Posts

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.

 

091718hm

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?

Corporate Culture, It Starts at the Top DNA Behavior

Corporate Culture, It Starts at the Top

Often in business, the way forward is not or but and. That is, not abandoning one cornerstone for another; rather, adding other building blocks as necessary. It’s the cumulative approach that can streamline savvy organizations who are able to move beyond the fear of adding additional elements or layers.

We’ve been seeing this trend in a way that is particularly connected to our work, at the intersection of data and behavior. But let’s look back a moment before looking forward.

Corporate Culture Five Years in the Making:

For the past five-plus years there has been a strong focus on corporate culture, including the installation of a Chief Corporate Culture Officer or some other executive-level champion of thoughtful, strategic culture initiatives. To a great degree, they focused on goals, alignment, and communication, with tentacles reaching into every corner of an organization. That is great and we should not throw out our emphasis on the power of a curated corporate culture.

Still, the last few years also have seen the amount of data organizations wield grow exponentially. That too is good and exciting, but only if they can fully leverage that data while at the same time deftly coordinating all the many aspects that affect and are affected by data or otherwise have to be part of the collaborative, comprehensive mix.

Chief of Corporate Culture:

So, let’s get back to that trend I hinted at above. At the intersection of culture, people, customer experience, big data, AI, machine learning and all of the other elements a robust organization must exist. Leaders are beginning to see the next overlay many will need to connect all of these dots. That is a Behavioral Science Officer or behavioral science team’s role. We know people approach and understand things differently and communicate in myriad ways. That’s what is driving these leaders to envision some sort of coordinated effort that leverages behavioral data across disparate areas of their business.

This might address anything from testing out new products, experimenting with words and customer retention to hiring, governance, regulation and accountability. In short, not only harvesting people data, but also ensuring it is valid and relevant and maximally redeployed to greatest effect.

A devil’s advocate might say of course this sounds like a good idea to someone who offers a validated behavioral discovery tech platform. But truth is, the need for a top-down, across-all embrace of behavioral science is bigger than just that tech platform, which could be one very effective part of such a rollout, but, still, only one part of it.

At Business DNA we help firms large and small their Corporate Culture. Register to learn more.

Behaviors Role in Corporate Culture:

The amount of data, including all sorts of behavioral data (whether harvested or not), generated and held by organizations will continue to grow. So will the need to improve everything from products to profits and accountability by leveraging the massive amounts of information. By managing behavior.

I would venture to say that even the early adopters of a behavior tech platform like ours would realize the most success by taking a big-picture, infrastructure approach to behavior sciences. Ultimately, the key is to activate all of the insight data you have (access to) so you can know, engage and grow employees and clients, anticipating what they want and need – and delivering it – maybe even before they know what they want.

All business is about people, and because business is a people science, we must understand human nature to truly excel at and understand business. Human nature is stable and needs to be understood; doing so can and will affect your bottom line. Using a behavioral science approach will identify the business goals and challenges that can be reached and resolved through the scalable and practical application of what I like to refer to as understanding people before numbers.

What areas of your organization would benefit from the layering in of behavioral science? And can you foresee a Chief of Corporate Culture or behavioral sciences team member in your organizations future?

I’m interested in your take on this, so talk back: Hmassie@dnabehavior.com. I’ll, of course, be watching this trend and any others that touch behavior, money, and tech. I promise to report back.

magnifying-glass-1607208_960_720

Can You Spot The Molotov Cocktail Client?

Historically, we have seen advisors selecting their ideal clients based on easily observed quantitative and qualitative factors. These often include (i) meeting a minimum of assets under management, (ii), shared values, (iii) preparedness to delegate, and (iv) being able to meet a specialist service need (estate planning, family business, business exit, etc.).

However, based on our work using Financial DNA over nearly 20 years, we have affirmed that there are deeper issues that need to be identified before taking on a new client – or retaining them once you see the pattern.

DNA Behavior International recently polled our advisor user base on their “worst client”. We got resounding feedback that most advisors worst client was “an engineer”. In my more than 30 years of serving clients, working with engineers was a challenge for me interpersonally because many of them constantly wanted to benchmark and finetune the portfolio. So, clients who are not relationally compatible with the advisor and therefore are hard to communicate with would not be suitable.

But in my experience, engineers aren’t the worst clients. The worst clients were hiding in plain sight during client onboarding but slowly required much more time and risk to manage throughout their financial journey because they are financially destructive.

In our 18 years of client discovery experience, we have found a trend of financially destructive clients. The most destructive clients tend to be the ones that require the most behavioral management and are not associated with a particular occupation. For instance, the couple that brings in $300k + per year and spends it all, the mother that cannot say “no” and the couple that constantly switches plans or presents with ideas for deals from dinner parties.

