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Investment Committee Membership: Professional Significance Isn’t Enough

– First Published on Nasdaq –

Investment Committees have historically been formed based on members’ professional experience. But in today’s climate, would these committees stand up to the scrutiny of diversity, equality, and inclusion (DEI), I wonder?

Like many areas of the financial services industry, much lip service is paid to DEI, yet despite accepted benefits in terms of profitability and productivity, the sector remains primarily white (~80 percent) and male (~80 percent).

Sadly, this is true of many industries and their governing bodies or committees reflect that. Here, I am focusing on financial investment committees and their responsibility to make well-informed, non-emotional decisions.

Money decisions, behavior

Most investment committees have an apparent mission: Serve as stewards for assets of the organization they represent.

Let’s assume that those forming these committees are fully cognizant of what DEI means. One would expect to see a range of experience and talent represented. But remember, each member would bring a decision making and emotional behavioral style with them.

Whether thinkers, initiators, analyzers, persuaders, strategists, or spontaneous, all will have a natural decision-making behavior that needs to be revealed and managed. The complexity of the committee’s decisions certainly doesn’t need behavioral variability to take it off track.

As individuals, these representatives probably make flawless decisions – but put them together in a group to form a committee that makes significant investment decisions, and behavioral diversity in decision making takes over. Emotion takes over. Bias steps in. And the behavioral pull of money pollutes the decision-making process.

DEI + behavioral diversity

So, where does DEI fit in this scenario?

DEI must go beyond socio and ethnic representation – that’s a given. It must also include behavioral diversity. Members possessing differing viewpoints, different decision-making approaches, creative attitudes to money, and a deep understanding of the emotional pull of money must be represented.

Investment Committees have historically been formed based on members’ professional experience. But in today’s climate, would these committees stand up to the scrutiny of diversity, equality, and inclusion (DEI), I wonder?

Like many areas of the financial services industry, much lip service is paid to DEI, yet despite accepted benefits in terms of profitability and productivity, the sector remains primarily white (~80 percent) and male (~80 percent).

Sadly, this is true of many industries and their governing bodies or committees reflect that. Here, I am focusing on financial investment committees and their responsibility to make well-informed, non-emotional decisions.

Money decisions, behavior

Most investment committees have an apparent mission: Serve as stewards for assets of the organization they represent.

Let’s assume that those forming these committees are fully cognizant of what DEI means. One would expect to see a range of experience and talent represented. But remember, each member would bring a decision making and emotional behavioral style with them.

Whether thinkers, initiators, analyzers, persuaders, strategists, or spontaneous, all will have a natural decision-making behavior that needs to be revealed and managed. The complexity of the committee’s decisions certainly doesn’t need behavioral variability to take it off track.

As individuals, these representatives probably make flawless decisions – but put them together in a group to form a committee that makes significant investment decisions, and behavioral diversity in decision making takes over. Emotion takes over. Bias steps in. And the behavioral pull of money pollutes the decision-making process.

DEI + behavioral diversity

So, where does DEI fit in this scenario?

DEI must go beyond socio and ethnic representation – that’s a given. It must also include behavioral diversity. Members possessing differing viewpoints, different decision-making approaches, creative attitudes to money, and a deep understanding of the emotional pull of money must be represented.

Let’s look to a four-part solution:

  1. Be committed to removing biases and ego.
  2. Uncover the behavioral patterns of committee members, concerning their approach to money.
  3. Engage a tech solution: preferably a highly validated one that also can provide adoption via API, enabling firms to easily layer it into their existing tech stacks.
  4. Secure a behavioral solution that reveals financial behavioral variability in individuals and groups.

When the financial services industry comes to terms with the importance of measuring the impact of human behavior on a range of transactions and decision-making that require human judgment, they will fulfill regulatory requirements and, bonus, build their businesses. The winning methodology: Pursue DEI in earnest, plus go one step further by layering in the functionality to assess and leverage behavioral diversity.

The marriage of these two disciplines is a passion of mine. Please reach out if you or your firm has a perspective or experience to share regarding the synergy of DEI and behavioral science.

See Leon’s other writings for Nasdaq here.

Money: The Greatest Gravitational Force Impacting Decision Making

– First Published on Nasdaq –

I’ve asked many advisors over the past few years, “How much time do you truly spend understanding the emotional behavior of your clients?” On average, the consensus is about 10%.

I then ask, “How much time do you spend understanding your clients’ identity?” this question is met with a blank stare.

The reality is that we know very little about the behavior of our clients, and, consequently, how they make decisions. Making assumptions about who the client is and what their true motivations are is a risky approach. Ultimately, as advisors, our ability to objectively understand how our clients are uniquely “wired” and then building a corresponding healthy relationship with them represents 80% or more of our success on their behalf. And our own success is riding on theirs.

When you think about it, the behavioral dynamics start from the moment a prospect makes contact with your firm. Because of the digital world we live in, that could even be before the first meeting. Therefore, it’s central to the ongoing success of the relationship to deliberately address behavioral differences early.

Deconstructing emotional decisions 

Over the past few months, I have spoken to many industry leaders in what we call Identity Conversations. There is one consistent issue: How to work with clients who make emotional decisions.

