For the right financial advice get the relationship right

For The Right Financial Advice, Get The Relationship Right

This article first appeared on Nasdaq.
No two people’s financial situations are ever the same. Finding a financial advisor who really understands that and who can deliver truly tailored advice is getting progressively more difficult.

So, it is increasingly incumbent upon financial advisors to have a depth of behavioral insight in order to deliver a significant level of personalized advice. Some advisors have taken steps to obtain a range of behavioral finance tools to ensure they are meeting client needs.

But the use of scientifically based data gathering tools is only part of the solution. The core objective, and a regulatory requirement, is to put the client first. If financial advisors are proactive in demonstrating their absolute commitment to delivering individual client-based solutions, they’ll be demonstrably more successful, as reflected by client satisfaction, retention and referrals. Behaviorally smart financial advisors don’t wait for regulatory requirements to force them to seek out ways to more effectively understand client communication:

  • They learn how to communicate with clients who find money an emotive subject;
  • They know how to satisfy the client who wants to be presented with exciting opportunities;
  • They know how to talk to a risk taker who needs to put the brakes on;
  • They invest time and resources into holistically understanding client’s financial personalities; and
  • They learn the methods for revealing information, hidden below the surface, that is pertinent to client’s financial well-being.

Be the advisor about whom a potential client thinks, she could become my financial coach and mentor. Or, I believe this advisor is the guy with whom I can work for years that my family will rely on as they need financial advice and make life decisions.

Sadly, many clients don’t feel empowered to engage new advisors. Often this reluctance to change their advisor is simply because trust is at an all-time low. Therefore, better the devil you know holds.

A colleague’s insight

A recent conversation with a colleague is worth sharing:

Many years ago, I wanted to invest in an exciting start-up. Something about this?entrepreneur and his ideas excited me. My financial advisor wouldn’t even discuss the opportunity, referring to me as a novice in terms of investing and to the entrepreneur as a seven-day wonder. The advisor had no idea about me, my plans for my life and indeed I think saw me as an amateur.

As I am reminded of that incident many years ago, I wonder if the advisor (long since out of my life) remembers the conversation as he watches the multi-billion-dollar empire this young man went on to build.

All it would have taken for this story to have a different ending, was an advisor who understood that I dont take risks, but that I am very savvy when I see an opportunity, and that at that time I could well afford the amount I wished to invest. But that advisor had no idea how to communicate with me.

That is just one of the many anecdotes we hear.

Client-centric for the win

It’s time for advisors to approach their clients as though they were their financial advisory soulmate. Working toward matching clients with advisors, based on communication style and the understanding of behavioral biases and decision making, will build confidence for the client, and enhance relationships for the advisors. Such a customer-centric transformation – that is, putting the client first – builds trust and attracts more customers.

Not every organization can afford to invest in sophisticated technical solutions, but even the smallest of advisory firms can and should invest in a process that reveals client’s financial personality and communication style at a deeper level.

Restoring trust and faith in a battered and bruised financial sector starts with you. With putting people before numbers. With relationships.

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

sticking-to-an-authentic-behavioral-discovery-process

Sticking to an Authentic Behavioral Discovery Process

The process of gathering scientifically based behavioral data is interesting. Filled with comments and contradictions. We at DNA Behavior have seen and heard them all. The most often heard is:

  • that is such an accurate report about me
  • I thought completing the process would be easier
  • but the process was hard
  • I didnt know which way to respond
  • I had to just go for it
  • look at how accurate the outcomes are
  • I really like the DNA results, but the journey was hard

And so much more. We make no apologies for the 10-minute DNA Natural Behavior Discovery questionnaire using 138 different words in 46 inter locking Forced Choice Questions. The questions are deliberately tight so that a specific outcome is achieved. Definitely, a right data in, right data out approach has been taken.

We know the importance of being able to authentically defend our discovery process is why we are so well positioned in the market place. When the DNA Discovery Process was designed it was critical, too, that the questions removed situational, cultural and educational biases and could not be easily gamed. Further, at all costs we wanted highly predictive measurable behavioral insights which would be universally applicable across the globe for all people and remain true for the long term regardless of the situation or circumstances the person is in. In other words, it would get to the core of who the person is. We knew this holy grail of behavioral measurement could be achieved and is forever grateful for the knowledge and guidance of Carol Pocklington and Lee Ellis to show the pathway.

Yes, we could simplify the questionnaire, but, why would we? That said, we listened to our customers, and one of the important business keys we discovered was that customer concerns are a rich source of marketing material. One of our friends – David Rendell talks about in Freak Marketing that looking to your greatest weaknesses will be sitting your greatest strength.

