When Clients Self-Sabotage Their Investments

When Clients Self-Sabotage Their Investments

This article first appeared on Nasdaq.

Since the global financial crisis and recession, clients are driving the industry in ways never thought possible (or appropriate).

Investor fears, lack of confidence and market uncertainty are provoking clients to demand better and more personalized advice from advisors. In this new client-led environment, advisors are struggling to understand how to navigate clients’ emotions, inconsistent thoughts and biases, while remaining in control of the advisory process. The relationship becomes further strained when the client presents as a know-it-all, bent on self-sabotaging.

Much is written about the role of the advisor and their behavior, but less about clients who don’t seek advice, but, rather, instruct advisors, perhaps to their own peril.

If the role of a financial advisor is, and should be, to advise, then what approach can they take to manage clients who know everything and think it is they who are the experts? Likewise, what to do when clients repeat mistakes and don’t want to learn from them?

Clients with this self-sabotaging approach to their investments are often unwilling to listen, are not open to new ideas or collaboration, and believe their opinions are the only ones that matter. As an advisor, these client traits may ring true for you.

Unfortunately, all advisors will experience such clients at some point. The key is knowing how to manage it in a way that provides a win/win solution to the client’s wealth creation options and maintains a healthy advisor/client relationship. Here are a few techniques to apply and to identify and challenge the self-sabotaging behavior of clients:

  1. Listen empathetically; remember the clients’ approach could stem from a lack of confidence around money, which to many is an emotive subject.
  2. Don’t let your frustration show; this is a client, not an adversary. Acknowledge what they are saying, as this engages and keeps them connected into the conversation.
  3. Remember, you are the financial expert, so get your facts straight, but be willing to listen to their investment suggestions and demonstrate your openness by offering to research on their behalf.
  4. Don’t allow the conversation to get away from you. Stay calm and focused. Most importantly, ask questions. Investors tend to get agitated by market volatility, perhaps unaware just how normal it is. The power of targeted questions can unravel some of this self-sabotaging behavior.

These techniques are more powerful when advisors have a level of information in advance of client meetings, as they can be tailored to each client’s uniqueness. Not only can financial personality be revealed, but perhaps more importantly, a guide to individually crafted questions is available to advisors so they can manage meetings based on revealed behavior.

Increasingly, the financial industry is turning to scientifically-based data gathering to prepare advisors, in advance of client meetings. Not only does this insight identify self-sabotaging behavior and provide direction on how best to manage it – it also delivers insight into:

  • Bias that can get in the way of investment strategy.
  • How to place clients more effectively at the center of the planning process.
  • Planning risks triggered by self-sabotaging behavior.
  • Issues, often hidden below the surface, that drive imperfect decision-making.
  • Risk propensity and risk tolerance that needs to be known and managed.
  • Whether the client sees their advisor as a financial coach and wants the relationship to be collaborative or Wants to delegate their financial decision making to the advisor and simply be kept informed.

Advisors who invest in scientifically based client discovery processes, understand that self-sabotaging behavior can come in many forms and that managing it must be approached on an individual basis.

Next time we’ll talk about things advisors need to know to better identify and assist this type of client, including how client behavioral insights empower advisors. In the meantime why not try our complimentary DNA Behavior Natural Discovery here.

Tech solutions

Innovative Tech Solutions For Talent And Culture Are On The Menu

We recently brought together leaders, influencers and tech wizards from human resources and related fields for DNA Behaviors Thought Accelerators: Future HRtech interactive dinner. Think Mastermind meets think-tank meets great meal at which participants discuss, debate and parse leveraging behavioral insights at scale across a broad range of applications.

Participants who are more familiar with our work helped underscore that the HRtech future is now, available to anyone in and around HR and tech who wants to drive innovation and behavioral solutions in everything from sales and marketing, to operations, recruitment, fit-for-hire and more. Imagine being able to deploy behavioral personality insights to guide people, teams and businesses using real talent insights for real results in real-time.

Participants who are less familiar with our 18 years of work perfecting a validated, practical and scalable psychometric system asked pointed questions, made astute observations and ultimately sparked, yes, more great ways to leverage the intersection of tech, data and behavioral insights within and beyond HR.

