Communication

Uncovering Human Behavior Risks

Generally in business, and particularly in financial services, people associate risk with the markets or economy. What we fail to drill down into are the risks caused by human behavior. Another way of looking at this is to consider how people handle the market risks. What decisions do they make? What solutions do they come up with? How do they manage their emotions? How do they communicate?

In essence, the market risks can be managed or exacerbated by human behavior. So, what needs to be better understood is how your people are going to handle market and economic risks that may be impacting your business. This will be particularly important when they are under pressure. What are their blind spots? What are your blind spots? Then, how will you manage your people so the risks are better managed?

Through our Financial DNA profiles we are able to reliably predict how people will behave and therefore the risks they may cause. Will they take too many chances? Will they be too impatient? Are they too independent and not accountable? We have found that the profiles are able to provide great insights into the true behavior of people when they are under pressure. Having this information can help you put in place the right management controls and also to provide the individuals with more self-awareness of how they will make decisions which could cause or exacerbate market risks. There is no doubt a large part of the success or failure of businesses in the long term comes down to being aware of and managing human behavior. You only have to look at some of the major corporate and banking disasters to see this.

So how aware are you of the risks that your people could be causing to the future of your business?

The Impact of Money on Your Family

What has been the impact of money on your family? This is a big question and one often addressed in a family meeting. Also, it is often asked by your financial advisor in the financial planning discussion.

There will be both positive and negative impacts of money on a family. In many ways these impacts will shape who the family is, determine the family relationships, define the family legacy and how the family is remembered by others. So, the impact of money is very significant.

Importantly, the impacts of money on the family will also shape each family member’s relationship to money. Your relationship to money will then have a large bearing on your relationship with the family.

Another question for a family meeting is what beliefs about money did your family give you? To understand this for yourself is very powerful for your development and building a healthy relationship to money. Then, having the family members share this together will be very revealing about their attitudes to the family and its purpose. Because every one in the family is different, there will be no surprise to find very different attitudes.

Remember, money and the belief systems built around it can do a lot of good in families and also it can do a lot of harm. The key point is to understand both perspectives for your own quality of life, financial planning and also building healthy family relationships and communication.

If you want a really good book to read on this topic, then get the Golden Ghetto by Jessie O’Neill.

Family Transparency

A common derailer that I have seen in many families is a lack of transparency. There is key information which is not being disclosed to other family members and, in some cases, to key people in a family business. Usually, this is caused by the holder of the information not trusting the other family members in some way. What is the cause? This is in part that person not trusting themselves and also having a desire for control and to manage outcomes. You will more often than not see this coming from the family leader who has a more naturally dominant behavioral style. You will also see this approach generally in at least one of the children. Interestingly, they expect transparency from everyone else.

Of course, there are times when it is appropriate not to disclose some sensitive information but you need to think very carefully about it. How will the other person feel?

The problem is that some of the other family members may either outright resent it when they find out. This will particularly be the case for those other family members who are very methodical and like plenty of information. Their tendency to trust is also lower. There will be others who will let it go for a few years, and then have a violent objection later when a problem emerges. Either way it does not build trust.

Whilst more open communication flows do create vulnerability which is difficult for some, it saves destructive behaviors later on which can rip a family and/or its business apart. Ultimately, this costs a lot more financially and non-financially.

One of the big points that I am bringing out in family meetings is to understand how to provide information to the different family members so there is trust. After all, trust is the currency of any family.

Information Flows Drive Energy

Last night I was called by a family friend (for the sake of the innocent, Amy) who was being pushed by an advisor to make a major decision in regard to transferring her retirement savings account. Why was Amy asking me the question?

Basically, she was feeling uncomfortable and very hesitant. And yet, Amy is normally a very confident decision-maker and is not completely inexperienced with financial matters.

The reason is that Amy’s financial advisor had made the recommendation and given her a huge envelope of documents to work through and absorb. Amy did not even know where to start. The whole thought of this was energy draining. Then the questions of what is the bottom line, what are the risks etc all come up. In essence, her level of trust is diminished.

The issue is not the fact that a proposal has been made. It is all about how the information has been provided. What you need to realize is that this was then negatively affecting Amy’s energy. What will happen? She could just make the decision and regret it later, or simply dismiss the proposal.

So, I gave Amy the very simple, but liberating solution, of asking her advisor to re-frame the proposal and provide in a summary format the benefits and costs of both the new solution and retaining the existing solution. The details can be checked afterwards as needed – which a detailed person will do.

What I am saying is that if you are the client, ask your advisor to communicate on your terms and then it will be easier to make a decision with comfort. If you are the advisor, build trust with your clients by asking them how they want the information provided. You may find that you will have a much happier and ultimately profitable client.

When people hesitate it is very often simply the way they have been communicated with. The information flows drive your energy to make good or bad decisions.

What is Balance?

During a recent Wealth Mentor Training with a group of financial advisors we were discussing our definitions of a Quality Life. A number of advisors made a very key observation: Is there such a concept as a balanced life? Can a person really have balance? This discussion really hit a chord with me as this point really gets to the core of what the Financial DNA program is all about.

What the discussion boiled down to was that balance is different for all of us. You cannot directly compare the life balance of one person to another. So, the conclusion of the group was that there cannot be a universal definition of balance. The reason is that we are all uniquely wired and consequently we will have different life outlooks and motivations. For some people this will mean spending more time and energy involved in work or business activities, or for another person more time and energy will go into family or sports or recreation and for others perhaps planned giving activities will be given more time.

Therefore, balance is really unique to your life. To a large degree balance will vary depending on your innate behavioral style, the environment you have lived in and currently live in, life experiences, education and values. At the various stages of your life the time and energy you put into these activities may vary. Also, an important part of the equation will be how much money you spend or invest in these various activities as that is part of balance too.

So assuming we accept that there is a concept of balance but recognize it is different for each of us, then how do we measure it? In essence, we need some frame of reference to monitor ourselves and also guide others. Some measurements may include: degree of happiness, contentment or general comfort, confidence, positive energy, low levels of stress, excitement and sound relationships.

So in advising, mentoring, coaching and guiding clients and others in your life it is important to recognize how you design your own life plan for balance may be different for others. Importantly, you also need to be careful in passing judgment on your clients or the family and friends you may be interacting with.