If customers were loving the outcome but not the process, what was this saying about our discovery process? We discovered (though we knew it) that our process may be antagonizing our customers by the tight choices it asks them to make when choosing Most Like and Least Like from 3 non-situational words or phrases across 46 questions. Some say, I am all of those in about 6 to 8 of the questions.

What the questions are doing is getting the participant to prioritize their greatest strengths/talents. It is not saying for the 3 choices they are not like them in any way. In varying degrees, we exhibit all the words in some situations. It is more about how regularly and strongly the behaviors are exhibited.

Overall, we found ourselves being able to offensively defend the questionnaire since it more reliably delivered better, deeper and more incisive insights into unique behaviors over long time periods. Again, when you must make serious decisions, do you want to participate in a fun and sometimes lengthy process which gives you a shallow and unreliable result? Or, would you rather participate in a quick but tight process which provides a deep set of very accurate insights that will be true for your life time?

Our purpose with the DNA Discovery process is to uncover the natural DNA behavior that sits below the surface; it is not seen because it is masked by the more dynamic (situational) learned behaviors that are shaped by the persons life experiences, education and values.

Learned Situational Behavior

Therefore, a persons overall personality, at any stage of their life, may be seen to change, but their core natural behavior will remain very consistent. Further, revealing core natural behavior draws out their inherent talents, strengths and struggles (blind spots) and communication styles.

The DNA Behavior Natural Discovery Process was designed to holistically uncover, capture and measure all dimensions of a person’s natural DNA behavioral style as the core of their personality. That is their ingrained, go-to, hard-wired behavior that was set by the time they were 3 years old. This is how people inherently make decisions, take direction and work with others; how they interact and build relationships, achieve results, handle information, complete tasks, develop trust, set and achieve goals, take and live with risks and their learning styles. This also includes their communication style, financial decision-making style, behavioral (finance) biases and their response to market movement (as an example).

After significant academic research and discussions with our independent team of experts, we selected the Forced Choice Assessment Model over the more traditionally used Normative (Likert-type) Scaling Model for measuring Natural DNA behavior. This led to the design of the DNA Natural Behavior Discovery Process; a system capable of assessing 8 major personality factors as well as 24 related sub-factors. The fact we can reliably measure 32 behaviors from 138 words across 46 questions is remarkable given that other systems need 15 to 25 questions to measure 1 behavior with less accuracy.

So, what is the Forced Choice Assessment- The traditional Forced Choice Assessment format is a descriptor used in psychometrics to signify a specific type of measure in which respondents compare two or more desirable options and pick the one that is most preferred. This is contrasted with measures that use Normative/Likert-type scales, in which respondents choose the score (e.g. 1 to 5) which best represents the degree to which they agree with a statement. Source: https://en.wikipedia.org/wiki/Ipsative

A correctly structured Forced Choice format using singular words (versus sentences and statements) presents the individual with item options that are equal in desirability with situational, cultural and educational biases removed; this ensures response choices they make will be far less likely to be influenced by social desirability, circumstances, experiences education or environment. Therefore, the outcomes will reveal inherent behaviors, hardwired core traits and strengths and struggles of the person being assessed which are universally applicable.

We are aggressively authentic in defending our method, the outcomes and the process. Were not embarrassed about this. Our approach is intentional.

Tight questions, using the Forced Choice methodology, get great life results and outcomes which are very strong. This enables individuals to understand their unique inherent behavior and from that position make strong life and business decisions.

The Forced Choice format forces the participant to instinctively choose their answer, and respond more truthfully, as there is not one obviously desirable quality to pick from. Also, the Forced Choice format reduces the potential for the participant to agree or disagree. A Forced Choice format using triads of items (a block of 3) enables greater insight into the interactions between the items for enabling more specific measurement of the behavioral factors (traits).

Further – the results place behavioral knowledge firmly in the hands of the individual. From this position –

  • They are better able to understand who they are in terms of strengths and struggles.
  • They have substance upon which to base life, financial and business decisions.
  • It tells people how to manage their communication style.
  • It reveals talents both overt and hidden that can be applied to career choices.

One of the important outcomes of this discovery approach is to understand that strengths, (upon which most people focus) can, under certain circumstances, become struggles and are difficult to manage without self-awareness and knowledge.

Why not spend 10 to 12 minutes learning about your own unique natural DNA style. Take the Business DNA Natural Behavior Discovery process or the Financial DNA Natural Behavior Discovery Process. Use the link below to take you to the questionnaire.

