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Don’t Reinvent Tech; Add Behavioral Power

– First Published on Nasdaq –

People are complicated. Some tell you their life story in the first few minutes. Others take time – and deep questioning – to reveal even the smallest details.

Financial advisors know that, around the emotional subject of money, gaining insight into clients’ financial personality is hard. But it doesn’t need to be. No matter how complicated – and different – each person is.

Knowing your clients at a deeper level and having real-time access to innate client behaviors and decision-making inclinations puts advisors in a powerful stance. Ready to deliver top-flight service – and results.

How will a client react to market movements? What are their biases? How do they consider and deal with risk? And what are their spending habits? Clients can tell you about themselves, and you can subjectively observe, but what if you had validated, objective client data built into systems on which you rely?

You’ve got tech; add #behaviortech

The solution is part of the move toward greater use of behavioral science. Financial advisors (and their clients) are coming to the realization that bona fide behavioral insights improve the effectiveness of financial advice – communication, service quality and outcomes.

Layering a behavioral data-gathering addition into your existing tech stack is easier than you may think. Hint: You don’t have to reinvent the wheel. Even if you don’t know what an API is, for instance, your IT people do. Imagine: A plug-in that adds behavioral info to the tech you already have.

This addition makes it possible for financial advisors to identify, engage and deliver client solutions in real time, leveraging data that informs financial planning from end to end. A behavioral tech stack combines customer engagement technology and behavioral insight data to inform client engagement. It enables the knowing-me-knowing-you element that creates trust from openness and transparency.

Plugging in personality

Client data collected through a quick, simple behavioral discovery informs the advisory process in significant ways:

  • Defining financial personality.
  • Advisor/client matching.
  • Individual client financial journey needs.
  • Quality life goal analytics.
  • Real-time access to client behavior data.
  • Client engagement via more effective communication.
  • Insights to inform marketing.
  • Eliminates information silos between client support teams.

Every financial advisor should have access to interactive business intelligence tools. And that includes but goes far beyond client EQ, to include a full range of behavioral insights. (In some cases, as many as 500-plus such insights.) That’s the power of modifying your tech stack to include the behavior module.

Be(havior) on the cutting edge

Imagine: In advance of every client meeting, whether face to face, on social media, conferencing platforms or the phone, an advisor could, at the click of a button, be able to deploy dashboards and personalized information to respond to specific client wants and needs. (Even wants and needs they may not know they have or cannot verbalize; again, you’ll be tapping into innate behavioral info.)

Best: The behavioral tech stack is so integrated into other advisor systems and platforms that client info and prompts appear as needed, with the advisor not even having to push that proverbial button. As an example, a pop-up might remind you the client you’re about to meet with has difficultly following set procedures and offers a checklist of ways you can simplify processes to ensure they stay on track.

This approach creates an experience tailored to individual client needs. Moreover, it’s the way of the future.

Using A Behavioral Science Tech Stack in Investment Committee Decision-Making

This article first appeared in Nasdaq

Most investment committees have a clear mission: Serve as stewards for assets of the organization they represent.

The committee must develop an investment plan according to the financial needs and circumstances of the corporation. So, if the primary role is to approve the fund’s investment objectives, how then do you ensure members of the committee have the appropriate behaviors to fulfill their role without bias?

The answer may lie in using your tech stack to power the investment committee – and its workflow.

Your next-gen investment committee

Recruiting the right people to this critical role – including having in-depth knowledge of their decision-making abilities – makes the difference between the success and failure of the investment committee.

But how do we define that fit-for-role? Is it a professional background? Education? Investment knowledge? And where does the diversity lens come in? (Or is it missing?) What about committee members’ inherent risk tolerance and behavioral bias toward investments?

Research demonstrates there are definite biases (both investment behavioral biases and workplace behavioral style differences biases) that should be considered when forming a committee with such weighty organizational responsibilities. Therefore it is increasingly important to know the inherent decision-making behavior and bias of each individual and how, in a diverse group, these differences will be managed.

Add this to your tech stack

As is the case with all critical appointments, the key lies not with their education qualifications, experience or talents, but with their ultimate behavior. What innate behaviors do they have – of which they may not even be aware – that will influence decision-making, especially financial decisions and/or those made during crisis?

Without the use of a validated behavioral profiling system of some sort, selecting individuals for an important function like an investment committee becomes little more than a lottery. And those are some weighty decisions to leave to chance.

Some financial leaders may not want to hear that their own perspective and powers of discernment may not be the only tools needed. Still, leaders committed to building the tightest, most reliable and trustworthy investment committee will want to introduce a behavioral finance (BeFi) tech tool that hones team member selection for the best possible fit and outcomes.

And why not? Tech is now an accepted part of so many aspects of financial processes, including throughout and across the investment community. In this case it is not usurping the wisdom, judgment and experience of leadership, but supplementing and heightening it by making key insights about potential committee members easier to access.

Financial planning and wealth management organizations are now investing in their value tech stack for everything from market insights and model portfolio construction to manager selection, cybersecurity and, yes, BeFi; so, using behavioral science (BeSci) to create a diverse investment committee should be welcomed, not daunting.

Behavioral diversity and better outcomes

Remember that diversity of opinion – about potential committee members and among committee members (once selected) – may not just come in the form of understanding different behaviors, bias and decision-making styles, but in experience, given that not every member of an investment committee has to be a financial expert. What is important is that members should have a wide set of perspectives and a willingness to be collaborative and open.

That’s why a depth of insight into the individuals to understand their decision-making approach and their likely response under pressure is crucial. Without such, important investment decisions will be flawed.

Selecting a BeSci expert, whether internal or external, to guide the committee using a behavioral discovery process can add a dimension of diversity to the investment committee by ensuring the group can function collaboratively and effectively while also preventing group think and other pitfalls you – and the committee – may not even know they were experiencing.