All agree that money is the most significant gravitational force impacting decision-making and that there is no doubt that the emotional pull of money can hijack decision-making. The question is how to recognize what it is that triggers these emotional responses.

For me, there is no doubt that understanding identity is key to working with clients. Identity reflects their X factor and their unique algorithm, as well as their values and purpose. Unlock this, and you will know your clients’ motivations, and this will reveal how and where and for what reason they want to build their wealth.

When market movements cause clients to become emotional, you will see what they are inherently trying to protect – their identity. That is the convergence of their talents, passions and life purpose.

Lessons from a challenging season

We don’t know what the world will ultimately look like when this pandemic has left us (and it will). What will the economy look like? How will our working lives have changed? Will our priorities have changed? And perhaps the biggest one of all: What will we have all learned about ourselves and our decision-making approaches during this challenging season?

As advisors, industry leaders or individuals, it’s time to prepare for what comes next. Check yourself before you wreck yourself: Figure out your own identity and those of key players around you. Form an opinion as to how the gravitational pull of money impacts your decision-making and prepare well for the next season via identity empowerment.

And if you are looking for a safe place to start an Identity Conversation, I’m always happy to help you kickstart such.

See Hugh’s other writings for Nasdaq here.

Financial Advisors + ID + EI – What Does It All Mean?

It’s an age-old question. How can financial advisors break through emotional barriers to help clients with their finances?

In recent Identity conversations with Canon Financial Institutes Executive Director Certifications, William Trigleth III, Hugh Massie,  Chairman and Founder of DNA Behavior Global, talked about the importance of financial advisers understanding Emotional Intelligence (EI) and Identity (ID) as a starting point to knowing how to manage advisor/client behavioral differences.

Trigleth acknowledged to Massie how the application of the DNA Behavior discovery tools helped advisors identify their emotional hotspots and revealed vital areas where clients’ financial conversations would need to be managed. 

An essential part of Identity is getting to grips with our emotional intelligence. It becomes crucial when financial advisors are discussing finances with their clients. Nothing disturbs emotional equilibrium more than conversations around money.

You can view a short version of the Massie/Trigleth conversation here:

Or head to our YouTube Channel to view the whole Identity conversation.

But I’m getting ahead of myself. Let me explain!

Over the past four months, Hugh Massie has been conducting online conversations with industry leaders worldwide. The discussions have circled the importance of understanding Identity regardless of the industry they lead. 

A large part of the conversations has revealed how closely aligned self-awareness of one’s own Identity and emotional intelligence are. 

So, what is emotional intelligence?  

In his book A Dictionary of Psychology, Andrew Colman defines Emotional Intelligence this way:

Emotional intelligence (EI) is most often defined as the ability to perceive, use, understand, manage, and handle emotions. People with high emotional intelligence can recognize their own emotions and those of others, use emotional information to guide thinking and behavior, discern between different feelings and label them appropriately, and adjust emotions to adapt to environments

There is no doubt financial advisors need to be able to manage behaviors and reactions that their clients have to market movement. Without this understanding, set goals won’t be achieved.

A great starting point is that advisors know themselves first. This self-awareness leading to self-management keeps the advisor very professional. Still, it also ensures their insight positions them to see and manage their clients’ behavior.

‍Remember, the pull of money is a highly emotive subject. Therefore, the more insight an advisor has into their own and their client’s response, the more likely they are to navigate clients through periods of anxiety.

So how can you increase your emotional intelligence? That’s easy. Head over to our website and complete a FREE trial. This is a perfect starting point, and if you want to talk to one of us about the outcomes – no problem, we can do that.

Maybe you think you would benefit from an Identity Conversation with Hugh Massie – let’s see what we can do to set that up.

I will continue to write something about these Identity interviews with these industry leaders. What they are sharing is GOLD. 

Interesting for us is the common thread, i.e., when individuals know their Identity, they can manage money conversations at a whole new level. As a result, they and their clients tend to make significantly better decisions – about money and finances and other things – that could negatively affect them.

Identity Conversation Takeaway: Adaptability Comes with Knowing Your Identity

Over the past few months, Hugh Massie sat down with some of the most influential consultants and entrepreneurs. Through their identity conversations, they all shared the impact DNA Behavior and knowing their identity has had on their work. We also asked Hugh some of our own questions on identity, here are our takeaways.

Adaptable, Nimble, Responsive Comes from Knowing Identity

One of the most important notions Hugh discusses with Nikki Evans during this interview is the notion of adaptability.

We are in a world today that is extremely dynamic. The foundations of the world are extremely different. The effect that technology has on our everyday life is tremendous. Our ability to connect much easier has changes the way we communicate and work together.

We are also in a world that is financially complex and extremely interconnected. Because of the constant change in our environment, the notion of adaptability is a must. We’ve seen it happened numerous times over the past years. Businesses used to last for centuries, today, they don’t even make it past a generation. Whereas many factors can contribute to it, a company that doesn’t embrace adaptability will always struggle to sustain itself.