DNA solutions in action

Reinforcements of our methodology and beliefs revealed during the dinner include the way we recruit (using a behavior tech platform); that is, starting with a proper design of the role based on specific behavioral talents and measurable KPIs (key performance indicators), doing no interviews until the candidates behavioral talents are matched to role.

Then look to resumes, which are best viewed from a futuristic perspective – focusing on predictors of future performance rather than a recitation of past accomplishments – though most diners agreed it’s tough to glean such knowledge from most resumes. The problem with the traditional methodology is that many suitable candidates are screened out based on resumes which address the past and a failure to recognize their talents at all.

But that futuristic look is increasingly crucial, particularly given that tech is changing every type of role so fast. Candidates and employers alike must prepare for roles and even industries that did not exist before. Still, by identifying natural (innate) behavioral talents through a validated discovery process, the one thing you can and should rely on is the foundation of the process.

It was noted that, ideally, job descriptions are written with behavioral characteristics in mind. This means looking beyond skills and experience to the ideal behavioral talents (strengths) your optimal candidate will have. Ideally, the business should be benchmarking each key role based on previous high performers who have succeeded in that culture and environment, or at least looking to comparable roles in other similar businesses.

In one sense the work of defining the job description role requires the data produced by the DNA Behavior Tech Platform and then also some experienced consulting input from a person who understands the exact requirements of the business who is recruiting. We encourage the many stalwart business partners we have who take our behavior tech platform (including an API) to use it for powering the building of specific role benchmarks, managing the hiring and onboarding process and then developing teams and monitoring performance.

One of the reasons these collaborations are so powerful is that they can more quickly – even exponentially – help us help businesses of all kinds accelerate human performance. To wit, businesses that build a more relationship-oriented culture with an eye on results do better than those that are focused solely on bottom-line results. (You simply cannot take people out of the equation.)

Behavioral insights power culture

There was much talk of the importance of the right organizational culture, with one participant emphasizing that culture is so important that Amazon purchased Zappos for nearly $1 billion, chiefly, to acquire its culture. Also noted: Even if you think your company does not have a culture, it does; its just not intentional and therefore likely is not serving you well.

It was agreed following the practice of openly sharing individual DNA Behavior discovery insights (reported results) was also crucial to building an intentional, sustainable culture. For instance, sharing the results of a discovery with the individual completing it and sharing their supervisors and team members profiles with them, and vice versa. Transparent sharing from the top down, bottom up and side to side across teams and the whole business, if you will, can be a powerful part of an optimized culture. The key point is that everyone has a common language to be vulnerable and be able in a more pin-pointed way to share their strengths, struggles and communication style.

We talked about how individual profiles detailing behavioral strengths and challenges (the result of a behavioral discovery tool – think probing questionnaire) are more powerful when used in onboarding and ongoing engagement in the workplace. Now that’s personalization – having someone’s behavior DNA baked into any and all HR processes. We all know that once a person is hired the ongoing relationship with their boss is critical to retention.

Best, this behavior tech is scalable now, in part due to agile API but also because each individual discovery takes approximately 10 to 12 minutes to complete. Thats a minimal individual commitment for results that pay dividends across time, platforms and functions.

Aprs dner

You know how great interactions, idea sharing and brainstorming continue to percolate after, in this case, a dinner? Well, an email two mornings after our Future HRtech dinner came from a participant who was previously not so familiar with our DNA solutions. He’s a serial entrepreneur who knows the value of powerful tech and data solutions across myriad industries.

Reflecting on a solution and corresponding challenge mentioned at the dinner, he had had an idea for a multifaceted app that would both leverage DNA Behavior discovery results and help users deploy them in practical ways, even enabling users to launch new products and services. (Yes, we’ve already put that idea into development.)

It’s always gratifying getting an appreciative, spirited thank-you note after a great dinner. You know what’s better? Enthusiastic participants who continue germinating robust ideas for real-world solutions based on our behavior tech platform.

Make your reservation

In addition to this Future Tech dinner focused on human resources, we previously had one focused on the financial services space. We plan other Future Tech and HRtech dinners and I am excited about what great ideas, insights and collaborations may emerge.

