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As a Financial Advisor, how do you advise Entrepreneurs

Advising Entrepreneurs, as a Financial Advisor

A good idea, a solid strategy, an understanding of clients genetic makeup could be a ticket to their success. But without this insight – failure is more likely both for you as an advisor and for the client who wants to be an entrepreneur.

DNA Behavior International’s extensive research from recent academic research and studies supports the findings that a person is born with entrepreneurial genes. Providing advice to a client like this could be tricky.

A key for financial advisors is to understand the genetic makeup of an entrepreneur. What makes them tick. All entrepreneurs have similar characteristics. Their minds are genetically wired in the same way. In other words, they tend to depart from established patterns of thinking. Their resilience and appetite for risk are inherent qualities. The more mindful financial advisors are in their understanding of the entrepreneurial mind, the greater the chances of success in delivering sound targeted advice.

The Business DNA research concludes that entrepreneurs have the following genes in descending order of dominance:

  1. Resilience (Measured by the Fast-Paced trait) – they achieve results, manage setbacks and rationally take quick action.
  2. Risk Taker (Measured by the Risk trait) – confidently take risks and tolerant of losses.
  3. Creativity (Measured by the Creative trait) – innovative with ideas and seeks to differentiate.
  4. Work Ethic and Focus (Measured by the Pioneering trait) – pursues goals and is often ambitious and competitive.
  5. Charisma (Measured by the Outgoing trait) – outgoing, connects with a lot of people and influences people to follow them.

Entrepreneurs are confident, passionate and determined to succeed. They are comfortable taking the risk and will invest heavily in their business venture, maybe to the detriment of other areas of their life.

However, being genetically predisposed towards entrepreneurialism doesn’t guarantee that an individual will become an entrepreneur and then whether they will succeed. It is not just enough to be born with the entrepreneurial gene, people must do something with it. Financial advisors need to be able to dig below the surface to understand the dynamics of the entrepreneurial client and then can target advice.

Behaviorally smart financial advisors should be:

  • Comfortable being a user to test the financial validity of an opportunity.
  • Confident enough to challenge ideas and ask questions.
  • Trustworthy enough to encourage yet confront when the entrepreneur’s ideas are spinning out of control.

When financial advisors understand that Entrepreneurs are driven by the need to succeed and control their own destiny, they are less likely to put them in a client box. They won’t deliver mundane advice but will recognize the importance of getting inside the mind and genetics of an entrepreneur.

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

2017 in Review (#104)

Sometimes, what we need is a reminder of what we already know rather than learning something new.

Because many of you (myself included) are on vacation this week, I thought that, instead of writing a new post, I would highlight the top Friday Forwards of 2017 and give a quick summary of each.

The Human Element: In many ways, our focus on technology and Artificial Intelligence (AI) is causing us to lose our ability to effectively communicate with and relate to each other as humans. It doesn’t always feel like progress.

18 Summers: This post affected a lot of parents. Many wrote to tell me that it inspired them to make similar plans with their family.

BS of Busy: Saying we are busy has become a cultural crutch. Being busy doesn’t make us happier or more productive.

Bad Week: The story of how Dr. Mary-Claire King was able to push forward during the worst week of her life, leading to a medical breakthrough that has saved millions of women’ lives.

Freedom to Fail: Important lessons from a soccer coach on how we all need to have room to fail, learn from our mistakes and grow.

Beautiful Day: This is the story of a man who created a wonderful legacy for his family.

Tri-It: Reflections and lessons learned from running my first Olympic Triathlon, including why you should practice on stage.

RV Reflections Part 1 and Part 29 lessons learned about life and business from a 10-day RV trip with my family though Yellowstone and the Grand Tetons.

Burning Bridges: Why it’s never a good idea to burn a bridge, even when you need to walk away from a relationship.

Carpe The Diem: The improbable story of how my son and I ended up together at the greatest Super Bowl in history after I decided not to be a hypocrite and take a chance.

Quote of the Week

“Any idea, plan, or purpose may be placed in the mind through repetition of thought.”

