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.

Best Practices for Conducting Virtual Interviews

In the wake of COVID-19, many companies around the world have shifted their hiring process. While virtual interviews used to be a preliminary step to sort through the numerous candidates you might have for a position, in order to move on to the next step which is an in-person meeting, today, everything that has to do with acquiring talents for your company has moved to be remote and virtual. Your responsibility as a hiring manager is to set up a solid process that serves you and your potential candidates. It is not only a matter of identifying the right fit for your company but more importantly having a perfect understanding of their personalities, behaviors, and communication styles.

To help you develop a reliable and sustainable process, here are our top recommendations for conducting successful virtual interviews.

Preparation Is Key

The key to conducting successful virtual interviews is preparation. You need to familiarize yourself with the position you are hiring for, its requirements but more importantly, the key characteristics and personality traits that this position needs. As the interviewer, you are to not only judge the candidate’s skills and ability to do the job, but also assess their personality, and how well they will fit within your organization. Are you looking to fill a leadership position or a support one? Should the right fit for this job be a born leader and initiator, or a detailed reflective thinker?
Unless you understand your own behavior, your candidate’s behavior, and that of the manager they will be reporting to, your interview process will be lacking pertinence and effectiveness.

Define Your Interview Strategy

We all know how bad it looks when a candidate comes to an interview completely unprepared. It sends the wrong message, gives a bad first impression, and seriously diminishes their chances of getting the job. However, did you know that it also works the other way around? An interviewer who is unprepared and lacks a clear strategy can miss an opportunity to make a positive first impression and have their lack of preparedness reflect on the company’s image as a whole.
Define your strategy. Define the inherent behaviors you are looking for in a candidate as well as their skills. Prepare your questions accordingly and make sure that by the end of the interview session, you have a perfect understanding of their capabilities and behaviors. Or else, how would you be able to assess whether or not they’re right for the job?

Discuss Your Company Culture and Values 

To this day, many interviewers still miss the opportunity to talk about their company culture and values during the first interview. The truth of the matter is, an organization is an eco-system that functions in perfect harmony thanks to its components, AKA, employees. Even if you find a potential candidate with the right skills and experience, if their culture and values do not align with those of your company, your partnership with them is bound to fail. An effective way for you to assess their alignment with your company culture and values is to understand their behavior and DNA style.

Develop Your Rating System

When conducting virtual interviews, one thing you might notice is how fast the process will go compared to in-person interviews. Shifting everything to a virtual format saves a lot of time and enables you to have multiple candidates to consider pretty quickly. When that happened, your responsibility is to develop a standardized rating system by which you assess your options for the position. When developing your rating system make sure that you take into consideration not only the qualifications of your candidates but also their character traits and behaviors. An easy and accurate way for you to run a team report and project how well certain personalities will fit within your team is our DNA Behavior tool.

Provide Information on the Next Steps

As a final step and good practice for conducting your virtual interview, make sure to inform your candidates of the next step and what they can expect going forward. Whether you intend to make a decision on the spot or have built a multiple steps interview process, communication is key.

Position Your Board And CEO For A Corporate Governance Win

There have been enough inquiries, reams of paper, and stacks of books written, yet we still see shocking headlines outing bad (often criminal) behavior in the corporate world. With so much information available to address corporate governance, why is there still no understanding that the behavioral styles of executives and the resulting actions are central to the issue?

Corporate Governance includes practices and procedures by which a company is guided, balancing the interests of its many stakeholders, and ensuring there is a framework to attain agreed-upon objectives while adhering to all laws and regulations. In recent years, the U.S. Federal government has turned the spotlight on corporate governance (e.g., Sarbanes-Oxley).

Corporations rushed to find solutions to demonstrate their governance was strong. They seemed to be addressing risky behaviors. But many continued to miss the point. It’s not cynical for boards to question the rapid growth and success of a business; sometimes success has a direct correlation with rogue behavior. Yet questions aren’t asked, because success often equals bonuses.
Micro-management is not necessary. What is required are clear value statements, sound governance and risk management practices. Also needed is a board with a majority of independent and experienced directors asking tough questions, and a culture of risk-taking that is balanced. Most importantly, corporations need the behaviorally smart insight to know people before numbers. In other words, get to know who is likely to go rogue.

Position Your Board And CEO For A Corporate Governance Win

(Hear Behavioral Strategist Hugh Massie talk about Operational Risk Management.)

Board members are required to be even more accountable than employees regarding their oversight, and to hold key executives to account. The day-to-day running of the organization belongs to the CEO and management team.