This scientifically based and validated discovery will reveal significant aspects of your natural behavioral style that is the core of your personality. It will help you as make healthy life, business and financial decisions.

Contact us if you would like to discuss this. Our highly skilled consultants will provide you with feedback on the discovery, and help you to take the next step in building a behaviorally smart life. To learn more, please speak with one of our DNA Behavior Specialists (LiveChat), email inquiries@dnabehavior.com, or visit DNA Behavior

markets-are-not-predictable-but-human-behavior-is

Markets Are Not Predictable, But Human Behavior Is

This article first appeared on Nasdaq.

Understanding how to uniquely manage each client during periods of market volatility is a major issue for advisory firms. So, when you have the capability to predict each client’s reactions in advance of market movements, communication is straightforward, understanding that markets are not predictable, but human behavior is. After all, mismanaged emotions destroy wealth.

In a down market, some cautious clients will panic about losses. On the other side, more extreme risk-takers will see it as an opportunity to buy. Prioritizing the management of clients based on market fear (or lack thereof) and providing corresponding key insights will develop more effective client relationships and retention.

Research demonstrates that markets cannot be predicted by advisors and investors. Instead, advisors should manage the behavioral biases of their clients. In fact, advisors are in an optimal position to do so.

Check yourself before you wreck yourself: Clients need to be part of the discovery process from the outset. This can only be achieved using highly targeted questions via an online discovery process, or verbally. Afterward, advisors can deliver advice based on the client’s goals, rather than the advisor’s perception or interpretation of client needs.

This leaves the advisor better able to align solutions and offerings to who the client is and what they are trying to achieve. It takes the advisors biases out of the conversation. Whether they are the personality biases or personal financial biases, the advice now becomes all about the client. Discovery upfront, as outlined here, delivers both a filtering and alignment that provides greater objectivity on the part of the client and advisor.

Emotional insight

Understanding and managing clients during market volatility is all about their emotional balance. If they are to achieve their goals, its important for the advisor to know how to stop them making silly decisions on their journey via emotion-based decisions or reactions to market movements.

This is where behavioral coaching and educating becomes such a big part of what advisors should be offering clients. Not every advisor, though, is going to have the skills necessary to coach clients in this way.

The use of a highly-validated discovery process that identifies and measures both inherent and learned behaviors will make advisors aware of clients who will react emotionally to triggers like disturbing media headlines or presidential tweets. Advisors with concrete insight can then best manage the client and their reactions for the best outcomes.

Having this insight on clients financial personalities delivers a more sophisticated set of tools into the hands of advisors.

Understanding the wiring and the whys

We humans have certain decision-making biases that are hard-wired early in life. These behavioral biases can be predicted, as they are inherently part of our DNA. The biases usually reveal themselves in times of higher market volatility, when a person is under more pressure or when a major life event takes place.

The key for investors is not to churn their accounts too much in times of volatility. For some advisors and investors whose DNA is wired to be fast-paced, overtrading will be a greater temptation.

As an investor, it’s important to know how much your account is actively managed. Active management can equate to overtrading and, in the end, could be costly or even destructive if not properly moderated.

The other bias to recognize is that investors have a much greater aversion to losses than gains. Those investors whose DNA is wired to be patient and risk-averse will feel the pain of losses much more; so, managing their emotions in times of volatility is crucial. These clients will need a portfolio that is very different from those that are higher risk-takers.

Advisors need to learn how to advise and communicate with each client uniquely in terms of their reaction to market volatility. Again, this is why advisors should consider using sophisticated, targeted questioning to gain insights into client behavior. Having predictive behavioral insight at the start of the client/advisor relationship is significant.

A customer-centric approach in all service industries is essential. But with the scrutiny and attention placed on the financial services sector, such customer focus becomes crucial to the reputation of the business, to client retention and to the overall success of the business. Further, it is a regulatory requirement.

Advice must now be tailored to the individual. One size does not fit all. Advisors who don’t get on board in terms of understanding the behaviors of their clients risk compromising their business and leaving themselves wide open to litigation.

Advisors no longer just need to know how they need to know why. Do you #KnowTheWhy of your client’s life and wealth creation goals?

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

APIFest2

One Way a DNA Solution Plays a Role in an Organization’s Big Picture

I was lucky to be part of the team representing DNA Behavior International at a recent 24-hour event in which teams competed to prototype technology for PNC Banks Asset Management Group. We were there alongside other API (application program interfaces) solutions vendors including Microsoft, IBM, and Envestnet Yodlee.

