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Making Behavioral Science Effortless in Workflow

Making Behavioral Science Effortless in Workflow

This article first appeared on Nasdaq.

When advisors and clients relate well and understand how to manage each other’s behavioral and communication differences, those solid foundations lead to repeat business and overall success.

Imagine heading to a meeting with a client and being able to use your smartwatch or other device to take a quick glance to remind yourself of their innate behaviors. Those revealed by the 10-minute assessment they took early in the advisory relationship.

You’d quickly refresh your knowledge of validated ways to best communicate with them. A smoother, more focused meeting. Perhaps quicker. And with improved outcomes.

Visualize knowing in advance, for instance, that this client values work-life balance and won’t budge from goals they have to support their lifestyle. Think about how important it would be to have access to client insights as you step out of the elevator and greet your client.

An insightful road map

Many of us can’t recall our own natural behavior when we are under stress, never mind trying to recall that of our client. But a quick glance at discovery report highlights provides these prompts:

You are motivated by out-of-the-box thinking and brainstorming. On the flip, your client who needs the big picture, action plans and logical key points.

You’re reminded to go into the meeting knowing how to manage the differences between you, including: Dial back your creative thinking and focus on the analytics and rationale, while remaining levelheaded
The world of advice is changing rapidly. Think back over the past few months and consider how often you’ve found yourself acting more as a coach-mentor than a financial advisor.

Robust info revealed in practical ways

Increasingly, and though they may use varying language to express it, advisors are inquiring how to foster this transition to coaching or mentoring.

All acknowledge their clients are smart and have a pretty good handle on their wealth creation in stable times. But they recognize we’re all a bit more emotional and not as consistent in decision making during tumultuous times.

My guidance: Get to know your clients’ natural behavior. It won’t change over time, but under pressure some aspects of their financial personality might cause a “behavioral flip” – so named by behavioral insights guru Hugh Massie – and will need to be managed. (Behavioral flip: Demonstrating behavior that seems to run counter to everyday, no-stress or low-stress behaviors.)

This is not some futuristic thought bubble; this behavioral insight is available now and can be used on any device via a simple integration. And that last point is one I get asked about a lot. Understandably, advisors are busy doing their core work and don’t need an add-on, for lack of a better term, if it’s not a quick and seamless process, including the time involved to get up to speed.

Leverage existing behavior data

Being able to reference and be guided by robust financial behavior data creates curiosity as clients see how empowered they are as they fully understand their inherent decision-making and communication style. This revolutionizes the advisor-client relationship and puts you and your client on the cutting edge.

Get an even better grasp on how to run a client meeting built on actual data and behavioral insight.

Understanding behavior satisfies know-your-client standards – without having to laboriously read piles of client bios – and ups the ante in terms of outcomes on all sides of the relationship.

Bridge the Relationship Gap to Engage Clients

More and more evidence is emerging suggesting Gen D (digital generation) represent an interesting developing market for financial services firms. Gen D are attracted by social media, they expect it to be evidenced in all areas of their life. Importantly they will look for this approach from their advisors who in turn must understand the importance of building trust with Gen D through the use of social media.

Interestingly, Gen D is not necessarily age related rather media savvy related. Good communication today doesnt involve changing the what of the message, but the how. Clients who fall into the Gen D bracket want to know you are on social media. Thats where they will look for you. Thats where building trust begins and where the voice of the customer is becoming the loudest. It falls to advisors to understand the importance not only of social media but how best to engage with a wide age range of potential clients through gaining behavioral awareness.

Having recently read an interesting article from Accenture following a survey they conducted into how Gen D investors approach wealth management its clear that the financial industry must change their approach to the use of social media if they are to attract, build trust with and maintain long term relationships with Gen D.? Click here to read the full article from Accenture.

Visit the Financial DNA website to learn more about building trust with clients and bridge the relationship gap.

Its All About Trust

The only valid purpose of a firm is to create a customer.

Wise words written by management guru Peter Drucker in his 1973 masterpiece, Management: Tasks, Responsibilities, Practices.

