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Can You Spot The Molotov Cocktail Client?

Historically, we have seen advisors selecting their ideal clients based on easily observed quantitative and qualitative factors. These often include (i) meeting a minimum of assets under management, (ii), shared values, (iii) preparedness to delegate, and (iv) being able to meet a specialist service need (estate planning, family business, business exit, etc.).

However, based on our work using Financial DNA over nearly 20 years, we have affirmed that there are deeper issues that need to be identified before taking on a new client – or retaining them once you see the pattern.

DNA Behavior International recently polled our advisor user base on their “worst client”. We got resounding feedback that most advisors worst client was “an engineer”. In my more than 30 years of serving clients, working with engineers was a challenge for me interpersonally because many of them constantly wanted to benchmark and finetune the portfolio. So, clients who are not relationally compatible with the advisor and therefore are hard to communicate with would not be suitable.

But in my experience, engineers aren’t the worst clients. The worst clients were hiding in plain sight during client onboarding but slowly required much more time and risk to manage throughout their financial journey because they are financially destructive.

In our 18 years of client discovery experience, we have found a trend of financially destructive clients. The most destructive clients tend to be the ones that require the most behavioral management and are not associated with a particular occupation. For instance, the couple that brings in $300k + per year and spends it all, the mother that cannot say “no” and the couple that constantly switches plans or presents with ideas for deals from dinner parties.

So, how can you identify these Molotov Cocktail Clients and avoid them? Look for these Molotov Cocktail Client traits:

  1. Have low Financial Behavior Compatibility because they are more prone to making destructive financial decisions that get in the way of wealth accumulation, and
  2. Are a low Relational Style because they are interpersonally harder to manage; thus, there is a greater chance trust will be lost and advisory risk will increase.

Discovering the Clients Financial Personality

The next evolution in discovering whether a client is ideal and how to behaviorally manage them is to get more insight into their decision-making and relationship behavior. Some clients will do a “behavioral flip” when who they naturally are at the core (Financial DNA Natural Behavior style) intensifies under pressure and in emotional situations – often caused by market and life events.

They go from seeming to be a congenial and desirable client to being too hot to handle. Is your firm prepared to manage clients who are not behaviorally ideal, even if they simply meet the four main criteria specified above?

We have adopted the belief that it is the client’s complete financial personality (their “Financial DNA”) which is a significant driver of wealth creation. Understanding a client’s risk profile is only one dimension that needs to be understood.

In particular, we believe that having a high ratio of spending to disposable income is the biggest destroyer of wealth. If a client spends all of their income then, unless there is a windfall event (bonus, inheritance, business sale), there is nothing left to invest. Also, of the clients who are spenders, many will invariably have high debt which puts their wealth creation further at risk.

Clearly, being a high risk taker can jeopardize wealth creation if poor decisions are made. Nevertheless, in order to create wealth, risks do need to be taken. So, in terms of a client’s Financial Behavior Capability, having a high risk tolerance is important. Clients also need to have a higher level of goal drive to build wealth. They need to be motivated to work harder and push themselves over a long period of time.

Financial Behavior Capability Research

DNA Behavior conducted a recent research study across 65,000 randomly selected participants who had completed the Financial DNA Discovery Process to determine which clients would be ideal from a behavioral management perspective. We identified the following statistics about a person’s Financial Behavior Capability when you combine the propensities for saving (or spending), goal drive and risk-taking:

 

Financial Behavior Capability Saving or Spending propensity Goals and/or Risk Population %
Very High High Saving And high goal motivation and high risk taking 11%
High High Saving And high goal motivation only 17%
High High Saving And high risk taking only 15%
Moderate Moderate Saving Moderate risk taking and goal motivation 14%
Low High Spending And low risk taking only 15%
Low High Spending And low goal motivation only 17%
Very Low High Spending And low goal motivation and low risk taking 11%

 

Relationship Style

 

Interestingly what we found is that only 3% of clients would be ideal from a behavioral management perspective when you combine a high Financial Behavior Capability and have a relationship style. All of the remaining 97% could be Molotov Cocktail clients who are prone to making financial decisions which would counteract accumulating wealth for meeting their goals and/or would be difficult (or not enjoyable) to inter-personally manage.

