Posts

Create a Behaviorally Smart Succession Plan

What is most frequently left out of an advisors succession plan is the client?? Not the assets, but the behavioral side of the client.? After all, 93.7% of the financial planning process is the behavioral management of the client, so why wouldnt this information be a valuable part of your business and your plan?

When the advisor is close to retirement, the client really has three questions:
1.?? ?Will my portfolio be similarly managed and allow me to reach my goals?
2.?? ?Will the relationship with my new advisor be an enjoyable one?
3.?? ?Will I receive the same service?

You will notice that the majority of the clients concerns deal with personality and behavior.

Now lets move to the new advisor.? They want to be sure to retain as many clients as possible. According to a Price Metrix Study, advisors retaining 95% of clients 2010-2013 grew AUM 25%; those retaining 80% of clients, grew AUM just 12%.

financial advisor, advisor successionWhat was a good fit for the retiring advisor may not be a good fit for the new advisor.? While you dont have to prospect to acquire this transitioned client, it can feel like you are starting over since you are just beginning the relationship.

There is a certain amount of trust that is transferred over from the retiring advisor but the new advisor will have to build it based on their unique personality.

Imagine being able to turn over your clients with the behavioral big data on how to sell, service and create a unique experience.? The first appointment with the new advisor would be so much easier and the client would feel understood.? Trust would be built at a much faster rate.? And trust is the key to retention.

Start building a behaviorally smart succession plan to ensure your clients will stay with a firm that you worked so hard to build!

To learn more, listen to Hugh Massies video on Behaviorally Smart Succession Planning.

3 Ways to Prepare for the Behavioral Awareness Movement

More financial services firms are starting to join the behavioral awareness movement.? Why?

Behavioral theories now have proven hard-edged results. By engaging clients on their terms, financial services firms can increase revenues and manage their compliance risks.

behavioral finance, behavioral awarenessWhat can you DO to help your advisors become behaviorally smart?

1. Give your advisors bigger behavioral data

93.6% of financial planning is behavioral management of the client. As described in What Drives Your Financial Decisions, an advisor needs to know deeper traits of the client such as personality style, emotions, listening style, communication preferences, confidence level and desire to control.? And, this behavioral data needs to be at the fingertips (via CRM) of the advisor and their staff.

2. Provide a client engagement solution for your advisors

In a recent survey by Practical Perspectives, one of the top topics of interest to advisors is client development and engagement.? Advisors are not interested only in theory.? What they really want is a program that is actionable and implementation-oriented.

3. Lead by example with your advisors

Does every employee that interacts with your clients know their communication preferences and behavioral style?? Research shows a 40% decrease in repeat calls when a call center rep tailored their response to match the unique personality of the caller (client).

Isnt it time to recognize individual differences and become behaviorally smart?

Discover the action steps to take now at www.financialdna.com.

How it Works, DNA Behavior, behavioral consulting, psychometric testing

Uncovering the Advisory Blind Spot

Dictionary meaning: blind spot a subject that you do not understand well, often because you do not want to know or admit the truth about it.

Most clients have a blind spot when it comes to financial management; but equally most advisors have a blind spot about who their clients are. The advisor often believes he or she can read people but it is natural the advisor will not be able to get a complete and objective understanding of the client regardless of their intuition or level of experience. Uncovering these blind spots has two powerful outcomes in the financial advisory process.

Advisory Blind Spots, Behavioral Finance, Financial PersonalityFirstly, for an advisor it increases their understanding of the importance of asking clients the right questions. Getting to know how clients are financially wired is a key to building relationships. Secondly, it uncovers the need for advisors to acquire skills that assist them to understand different client communication styles and how to use that knowledge to moderate/adjust communication styles to draw out information about clients financial behavior and decision making patterns, and from there adapt advice to better meet their needs.

The challenge for clients is that they dont know what they dont know and this leads to blind spots. They may well not be able to see opportunities in risk nor risk in opportunities, and advisors need to be able to expose these blind spots and the possible history behind them. Being able to discover their future plans, their aspirations, their background and what has driven or influenced where they want to go in terms of wealth management ensures that advisors give targeted advice that will undoubtedly build stronger client/advisor relationships.

Sarah and Michael recently engaged to be married decided to speak to a financial advisor about planning their financial future. The advisor encouraged them to save and invest; to work towards owning their own property and gave them reading material to support the advice.