The competition was a great opportunity to showcase how our data and tech solutions serve as a crucial facet – akin to a computer chip – for larger projects. So, while some of our clients and partners know us as a stand-alone solution, it was fun to see a wide array of really smart people – all PNC Bank employees with a variety of skills, including designers, developers, product managers, project managers, business analysts, and marketers – use the fintech API from us and from many other impressive vendors to design, build and pitch their solutions to a panel of judges.

The three use cases participants chose from were Creating a value exchange for financial planning, Prepare the next generation for wealth, and Deliver content as service. Seventy-five participants on 12 teams convened Sept. 27-28 in Pittsburgh for Triple Crown APIFest: Wealth Management’s Winners Circle, competing for cash prizes, bragging rights and the possibility of seeing their ideas put into production. The teams participating in the 24-hour event were selected from a series of judged rounds and design/review hurdles over the past month.

The intensity of the focused, 24-hour competition drove some especially creative ideas and approaches. It is inspiring.

We are proud and a bit humbled that five of the 12 teams used Financial DNA’s API product in their apps. Ultimately, three of the apps integrated with Financial DNA were chosen among the top five of the event. (These using the DNA chip place third, fourth, and fifth.) Businesses worldwide already use our API to win, so it was fun to see so many talented pros create their own wins with one of our core products.

And, as you might guess, a busy, round-the-clock event like this comes with some aspects you’re not likely to see in a more standard work event: 4,800 pounds of food was consumed, along with 720 cups of coffee, 216 Red Bulls and 900 bottles of water. And seven of the teams pulled an all-nighter.

All told, it was a win-win. All of the vendors API solutions inspired the teams and those teams, in turn, inspired us to think beyond our current solutions. What application or partnership is next on our DNA solutions agenda?

financial-advisors-are-you-ready-to-embrace-artificial-intelligence

Financial Advisors: Are You Ready To Embrace Artificial Intelligence?

This article first appeared on Nasdaq.

And the hits keep coming, so to speak. Never has every move, decision, and interaction with clients of financial advisors been analyzed to this degree. And that will only become more prevalent. Any form of questionable practice will be identified and challenged. It begs the question, are financial advisors ready to embrace artificial intelligence?

The use of Artificial Intelligence (AI) tools to monitor regulatory compliance is a conversation that is heating up, not just within financial services firms, but within regulatory agencies who are now considering both AI and machine-learning tools to enforce compliance.

This increased automation using AI focuses on Know Your Customer (KYC) rules, Anti-Money Laundering (AML) rules, and tax reporting.

AI isn’t all about policing the industry; its broader use can be used for financial advisors to analyze and understand how account holders spend, invest and make financial decisions, so they can customize the advice they give. The role of the financial advisor will change significantly as machines take over routine aspects of the service offering. The gap left is the key to improving the financial service.

Many organizations that deliver support to financial advisors recognize the importance of understanding people before numbers in financial planning. These organizations tend to be early adopters of AI.

Behaviorally smart financial advisors already use a validated scientific discovery process with their customers in advance of the first meeting. This measurable insight into the customer’s personality, the client’s communication style, risk patterns, decision-making approach, and reactionary market movement pressure points, is available at every touch point so clients can be managed honestly, openly and transparently.

The significance of revealing natural and instinctive financial personality and delivering targeted advice provides assurance, so advisors know the client at the deepest level – among other reasons, to mitigate compliance risks.

Information obtained from the use of an automated discovery process puts clients at the center of the financial planning process; matches advisory teams, clients, goals, and solutions; enables a customized communication approach at all stages of the client lifecycle; builds tailored portfolios; behaviorally manages client emotions; and enhances compliance and reduces complaints.

The financial industry is waking up to the use of AI. It is asking the right questions in terms of how it can add value to business models and satisfy regulatory requirements – thus demonstrating to a skeptical public that they are cleaning up their houses.

Like all technology, AI needs to be in partnership with humans. Financial advisors who use a validated financial personality discovery process work more effectively and efficiently by filtering key information from their client’s online personality profiles to inform the advice they give.

The danger is that too much focus is placed on the use of AI for detecting and analyzing brand sentiment or providing investment insights, even identifying rogue behavior – and yet missing the greater use: Getting to know the customer at a deeper level to deliver the best and most accurate advice.

The financial sector is, in a sense, being forced into this new world. Lack of trust, media and regulatory bodies sharpening their focus on compliance ensure the industry is rushing to find solutions that satisfy regulatory compliance, including staying within the bounds of the DOL’s new fiduciary rule.

Traditionally, a slow-adapter industry, the financial sector has been dipping its toe in the water in terms of using robo-advisors. Investors are drawn to this service as they no longer need to pay substantial fees for something they don’t want, need or in some cases get.

