Can Behavioral Diversity Strengthen Financial Advice?

– First Published on Nasdaq –

When financial advisors bring unique backgrounds and perspectives to the advisory process, including behavioral diversity, it can strengthen financial advice.

That’s not only a win-win for advisor and client, but it can also be the edge advisors need and the edge savvy clients are looking for. In fact, delivering consensus advice that results in mediocre outcomes will cease once advisors and clients recognize the importance of understanding behavioral diversity.

One advantage of adding behavioral diversity to the planning mix: Financial advisors can provide advice that delivers wealth creation supporting a client’s individual life goals. This advice will truly focus on the uniqueness of the client.

Behavioral diversity overdue

I wonder how much of the financial services industry has robust practices in dealing with behavioral diversity in their hiring processes? But I question how many have extended this approach and consideration to the financial advisory exchange between advisor and client?

Current diversity discussions tend to focus on gender identity, sexual orientation, age, race, ethnicity, religion, marital status and health & disability status, but little debate occurs around behavioral diversity in decision-making.

And behavioral diversity concentrates on the idea that, within a workplace, different types of behaviors work better. Why then is there little or no discussion about behavioral diversity in the financial planning process?

If behavioral diversity is defined as encompassing different and varied behavior patterns exhibited between individuals, consider these questions:

  • How can a financial advisor quickly get below the surface to understand the behavioral diversity of their clients?
  • How can advisors deliver advice that is unique and satisfies their client’s behavioral diversity?
  • How can advisors and clients have a meaningful communication exchange based on one another’s behavioral diversity?

The key is to reveal a client’s varied and unique way of thinking, not just in terms of life goals but also how clients make financial decisions and their emotional reactions to markets.

I would suggest that most of the financial planning industry can understand their clients’ bias and risk factors. But behavioral diversity refers to the traits and characteristics that make people unique. Without addressing that individuality, can you ever really achieve the “secret sauce” of truly top-flight financial advisors?

People react differently to an extraordinary range of issues and, in the process, exhibit significant behavioral diversity. This is especially true when money is involved. The emotional pull of money brings out the best and worst in individuals. This, for any financial advisor, is a potential minefield.

Objective rather than subjective

With this in mind, let’s reflect on previous articles published in this space about using a validated behavioral profiling process to identify significant levels of inherent behavior. Adding such functionality to your existing tech stack to reveal communication styles and behavioral diversity can go a long way to helping everyone feel heard and seen.

Once you have automated this aspect of the advisory process, you can get to the good stuff, planning to increase the wealth that furthers both the mundane and the exciting life goals.

For the financial planning industry to succeed, it is not enough to break down walls and start growing a behaviorally diverse profile of each advisor and client. Behavioral diversity must be understood and managed on an ongoing basis so as not to be superficial. Authenticity may be an overused word these days, but it is the critical goal here.

Onboarding this extra edge

Creating change in the financial advisory industry requires that several elements be put in place:

  • A genuine commitment to investing in data-gathering to reveal a client’s behavioral diversity.
  • The transparency to build trust through advisors-client matching.
  • Education programs that help advisors understand behavioral diversity.
  • Recognition that behavioral diversity is not tokenism and is more than and goes deeper than current DEI initiatives. (It is an “and,” not an “or.”)
  • Look at all aspects of the diversity pipeline.

Consider the difference. On one hand, a number of meetings with a client before you can start delivering a tailored financial plan and, even then, it may never be truly objective or well-focused on their individuality. On the flip, imagine a client spending 10 minutes to complete a questionnaire that delivers a deep understanding (for them and for their advisor) of every aspect of their behavioral diversity.

See Leon’s other writings for Nasdaq here.

Capitalize on ESG Investing Via Your Tech Stack

– First Published on Nasdaq –

The 1990s introduced “the triple bottom line” as a measure of the integrity and sustainability of a business. Investors wanted to know their money was doing something meaningful, understanding that the “triple” in question is profit, people and the planet. The concept evolved into Environmental, Social and Corporate Governance (ESG) and is increasingly mainstream, less niche.

In fairness, the ’90s didn’t have the technology to support ESG. But now advisors can have validated information at the touch of a button, if they have first invested in tech and data (gathering). For instance, today’s advisors can have a client complete a simple, scientifically validated questionnaire that reveals essential information. This enables the advisor to make accurate, appropriate investment suggestions that match the client personality and risk tolerance, as well as their ESG inclinations.

