Customized Experiences Include Helping Investors Manage Market Fears

Customized Experiences Include Helping Investors Manage Market Fears

Before I jump into this product announcement, I would like you to know that we planned this launch months ago, long before there were hints of our current market disruption. While Market Mood does aid in managing client’s fears in volatile markets, our intention is not to attempt to capitalize on these difficult times or the concerns of investors. Stories are starting to come in from the DNA community members around the world about these trying times and we are seeing the fear and emotions that DNA measures, come to life.  The fear and emotions that investors are experiencing is real and it would be a disservice for us to make these times an opportunity for DNA. For this reason, if you feel that this tool will help your firm or aid in your ability to manage your client’s fears – we will work with you however we can by providing trials or waiving steps or fees to simplify the onboarding and get you started. 

Our team at DNA Behavior released a new behavioral finance API endpoint called the Market MoodTM API to help financial services firms measure clients’ market fear or exuberance. This Fintech tool arms them with data to behaviorally manage clients during times of market volatility.

While financial advisors have been using Market Mood since 2015, the API provides a flexible, relatively quick way for firms large and small to scale this solution.

Stopping Clients From Making Financial Mistakes

The Market Mood API measures the current level of market fear or exuberance for each investor. It also provides easy-to-understand behavioral management tips and action items for investment advisors (and Fintech applications) to behaviorally manage or “nudge” their clients, in a way that is tailored to each client via automated customization.

Research affirms that investment advisors bring the most value to clients by stopping them from making impulsive decisions that change investment positions at the wrong time. Our own research tells us that, in typical market conditions, using Market Mood can help advisors bring an additional 150 bps to investors; however, in adverse volatility, this can increase to higher amounts.

Like all DNA Behavior tools, Market Mood helps individuals easily (and practically) apply behavior to create customized experiences. In this case, advisors & Fintech apps customize the experience for investors, easily using behavioral finance nudging techniques (traditionally only addressed in advanced textbooks and research papers).

Investor clients typically have one of two reactions to market events. A reaction to market news they hear regarding movements of a particular index, such as the S&P 500, and a reaction when they see their actual portfolio in their investment app. With the Market Mood API, we help firms measure both reactions; the API measures client-specific Moods as well as Moods powered by market indices.

Nearly Each Clients Will Have a Different Reaction to the Same Market Event

It’s logical that clients will react differently to the same market events, but traditionally, firms and advisors treat each client the same when markets are volatile. With recent market shifts caused by events such as the China trade talks, Brexit, and now the coronavirus outbreak, some investors are opportunistic when the markets are down, and others are fearful.

In sharing his experience, Shay Woodward of Performance Wealth says that, “Market Mood is a new way of thinking about and looking at my DNA Client Data and how clients will react to the stock market. The communication cues and tips provide a structured approach to engaging with my clients. I continue to find better ways to engage with my clients using Market Mood.”

Market Moods Clients May Have

There are eight different Market Moods, represented with four colors to easily demonstrate the level of urgency for financial services teams.

Market Moods, when investment returns are positive:

  • Comfortable
  • Exuberant
  • Watchful
  • Apprehensive

Market Moods, when investment returns are negative:

  • Comfortable
  • Opportunistic
  • Concerned
  • Fearful

Learn more about Market Mood: Download the Market Mood Brochure

Market Mood API Documentation

Ryan Scott

Ryan Scott

Ryan Scott - CTO, Prod Dev & Integrations

As the CTO, Prod Dev & Integrations, Ryan designs, develops, and maintains all of the web-based DNA Behavior products and solutions in addition to providing support for clients.

He has a passion for creating and implementing efficient business processes and leveraging technology throughout our business.

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