Now fast forward to 2013 and the financial services industry.? What are customers looking for when choosing a financial advisor?

Trustworthiness.

According to a new study released by the CFA Institute/Edelman Investor Trust Study, clients consider trustworthiness more important than investment management skills when choosing a financial advisor. 35% of respondents said whether an advisor was trusted to act in my best interest was the most important factor when hiring an advisor. The ability to achieve high returns was cited half as often, at 17%, and the advisors fee structure was important to just seven percent of respondents.

This is yet another example to support the fact that 93.6% of financial planning is behavioral management of the client.

A behaviorally smart advisor knows how to build trust from the very first interaction with the customer.

The research offered three behavior related attributes to building trust:

  1. Create transparent and open business practices. What tool do you have in place to objectively understand the clients financial personality, including their natural level of trust?? Using a discovery system helps formulate the basis for deep, meaningful conversations tailored to the unique characteristics of the customer. You will eliminate the guess- work and assumptions. And, as an advisor, you should share your financial personality and level of trust with the customer.? Thats transparency!
  2. Take responsible actions to address an issue or crisis. The real behavioral approach is to find out what responsible actions means to each unique customer.? A research -laden email explaining the markets may suffice for some.? Others may need a phone call to allow them to express emotions along with some high level facts.? You need to discover this information up front with a customer before the crisis occurs.? Knowing exactly how the customer operates under stress is crucial to the longevity of your relationship.
  3. Have ethical business practices. Whether you agree or not, the financial services industry is still suffering from the 2008 financial crisis.? The bailouts and lack of punishment for those responsible still leaves a shadow of doubt in the general populations mind on how far they can trust financial institutions.? If you adopt an understanding people before numbers approach and have an objective system for uncovering all the risks of the customer relationship (financial, investment and personality), chances are you will be viewed as a trusted advisor.

Isnt it time to become a behaviorally smart advisor?? Your customers are counting on it!? Simple, actionable solutions are waiting for you at the Financial DNA website.

Its All About Trust

The only valid purpose of a firm is to create a customer.

Wise words written by management guru Peter Drucker in his 1973 masterpiece, Management: Tasks, Responsibilities, Practices.

Now fast forward to 2013 and the financial services industry. What are customers looking for when choosing a financial advisor?

Trustworthiness.

According to a new study released by the CFA Institute/Edelman Investor Trust Study, clients consider trustworthiness more important than investment management skills when choosing a financial advisor. 35% of respondents said whether an advisor was trusted to act in my best interest was the most important factor when hiring an advisor. The ability to achieve high returns was cited half as often, at 17%, and the advisors fee structure was important to just seven percent of respondents.

This is yet another example to support the fact that 93.6% of financial planning is behavioral management of the client.

A behaviorally smart advisor knows how to build trust from the very first interaction with the customer.

The research offered three behavior related attributes to building trust:

1) Create transparent and open business practices.

What tool do you have in place to objectively understand the clients financial personality, including their natural level of trust? Using a discovery system helps formulate the basis for deep, meaningful conversations tailored to the unique characteristics of the customer. You will eliminate the guess- work and assumptions. And, as an advisor, you should share your financial personality and level of trust with the customer. Thats transparency!

2) Take responsible actions to address an issue or crisis.

The real behavioral approach is to find out what responsible actions means to each unique customer. A research -laden email explaining the markets may suffice for some. Others may need a phone call to allow them to express emotions along with some high level facts. You need to discover this information up front with a customer before the crisis occurs. Knowing exactly how the customer operates under stress is crucial to the longevity of your relationship.

3) Have ethical business practices.

Whether you agree or not, the financial services industry is still suffering from the 2008 financial crisis. The bailouts and lack of punishment for those responsible still leaves a shadow of doubt in the general populations mind on how far they can trust financial institutions. If you adopt an understanding people before numbers approach and have an objective system for uncovering all the risks of the customer relationship (financial, investment and personality), chances are you will be viewed as a trusted advisor.