 

The behaviorally ideal clients (3% of the population) exhibit the following characteristics:

 

  1. High Financial Behavior Capability based on the 11% of the population having the propensity to: (i) save money (low spender), (ii) emotionally manage losses (high risk tolerance) and (iii) build wealth (high goal motivation).
  2. High Relational Style based on the 11% of the population with high financial capability as defined above, only 27% of that population (roughly 3% of total population) will have a desire to congenially work with the advisor to build a long-term relationship and not simply for performance management. Put another way, more than two thirds of the population with a high Financial Behavior Capability will be more relationally difficult to work with because of their strong results focus and demanding nature.

Will you be the advisor – or organization that employs many advisors – that takes on any client and advises them without any insight into their financial personality? Or will you leverage data to maximize advisor-client fit, tailor advice and client communication, and ensure retention, satisfaction and success on both sides of the advisory relationship?

Consultant

Disruptive Innovation Challenges Business Consultants to Understand Behavior

Consultants are facing extraordinary changes in every industry, which is making it harder to identify and execute sustainable solutions. How do you best support, advise and mentor your clients when they are faced with unusual “competitors”, that is, the Disruptive Innovators?

Disruptive innovation is not new. Clayton M. Christensen first mentioned this theory in 1995. It’s only recently that industry has begun to recognize that finding new markets and new innovations to take to markets, might be worth pursuing to build their businesses.

So, what is Disruption Innovation?

Investopedia defines it as, “A technology whose application significantly affects the way a market or industry functions. a classic example (is) the internet.”

Interestingly, disruptive innovations come, not necessarily from the big end of town, but from entrepreneurs and even cottage industries. That is the mum at home or the guy in his garage.

This speed of change that likely threatens your clients can place business consultants at a disadvantage, leaving you unable to advise clients on how best to manage the impact of these disruptive innovators. Both you as the business consultant and your clients must be far more adaptable in your thinking – and the clients in their operational business structures – in order to make the quick pivots to deal with threatening changes.

 

The benefits of agility

Start-ups don’t have to worry about processes and procedures. They don’t have to “get everyone on board” to change. They don’t have to persuade their board or stakeholders. This gives them a huge advantage over established businesses.

They can take an idea and product to market using minimal input. They can market using social media. They can mockup their product and get friends to try it and provide the feedback to understand what customers might need. Who knew we’d be shopping online or having our coffee in “pop ups”? Who knew we’d be doing business of every kind online with our feet up and watching TV?

Many of us fear change and yet we are currently in the middle of a generation that welcomes, encourages and chases disruption.

 

Headache or opportunity?

This kind of pressure for push, push, activity puts established business on notice. They may want to find more innovative approaches to their business but are significantly restricted in what they can do – hence the potential headache for you as a consultant.

So, this begs the question – where do consultants fit in to this world of innovative disruption? Perhaps more importantly, how can a behavioral approach power innovative disruption?

Consultants who want to offer a much more effective service in this ever-changing world of disruption innovation need to approach their offering from a completely different place. First, consultants need to know human behavior is relevant at a very deep level. They need to understand the behavioural issues for all organizations.

When pitching for a contract in this climate of disruption innovation you must understand the biases and emotions that cloud judgment and impact decisions. You need to understand that the corporate world may well have the money to invest in innovation, but unlike the mum at home, or the man in his garage, they will see innovation as fraught with uncertainties. People like to know what is certain when they are making decisions.

Jeff Bezos, CEO of Amazon, says, “focusing on what won’t change has been the center of Amazon’s strategy.” He suggests that you should build a business strategy around the things you know are stable over time.

 

From Bezos to behavior

Well, natural DNA Behavioral insights, if measured using robust methodologies, will last forever as they do not change, and they pervade every aspect of how a business is run and the decisions made.