Two crucial relationships in the governance debate are between the CEO and board, and the other between the CEO and CFO. The latter, in some respects, will feed into the former in that, if the CFO is vulnerable to bullying by an intimidating, strong-minded, and willful CEO, information flowing to the board will be compromised. A behaviorally smart CEO will know the value of a good relationship with their CFO, and ensure their skills and behavior complement each other. The board has a responsibility to ensure both CEO and CFO have access to and a trusting relationship with the directors.

When inappropriate due diligence has been applied to these two relationships, managerial functions will, if not watched closely, endanger the business. The CEO is responsible for overseeing the execution of the board’s directions and policies. If the board has, for instance, hired a CEO whose credentials shine but whose behavior is questionable, they will have difficulty building a transparent relationship and establishing trust.

Boards need to be ever-alert to CEOs who adopt risky practices as new business opportunities arise and the business environment improves. Likewise, they need to be alert to the CEO who is unduly pressuring other key executives. Has your business got the governance structure in place to deal with a CEO who fails the transparency test or becomes the rogue employee?

The more the board members understand the strengths and behaviors they bring to their roles, the better able they will be to ensure there is a robust strategy in place to handle inappropriate behavior.

Potentially 5 percent of the workforce includes employees that are a high-security risk. The cost of all types of fraud is a staggering 5 percent of turnover, per the 2014 Global Fraud Study by the Association of Certified Fraud Examiners (ACFE).

While larger businesses are investing more in cybersecurity and other monitoring programs, virtually nothing is being put toward identifying and monitoring costly employee behavior risks from the CEO down. The problem is that many of these insider threats are already in your business and the situation is stealthily gaining momentum. The Global State of Information Security Survey 2015 recommends that 23 percent of the annual spend on business security be directed to behavioral profiling and monitoring of employees.

Research shows that the following problems are caused by human behavior:

Combinations of human behavioral factor outliers and external environmental factors (e.g., financial difficulty) trigger emotions causing negative behavior toward the company.
Combinations of employees with too similar or too different styles working in a high-risk environment cause internal control issues.
A key part of the solution is the deployment of a validated personality discovery process, providing insights into hidden, hard-wired traits and a reliable prediction of where security or compliance risks exist.

The employee behavior review using personality assessment methodologies should be uniformly applied to every employee in the business from the top down to distill hot spot areas. The high-performing leaders down through the sales and operations teams to the disgruntled bookkeeper are not exempt – new hires, or old guard – every individual including board members.

Using behavioral insights, management can dynamically match employees with specific environmental conditions to determine their potential response. They can also discern the degree to which such responses could create rogue behavior and negative actions toward the business. Lastly, management can apply these insights towards talent re-allocation, employee evaluation, team development, and improved hiring processes.

Effective corporate governance begins with the directors in the boardroom. It includes the relationship between the board and the CEO. Understanding behaviors and interrelationships could actually be the key to delivering high-quality governance in any organization, rather than being seen erroneously, as it often is?as a soft approach not worthy of investment.

The advantage gained by institutionalizing the behavioral insights process combined with strategic oversight processes and procedures can and will deliver an environment that minimizes or eliminates rogue behavior. Don’t be part of another headline heralding: Corporate Governance Fails Again!


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

Why not complete your own complimentary profile and see how to leverage your behavioral profile for success? Click here.

Measure Behavior for Better Hires

Measure Behavior for Better Hires

Whether your organization is up and running or you are an entrepreneur facing your first hire, you may have valid questions around the hiring process. Is this the right time to hire? Do I have a recruitment process that fosters ongoing employee engagement? And if you really want to be poised for hiring success, youll hopefully include behavioral insights in your hiring equation:

  • Have I benchmarked the typical behavioral characteristics needed for specific roles?
  • Am I clear about the talents and the behaviors I expect from the hire?
  • Do I have quality behavioral questions to use during interview?

The cost of making the wrong hire is clear. One study cites 69 percent of employers in 2012 reported that a bad hiring decision placed a strain on their company. Twenty-four percent of companies reported that a bad hiring decision cost them well over $50,000, with a larger 41 percent of businesses reporting a figure of over $25,000. Other findings put the figure at over $40,000 to replace an executive employee, and anything from $7,000 to $10,000 to replace an entry- to mid-level employee. According to Entrepreneur magazine, citing a Robert Half survey of financial professionals, in 95 percent of cases a bad hiring decision can affect office morale. Likewise, Gallup estimates that there are 22 million actively disengaged employees costing the economy as much as $350 billion per year in lost productivity. These costs are in addition to the cost of replacing a bad hire. When you know 87 percent of business issues are people-related, its not hard to see how important the hiring process is. According to a Deloitte Insights article from 2015, culture and engagement is the most important issue companies face around the world. Consequently, the hiring process must include:

  • Benchmarks of inherent natural behavioral talents and communication styles.
  • Benchmarks of talents required for different roles to the candidates talents
  • Benchmarks of the typical behavioral characteristics needed for high performance in specific roles, so the right people can be hired for that role.