If you’re interested in being part of one of these dynamic evenings, please just drop me a line: inquiries@dnabehavior.com. Your big idea may be the next best thing on the menu.

And if you would like to whet your appetite, take your complimentary BDNA Discovery here; you’ll receive an infographic report were happy to review with you.

Remote Working

Invest In and Trust Your Workforce

This article first appeared on HR Management App.

Remote work is really about trust. Are they doing their job? Are they slacking off?
Sometimes leaders don’t support remote working because they feel the need to be in control.

As the CEO of a global company I have key executives working remotely. The executive team meet regularly via voice and video chat apps. The team leaders meet daily for 10 minutes with an executive.

I am in regular contact with my managing director and at least once a week with the full executive team. If time zones get in the way of face-to-face meetings, we record them, and the links await the team member when they are back at their desk.

Technology is the key enabler of remote working. Fast wi-fi connections, project management software and other tech tools help us communicate and collaborate instantaneously.

So, how do we make this work?

Well, it helps that we are in the business of accelerating human performance. We deliver real-time management solutions through validated behavioral insights to connect, customize and power human performance.

So, I hire the right people. But you don’t have to be in my industry to get remote work right.

And not everyone has the behavior to be comfortable working remotely. They want and need the interaction of working in an office with a team around them. Wherever I can, we accommodate this.

Others are comfortable with and excel in the remote experience. They are able to function alone but also want to know they can interact with colleagues as and when they need to.

I ensure communication is robust. Each staff member has access to connect with their colleagues as they wish. Any instructions or guidance is imparted using a variety of styles, words, pictures, videos – whatever is needed to get messages across. People think and give and receive information differently.

All staff are hired not just for their talents and credentials, but also for the “fit” to the benchmarked role they will fill. They are also profiled using a validated system to ensure their behaviors meet our cultural and behavioral standards. The outcomes also show those whose inherent behavior is more suited to remote working.

Ask them to “talk back”

All executives and team leaders are required to take part in our 360-degree performance review. Regardless of where they sit in the world or where their staff are, we continuously check to make sure everyone feels valued and supported.

The greatest gift I can give to my team is to trust them. In return my employees are happier and loyal. Stress levels are low, and they work hard and have the space to play hard and keep their life in balance.

I was skeptical in the beginning but after eighteen years of remote working in some form or other, I’m persuaded every leader should consider using this form of working with their teams.

Invest in a discovery process that optimizes your people and procedures, including shorter term check-ins and long-view feedback loops. You’ll be investing in your team members and they, in turn, will be more invested in you.

Blog (6)

Getting In The Way Of Our Own Financial Success

This article first appeared on Nasdaq.

If we are to be effective in the decisions we make, we need to understand our uniqueness, our talent, our individual behavior and our personality. Without this insight, we are unlikely to make rational, wealth-growing financial decisions.

What gets in the way of our own success? Lack of self-awareness? Do we have a bias we are unaware of? Perhaps it’s because we do not know how or why we make the decisions we do. Or maybe it’s because we have no life plan or direction in life.

That’s what we call getting in the way of our own successes, whether financial or in life in general. So, expecting financial advisors to know how to advise us is a big ask. We are all unique, even though some of us might share similarities, we are all different in terms of how we respond to situations and make financial decisions.

Add to the mix a partner, and unless we and they devote time in to understanding each other’s communication, behavioral and decision-making approach, we simply have more confusion. More to decipher. I might add that the partnership dynamic is often a significant problem for financial advisors to navigate. Examples:

  • One party is results-focused; the other relationship-focused.
  • One wants the pension fund; the other the big house.
  • One wants to research and make the financial investment decisions without an advisor. The other needs guidance from an expert.
  • One is trusting and will go with whatever the advisor says. The other is skeptical and questioning and challenges everything they say.
  • One is comfortable taking risk; the other cautious and conservative.

Still, we often put our financial decisions in the hands of advisors who have absolutely no understanding of how to manage these our differences. Therefore, we make dumb decisions and get in the way of our own success. Not only that, if we make no attempt to be behaviorally self-aware, we will keep making the same dumb decisions and failing at our own financial success. I believe we make those dumb decisions because:

  • We lack self-worth.
  • We lack confidence.
  • We are too easily persuaded.
  • We are not growing in terms of understanding our behavior.
  • We don’t understand how to buy time out to consider our response to decision making.