Much has been documented about cognitive biases and deviations from rational decision making. As a consultant the solution is clear: You must know the inherent behavior, decision making and biases of the executives you work with.

Seeing innovation from a behavioral perspective can lead to more effective decision-making outcomes. A behavioral approach to working with companies to help them become more comfortable with disruptive innovation will put you in a significant place to offer advice more in tune with the challenges the corporate world faces from corporate disruption.

Understanding behaviors will inform:

  • What’s getting in the way of the business being more innovative.
  • Who on the team will be more adaptable and able to pivot with fast changes caused by disruption?
  • Who on the team has the innovative thinking to identify what is happening next and come up with solutions?
  • Why leaders might be challenged and holding back those in the business who welcome disruptive innovation (in other words, are threatened by more innovative people and close them down).
  • How best to managing stakeholders and important “others” in the business when risky decisions have to be made.
  • How to see disruptive innovation as a new-world concept to be embraced without fear.

Consultants: Here’s where you start

  1. Get to know what forms of disruptive innovation your clients are facing in their industry.
  2. Take our complimentary DNA Behavior Natural Discovery using the link below. This will inform the degree to which you can uncover behaviors that embrace or resist disruptive innovation through your own personal lens. Said another way – how would you and your consultancy respond to a disruptive innovation that challenged your own business?
  3. Remember, when you purchase a Consultants Package from us, not only will it accelerate your offering with Behavioral insights that empower performance, you will be backed by a platform well on its way to managing in excess of a billion relationships.

DNA Behavior Natural Discovery

We’re here to help, call 1-866-791-8992, email, or visit our website to learn more about how we mentor/coach consultants worldwide.

 

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Financial Advisors See Data as a Differentiator

This article first appeared on Nasdaq.

With financial advisors under considerable pressure to strengthen their competitive position through an improved understanding of their clients, adding a behavioral insight tool to the client onboarding process can help advisors obtain new insights about a client’s behavior and financial personality.

In doing so, it is imperative for firms to interrogate this data that is relevant to each client. The way to use data as a differentiator is to know clients at a deeper level. Their decision-making style, spending patterns, goal-setting motivations, approach to and tolerance of risk, behavioral biases, and responses under pressure, as well as knowing each client’s likes and dislikes and life journey.

Measuring and discussing financial behavior is the first step for advisors to get to know their clients. And we already know that, for advisors to provide valuable advice, it is key that they understand clients and client goals.

Gone are the days of form filling. Advisors need in-depth, accurate information at their fingertips. Clients already understand that life requires them to be subjected to an array of technology experiences. They get it.

What many clients do not accept is poor service. For instance, feeling that they are not front and center of the relationship. Feeling they are a statistic. Feeling like the financial advice they are getting or the way they are getting it is generic or ill-matched to them.

When advisors start to deploy technology which delivers a great experience for their clients, then and only then will they gain a competitive edge and restore broken trust.

The use of application programming interfaces (APIs) is presenting a new and exciting range of possibilities to financial advisors. Essentially, APIs act as a sort of plug in, bringing a specific functionality to other, already up and running systems, so an advisor, group of advisors or small or large organization can add bells and whistles to a system without having to invent/reinvent their own.

Such an API can permit the flow of information between applications and give financial advisors the ability to, in this circumstance, easily access on a real-time basis client data, gain insights and offer innovative solutions tailored to the clients’ life plans while complying with regulatory requirements

Through the magic of APIs, “behavior tech” platforms can now be white-labeled and inserted inside organizations so that they can access scalable and easy-to-use online behavioral management solutions to know, engage and grow every client (and their advisor!).

APIs like this are not tomorrow’s solutions. They exist now, waiting only to be embraced and leveraged. This is the power – here and now – to use behavioral insights to create truly unique and robust experiences for advisors and clients. It engages clients in a way that demonstrates the degree to which advisors will go to enhance the financial planning experience – and the success they can have with and for a client.

Every financial advisor should be able to use interactive business intelligence tools to drill down into client information. In advance of every meeting or phone call the advisor should, at the click of a button, be able to deploy dashboards and personalized information to respond to client needs. This approach can and will create an experience tailored to individual clients’ needs.

