Does My Advisor Understand His Own Bias (Digitally)?

– First Published on Nasdaq –

I recently had an interesting conversation with an investor who had attended a behavioral finance webinar.

He shared that his advisor’s level of communication had improved dramatically – from being less tolerant and on occasions showing bias – to having a meaningful conversations about life-goals and how to tolerate sudden market movements. “I finally felt I was genuinely being coached instead of being bullied,” he said.

It seems the advisor’s firm had recently invested in adding a behavioral tech solution to its advisor portal. The client recalled completing a 10-minute questionnaire and learning more about his investing and spending habits. In addition, the advisor now had access to a range of dashboards and personalized information that enabled him to respond to his client’s specific goals, wants and needs digitally.

The investor was more than happy to see the level of communication lift and to have the advisor considerably more focused on his individual needs. He also noted it was the advisor’s own lack of bias that was the most notable.

I pressed the investor for an example or two.

“I’m a cautious investor,” he told me, “in fact I’m risk-averse and likely to respond to troubling market movements by selling, probably at the wrong time, but that’s who I am. I always felt my advisor had an edge of criticism when I shared my concern about uncertain markets and how they would impact my life goals.”

He went on to say that the advisor, through understanding him at a deeper level and checking his own bias (the advisor is a comfortable risk-taker) now understands how his previous responses to the client’s risk aversion was at best naive and at worst unprofessional.

Understanding, overcoming bias

This exchange got me thinking about the impact of Diversity, Equity and Inclusion (DEI) in the financial services industry. When individuals are not aware of their own behavior and their own communication style, conversations can become toxic. Unintended, hidden bias is often the culprit.

That’s why doing everything possible to create an insightful human connection is so vital to so many business relationships, certainly including the financial advisory-client relationship.

Ultimately, we are all relying on a variety of video conferencing and other chat and tech platforms to conduct our business these days; however, when behavioral science guides the tech stack, inherent behaviors can be revealed in an instant digitally, making remote communication richer and more effective for all involved.

No longer is an advisor relying only on memory or CRM notes to refresh themselves on client behavior and how they might best respond to such. Behavior tech enables the advisor to know and understand natural behavior insights in real-time. By doing so they can better help the investor-client recognize that their behavioral biases are at play, providing perspective and, if needed, redirection and other tailored counsel.

These tools also can remind the advisor of their own bias and provide keys to remember when working with the client. This type of interaction creates a trusting relationship and reinforces the “know your client” fiduciary role to which responsible advisors are committed.

Feeling seen and understood

Unintended, unaddressed DEI issues are often at play when a professional conversation between an advisor and client leaves one or the other feeling stung or unheard. Consideration must be given to eliminating anything that causes confusion in a conversation because it can derail the interaction and even the entire relationship.

When a client feels behaviorally understood by their adviser, the relationship will flourish. Having insight into a client’s preferences, bias, communication styles and of course their “financial personality” reinforces the importance you as an advisor place on the relationship.

We all have blind spots. Most can be tolerated. However, those blind spots born out of ignorance are not ultimately acceptable, especially when there are tools to reveal and help correct. Add money and emotions to the equation and blind spots or bias can certainly harm or end client relationships. However, the client before and after experience above demonstrates that advisor-client service informed by validated behavioral insights is not only beneficial and powerful, but can actually save a relationship.

We can no longer sit back and tolerate a deafening silence on DEI, even if – or especially if – it is revealing itself via seemingly small but relationship damaging (or killing) occurrences. If nothing else, this recent conversation made me realize that the issues of diversity, equity and inclusion are part of the very fabric of all we do.

How will you spot advisor-client bias? How will you address it?

Leon Morales

Leon Morales

Chief Relationship Accelerator

Human Behavior Advisor, Human Capital Management, Customer Experience Specialist

Leon Morales is a builder of successful people driven organizations. With a deep conviction that organizational success is only achieved when leadership really understands each employee, Leon is certified in the DNA Behavior. Method and Birkman Method of personality assessment and has crafted his professional career around high-impact consultative roles. These include serving as Business Development Principal and Leadership Practice Principal for Innovar Collective, LLC and in various corporate leadership roles during his 17-year tenure with Cox Communications.