So, how can you identify these Molotov Cocktail Clients and avoid them? Look for these Molotov Cocktail Client traits:

  1. Have low Financial Behavior Compatibility because they are more prone to making destructive financial decisions that get in the way of wealth accumulation, and
  2. Are a low Relational Style because they are interpersonally harder to manage; thus, there is a greater chance trust will be lost and advisory risk will increase.

Discovering the Clients Financial Personality

The next evolution in discovering whether a client is ideal and how to behaviorally manage them is to get more insight into their decision-making and relationship behavior. Some clients will do a “behavioral flip” when who they naturally are at the core (Financial DNA Natural Behavior style) intensifies under pressure and in emotional situations – often caused by market and life events.

They go from seeming to be a congenial and desirable client to being too hot to handle. Is your firm prepared to manage clients who are not behaviorally ideal, even if they simply meet the four main criteria specified above?

We have adopted the belief that it is the client’s complete financial personality (their “Financial DNA”) which is a significant driver of wealth creation. Understanding a client’s risk profile is only one dimension that needs to be understood.

In particular, we believe that having a high ratio of spending to disposable income is the biggest destroyer of wealth. If a client spends all of their income then, unless there is a windfall event (bonus, inheritance, business sale), there is nothing left to invest. Also, of the clients who are spenders, many will invariably have high debt which puts their wealth creation further at risk.

Clearly, being a high risk taker can jeopardize wealth creation if poor decisions are made. Nevertheless, in order to create wealth, risks do need to be taken. So, in terms of a client’s Financial Behavior Capability, having a high risk tolerance is important. Clients also need to have a higher level of goal drive to build wealth. They need to be motivated to work harder and push themselves over a long period of time.

Financial Behavior Capability Research

DNA Behavior conducted a recent research study across 65,000 randomly selected participants who had completed the Financial DNA Discovery Process to determine which clients would be ideal from a behavioral management perspective. We identified the following statistics about a person’s Financial Behavior Capability when you combine the propensities for saving (or spending), goal drive and risk-taking:

 

Financial Behavior Capability Saving or Spending propensity Goals and/or Risk Population %
Very High High Saving And high goal motivation and high risk taking 11%
High High Saving And high goal motivation only 17%
High High Saving And high risk taking only 15%
Moderate Moderate Saving Moderate risk taking and goal motivation 14%
Low High Spending And low risk taking only 15%
Low High Spending And low goal motivation only 17%
Very Low High Spending And low goal motivation and low risk taking 11%

 

Relationship Style

 

Interestingly what we found is that only 3% of clients would be ideal from a behavioral management perspective when you combine a high Financial Behavior Capability and have a relationship style. All of the remaining 97% could be Molotov Cocktail clients who are prone to making financial decisions which would counteract accumulating wealth for meeting their goals and/or would be difficult (or not enjoyable) to inter-personally manage.

 

The behaviorally ideal clients (3% of the population) exhibit the following characteristics:

 

  1. High Financial Behavior Capability based on the 11% of the population having the propensity to: (i) save money (low spender), (ii) emotionally manage losses (high risk tolerance) and (iii) build wealth (high goal motivation).
  2. High Relational Style based on the 11% of the population with high financial capability as defined above, only 27% of that population (roughly 3% of total population) will have a desire to congenially work with the advisor to build a long-term relationship and not simply for performance management. Put another way, more than two thirds of the population with a high Financial Behavior Capability will be more relationally difficult to work with because of their strong results focus and demanding nature.

Will you be the advisor – or organization that employs many advisors – that takes on any client and advises them without any insight into their financial personality? Or will you leverage data to maximize advisor-client fit, tailor advice and client communication, and ensure retention, satisfaction and success on both sides of the advisory relationship?

Blog (11)

To Effectively Coach/Mentor, Begin with Validated Individual Insights

As a DNA Behavior Accredited Consultant, I coach and mentor business leaders and individuals daily.

Every person I have coached has begun the engagement by saying in various ways that they want to find and fulfil their life’s purpose. Very often they are at a crossroads and need someone to signpost them in the right direction.

Universal signpost: Personal behavioral insight

Whether she’s a leader frustrated by her inability to drive greater success, or he’s an individual who has lost his way, every issue boils down to one clear truth – the lack of personal behavioral insight.

In the case of the leader:

  • How they lead;
  • How they communicate; and
  • How they manage people.

In the case of the individual:

  • How can I feel more appreciated?
  • Why can’t leadership see my unused talents?
  • How can I find my life’s purpose in work?

Whether as a leader or as an employee, each desire to do a good job that is life-giving and has meaning. But when their endeavours are not appreciated or ignored, people lose their compass. And often lose interest and initiative too.

Digging below the surface I find there is often dissatisfaction. An itch they can’t scratch. A longing that can’t be met. Unless this can be revealed, individuals can’t change direction and realize their life’s purpose. And, without this same revelation, leaders can’t create the space for team members to achieve it.