Clients and advisors alike want “easy” and they’ve got it if the right API or behavior tech solution is deployed. Everything is right there on their mobile devices.

Network of business concept.

Is Enculturating Behavioral Sciences Next?

Often in business the way forward isn’t “or” but “and”. That is, not abandoning one cornerstone for another; rather, adding other building blocks as necessary. It’s the cumulative approach that can streamline savvy organizations who are able to move beyond the fear of adding additional elements or layers.

We’ve been seeing this trend in a way that is particularly germane to our work, at the nexus of data and behavior. But let’s look back a moment before looking forward.

For the past five-plus years there has been a strong focus on corporate culture, including the installation of a chief culture officer or some other executive-level champion of thoughtful, strategic culture initiatives. To a great degree they focused on goals, alignment and communication, with tentacles reaching into every corner of an organization. That is great and we should not throw out our emphasis on the power of a curated culture.

Still, the last few years also have seen the amount of data organizations wield grow exponentially. That too is good and exciting, but only if they can fully leverage that data while at the same time deftly coordinating all the many facets that affect and are affected by data or otherwise have to be part of the collaborative, comprehensive mix.

So, let’s get back to that trend I hinted at above. At the intersection of culture, people, customer experience, big data, AI, machine learning and all of the other elements a robust organization must coordinate, leaders are beginning to see the next overlay many will need to pull across all else (as they did when making culture a studied part of their infrastructure).

That is a Behavioral Science Officer or behavioral science team. We know people approach and understand things differently and communicate in myriad ways. That’s what is driving these leaders to envision some sort of coordinated effort that leverages behavioral data across disparate areas of their business.

This might address anything from testing out new products, experimenting with words and customer retention to hiring, governance, regulation and accountability. In short, not only harvesting people data, but also ensuring it is valid and relevant and maximally redeployed to greatest effect.

A devil’s advocate might say of course this sounds like a good idea to someone who offers a validated behavioral discovery tech platform. But truth is, the need for a top-down, across-all embrace of behavioral science is bigger than just that tech platform, which could be one very effective part of such a rollout, but, still, only one part of it.

The amount of data, including all sorts of behavioral data (whether harvested or not), generated and held by organizations will continue to grow. So will the need to improve everything from products to profits and accountability by leveraging the massive amounts of information. By managing behavior.

I would venture to say that even the early adopters of a behavior tech platform like ours would realize the most success by taking a big-picture, infrastructure approach to behavior sciences. Ultimately, the key is to activate all of the insight data you have (access to) so you can know, engage and grow employees and clients, anticipating what they want and need – and delivering it – maybe even before they know what they want.

All business is about people, and because business is a people science, we must understand human nature to truly excel at and understand business. Human nature is stable and needs to be understood; doing so can and will affect your bottom line. Using a behavioral science approach will identify the business goals and challenges that can be reached and resolved through the scalable and practical application of what I like to refer to as understanding people before numbers.

What areas of your organization would benefit from the layering in of behavioral science? And can you foresee a C-level behavioral sciences team member in your organization’s future?

I’m interested in your take on this, so talk back: HMassie@dnabehavior.com. I’ll of course be watching this trend and any others that touch behavior, money and tech. I promise to report back.

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Why Senior Executives Leave in Droves?

How does the Behavior that took them to greatness become the Behavior that wrecks their success?

Bad news, it’s always been there but has either been managed, or sat below surface.

A recent major fail was that of Elon Musk, CEO of Tesla, publicly smoking pot while being interviewed. It begs the question, What kind of a brain snap caused him to do this? At the very least his judgment would come under scrutiny from investors and board members, but more worryingly for Tesla, Musk had already attracted the attention of SEC.