This insight would not only deliver the right people for the job, but also enable more effective matching of individuals to teams and line managers. This same sort of matching also can provide value by aligning customers with your organizations representative(s) who can best serve them. Too often, people are employed for their skills and knowledge, with little or no attention paid to identifying a candidates true talents – those natural behaviors which continually and predictably repeat over time and are often not easily seen in an interview. When a highly-validated discovery tool is introduced into the hiring process, it not only reveals talents, behaviors and communication styles – all of which are measurable,it also reveals how the individual will respond under pressure. This insight allows the interview process to include specific behavioral questions that drill down to a candidates masked behavior, which likely only surfaces under the weight of a busy workload or, worse, in conflict with colleagues. Without a behavioral discovery process, over time and with pressure, the natural behavior emerges, and the candidate may not perform as hoped. Anyone involved in the hiring process also has blind spots and biases that likely form part of any failure to uncover the natural behaviors of the interviewees. Having a strong hiring process supported with robust discovery processes and strong behaviorally based interview questions will flag warning signs around an otherwise talented candidate. It could be that their moral compass when tested is lacking. It might be that under pressure or in a season of fast change to the organization they get left behind and this opens the potential for them to go rogue. Smart employers will know the value of having this information up front.

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


HIRING – What You See May Not Be What You Get

Hiring is not an exact science, but there are ways to mitigate getting it wrong.

Twenty-seven percent of employers in the U.S. who reported a bad hire said that a single bad hire costs more than $50,000. (According to a CareerBuilder survey of 6,000 hiring managers and HR pros worldwide, 2013.) The internet is rife with tales of how expensive a bad hire can be.

But the bigger issue, and the one that has the potential to cause long-term damage to any organization, is the impact a bad hire has on productivity and morale. Matching candidates talents to the specific role, the team culture and conducting behavioral interviews to get below the surface, is more likely to get you to the right candidate for the role.

Sixty percent of hiring managers report that bad hires dont get along with co-workers, according to the Society for Human Resource Management.

Keep in mind that candidates will have a mixture of natural, learned and cognitive behaviors. These insights are measurable and, using a validated tool, can be revealed at the outset of the hiring process. Still, it isnt enough to fill a vacancy. The fit to the team, the organization, the culture and the up-line management, are significantly more important than the skill set a candidate brings to the table.

The lesson for CEOs: Dont hire yourself. Just because the interview went well and you connected does not translate to a fit for a role. Hire to the job. Hire to bring the talents you dont have to the organization.

And for you Recruiters? If you want to hire well, make sure you have a benchmark of the typical behavioral characteristics needed for high performance in specific roles. Not only do you need benchmarks for the role, you also need them for the team, department and decision makers. Without this information, the hire will be based on resumes, references and gut instinct.

Your reputation is riding on it. Candidates will be watching for vacancies at organizations who are known for their integrity, culture and treatment of their people. They will be more interested in the role than the salary. They will want your company name on their portfolio of work. They will want to boast they work for you.

Assessment Centers should take recruiting seriously too. Spend time with candidates. Its not enough to hire those that look good on paper and fit all the benchmarks; they also need the right character traits. If you are recruiting to a highly-pressurized role, you need to know their potential to manage others under pressure. Is there risk associated with the decision making in the role? How will the candidate respond under pressure? Are they going to become a rogue trader (for example)? Time spent in an assessment center provides insight into the extent a job applicant meets these qualities.

What to do?

  • Use a validated talent discovery system to get under the surface and discover the natural strengths and struggles.
  • Compare the outcomes to understand the candidates team fit and how they will interact with the leader and team members.
  • Have a list of powerful questions for conducting a behavioral interview based on the candidates natural strengths and struggles.

The most effective investment that a business can make into the hiring process, is to devote time and energy into benchmarking the talents and behaviors required for different roles. This makes for a smoother and more effective hiring process as you match candidates to roles.

To learn more, please speak with one of our DNA Behavior Specialists (LiveChat), email, or visit DNA Behavior