Or perhaps we simply fail to consider the why of what we are doing. Why:

  • Am allowing other people to make financial decisions for me?
  • Have I not considered the significance of delegating these life decisions?
  • Is it that I’m accepting the decisions others are making about my life and circumstances?
  • Aren’t I making these decisions for myself?

Taking a step to gain insight into our inherent talents and behaviors ensures we are well equipped to understand how we make decisions. What should our life goals be? How and when and who to entrust with advising us? There are many quality behavioral data gathering processes that can be used. Be behaviorally smart and make sure you the advisor know yourself and, in turn, help your clients complete this discovery process. This will put you both on the same page. Your clients have a lot at stake and will appreciate the small investment of time it takes for you and them to best know how to help them. The vast majority of clients will find it at least enlightening and often fun.

 

Why not begin right now – try our complimentary DNA Behavior Natural Discovery here.

 

Behavioral Science

Behavioral Science Teams Increasingly Important to Financial Services

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.

Cost justified

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.

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

Are Advisors Asking the Tough Questions

Are Advisors Asking the Tough Questions?

 

This article first appeared on Nasdaq.

 

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Are you asking clients the hard questions about who they are and what their goals are? Or are you just selling them products based on potentially false assumptions?

Advisors must be willing to have bold-but-caring client conversations that focus on the client as a person without pushing for preconceived outcomes. Getting to know them and reaching below the surface to have real conversations not only accelerates trust, it also provides insight, so you can deliver more targeted and accurate advice.

  • Educators;
  • Sounding boards;
  • The go-to person when big financial decisions that impact the family need to be made; and
  • The protector of the clients wealth creation.

Likewise, it is critical for advisors “to know” their clients likely response to market shifts and be able to help them navigate challenging investment environments. Mis-managed emotions destroy wealth.

But, and its a big but, advisors themselves must be behaviorally smart and learn how best to communicate with clients. Everyone is unique; how they hear and interpret information, how they communicate and wish to be communicated with, how they make decisions, react to markets, behave under pressure – all this should be known to advisors.

The first step is to clarify in your mind that this approach is not only important in order to gather and retain clients, but that it satisfies the regulatory requirements of the knowing-the-client rules.

Understanding a clients financial personality from the very first point of connection, through every interaction over the lifetime of the client relationship, could be critical to the sustainability of your business.

A person’s financial personality is driven by their natural (hard-wired) behavior, which was programmed into them from birth to around the age of three. This is the predictable behavior that sits below the surface and will reveal itself when they are under pressure, which is often triggered by money and relationships.

By understanding the behavior first, the life perspectives and motivations of the client can be truly understood. It follows that you will then understand how the client makes financial decisions, which are inherently integrated with their life choices.

Having this insight in advance of working with a client raises an advisors consciousness to be able to pinpoint key issues. Further, it enables advisors to craft and ask powerful questions and, from there, guide the client through a deep discussion. Ultimately, the goal is to liberate the client, so they can find their life purpose and really articulate the goals they can be committed to.

Additionally, when advisors understand their own decision-making style; their own financial personality; their own bias (yes, we all have them) this insight, that can be shared with clients, creates a safer and more mutual environment that increases trust and open communication. Why not begin right now – try our complimentary DNA Behavior Natural Discovery here.

Still, most people are inclined to show their learned behavioral style at the first meeting (as opposed to showing their natural, inherent behavioral style). Its human nature; they are sizing you up before they share their true self. This learned behavior is consistently shaped by their environment, life experiences, values and education.

The use of the typical risk profile only provides a singular measurement of one aspect of the clients financial personality. They are usually highly situational in nature and not reliable in changing circumstances. The use of a robust financial personality discovery process reveals and measures all dimensions of who the client is, including their ability to manage risk at a deeper level, together with biases and communication styles.

Ask deep, probing questions – use behavioral insight to understand how to target these questions to each client. Clients and their families have deep-seated feelings about money. Its an emotional subject. Your job as an advisor is to cut through anything hidden – the issues, the hopes and expectations, the life plans – and direct a rational pathway for the client to achieve their financial goals.

What questions will you ask?