Isnt it time to become a behaviorally smart advisor? Your customers are counting on it! Simple, actionable solutions are waiting for you at: www.financialdna.com.

Its All About Trust

The only valid purpose of a firm is to create a customer.

Wise words written by management guru Peter Drucker in his 1973 masterpiece, Management: Tasks, Responsibilities, Practices.

Now fast forward to 2013 and the financial services industry.? What are customers looking for when choosing a financial advisor?

Trustworthiness.

According to a new study released by the CFA Institute/Edelman Investor Trust Study, clients consider trustworthiness more important than investment management skills when choosing a financial advisor. 35% of respondents said whether an advisor was trusted to act in my best interest was the most important factor when hiring an advisor. The ability to achieve high returns was cited half as often, at 17%, and the advisors fee structure was important to just seven percent of respondents.

This is yet another example to support the fact that 93.6% of financial planning is behavioral management of the client.

A behaviorally smart advisor knows how to build trust from the very first interaction with the customer.

The research offered three behavior related attributes to building trust:

1)??? Create transparent and open business practices.

What tool do you have in place to objectively understand the clients financial personality, including their natural level of trust?? Using a discovery system helps formulate the basis for deep, meaningful conversations tailored to the unique characteristics of the customer. You will eliminate the guess- work and assumptions. And, as an advisor, you should share your financial personality and level of trust with the customer.? Thats transparency!

2)??? Take responsible actions to address an issue or crisis.

The real behavioral approach is to find out what responsible actions means to each unique customer.? A research -laden email explaining the markets may suffice for some.? Others may need a phone call to allow them to express emotions along with some high level facts.? You need to discover this information up front with a customer before the crisis occurs.? Knowing exactly how the customer operates under stress is crucial to the longevity of your relationship.

3)??? Have ethical business practices.

Whether you agree or not, the financial services industry is still suffering from the 2008 financial crisis.? The bailouts and lack of punishment for those responsible still leaves a shadow of doubt in the general populations mind on how far they can trust financial institutions.? If you adopt an understanding people before numbers approach and have an objective system for uncovering all the risks of the customer relationship (financial, investment and personality), chances are you will be viewed as a trusted advisor.

Isnt it time to become a behaviorally smart advisor?? Your customers are counting on it!? Simple, actionable solutions are waiting for you at: www.financialdna.com.

Why Helping Your Clients Know Their Number is an Old School Approach

Have you ever had a client tell you their number? You know, the net worth number that will make them happy. Or that number they ask you to calculate so theyll know theyll be okay?

Focusing on this number is outdated, a mistake and I contend will actually hurt someones chances of reaching their long term goals. Heres why:

You are encouraging your client to focus on the wrong thing. When someone focuses on a future number they arent focusing on what they need to do to get there. Unless they are planning for a short term liquidity event, such as selling a business or winning the lottery, having a big number in their head doesnt do anything to move them toward the goal.

Helping Clients Know Their Number is an Old School ApproachClients may very well use this number to gauge their progress. One of the positive impacts of goals is that they give us a target to move towards. One of the negatives is that when we dont hit them we feel as if weve failed. When we put our attention on missing a goal, our energy is on the failing as opposed to the achieving of the goal.? For example, if your goal is to drive to Denver and you hit a detour and find yourself in Birmingham it doesnt get you to Denver any more quickly by feeling badly youre in Alabama. Instead, if you get a map or use your GPS to guide you to your preferred destination youll have a much easier time actually getting there.

In his Psychology Today blog Ray Williams surveys various research articles looking at how goal setting doesnt work. He quotes L.A. King and C.M. Burton in an article entitled, The Hazards of Goal Pursuit, for the American Psychological Association. They argue that goals should be used only in the narrowest of circumstances: “The optimally striving individual ought to endeavor to achieve and approach goals that only slightly implicate the self; that are only moderately important, fairly easy, and moderately abstract; that do not conflict with each other, and that concern the accomplishment of something other than financial gain.”