The U.S. Securities and Exchange Commission is intensifying its scrutiny of Tesla’s public statements in the wake of Elon Musk’s provocative tweet Tuesday (8/7/18) about taking the electric-car company private, according to two people familiar with the matter. http://fortune.com/2018/08/09/sec-investigating-tesla-elon-musk/

Every mis-step (to be polite) begins at the top. Musk may be why the business has become successful, but there is clearly a dark side, and that may prove to be the cause of the company’s failure. It’s not a new phenomenon for a successful person to go rogue. But this behavior can be uncovered. And where there is a level of accountability and self-examination into personality that lies below the surface, such potential meltdowns can be identified and managed.

In the case of Musk, the chances are that this unprincipled behavior that always sat below the surface has now been revealed because of changes to environment, stress, fear, burnout or endless other reasons.

The kind of meltdowns covered in the media, though they surface from inherent behavior, have probably been managed until now. In most cases, the work-life balance has shifted sufficiently to surface this craziness.

Many entrepreneurs, CEOs and senior leaders do a great job. They lay strong foundations both in their business and in their life. They make themselves accountable to others so that unhealthy or outlandish behaviors can be challenged.

The truly behaviorally smart ones invest in a scientifically based data gathering process to understand the hot spots in their personality. They get a good read on what or who can surface inappropriate responses in them and learn coping mechanisms so they can be managed.

One of the recorded fall outs from Musks peculiar behavior, is that talent will leave the company in droves, not wishing to be associated with weird behavior. This outcome is very often the red flag to the board, investors, customers, and would-be hires, that this company is heading for a train wreck.

Worryingly, this behavior is not isolated to industry leaders as many nations are finding the behavior of their political leadership.

In his book,Behaviorally Smart Entrepreneurship: Mastering Your Entrepreneurial Genetics, our founder, Hugh Massie, CEO and Founder of DNA Behavior International, records the following:

As the business grows, entrepreneurs tend to feel besieged by the day-to-day workload. The appointment of an Integrator (or Master Key Executive) who has the experience, skills, and temperament to manage the day to day business operations and understand how the entrepreneur ticks will ensure the business has a strong foundation. More importantly, this role lifts the daily pressure from the entrepreneur, leaving them free to focus on their strengths.

Entrepreneur eBook

A Master Key Executive or COO whose personality works with the CEO, yet has the strengths and behaviors to not only compliment them but challenge them, could be the missing link that caused these senior leaders to go rogue.

The phrase get to know yourself, before you wreck yourself may feel like something out of the urban dictionary, but as a leader of a multimillion-dollar business, Musk and others should have done themselves a favor by knowing and acting on this phrase.

Maybe the thought of using a scientifically based psychometric testing process is a controversial topic, but such an investment into self-knowledge reveals, not just strengths, but also specifically what’s below the surface, that needs to the surfaced, understood and managed. No one is above learning more about themselves.

This investment into self provokes people to think more deeply about their entrepreneurial and leadership genes and the essential success factors. If you have no real insight into your personality, it’s time to learn more.

The key to getting started is the completion of the Business DNA Natural Behavior Discovery Process, which takes 10 to 12 minutes online. The outcome provides insights into your leadership and entrepreneurial genes. Armed with this heightened self-awareness, we deliver a structured approach on how you can take the first step towards your entrepreneurial goal. Why not begin right now – try our complimentary DNA Behavior Natural Discovery here.

If you have completed this process you can contact us on (Australia) +61 2 80742995 x706 or?1-866-791-8992 (United States) for one of our highly-qualified consultants to work through the report with you.

Do it today to avoid the chances of becoming a headline.

To learn more, please speak with one of our DNA Behavior Specialists (LiveChat), email inquiries@dnabehavior.com, or visit DNA Behavior

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How to Become a Behaviorally Smart Advisor

The financial services industry needs new business models ones that help re-define what a financial advisor is capable of beyond just a numbers oriented investment orientation. The traditional twenty-five year + model of providing investment access and selection is being disrupted by technology and new players coming from other industries. The friction from this evolving operating environment seems to be leading to exploring more holistic and new client-focused experiences that create more engagement and deeper connections.