In support of such, every financial advisory business has some form of tech stack. If it’s easier, think of it as the data ecosystem – all of the tech the firm invests in. Still, not everyone has a plug-in that leverages that tech stack by revealing important behavioral data on clients or delivers behaviorally focused scripts on guiding clients. For those without such, tech makes such a plug-in easily accessible, without reinventing the existing tech stack.

Amp up advice with tech

Connecting technology with financial advice and behavior enables advisors to work more effectively with people.

Tech stacks that match clients to advisors and not just safeguard against advisors putting clients into high-risk or low-risk investments can help advisors fully appreciate what ESG means to clients. Behaviorally understanding clients and taking a figurative walk in their shoes is always beneficial in other ways too. This is when a financial advisor and client can truly develop a solid partnership with a mutual view of the world (including as it pertains to ESG investment needs).

Talking recently to a colleague about this very subject, I was interested to learn that a large gap often exists in the tech capability of firms and the very financial advisors who want and need real-time nudging data on and for clients. While advisors are struggling to keep all the balls in the air, my colleague’s firm steps into the gap to work with advisors to understand the tech stack at their fingertips, so they can use it effectively. (And why not maximize that tech investment?).

One such area: Understanding the client’s need to invest in ESG businesses. What’s behind the “whys,” among other questions. Is it to feel good, look good or to genuinely see such an approach delivering not only wealth creation but a quality life?

For advisors to listen and understand the behavioral shift in investors (their clients!), they need to better connect people to technology and business requirements in order to get investors to accurately connect. (That’s where the aforementioned discovery questionnaire pays dividends.) This enables advisors to deliver targeted advice that satisfies ESG requirements for the investor.

An advisor’s most significant impact must surely be in connecting – via technology – investor feelings to the investment strategy that matches their emotions and still creates the wealth they require for life goals. When advisors get this right, it delivers an incredible capacity to bring about positive change in investors’ lives.

THAT is the bigger picture of the advisor-client relationship – and one that is easy to lose sight of, when focusing on the proverbial trees.

Where ESG comes from, is going…

The shift toward ESG doesn’t always come from an analytical brain; more often it originates from feelings. If this past year has taught us anything, it’s that we are all taking time to consider the next season of our lives, including what we will focus on. What we might do differently.

Thus, savvy advisors are alert to the market for ESG-based investing as it becomes both increasingly popular and more complex, primarily due to upcoming regulatory and compliance changes.

Even now, there are indications that all providers of financial products must consider client ESG preferences when deciding and advising the suitability of investments. Firms and advisors who have already invested in tech that fosters tailored, behaviorally focused client and portfolio management are ahead of that curve – already meeting or exceeding standards that have not even been implemented yet.

In-depth data at an advisor’s fingertips is what this market demands, especially when it comes to popular niches like ESG investing. Advisors can provide more informed, focused and client-specific client guidance. On the flip, clients can make more informed, less-stressful investment decisions, while also seeing that they are part of a process in which they are “seen” and heard and which they can be confident is transparent.

These are some of my insights regarding ESG and technological solutions; I’d love to hear your insights on the same.

A Healthy Marriage: Human Advisor Plus AI for Your Tech Stack

– First Published on Nasdaq –

Human interaction deprivation really is a thing. Never before have people all over the world been subjected to various forms of isolation, including lack of human interaction or touch.

As the months of the global pandemic drag on, I’ve been thinking about that and about what life will look like after this forced experiment in deprivation.

For one, businesses the world over will need to recover and build resilience for the future, and many are looking to do so by using lessons learned during the pandemic. This approach will help future-proof them, at least to some degree, while also delivering innovation that drives business.

If nothing else, this pandemic “season” has highlighted the importance of people. Without the human ability to change and find new ways of working, many enterprises would have failed. I bet you know myriad examples of people pivoting and adapting well during this challenging time.

My financial advisor proposes…AI

The age of AI – artificial intelligence – fascinates me. To date, I’ve envisioned automation replacing people. But over these past months I’ve been considering where the balance between machines and humans should reside.

Technology is advancing at such a rapid rate but there are indeed times I want to deal with a person. I want to know that those who provide me with a service want to get to know me as an individual. I don’t want to be just captured data!

My financial advisor was recently telling me about a new focus his firm is taking in terms of delivering financial advice. He demonstrated a feature that helped him know what types of conversations to have with me during market volatility. These new features enable the firm’s tech stack to create an even more personalized experience for me as an investor-client.

If I opted in, it would require me to complete a quick questionnaire, the outcomes of which would give my advisor an in-depth connection beyond the screen. That is, insight to many aspects of my financial personality.