Fully engaged, focused on success

There are many reputable reports and studies showing there is a definite correlation between engaged employees and creative output, and how these drive business growth and innovation. So, when a client comes to me for coaching, the question of leadership always comes into the conversation.

Leaders have a huge responsibility in terms of creating settings within which people can work to their optimum. But when leaders do not know their people at a deep level, its unrealistic to expect them to establish spaces that enable individuals and teams to become engaged employees.

Gallup, Inc., defines engaged employees as those who are involved in and enthusiastic about their work and workplace. But the majority of employees are indifferent, sleepwalking through their workday without regard for their performance or their organizations performance. As a result, vital economic influencers such as growth and innovation are at risk.

My personal frustration: The many times an individual says, I just want someone to appreciate me and tell me if I’m doing a good job. Such exchanges between managers and employees don’t in themselves produce engagement, but its a good beginning.

Reconnecting the disconnects

When leaders know how to emotionally invest in their people, then real engagement begins. Whenever I work with leaders, I always ask them if they know how closely the success of the business aligns with the success their people are hoping for in their own lives.

Be mindful of the external stressors the people in your organization are dealing with. For instance, they may be dealing with and worrying about things like buying a home, schooling their children, saving for a holiday, paying off their college fees, investing to create wealth, the health of a loved one and more.

Successful leaders know their employees. They understand the power of engagement. They are comfortable having insightful conversations with them. Moreover, this then leads to healthier conversations when an individual’s work level falls off.

That kind of conversation isn’t about criticism and likely begins with, What’s happening in your world that’s causing this slump in your work? How can I help you get back on track? This is where true engagement comes into play and teams are built on trust and commitment to the business.

This is how leaders build and motivate their people. In the genuine exchanges.

Going below the surface

As consultants we need to advise our clients about the importance of getting below the surface of themselves and the people they lead. Some leaders may need to be taught how to engage in this way.

They may feel vulnerable doing it- but here’s the thing, if they want success in their business, getting the people stuff right is the only way to go. They may need to learn that that people stuff is not as soft and undefinable as they think. There are metrics, processes and tools that can help each of us know, engage and grow ourselves and the organizations we lead.

The first step for me in my coaching and mentoring approach as a consultant is for each client to complete their DNA Behavior Natural Discovery process. I can’t possibly advise, mentor and coach when I have no idea what people have hidden behind their personality mask. I wouldn’t even try.

Armed with this in-depth insight, I can then very quickly help them accelerate their performance, enabling them to achieve success on all levels regardless of where they sit in the organization.

Experience the kind of insights Im talking about by taking the DNA Behavior Natural Discovery yourself, at no cost or obligation.

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

photo-1534844624972-72af3082566e

How To Build Trust In A Team: A Business DNA Product Upgrade

When we design feature improvements for Business DNA, we look at the hot topics that are raised in our training and coaching events. Last year, a hot topic was, “How to build trust in a team”. I am excited to announce that today, we released an update to the Trust scoring model for Natural Behavior that will answer that very question.

Trust Scoring Upgrade:

This upgrade was a culmination of 5 years of psychometric research and independent validation by our team of PhD’s and data scientists. The bar is now raised for DNA Behavior as having one of the only independently validated psychometric measurements of Trust in the behavioral profiling industry. In addition, this measurement provides our Business DNA Coaches, Consultants and Users with the following in-depth insights (in addition to the other 54 additional behavioral attributes we measure):

  • Trust and Skepticism
  • Delegation and Controlling
  • Openness and Suspicion
  • Approachable and Questioning
  • Relaxed and Exacting

If you want to know how to build trust in a team, you must first understand how your team builds trust. While asking questions and drilling in on details can build trust for some team members, that same activity may feel like a lack of trust to others. Trust building is not a one-time activity, but trust erosion can be. In order to build trust, you must consistently behave in ways that are seen to build trust with your team. Knowing how each member of your team responds naturally around trust can help you hit the right note with your team members and help you understand why something you do successfully with one person is failing with another.

How to measure trust in a team using Business DNA:

The Business DNA Natural Behavior assessment is an online questionnaire process that takes 10-minutes to complete. You and each one of your coworkers can spend just 10-minutes to complete their own assessment and compare your results. Each individual’s Trust score will be available in each individual’s 1-page factor Report, Workplace Operations Report and the Coaching Report.

How to build trust in a team:

Ready to build trust in your team? Our experience tells us that the first step to build trust in a team is to help each person understand each other’s unique style. The self-guided Team Report profiles an experiential walkthrough of the behavioral patterns for each of your team members and is intended to build trust by opening the lines of communication for each person’s unique style.

Are you Naturally Trusting or Skeptical?

Are you naturally more trusting or skeptical? Find out in just 10-minutes with our free trial. Experience Business DNA with this free trial and see how business leaders, coaches, and consultants discover the talents, communication styles, and personality profiles of employees and customers.