The Institute for Innovation Development, to explore this further, recently talked with Leon Morales, Managing Director of DNA Behavior International a behavioral finance technology platform designed for financial advisors to Know, Engage and Grow their relationships with their clients and prospects. We discussed the evolving nature and changing value proposition of financial advisors into this more holistic model with advisors serving as client behavioral coaches and mentors.

Hortz: You have frequently quoted from the Spring 2000 Journal of Investing article that states 93.6% of the financial planning process is the behavioral management of clients. We have always understood that being an advisor is, bottom-line, a relationship business but, what does that number tell us about the true nature of the financial advisor role

Morales: All the studies and resulting data that have looked at the issue appear to agree, that client behavioral management is one of, if not the, most important function of financial advisors. Understanding the clients communication style, personality, emotions and fears, these need to be mastered and managed by the advisor. Learning practical ways to understand the individuality of clients, how they make decisions and what triggers their emotions, are key to being able to guide the client over the longer term successfully, coaching them to truly achieve financial goals. What this points to is the ultimate importance of advisors being behavioral managers as much as they are technical managers of investments.

Hortz:What do you recommend as the key steps advisors must take to start strengthening their behavioral IQ and behavioral management skills with clients?

Morales: The most important step required for moving from the traditional financial advisor role to that of a Wealth Mentor is to learn first how to ask much better questions of the client. This enhanced discussion builds greater client relationships and opens the dialogue to reveal core behaviors, biases, reactions under pressure and other issues. Part of our Certified Wealth Mentor program’s takeaways is a list of many key conversation opener questions, used for client meetings. Further, the questions will encourage the clients to probe their own thinking. The advisor then gains insight into how the client makes decisions, the client’s reaction to taking a new direction, or confirmation they are on the right path.

Together with insights from our behavioral reports, this enables the advisor to identify points of alignment between what’s stated in the report, versus what clients are saying. This comparison enables the advisor to zero in on the clients areas of strengths and struggles and narrows down the tension between processes and behaviors that might get in the way of delivering outcomes. This kind of client connection, using our very concrete system, builds long term advisor/client relationships and advisors will know how to manage client bias and reaction under pressure.

Hortz: What are some predictable insights you can discover about your clients

Morales: Our DNA Discovery process delivers insights in several key areas:

  • Communication- -enables advisors to connect and work with the client on their terms
  • Biases - – awareness of assumptions or mental habits that need managing
  • Spending patterns -uncovers money habits that may impact investment strategies and outcomes
  • Risk tolerance and reaction to market movement- provides detailed behavioral insight into the client’s natural risk tolerance and risk propensity

Hortz: Can you walk us through your claim that a behavioral approach, using your wealth management platform, results in 99.5% client solution suitability and additional client value

Morales: The use of the Financial DNA behavioral approach enables the advisor to more deeply engage with their clients. Asking the right questions, and having a robust discovery process that more rigorously breaks down all the elements that make up risk, to a much tighter client discussion, reveals how much risk really needs to be taken, how much risk could financially be taken, and blending learned behavior and natural behavior to cover the right level of risk. Behaviorally smart advisors -who manage these conversations with the client well – will get a much higher level of suitability in what they recommend and what gets deployed or purchased in the end.

Dalbar research shows that 7.45% a year is the potential loss because of investors not having an advisor and making poor decisions. There is safety for clients in having a behaviorally smart wealth mentor manage their portfolio, rather than trading their own accounts. This goes back to the risk profiling where we believe we can get to 99.5% clients solution suitability. Therefore, 91% reflects accuracy from the DNA Natural Behavior Discovery and the other 8.5% comes from the learned behavior discovery.

Hortz: Do you see an evolution in what a financial advisor’s core job is and how they will be perceived in the future?

Morales: Yes. I believe that the advisor needs to become a guide for life for the client and to be able to navigate all the issues clients might face. When the client sees the advisor as their go to person for help with decisions, a trusted collaborator, that not only impacts their financial and investment world, but also life decisions and choices, all of which are foundational and have financial consequences. This kind of advisor-client relationship opens wider conversations regarding family dynamics. Advisors need to be the family advisor, and that’s going to be a big area for them in the future. To do that, they need to broaden their skills to handle a wider range of areas, or at least be able to communicate about them.