Behavioral tech stack evolution

Armed with insightful data, my advisor would have a window into my reactions to market volatility and he would be prompted, if need be, to connect with me to ensure I’m sticking to my life goals around wealth creation and not panicking and selling or rushing to buy more, more, more. It also would provide him with insight into how much guidance and support I needed from him, or not, how best to communicate with me, and more.

This coming together of AI and human interaction would go a long way toward providing me with a personalized service – without taking anything from the fast, automated experience we all now expect. In fact, it would enhance that.

My test run with this new approach demonstrated how efficiently technology can provide these insights, further enabling my advisor to deliver the unique service and service-delivery to which I am naturally inclined. In this way he could provide highly individualized service to every client.

And lest you think that is just an “extra” – a public relations or customer service gimmick – pause to realize that his advice and my receipt of his advice would literally be improved. That’s not just a client feeling better about their advisor relationship; that’s a client getting better advice, processing it to maximum benefit and realizing the results…right there in their portfolio.

People still matter!

Ultimately, there are many considerations about the impact of automation, not the least of which will be including our wish to interact with others (or not!). When tech stacks contain behavioral data – information that goes to the core of who I am, including how I wish to be interacted with – there can be a happy, healthy marriage between tech stacks and humans.

There also is significant data that the one-two punch of stellar human advice aided by behaviorally smart AI provides strong ROI. The advisor, firm, client and client’s accounts all benefit.

When financial advisors have access to my financial personality, my financial motivations, pressure points and bias, their approach and service can genuinely be tailored. So, no, AI is not supplanting humans. Instead, having AI as part of your tech stack supercharges the advisor and what he or she can provide clients.

Stop Trying to Delight Your Investors

In the world of financial advice, many clients think they know themselves and their money better than they do and certainly better than the advisor does. How does this thought impact the role of a financial advisor? If you know nothing about behaviors then clients with this ‘know it all’ attitude will be difficult to advise and manage.

Most successful financial advisors invest in understanding client behaviors. They ensure they have the insight and tools to be able to understand how people think, make decisions, and want to be communicated with. As a first step getting to understand how to speak with clients is important. DNA Behavior Discovery provides in-depth insight into the way people communicate and how they wish to be spoken to.

It takes just a few minutes to complete a discovery. The outcomes prepare the way to start the advisor/client conversation.

Why Getting to The Root of Behaviors Is Key to Addressing Them Head-On?

So, what to do? One important key is to know yourself. There is little point trying to manage a tricky client if you allow them to push your behavioral buttons.

So, first step, get to know your own financial personality and communication style. Remember, as an advisor, there will be many conversations with clients where you need to understand the importance of managing the behavioral differences between you and your client and how to navigate any bias either you or your client might have. Comprehensive self-knowledge will inform ways to flex in order to keep the conversation going.

The wide-ranging DNA Behavior Natural Discovery process takes just 10 minutes to complete, can be delivered in real-time to any of your devices, and delivers 200 insights, 64 behavioral factors leading to 1 unique style (your client).

Successful financial advisory practices don’t get involved with a ‘one size fits all approach’. They know the importance of delivering accurate advice that reflects the needs of the individual. To satisfy the ‘know your clients rule’ advisors must be able to manage the behaviors of their clients on an individual basis.

The Behaviorally Smart Organization

As businesses emerge from the global pandemic self-isolation/remote working season, many will be looking at ways to increase their business flow and maintain their existing clients. Advisors will have relied solely on online platforms to stay connected. Clients who might not have previously considered working with their advisor using online tools could well be open to this new approach. Organizations wishing to demonstrate their understanding of the behaviors of their clients will be looking to data collection, online platforms, social media, and other tools to collaborate with their clients, build their business and improve their service offerings. One such way is to use DNA Behavior to work with your entire organization to match advisors to clients. What better service offering can there be than one that has such a deep understanding of their advisors and clients’ financial and communication personalities and is able to deliver a customized behaviorally smart matching approach to their advisory business?

Moving the Needle to Build Advisor/Client Relationships

DNA Behavior will work with your entire organization NOW to prepare you to build an enhanced service offering post coronavirus. It’s time to take a fresh look at how this virtual working has offered solutions to improve service offerings. Going back to the same old same old just won’t cut it. Clients want something different as do advisors. Now’s the time to take a deep dive into understanding the personalities of the people that make up your business. Whether an advisor or client. Whether receptionist, the board, or the C suite, we will set you up to face the ‘new world’ by using our extensive tools to improve your bottom line.

