This article first appeared on Nasdaq.
Behavioral sciences teams can influence business strategy, decision-making and service offerings through deep insight into human behavior. Such a teams ability to understand behaviors helps mitigate failure and decrease industry waste.
The more innovative financial services companies are starting to appoint behavioral teams. They understand the power of applying behavioral science to improve customer and employee behavior.
Why add the behavioral facet?
Real-world financial decisions are complex. Investors look to advisors to inform their decisions. They want to make the most of their money to achieve goals and build for their future.
But how can each party build trust sufficient to share life goals? And the other provide corresponding advice that delivers those goals? How can customers be sure their finances are being managed within a culture of integrity, honesty and trustworthiness?
Never has there been a greater need for the financial services industry to prove it can be trusted.
What will be revealed…
Using behavioral science to identify and weed out misconduct is just one aspect, though it may be the most familiar. Being able to better understand people to inform the culture of the business is another side of behavioral science, and a fundamental aspect of building trust.
But the big one – and the one that will build and sustain business – is being able to use behavioral science to better understand customer behavior and to advise them how to make better decisions. Relying on big data itself is not enough. Big data is stronger when paired with little data, if you will; that is, behavioral insights and overlays that are sourced from personality discovery.
Interventions to foster better customer decisions have been around for a long time; behavioral science has opened our eyes to human differences and complexities.
Science, not soft
The application of this approach to the advisor-client relationship is new. The market now offers validated, scientific profiling systems that will identify not just decision making, but also how individuals react under pressure. This information is delivered to the advisor in real time at their fingertips.
Building a trusting and trusted culture based on financial behavior to help clients make better financial decisions is no longer a nice-to-have feature. Its becoming a competitive edge, if not a must-have.
Appointing a behavioral sciences team to work with leadership to shape culture and help advisors work more effectively with clients impacts the bottom line. Using the team in the hiring process and in the workplace sets the trust compass in the right direction.
Applying a behavioral data-gathering discovery places deep insight into the behavioral science teams hands. They can then respond to different demands across the business. From the behavior of the board to the frontline, they can advise and educate on how to understand and leverage (or attenuate) behaviors. Behavioral science teams look for and correct bias. Their work keeps the financial industry honest.
When financial advisors know how to use and apply behavioral insights, they develop stronger client rapport and can give tailored financial advice to clients. Ultimately, they can claim greater market share as they build a reputation of trust and integrity.
Think of that impact industry wide if behavioral science and discovery are applied to recruiting, assessing and managing people, truly tailoring advice, excluding any form of unconscious bias and making sure peoples inherent behaviors are accounted for.