Sarah and Michael left confused and dissatisfied. They had wanted to talk about handling money responsibly; they wanted to ask questions about separate or joint accounts; they wanted to start a college fund for the future education of their hoped for children; they wanted to avoid debt but use and manage credit sensibly; they wanted to ask about a self-managed pension scheme; they wanted to share their dreams for the future and how they could build wealth to enable them to realize them.

Did the advisor give advice? Yes. Did the advisor uncover anything significant about these two potential clients? No. Had time been invested into asking questions, discovering their financial personality style uncovering their history, revealing any blind spots ? the advisor would have discovered that Sarahs parents divorced after mismanagement of finances that led to bankruptcy and she was determined that this should not happen to her but knew she had many concerns about never taking any risk with finances. Michael came from a long line of financially astute family members. As a family they openly discussed finances and understood the importance of encouraging the younger members to do likewise.? Michaels family through careful management had built up a significant wealth.

http://www.communicationdna.com/newsite/wp-content/uploads/2012/04/cdna-solutions-slide-enterprise1-130x60.pngHad the advisor been behaviorally smart; had they objectively known the different behavioral styles and emotions of these clients which comes from using a formal behavioural discovery process; had the advisor been equipped to navigate human differences by discovering and aligning how to uncover different communication styles, behaviors, solution preferences and blind spots this story would have had a happier ending. As it was Sarah and Michael took their business elsewhere.

To learn more about uncovering the advisory blind spot, please visit the Financial DNA website.


Try Financial DNA Free for 30 Days.

Discovering the Silent Killer

Indifference. Websters dictionary defines this word as lack of interest, concern or sympathy.

J.D. Powers and Associates just released the results of a survey that found 31% of financial advisors were indifferent about their work and have no strong attachment to their firms.? Without a connection to their firm, these advisors are likely to be open to discussions with competitors.

There is a silent killer lurking in the midst of our organizations. Could a third of your clients be classified as indifferent?

http://dnabehavior.com/Company%20Values%20Resize.jpgOne of the biggest challenges with identifying indifference is that we usually judge our clients through our own viewing lens.? That is not always objective. Or we point to our annual client surveys.? But there is a risk that you can have lots of data and not see what it is saying.

Indifference can translate into business risks.? The first is that the client will not stick to their financial plan and that will present problems for you in the form of difficult conversations and unrealized goals.? In addition, the client will not add money to their account or provide any referrals.? Finally, the client is open to conversations with other advisors and the ultimate risk is losing the entire relationship.

What can you do to combat the silent killer?? Start by asking a lot of questions to get beneath the surface of a client. Human differences are really the hidden obstacles in any relationship.? It takes time but you will uncover the behavior and emotions that lead to authentic engagement.? Next, be sure to adapt your communication style to that of your client. You might be excited about sharing all the market data when in reality your client is happy with the concrete, bottom line results. Finally, customize your products and services to your client.? A lengthy newsletter is not necessary to clients who prefer picture, graphs and bullet points.

All of these recommendations may seem small. But small changes produce big results.?? Keep in mind that it is in understanding behavior that leads to customer engagement.? When your clients are connecting with your firm at a deeper level, there is no room for indifference.

Learn how you can objectively uncover and navigate the different financial personalities of your clients by visiting the Financial DNA website.

The Outgoing People Connector

This post is part 4 of our 10 part series on Financial Behavioral Insights from our Financial Performance in the New Behavioral Economy White Paper. The financial behavior insights will help you gain greater self-awareness for recognizing some of your own behavioral tendencies and also those of investors.

Behavioral Insight 4: The Outgoing People Connector

Helen Jones is a 38-year-old mother of 3 children who has a very bubbly, outgoing personality and an active social and community life. Helen openly admits that she has gone to lunch and dinner parties and hears the latest hot tips on what stocks are going up. Often in the excitement of the moment Helen has taken a few bets. She justifies to herself that it will fund a vacation, or this will mean she can have some nicer clothes. However, after a few years of much heavier losses than gains, and the future of her family on the line, Helen realizes something is wrong. Outside help is needed.

Behavioral Insight
Naturally expressive and talkative people will be Engagers who are Outgoing People Connectors. They are able to network with people well but may make uneducated bets from following the herd that sabotage their portfolio.

Communication key: Tell them the names of the people who are involved in the company and management of the investment.

Helen is clearly an Engager with the dominant trait of being an Outgoing People Connector. This means she is constantly networking with others and always exposed to the latest idea or solution.? The Outgoing People Connector will usually be the expressive and talkative type who enjoys mixing with people.