Napoleon Hill

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Playing it Safe (#96)

Last week, I wrote about how having the freedom to fail is an integral part of growth and how many parents are failing this test. In response to last week’s post, a friend sent me an article titled, “The Fragile Generation.” The author opens with an anecdote of a teen boy who was chopping some wood to make a fort with his friends. An onlooker notified the police who arrived at the scene and “took the tools for safekeeping to be returned to the boy’s parents.”

The author writes, “We told a generation of kids that they can never be too safe—and they believed us.”

This need to be “safe” has evolved part and parcel with the explosion of the internet and social media.  Many of the things that have a very low probability of bringing us harm are sensationalized online and in the news; because we see it happening on the internet and how horrible it is, we start to question our safety. For example, the leading cause of death in the US is an unhealthy diet, not any of the things we read about in the news. Yet … we aren’t blocking the doors to McDonalds.

Our inclination to seek “safety” removes a degree of risk-taking in our lives that is necessary for getting us out of our comfort zone, such as travelling to new places, trying new foods and interacting with people of different background and beliefs.

Our physical need for safety has also evolved into an emotional need. This comes at a very high price.

One emotional cost is that more and more people today are delaying – or altogether missing – adult milestones; landmarks that come with a certain degree of risk, such as buying a home/living on their own, getting married or having kids.

If we try to ensure that we, or those we love, will never get physically or emotionally hurt, it’s unlikely that we’ll lead fulfilling, prosperous lives.

This is a big problem; one that is not easily solved. That being said, I believe one area where we can all start to be more growth-minded and a little less safe is in our communication and feedback. Often, we don’t say what we really mean. It’s either safer not to or it helps us (or the recipient) maintain the status quo.

One of the best frameworks I’ve come across around feedback is from Kim Scott’s new book, Radical CandorBe a Kickass Boss Without Losing Your Humanity. Radical Candor, she argues, should be the default form of both personal and professional feedback.

One of the quadrants in the Radical Candor graph that gets less attention, but is often our automatic form of commutation, is “Ruinous Empathy.” This is when you care about the other person and their perspective, but you don’t tell them what they really need to hear, which is likely to be a tough message and/or the truth as you will see in this sample video.

According to Scott, Ruinous Empathy comes from our desire to try and control other people’s feelings, something we should not and cannot do. While it may come from a good place, it is also a misplaced, misguided effort. It’s about being safe.

This week, let’s encourage open and vulnerable communication. We may get our knees skinned – we maybe even get rejected outright — but at least we’re living authentically, growing and working toward empowering ourselves and others.

Quote of the Week

“A ship is safe in harbor, but that’s not what ships are for.”

John A. Shedd

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Acting on Feedback (#70)

Giving and taking feedback is a popular topic these days. Companies are going to great lengths to solicit more feedback from employees and customers – especially those regularly turning to social media.

In my many discussions with high-achieving individuals and companies, one thing that consistently sets them apart is their willingness to not only receive candid feedback, but to then act on it.

Acting on feedback is harder than it seems. It means that we need to first accept what people are telling us about how we can improve and overcome our inherent cognitive dissonance. It also means admitting that we don’t always have the best ideas and be comfortable giving credit to others. These are hallmark signs of a great leader. Individuals who want to do and be better don’t care where the best ideas or suggestions come from.

Here are two examples of CEO’s who have recently accepted and acted upon customer feedback:

If you want to be an effective leader, it’s vital that you demonstrate a willingness to act on feedback. Doing so conveys that you are approachable, solution-oriented, and are looking for the best ideas—regardless of where they came from and irrespective of credit.

When people see and experience this positive feedback loop, they will be even more open and honest with you or your company; it’s that open, honest communication that leads to major breakthroughs within an organization, and it costs you nothing.

To do for next week: Act on someone else’s suggestion, let them know, and see what happens.

Quote of The Week

“I think it’s very important to have a feedback loop, where you’re constantly thinking about what you’ve done and how you could be doing it better. I think that’s the single best piece of advice: constantly think about how you could be doing things better and questioning yourself.”

Elon Musk

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Dysfunctional Boardroom Behavior – 5 Steps to Manage

A dysfunctional board of directors can cause multiple challenges for any organization.
Industry leaders, celebrities, and subject experts often make up Boards. Many of these individuals are not accustomed to having their opinions challenged. So while they may add credibility, there’re not always a mutual fit.

