM (Source:The Advisors Alpha: Putting a Value on Your Value, Vanguard 2015). So, adding a tool to your resources gives you a new differentiator between you and your competitors.

If there is a proven method available to ensure you can connect with absolutely every type of person, why wouldn’t you use it? Behavioral Science can help you accomplish your goals by giving you easy tips on how to engage different styles by making small adjustments to tailor your communication with your clients and prospects. Having this tool can turn you into someone with the ability to communicate with anyone, regardless of whether it comes to you naturally, or not.

What’s your communication style?

Kill Me Its Another Meeting1

Kill Me It’s Another Meeting

Some meetings should never take place!! When the leader of the meeting has no control over them, they are a waste of time.

According to research from Harvard Business School and the London School of Economics, executives spend upwards of 18 hours per week – a third of their working week – in meetings. And with an estimated 25-50% of meeting time considered wasted. Source

11 million meetings are held in the United States each day on average. That adds up quickly to 55 million a week and 220 million a month. By the end of the year, the meeting total is well over a billion. Source: (accessed 4/18/15). – Dave Johnson, How Much do Useless Meetings Cost?, CBS MoneyWatch (February 16, 2012).

The most frustrating meetings are when the boss let’s those with the loudest voice have too much time. Even trying to shut them up (politely) just doesn’t work. Then there’s the person in the room whose whole body language says, I know best; no one else’s opinion matters’. What about the colleague who has plenty to say on the way to the meeting, and just sits there and says nothing in the meeting. Poorly run Meetings are an expensive waste of time

Kill me its another meeting2.jpgSource: Google images www.annmarieklotz.com

Howard is compliant, hesitant and diplomatic. He is well liked and respected among most of his team and peers. But when leading staff meetings, Howard fails to control difficult people who upset the balance of the meeting and leave most of the remainder of the team wishing they were somewhere else.

The discussions tend to be unbalanced and very little gets resolved or decide upon.

Phil is the CEO and on one occasion sits in on the team meeting. He senses the atmosphere has no healthy positive energy; it’s heavy and negative; people are frustrated and deflated. Nothing is agreed. Phil knows he needs to work with Howard to improve his leadership skills.

Phil is goal driven, ambitious and yet understands the impact of knowing how to communicate with a range of people. Phil appreciates the importance of getting results through people management and strong strategic leadership.

Using his own experience as an example, Phil talks to Howard about how he felt when leaving the meeting. He explained that Howard needed to change the dynamic of the meeting in order to ensure people didn’t leave feeling frustrated, deflated and lacking a sense of direction. Phil explained to Howard the relevance to his leadership style of understanding behaviors. Further, he talked about the significance of becoming more effective and efficient in terms of managing individual communication styles. He explained that leadership required a person to adapt their own behavioral style to build relationships and meet the performance needs of a specific situation and in this scenario to manage meetings more effectively.

Four Primary Communication Styles Graph

Communication Differences Relationship Performance

Had Howard understood the dynamics and communication styles in the room and gained insight into his own communication and behavioral approach, he would have known how to manage individuals and control the meeting. Phil used examples of how he should be communicated with to help Howard understand communication styles. He then contrasted that with how Howard would wish to be communicated with. Very quickly Howard realized that he needed to gain insight into understanding communication styles if his meetings were to be effective in the future.

Howard

  1. Allow a short time to discuss family, life and non-work issues upfront
  2. Communicate at a slower pace and do not make them feel pressured – keep it even
  3. Have office meetings in a more living room environment
  4. Show with empathy that you care about their well-being and desire the best outcome for them.
  5. Give them step-by-step instructions to avoid any feelings of chaos.
  6. Provide lower end estimates of returns and keep them diversified
  7. Communicate security and the safety buffers
  8. Ask them how much contact they would like with you and what type (email, phone etc.)
  9. Indicate your feelings about the recommendations and get them to discuss theirs
  10. Invite them to group workshops and demonstrate how solutions work

Phil

  1. No long stories, keep to the point
  2. Keep meeting agenda short and focused
  3. Prioritize objectives around their goals
  4. Start with the big picture, not too much detail on one part of it
  5. Lay out the options so a decision can be made
  6. Provide bullet points
  7. Clearly outline risk/reward from best and worst case scenario
  8. Ask for their thoughts on recommendations
  9. Ask how involved they want you in the planning process
  10. Recognize them with referrals to other influencers
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How Do I Get People to Listen to Me?