Artificial Intelligence used as a tool to put the client front and center of financial advice can and should be pursued. Technology that reveals below-the-surface information about clients will empower advisors to proactively engage said clients on what matters to them the most and on their terms.

Financial advisors, whether individual practitioners or part of a corporate organization, can no longer get away with pushing inappropriate product to investors. The customers are smarter, and the regulators clued in, so what is the smartest change to make to begin to get back the trust of customers? AI.

Get to know your customer at a deeper financial and personal level. Uncover what they want to do with their wealth. Build a relationship based on understanding their inherent approach to life, offering emotional support and becoming the go-to person when they make life decisions.

Much can and will inevitably be managed by AI automation, but most investors will want the human touch. An advisor who knows the importance of a quick phone call to a client when markets wobble or sending an interesting opportunity to an investor able to manage risk – these are the service touch points that maintain or help rebuild trust in the industry.

Financial advisors need to embrace artificial intelligence in general, and financial personality discovery tools in particular, if they are to stay ahead of the game, deliver more relevant offerings to the client and build long-term relationships.

Why not complete your own complimentary profile and see which behavioral biases may affect your financial decision-making. Click here.

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

Startup entrepreneurs working on their venture in co-working space

Diversity and Inclusion Make Teams Great

This article first appeared on HR Management.

Is diversity and inclusion (D&I) in organizations and teams just the latest HR craze? Or maybe just a nod to equality compliance?

Neither. D&I, when introduced appropriately, mines the rich and often untapped talent within an organization. In fact, understanding what D&I means when implemented within a business can be the change that takes an organization from mediocrity to greatness.

Applied to teams, D&I opens doors to innovation, experience, creativity and an unmatched depth of knowledge. But – and it’s a big but – a multifaceted D&I strategy, if not handled appropriately, can lead to chaos and confusion.

The key is to tap into the inherent behaviors and biases of individuals. A highly-validated behavioral discovery process (think a quick-but-thorough assessment tool for every team player) will deliver this insight quickly, accurately and with comprehensive reports that cover every aspect of an individual’s inherent workplace and life behavior.

Such a process provides insight into hidden abilities, revealing behaviors below the surface that, if not managed, might result in disruptive behavior that could unsettle the team. It will highlight communication styles, which helps build a more engaged and productive workforce. Further, the process delivers a culture of openness, mutual respect and trust in the business environment that should satisfy any cultural or legal requirement.

Be mindful that D&I isn’t just about ethnicity, religion, gender, gender identity, sexual orientation, and other such factors; its also about the behaviors that drive performance and reveal (and channel) such behaviors, biases and communication styles to foster successful team outcomes.

Harnessing these differences without the use of a behavioral insight tool can be challenging, if not impossible. People with different backgrounds bring unique information and experiences to tasks. They also bring a significant range of communication styles, decision-making approaches, and thought processes.

In any team, there will be those who passionately and tenaciously bring a vision to completion. Others will be spontaneous, creative and challenge conventional ideas. And there will be those whose experiences and behaviors cross-pollinate, bringing unique perspectives and approaches to work in different functional areas.

Plus, its good business practice to embrace diversity and inclusion: Complex and challenging issues are more likely to be resolved when a team includes a range of talents, thought processes and behaviors.

Dr. David Rock, co-founder of the NeuroLeadership Institute and Summit, and Dr. Heidi Grant, a social psychologist, note in the Harvard Business Review that, striving to increase workplace diversity is not an empty slogan – it is a good business decision. A 2015 McKinsey report on 366 public companies found that those in the top quartile for ethnic and racial diversity in management were 35 percent more likely to have financial returns above their industry mean, and those in the top quartile for gender diversity were 15 percent more likely to have returns above the industry mean.

Teams formed based on diversity and inclusion that are behaviorally aware, behaviorally smart and which include a range of different skills, are more likely to examine facts, consider a range of options and opinions, and remain objective. They will challenge each other professionally, without causing offense or disconnect. Biases will be openly discussed and resolved. Counterproductive thinking will be constructively argued to find mutually beneficial solutions. All of this leads to more effective decision making and organizational and business improvement.

As an example, Bain and Co. research shows that decision-making effectiveness is 95 percent correlated with financial performance.

Still, diversity and inclusion cannot be a one-off initiative. You should incorporate D&I at the hiring stage, and it’s a continuing work in progress, made more effective by the introduction of tools that reveal hidden behaviors and communication styles. D&I evolves, so your approach should too.?Diversity and inclusion make teams great and inclusion will set your organization apart from your competitors and improve your bottom line.

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