Dysfunction arises when:

  • Individual behaviors, cognitive biases, decision-making styles and communication styles are not in sync.
  • Decisions are inconsistent or simply not made.
  • Board members have conflicting agendas.
  • There is lack of leadership from the Chair, no mutual respect and lack of trust.
  • Individuals react inappropriately under pressure.
  • Boardroom bullies are not managed or members just sit back and watch.

A 2009 Gallup Research paper revealed a 70% productivity gain when groups of people working together understood and were able to close the behavior performance gap. This study holds true today.

Every board plays an integral role in the success of the organization. When Board members are dysfunctional and not engaged, the flow on to the organization can be significant.

5 Steps to managing boardroom behavior.

  1. Commit to being behaviorally smart in the boardroom.
  2. Use a validated natural discovery process to assess key personality traits.
  3. Use the outcomes to build a balanced relationship between all players.
  4. Appoint a highly skilled facilitator to work with individual directors to understand communication and behavioral styles.
  5. Commit to building a culture of understanding, acceptance, and respect.

Understanding different personalities can lead to better decision-making. Directors cannot fulfill their responsibilities in a boardroom where a few dysfunctional members are allowed to control the meeting or obstruct board decision-making.

Advise Your Advisor On How To Advise You On Financial Advice

Advise Your Advisor On How To Advise You On Financial Advice

Your Advisor’s not telling you that your long-term financial goals may be out of sync with the level of risk you’re willing to take in order to reach them. No risk, no reward, right? It’s time to advise your advisor on how to advise you on financial advice.

According to a recent survey by asset manager Natixis, while about 73% of investors polled said that pursuing returns is more important, nearly 84% also said they would choose safety over risk.

So how can you balance increasing assets vs. tolerating risk? And how do you relate this to your advisor? For financial advisors, this balance presents a challenge as well. How your advisor is able to accurately assess this is by delving into your core natural risk propensity and tolerance, part of your financial personality.

The opportunity is to educate your advisor on realistic expectations and strategies to best reach your goals. And while he or she has the tools and training available to them in order to help you along, not everyone is onboard with matching your individual personality behaviors with your personal financial goals.

Where advisors often fall short is not identifying all of the risks associated with your particular situation: investment, financial, and personality risks. This is an important factor because under stress, you might not be as clearheaded or know all the ins and outs of a given situation in order to rationally process what’s happening and make behaviorally smart decisions. You very well may be operating based on your core natural behavior.

As you’re transitioning jobs, getting married, buying a house or preparing for retirement, you’re under a lot of financial stress – worries regarding accumulating wealth may push you into new, riskier investment decisions. Then add market volatility, unforeseen personal events or escalating college tuitions or long-term health care costs, or the emotions associated with being in the “withdrawal stage” rather than “accumulation phase”, and you’re pushed according to your core natural behavior. In many cases, this mix of stress and decisions based on your reaction to that stress is not beneficial for the long-term success of financial goals.

Your financial advisor needs to be in a position to manage not only your portfolio, but protect you from your natural self. This is an important step in the investor/advisor relationship and necessary to your financial success, because under stress, your risk behavior is less predictable without an objective tool. You may want to jump at every opportunity, or over-spend, or take no action at all. This is where knowing your behavioral insights and communication style, help your advisor help you and your significant other.

In many cases, a couples’ behavior will be directly opposite one another. So there is an added challenge for your advisor to know the behavior of each of you in order to address both in different ways.

So, how do you uncover these behavioral risks?

You need an objective, third party system so that your behavior, under stress, becomes more predictable and therefore can plan accordingly. Then, in combination with your experience and wisdom, discovering your financial natural behavior will allow you to become a behaviorally smart investor and provide valuable insights to your financial profile. It’s an enlightening process to see if your advisor is right for you, and then in turn, to see if you’re a match to them. And who knows? With these insights, you may find out a lot more about yourself and your partner, than you’d previously known.

Be sure to discover all of your risks originating from your natural core behavior. It’s the only way to protect you, from yourself. And it helps establish a trusting relationship with your advisor to create a financial plan that is as unique as you.