Importantly, a core adjustment required is the change from client meetings to client conversations. The word conversation makes the advisor/client engagement process easier, less formal, more likely to deliver open discussions. This adjustment is the process we have been bringing in to some of the firms we have worked with recently.

Hortz: How do you help advisors change their habits and ways of doing business to help them evolve into this new advisor business model

Morales: While education and our Certified Wealth Mentor Program are an important part of the process, a key strategy for DNA Behavior International, in order to help advisors make this happen, is to embrace our role as a behavioral Fintech company. We can now take our behavioral tools, processes and knowledge and embed that into their practices through an easy, accessible, online behavioral platform which provides them with practical and scalable behavioral intelligence across every client and firm employee. They would have readily available behavioral awareness, using our built-in discovery processes, and real-time behavioral management capabilities using our apps. Behavioral management can now be infused into the DNA of the firm.

Hortz: Tell us a little about your steadily growing list of strategic partners (BrilliantFIT, AMP) and how you work with them in extending your behavioral platform and resources to equally support advisors, clients, and other key financial services vendor firms

Morales: We have a wide range of technology integration able to be deployed, not just in the financial services arena, but across many disciplines and industries. With Financial DNA, we are a leader in the deployment of personality and behavioral based tools, but we also have such relationships as our hiring partner Brilliant Fit, based in Melbourne, Australia. They are making inroads by integrating behavioral discovery to the filtering of candidates for management roles and ongoing career development.

We built an alignment with Salesforce, so DNA insights are on the Salesforce platform. We are also currently working with firms on matching advisors to clients based on personality styles. We work with big data to open a significant access to leads by building algorithms to be able to link that data to personalities. We are working with a range of financial planning software groups globally using our behavioral chip strategy to power the behavioral management of the client experience.

Hortz: From your perspective in building to and working with a wide cross-section of financial advisors, what is your best advice for advisors in how to navigate this changing business environment in which they are now operating?

Morales: From my perspective, the first key point would be for advisors to develop their emotional intelligence (EQ). Personal development will make them more effective advisors as they interact with a wider range of clients. Maturing professionally in this way will make them a better advisor in guiding others through life challenges again, an expansion of their roles beyond financial guidance. This approach is what will lead to sustainability of the relationship.

Also vitally important are building more processes inside their businesses, particularly around technology, to enable a customized experience to be delivered. Introducing good technology releases advisors to build business and identify gaps where they need to hire and develop good teams.

A further key area is looking at existing revenue models. The current approach needs to be reviewed considering the changing role of advisors with the ability of advisors to become behavioral coaches to their clients. Knowing the importance of behavioral management, advisors can use these behavioral insights to look at how they make their money.

Delivering goals-based financial planning means advisors need to look at how they bring in a retainer fee for working with the clients on an ongoing basis. The new revenue model needs to reflect: running the annual meetings, helping the clients work out their goals, navigating difficult decision-making situations and transitions. Price points can be reviewed, as they add value through mentoring- coaching clients on how to manage their behaviors towards their goals.

Ill leave advisors with one of the favorite quotes of our founder, Hugh Massie: Strict rationality kills culture and relationships, and unmanaged emotions destroy wealth. Financial advisors will be well served to be able to deeply engage and reconcile client thinking and behavior with that clients life and wealth goals.

Written by Bill Hortz, Founder & Dean, Institute for Innovation Development

The Institute for Innovation Development is an educational and business development catalyst for growth-oriented financial advisors and financial services firms determined to lead their businesses in an operating environment of accelerating business and cultural change. We position our members with the necessary ongoing innovation resources and best practices to drive and facilitate their next-generation growth, differentiation and unique community engagement strategies. The institute was launched with the support and foresight of our founding sponsors – Pershing, Voya Financial, Ultimus Fund Solutions, Fidelity, and Charter Financial Publishing (publisher of Financial Advisor and Private Wealth magazines). For more information click here .