Do you understand the words that are coming out of my mouth?

1998 Rush Hour movie starring Jackie Chan and Chris Tucker

How many times have you been in a situation where you were trying to communicate with someone and it felt you might as well have been talking to the wall? I remember explaining a concept to a client using a PowerPoint and the client didn’t hear a word I said because he was focused on how he didn’t like the color scheme on the slide.

60% of communications fail because communication styles and preferences are not aligned. Based upon 1999 Stanford Research study.

Our brains are hard-wired to process information and learn a certain way. Most people accept this by now due to the volume of research on the topic. However, we can learn how to adapt to different communication styles to increase our effectiveness.

Sales increased 17% just by a salesperson mimicking the communication style of a potential customer. Harvard Business Review

Our research has identified that most people have one of 4 primary communication styles: Goal-Setting, Lifestyle, Stability and Information. There is a lot you can learn about people and how their brain processes information:

  • Learning Style
  • Communication Preferences
  • Information needs for Decision-making

Iceberg picture

With this knowledge, you can make some simple adjustments to how you approach a person to help them absorb the information, understand why your communicating and ensure they take away the points you feel are important (the ability to influence them.)

8 Simple Tips to Adapt Your Communication Style for Others:

If you are interacting with a Goal-Setter primary communication type:

1. Start with the End Goal in Mind – What is the purpose of the interaction and how does it connect to your audience’s goal (what’s in it for them?) Use bullets and executive summaries to convey more information with fewer words. Details can be provided after the summary if needed, but Goal-setters don’t read long emails/blogs or sit through long presentations.

2. Provide Options – If you only give them one recommendation or option, you will most likely get pushback or a “no.” They want to be able to make a choice. They will likely want to discuss it.

If you are interacting with a Lifestyle primary communication type:

3. Explain Who is Involved -Being more relationship-focused, their brains first have to understand who is involved, their role, how they fit into the discussion and what they may think about it. They also respond well to social events and informal communication methods.

4. Use Visuals – Rather than send a long email or written instructions use a picture, infographic or demo to better help their brains process the information and retain it. They need to experience it to learn.

If you are interacting with a Stability primary communication type:

5. How You Say It Matters – The right tone is especially important for this group. They prefer supportive and low-risk interactions and solutions. Email may not be the best choice, but if you do send an email, be very careful to consider them as a person and how they might perceive it or “feel” about it.

6. Slow Down and Reassure – They like to be thorough and appreciate step-by-step instructions. They want to be very comfortable and sure of their actions before they act.

If you are interacting with an Information primary communication type:

7. Stick to the facts – They prefer to primarily focus on tasks/results and do not necessarily want a lot of social interactions. They tend to be logical, want to “get to the truth,” and understand “why,” therefore, they are more comfortable when they have more details, information, and research.

8. Don’t Try Appealing to their Emotional Side – I repeat, stick to the facts, policies and procedures, and the logical explanation. If you try to sway them with name-dropping, leverage office politics, oversell a concept with marketing hype or appeal to their emotional side, you will actually repel them, not influence them.

What’s your communication style? For more information on the research, how it works, or how to apply this knowledge, contact inquiries@dnabehavior.com.

Difficult Conversations After a Confidence is Broken Batch 2

Difficult Conversations After a Confidence is Broken

Managing Difficult Conversations in the Workplace

The President of a company called together his senior executives and announced that the CEO had a heart attack. The CEO was hospitalized, but after surgery he was expected to make a full recovery. The President insisted on complete confidentiality until he had more information to share.

The President was a wise man. He was formal, systematic in all his dealings, good at analyzing information, a man of integrity, thoughtful and well respected.

His Head of Marketing left the meeting feeling confused, a sense of instability, emotional, and concerned. He immediately used social media to encourage all his friends to think about the CEO and believe for a fast recovery. The Head of Marketing was empathetic and warm. He was a person who needed stability and a calm, predictable working environment. He was very well liked, very good at his job and had a wide network of friends and business contacts.

Four Primary Communication Styles Graph

Directly after the meeting, the President received a call from the media asking for a comment; the company share price dropped 10%. The next call was from the Chairman insisting the source of the leak be found and fired.