Williams continues:? There is an addiction in our culture to getting more, the going for the goals hype is disconnected from peoples’ authentic selves, and their values.there are psychological manifestations of not achieving goals that may be more damaging that not having any goals at all. The process sets up desires that are removed from everyday reality. Whenever we desire things that we don’t have, we set our brain’s nervous system to produce negative emotions. Second, highly aspirational goals require us to develop new competencies, some of which may be beyond current capabilities. As we develop these competencies, we are likely to experience failures, which then become de-motivational. Thirdly, goal setting sets up an either-or polarity of success. The only true measure can either be 100% attainment or perfection, or 99% and less, which is failure. We can then excessively focus on the missing or incomplete part of our efforts, ignoring the successful parts. Fourthly, goal setting doesn’t take into account random forces of chance. You can’t control all the environmental variables to guarantee 100% success.

If youre not buying the danger of goal setting argument, then consider that making the number the goal is the wrong goal. People think that having a money goal will motivate them to achieve it. Actually, they are focusing on the wrong incentive. People may think they are motivated by money or advisors may think clients are, but really people are motivated by what they money will do for them. The money might help them leave a job they hate, pursue a hobby they enjoy, give to causes they believe in, etc.

Build better relationships with clients and do a better job supporting them in getting to where they want to go.The number is a meaningless moving target. I had a client who told me at our first meeting that his number was $5,000,000. When he got to $5 million he said, Oh, I guess that number doesnt really make me feel like Im there. I think its really $10 million that would have me feeling okay. Guess what, $100 million might not make him feel okay. The feeling of security or knowing that well be okay isnt typically related to the number, but rather our beliefs about what okay is.

As advisors, many of us create financial plans for our clients, run projections, make assumptions etc. We help our clients create a road map for their financial futures. Anyone who has been in business over the past ten years knows that our projections are just that, projections. The world often changes in ways we cant anticipate. What we are really doing for our clients by creating a financial plan is to provide them with a plan that satisfies their logical minds and really serves to ease their concerns about the future. When we can calm our clients worries we help them to make much better decisions with their money.

There are real benefits from the financial planning process. As advisors we need to expand our views about all the benefits a plan provides. When we move past the left brain logical benefits and expand our focus to the more right brain behavioral benefits well build better relationships with our clients and do a better job supporting them in getting to where they want to go.

As a 21st century advisor make sure you understand your clients well enough to know:

  • What they want their retirement to look and feel like.
  • The most important people in your clients lives and how they want to be involved with them in the future.
  • The causes important to your clients and what impact, if any, they would like to have on these causes.
  • How strong their internal barometer is for making adjustments in their financial lives based upon whats happening in the world.
  • What they really need from you to make solid financial decisions.

Helping clients to tap into their motivation behind their number will allow us to be much more effective in helping them get to where they want to go. People are motivated by avoiding pain and moving toward their passions. To succeed as an advisor in the coming years it will be crucial to expand the conversation from just the numbers to instead, focusing on intentions and passions. This is what it will take to truly move people closer to their desired outcomes.

Ellen Rogin, CPA, CFP
is the co-author of Great with Money: 6 Steps to Lifetime Success and Prosperity. She speaks and consults to the financial services industry on business building strategies and working successfully in the women’s market. To learn more and to sign up for Prosperity Tips visit www.ellenrogin.com.

Keys to Developing a Client-Centric Approach

If you don’t decide strongly for yourself the favorable outcome you want out of a client/advisor relationship, your success as an advisor will likely come from others’ definition of success.

In most cases those who ask for financial advice already know the answer. Often this is based on their instinct and seeking professional advice delivers not only a confirmation but probably a measure of confidence in terms of trusting their instincts.

The measure of a strong advisor client relationship lies not in the confirmation of things already known but whether or not the advisor has the skills to take the relationship to the next level.

Financial Planning, Financial Personality, Quality Life Planning, Perpetual Income

A primary responsibility of an advisor is to gain an understanding of where the client is going before deciding how to get them there. This level of connection begins the process of taking the relationship to the next level.