BeFi API is A Must for Broker-Dealers

A robust Behavioral Finance platform will enable Broker-Dealers to meet the fast-growing need for mega-customization. Such a platform will not only provide insights into how clients invest but also reveal habits to how Broker-Dealer employees and investors spend, set goals, communicate, work, live, and make decisions. These insights become transformative when powering core Broker-Dealer workflows such as:

• Advisor-client matching programs (which advisor is suited for which client)

• Optimizing marketing spend (who wants steak dinners vs. Super Bowl tickets)

• Sending customized behavioral driven marketing content to clients

• Developing customized onboarding playbooks

• Arming advisors with the perfect behaviorally generated scripts to deliver at the right time

• Predicting fearful and opportunistic clients on a real-time basis with Market Mood™

To learn more, download our E-Book.

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.

Get Below the Surface When Going Remote

Get Below the Surface When Going Remote

(If you missed Your Intuitive Supplement for Online Business, it would be helpful for you to read that first.)

With increasing use of remote communications, during the coronavirus pandemic and beyond, it is important for advisors to ensure regular client communications are reliable and effective, no matter the communication platform.

This is an added reason to get below the surface, using a validated behavioral insights tool to “check” your own communication and that of your client(s). It’s also an opportunity to introduce a proven point of difference into your advisory business.

Your unique selling proposition – one of your points of differentiation and added value: A behavioral finance technology that will allow you to know your client quickly at a deep level and give you an immediate supplement to your intuition.

Have every client complete the Financial DNA Natural Behavior Discovery process online. In just 10 minutes, you will have their financial personality at your fingertips.

This will reveal a range of important factors that will help you deliver quality – in person or remotely, at times of crisis, like the current isolation, or not.

The depth of insight you/your client will get

  1. How the client wishes to be communicated with. Know in advance how best to manage your communication style to theirs. In these troubled times and beyond, this customized communication approach is vital. Example: If you are a confident speaker, you may find your client’s communication style requires you to dial down your confidence, which might seem aggressive to them.
  2. How likely the client is to panic and want to shift financial life goals and sell at the wrong moment. From their financial personality, you will see whether this approach of panic and flight is momentary or inherent. In either case, you can mediate and keep the client on track and focused on life planning goals.
  3. You will see in-depth how best to behaviorally manage your client’s emotions. Money is a huge source of emotional energy. Add market volatility and a major global pandemic scare. This is a recipe for panic and poor decision making. With behavioral insights in hand, you have a depth of insight to manage and advise in this climate. (Not to mention knowing and understanding your own reaction to the current climate.)
  4. Moving from financial advisor to financial counsellor or coach. These uncertain times require advisors to lay down their “sales pitch” and become counsellors, confidents and wealth mentors. Financial DNA reveals such a depth of behavior you can quickly assess how to advise and manage clients based on their very individual characteristics. (Based both on your own and their insights.)
  5. Getting to the core of the client’s decision-making biases. We all have behavioral biases; both you and the client. But we also now understand what those biases are and how best to keep them under control. Do you assume you can move from confident “face” meetings to remote advising – on Zoom, Skype, or otherwise? Do you think that because you’re skillful and successful in a meeting room that those intuitive skills translate via video conferencing? That kind of unchecked personal bias could seriously impact your business – and client portfolios.


Individuality versus success

We all respond differently to the same circumstances. So, if you want to keep your business open and successful and your clients happy and confident to know their money is in good hands, lay aside your individualism and pay attention to your clients’ personalities.

Know unequivocally how to adjust your behavior and personality to best communicate with clients – even when away from the familiarity of your office and beyond “face” meetings. Again, get to know yourself now before you assume you’ll be great online.

Here’s how to begin…

Select a client and get them on board so you can match both of your behaviors to understand the differences and how best to manage them. And use our Financial DNA Market Mood app to measure in real-time clients’ market fear or exuberance as the markets gyrate. This instant behavioral insight arms advisors with data to behaviorally manage clients during times of market turbulence.

So not only will you have a deep understanding of the clients (and your own) behavior, you will also have minute-by-minute access to a client’s reactions to current markets. Even with the most basic use of FDNA and Market Mood, you can use the information to pick up the phone and allay the fears of those clients who might panic.

How we can help

In the spirit of giving each other a hand up during these difficult times, try Financial DNA to reveal your financial personality on us, free. See below to get your free trial and/or book a 15-minute chat with one of my advisors right now to discuss how we can help you.

Stay safe. Stay home. And stay maximally engaged with your clients, even when your work with them can only take place remotely.