The Cooperative Compliant Client

This post is part 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 Cooperative Compliant

Behavioral Insight 3, Take charge investors, investor behaviorDon Spring is a 64 year old recently retired Chief Operating Officer who has now moved on to helping with fund raising programs in his local community. Don has been to stockbrokers in the past but never had a full service financial planning relationship. However, he now recognizes the importance of having an adviser help him through making key decisions with the substantial wealth he accumulated through his working career and also an inheritance from the passing of his mother. Don has three middle aged children and 7 grand-children with a range of needs. Don feels he has to help them financially without risking his own life in retirement.

Don is a Community Builder with a dominant trait of being a Cooperative Compliant. This means he is a person who naturally seeks to fit in with others and deal with what is immediately in front of him. He will naturally seek to work with others and get involved in group activities. In the community Don will be seen as generous.

When it comes to dealing with investments, a Community Builder with Cooperative traits will focus on each individual investment and may get lost in sorting out when to hang on to winners and sell losers. However, will follow a plan that is mapped out for them providing there are clear instructions on the investment policies and how they will be administered. 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 practical and diplomatic people will be Community Builders who are Cooperative Compliants. Without advice they will tend to suffer from the disposition effect of selling winners and hang on to losers because of their naturally hesitant nature.

Communication key: Encourage their input to decision making and provide specific directions.

A struggle that a Community Builder will have is being hesitant in making key decisions. This will lead them to at times procrastinating and then? taking what is the easy step in the short term rather than what may be best for the longer term. This will usually result in suffering from the Disposition Effect of keeping the winners and not selling losers.

An advisor who is a Community Builder with Cooperative Compliant 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 Community Builder with a Cooperative Compliant dominant trait will seek to delegate responsibility for their overall planning to an advisor. The advisor should aim to guide them by seeking their views and then giving them specific instruction which are clearly explained. Ask the client: How confident are you in making financial life and decisions? How would you like the financial planning process to be managed?

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

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