When these networking talents are used well the Engager who is an Outgoing People Connector will learn of some great ideas. The key will be using the ideas wisely. However, often this type of person is quite impressionable regarding what others have to say and will display a herd mentality. We all know that there are people who pick up the latest money-making idea at a dinner party. Everyone else is jumping into a deal; why shouldnt I? Or one of their friends is talking about a hot stock tip.

Further, a struggle for these Engagers who are Outgoing People Connectors is that they are often quite emotionally vulnerable, and they have a desire for instant gratification. So this leads to impulsive decision-making and later regret. While they create the perception of being risk takers, very often they are not. Usually, the quick leap into an investment is matched by a quick leap out with great wealth destruction consequences.

An advisor who is an Engager with the primary trait of being an Outgoing People Connector will be naturally strong at finding out from others what the new opportunities are. However, they need to restrain themselves and only present these opportunities to clients when they have thoroughly researched them. Otherwise, their clients will each have a portfolio with a mix of poor investments.

Learning Point:
The advisor needs to be aware that the Engager who is an Outgoing People Connector will be responding to a lot of up and down emotions with every investment opportunity, and therefore each one needs to be discussed so that wise decisions are made. Ask the client: Tell me who you consult with to get investment ideas? How do you check the opportunities that are presented to you and who is presenting them?

What are your thoughts? For additional information on discovery through behavioral profiles, click here.

The advisor needs to be aware that the Engager who is an Outgoing People Connector will be responding to a lot of up and down emotions with every investment opportunity, and therefore each one needs to be discussed so that wise decisions are made. Ask the client: Tell me who you consult with tNaturally expressive and talkative people will be Engagers who are Outgoing People Connectors. They are able to network with people well but may make uneducated bets from following the herd that sabotage their portfolio.
Communication key: Tell them the names of the people who are involved in the company and management of the investment.
o get investment ideas? How do you check the opportunities that are presented to you and who is presenting them?

The Take-Charge Visionary

This post is part one of our series on Financial Behavioral Insights from our Financial Performance in the New Behavioral Economy White Paper. The financial behavior insights will help you gain greater self-awareness for recognizing some of your own behavioral tendencies and also those of investors.

The Take-Charge Visionary

Behavioral Insight 3, Take charge investors, investor behaviorJack Sun is a 40-year-old driven businessman who has come to meet with you to discuss his finances. You have learned that Jack has just sold one of his businesses and he now has capital to re-invest. You ask Jack the question: What will your life be like in 3, 5 or 20 years? Jack is able to immediately respond that he loves running restaurants and managing people. As the discussion goes on it becomes obvious Jack has worked out his life plan and he will not be retiring. Further, he does not mind what he invests his investment capital in so long as it makes money. He says he is interested in the overall return and not the performance of any particular asset.

Jack is an Initiator with a dominant trait of being a Take-Charge Visionary. This means he is naturally a big-picture thinker. He can see his life out a long way. Being able to more easily get the big-picture clarity does mean he will be naturally more comfortable making long term investment plans. Further, this clarity will help Jack with being able to more confidently make financial choices.

Also, when it comes to managing investments, an Initiator with Take-Charge Visionary traits will be able to more easily look at their investment portfolio in the aggregate. This will generally help them focus on the overall result and not get stuck on looking at whether each particular investment is a winner or loser.

Behavioral Insight
Naturally big-picture thinkers and decisive people will be Initiators who are Take-Charge Visionaries. They know where they are going and will have a consolidated view of their investment portfolio.

Communication key: Keep the discussion high level and provide options on recommendations.

A struggle that an Initiator will have is listening to advice from an advisor because it is about their agenda and plans. This means they could miss learning important information before making a decision and over extend themself.

An advisor who is an Initiator with Take-Charge Visionary traits will be naturally good at giving the client direction but needs to slow it down and listen to what their client has to say. This type of advisor needs to be very careful that their dominant attitudes do not overly influence the portfolio.

Learning Point:
The Initiator with a Take-Charge Visionary dominant trait will more independently set the direction of their overall planning. The advisor should aim to guide them by providing options and recommendations on investment choices. Ask the client: What goals would be the most important for you to achieve in your life? Have you built a detailed plan for your wealth creation?

To read about additional client behavioral styles, download the full Financial Performance in the New Behavioral Economy White Paper.

What are your thoughts?