The news of the CEO’s heart attack was now only 3 hours old; the potential fall out to the business (and the family) was significant.

The President recalled his executive team kept them standing and insisted the culprit own up immediately. The Head of Marketing owned up and the remainder of the team left the room.

The President immediately put the Head of Marketing on notice saying, “I instructed you to keep what I told you in confidence. That means you agree to keep the information completely, totally secret and not to repeat the information without permission.” He continued, becoming even more analytical in his communication, “asking someone to keep a confidence is a solemn contract. You broke it.”

The Head of Marketing tried, without success, to respond. The President left the room leaving the executive confused, bruised (metaphorically speaking) and devastated that he had acted so inappropriately. His first reaction to the news was driven by feelings and a loss of certainty about his future. He’d given no thought to the family or the consequences of such news reaching the marketplace.

Communication Differences Relationship Performance

The reality of the situation is that the President and Head of Marketing were operating from their natural zone and they did not have the awareness to adapt.

Had both parties understood their inherent communication and behavioral styles this would have been a different scenario. The President would have emphasized the potential market risk. He would have understood the inherent behaviors of some of his team. He could have stressed the importance of not bringing emotions into the situation. The Head of Marketing would have understood his own reaction to the challenging news. He would have realized he’d be concerned about the potential loss of stability and safety in his environment and known how to manage his reaction to the news.

Difficult Conversations After a Confidence is Broken  Insert Photo 3

  1. Set a structured agenda and have prepared questions.
  2. Meet in a more formal environment in the office.
  3. Expect yes/no answers.
  4. Offer details and analysis.
  5. Avoid abstract ideas in communication, and keep to specifics.
  6. Present the research performed to come to the specific conclusion.
  7. Provide case studies as examples rather than having a high-level, conceptual discussion.
  8. Show the risks are minimized (not eliminated) in the recommendations.
  9. Say what you are going to do and then do it. Be very transparent.
  10. Provide them with newsletters and books, economic information.

How we handle responsibility for our decisions, as well as our mistakes, is a direct reflection on our character. However, without insight into our inherent communication and behavioral style we do not know our default reaction to a situation such as the Head of Marketing faced.

 

The Harsh Reality About Communication Styles

The Harsh Reality About Communication Styles

“We treat you like you’d treat you”. This commercial gained tremendous popularity for one reason: for effective service you need your communication styles to match each client’s unique style.

I like transactions that are easy, effortless, and fun. Save me some time and the aggravation of not having to wait in a long voicemail “queue” and I will reward your firm by sharing my positive experience at every opportunity.

But how would a customer service employee know that about me if they haven’t had frequent interactions with me? And furthermore, what difference does it make?

The hard-edged, measurable results are that you will get more business. According to Gallup research, 23% more business to be exact, from me and from my referrals.

A few weeks ago, I needed to call customer service at a major financial services firm. Like many of you, I was dreading having to even make the call. Why? Long automated menu selection, not even having the option that I need to select, then having to figure out how to get a “live” person, and then going into another “queue” that informs me I am calling at a high volume time and my anticipated wait time is five plus minutes.

“Really?!”

Then, after the wait, I finally talk to a service person, only to get the wrong information. I had to call back two more times (and yes, go through the queue again) before I received the correct procedure.

I certainly shared my experience on the satisfaction survey I received the next day. I guess it is no surprise that no one has acknowledged the poor service or tried to assure me that they want me to have a better experience next time.

How many calls come into the typical customer service center on a daily basis? 1,000 plus! The way I see it, a firm gets 1,000 plus opportunities to build and strengthen client relationships.

If you are relying only on customer surveys to gain intelligence on how to create a unique customer experience rather than learning how to customize communication styles, you will be left behind by the competition.

To provide unique customer experiences from the very beginning, you need the right behavioral information at your fingertips. So bring the solution to your firm so you can say with confidence: we treat you like you’d treat you.

About the author:

Peggy Mengel – Senior Consultant, Human Behavior Solutions Advisor

Peggy Mengel has spent 30 years helping financial services firms build deeper, stronger and more trusting client and employee relationships. With an understanding people before numbers approach. Peggy helps you navigate the human differences in your business to create sustained success. Armed with behavioral intelligence, you will be able to attract and retain the right clients, empower your team for authentic productivity, and enjoy a 23% boost in revenues. Read more