When we speak of environmental changes, we don’t only refer to changes inside of a business, but also inside of people’s lives. And therefore the ability to flex is extremely important. Change can also be perceived as a chance to seize opportunities. As part of knowing yourself and your identity, you’d be able to take an opportunity when you see it.

In this day and age, you have to be able to make timely impactful decisions, all while knowing for sure that it is the right decision. We all have to be clear about our identity, our purpose, the impactful decisions we make in life, and how we execute them.

If we look at this on a bigger scale and from a business’s perspective, you will see that once individuals are aware of their identity and behavioral style, and able to seize the opportunities they are presented, their performance would have a tremendous impact on the business.

There’s Power in Individual and Group Identity

We’ve covered the topic of individual identity and how important to familiarise ourselves with our behavioral style. In addition to that, there is a concept of group identity and group purpose that is worth looking into.

You see, not only do individuals have an identity, groups and businesses have an identity as well. The team identity might revolve around the leader and who’s been brought up to the team, but it also can revolve around the product or service the business offers.

Although the world is moving towards a direction where it is less product-driven and more human-centered. So the business’s identity is drawn from its people.

It’s even reflected in today’s marketing efforts. The Marketing campaigns that get the most traction are the ones that address the human factor of the business and discuss founders and team members as opposed to just product and value delivered.

Final Thoughts

We’ve said it before and we will say it again. It is all about human behavior and identity. Your team, no matter the type of business that you run, has got to embrace its identity and be clear on its purpose. It is less about the bottom line and the results and more about clarity of purpose.

You see when you’re truly living your identity and your purpose the money will follow. The pursuit of money by itself may not be as fulfilling as you may think. It actually tends to be the one approach that destroys wealth instead of preserving it.

Genuine Identity and Purpose: The Money Will Flow

– First Published on Nasdaq –

How does knowing your identity impact how you relate to other people? What part does it play in boosting confidence? Throw the emotional and gravitational pull of money into the mix, and where does knowing or not knowing your identity fit?

There is no doubt that understanding your identity reflects who you are at the core. It informs the direction of your life. It highlights the importance of your communication style, whether professional or personal.

Here, we speak of identity as your inherent or innate passion and purpose and the associated behaviors, good or bad.

People, then numbers

It may go without saying that we are all different and being able to manage differences enriches relationships. That can be particularly impactful in the financial services industry, where the emotional pull of money is front and center.

In fact, understanding the identity of clients is foundational to the advisory process. The same is true of advisors knowing their own identity. On a day-to-day basis, advisors need to be able to adapt their own communication to those of others. For example, they need to know when to be direct, inclusive, soft, a listener, or a counselor.

When knowing identity focuses on the advisor-client relationship, walls come down, creating a much healthier framework for delivering advice. Advice that is likely to be more accurate and lasting. Clients know when an advisor genuinely knows them and cares about their life goals, plans, and wealth creation. They know when advice is more about people than numbers.

Money decisions are different

I’m passionate about pioneering the understanding of money behavior. We of course all have innate behaviors and understanding those behaviors – especially as pertains to decision making – is particularly challenging but also particularly revealing when it comes to money.

Money impacts every aspect of our lives. Money can power our lives positively or negatively, regardless of the amount of money we have.

But what I’ve confirmed over the past few years is that when individuals know their identity, they can put money to work for them positively. As a result, they tend to make fewer decisions – about money and finances but also about other things – that impact them negatively.

When you know your identity, you know your talents, and you know your inherent behaviors, leading to wealth creation via applying your skills and building meaningful, supportive relationships. Whether you are an individual investor or leading a team or organization, it’s essential to understand the energy of money and people’s relationship to it.

Identity as info & armor

We live in a world that is highly dynamic and interconnected. Whether the speed at which we all work, the many ways technology has shaped what we do, or the deluge of opportunities coming at us, we need to be able to flex. To adapt at a moment’s notice.

So, if identity is what shapes and protects us, we understand who we are and our inherent reactions, and we can flex and adapt securely. We are less likely to make bad decisions. Instead, we see opportunities for what they are and choose whether to grab them or walk away.

A cautionary note for advisors and industry leaders is that the environment changes regularly inside a business and in people’s lives. Unless identity is known, you have no way of anticipating how clients will respond to life challenges. In reality, you are advising and leading the (figuratively) blind.

As an advisor, knowing your own identity is transformative. It increases and clarifies the quality of the questions you ask your clients, the observations you make, and the guidance you provide them – including how and when you communicate with them. You know the importance of getting to foundational stuff that means the advice you give or leadership style you adopt is suitable for that individual in that scenario at that time.

The clarity of identity

Whatever your life circumstances are, discovering a robust identity and then living it is the pathway to accelerating your advancement. There are no magic bullets here. There is work and focus involved.

Once you get the clarity of your identity, your confidence will dramatically increase. Confidence is the Number One influencer of performance. The journey will be highly positive, and through it, you will be a better person, at work and at play. And, as an advisor, you will have a better business.

It’s true for both advisors and clients: Genuinely live your identity and your purpose, and the money will follow.

See Hugh’s other writings for Nasdaq here.

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.