Investing time into understanding the journey clients are on can only be achieved if the advisor firstly understands how to communicate effectively with them. Communication is the key that unlocks closed relationships and makes a pathway for questions to be asked in a way that causes no offence and yet elicits answers that go to the heart of how a client wants to use their money.

  • what their drivers are
  • the plans they have for their lives and those of their family
  • their tolerance to risk

Perhaps more importantly such an approach opens the door to insights that inevitably allow the advisor opportunities to upsell in a non-threatening way.

Todays economic landscape is constantly evolving and as a result people are far more cautious about the advice they listen to. Clients are likely to seek advice from many sources but are far more likely to return to those whose advice is based on understanding their journey and knowing how to communicate effectively with them. This is the relationship that not only delivers success for the advisor but peace of mind for the client. A win win.

Visit the Financial DNA website to learn more about how you can develop a client-centric approach.

The Outgoing People Connector

This post is part 4 of our 10 part series on Financial Behavioral Insights from our Financial Performance in the New Behavioral Economy White Paper. The financial behavior insights will help you gain greater self-awareness for recognizing some of your own behavioral tendencies and also those of investors.

Behavioral Insight 4: The Outgoing People Connector

Helen Jones is a 38-year-old mother of 3 children who has a very bubbly, outgoing personality and an active social and community life. Helen openly admits that she has gone to lunch and dinner parties and hears the latest hot tips on what stocks are going up. Often in the excitement of the moment Helen has taken a few bets. She justifies to herself that it will fund a vacation, or this will mean she can have some nicer clothes. However, after a few years of much heavier losses than gains, and the future of her family on the line, Helen realizes something is wrong. Outside help is needed.

Behavioral Insight
Naturally expressive and talkative people will be Engagers who are Outgoing People Connectors. They are able to network with people well but may make uneducated bets from following the herd that sabotage their portfolio.

Communication key: Tell them the names of the people who are involved in the company and management of the investment.

Helen is clearly an Engager with the dominant trait of being an Outgoing People Connector. This means she is constantly networking with others and always exposed to the latest idea or solution.? The Outgoing People Connector will usually be the expressive and talkative type who enjoys mixing with people.

When these networking talents are used well the Engager who is an Outgoing People Connector will learn of some great ideas. The key will be using the ideas wisely. However, often this type of person is quite impressionable regarding what others have to say and will display a herd mentality. We all know that there are people who pick up the latest money-making idea at a dinner party. Everyone else is jumping into a deal; why shouldnt I? Or one of their friends is talking about a hot stock tip.

Further, a struggle for these Engagers who are Outgoing People Connectors is that they are often quite emotionally vulnerable, and they have a desire for instant gratification. So this leads to impulsive decision-making and later regret. While they create the perception of being risk takers, very often they are not. Usually, the quick leap into an investment is matched by a quick leap out with great wealth destruction consequences.

An advisor who is an Engager with the primary trait of being an Outgoing People Connector will be naturally strong at finding out from others what the new opportunities are. However, they need to restrain themselves and only present these opportunities to clients when they have thoroughly researched them. Otherwise, their clients will each have a portfolio with a mix of poor investments.

Learning Point:
The advisor needs to be aware that the Engager who is an Outgoing People Connector will be responding to a lot of up and down emotions with every investment opportunity, and therefore each one needs to be discussed so that wise decisions are made. Ask the client: Tell me who you consult with to get investment ideas? How do you check the opportunities that are presented to you and who is presenting them?

What are your thoughts? For additional information on discovery through behavioral profiles, click here.

The advisor needs to be aware that the Engager who is an Outgoing People Connector will be responding to a lot of up and down emotions with every investment opportunity, and therefore each one needs to be discussed so that wise decisions are made. Ask the client: Tell me who you consult with tNaturally expressive and talkative people will be Engagers who are Outgoing People Connectors. They are able to network with people well but may make uneducated bets from following the herd that sabotage their portfolio.
Communication key: Tell them the names of the people who are involved in the company and management of the investment.
o get investment ideas? How do you check the opportunities that are presented to you and who is presenting them?