The New Behavioral Paradigm for Financial Planning Risk Measurement

Release of the New Financial Talent DNA Report

The topic of risk profiling is quite rightly gaining increasing attention all around the world in the past 12 months. The turbulent markets, increasing compliance obligations and the need to add value are bringing the topic of client and advisor behavior to the forefront, and will do so on an exponential basis in the coming years.

Financial Planning Risk Management

Based on our extensive research the key point that advisors need to recognize is that the questionnaire format underpinning the validated psychometric model is equally as important as the perceived output from the process.

The customary approach to addressing risk in the financial planning process is to measure investment risk propensity on a singular and situational basis. The strategic weakness with such investment risk profiling instruments is that their singular nature perpetuates financial planning as being solely about investment management and investment products.

addressing client financial personality

Since 1999, we have advocated the development of holistic financial planning that can assist clients to achieve their life and financial goals. We believe that this broader viewpoint embraces far more than just investment risk and moves the paradigm to financial personality. It also necessitates the objective and reliable measurement of how personal financial clients will behave on a long term basis and points very clearly towards educating them on how their behaviors will impact on their financial wellbeing and relationships.

In order to assist advisors interpret and manage a clients investment, financial and relationship behaviors across 10 key behavioral dimensions we are pleased to announce the launch of a new 1 page Financial Talent DNA Report. Following considerable research and feedback we have simplified the client reporting to be more investment, financial and relationship risk focused than our traditional Wealth Mentoring reports, which are also still available. A sample of this new 1 page report is shown below.

Financial Planning Risk, Risk Tolerance, Financial Risk Factors

In addition, through our Financial DNA Summary Report which accompanies this report we provide more information for assisting advisors to interpret and facilitate the client through financial planning discovery. In this report, we provide insights on the clients Investment Portfolio Parameters based on their natural level of emotional comfort in taking investment risk. This information can be easily linked to the advisors investment allocation model.

Investment Portfolio Parameters

We believe for our current users of Financial DNA that our new reporting structure will help provide a more valuable client experience and also enable more robust discussions with your clients. For advisors considering using Financial DNA our desire is that you now have a compelling behavioral discovery solution which is Platinum Standard in terms of a highly reliable psychometric construct and simple advisor-client experience.

When we started developing the Financial DNA Discovery Systems in 1999 we knew that there needed to be a paradigm shift in the validated psychometric model for constructing risk profiles because many used a traditional scoring model. Notwithstanding, some of the traditional models may be psychometrically validated they nevertheless had 3 fundamental problems:

  1. The questionnaire models only allowed for uncovering situational investment risk propensity and not investment risk tolerance, financial risk behaviors and relationship risk behaviors;
  2. The situational nature of the questionnaire format inherently leading to the data not being reliable for long term portfolio development;
  3. Even if the results were consistent over time they would nevertheless be skewed to the high side because of the scientifically proven human tendency for the participant to self-promote by scoring themselves higher than what they are in reality.

Our decision was to utilize a Forced Choice Assessment Model because it has been academically proven through independent research to be a far more accurate and reliable predictor of behavior than the Traditional Assessment Models that ask the participant to rate statements from 1 to 5 or True/False.

Research has now shown that the traditional questionnaire format may lead to the over inflation of scores by one standard deviation, which is statistically very significant. This exposes a very material risk for advisors who over rely on an instrument that uses a traditional questionnaire format and then do not conduct a proper behavioral interview with the client.

To learn more about Financial DNA and the next generation of behavioral discovery capturing all dimensions of financial personality using a highly validated and reliable psychometric model, please visit

If you would like more information or to undertake a trial please email us at

Engaging Customers to Inform Growth Strategies

customer engagement case studies, employee engagement case studies

There is endless chatter around engaging customers; understanding the consumers headspace; how they are using the cloud; understanding their buying behavior and how to shift focus to engage this new breed of customer to improve business bottom lines. IT departments and Marketing heads are likely left asking what it all means for their business. But they know they need to get on board in order to leverage customer insight to inform growth strategies.

To cut through the confusion the first step is to realize that there is an essential difference between winning market share and engaging and retaining customers. Going after market share as a priority is between business competitors and rarely involves the customer. However, engaging customers through gathering and understanding behavioral intelligence creates a high-value relationship, one that customers see as having worth.

To provide a tangible solution to this problem, more and more organizations are realizing the power of behavioral profiling; using this approach to not only understand how to communicate more effectively with customers but also to understand their decision making style.

With technological advances such as this it is now possible to understand, like never before, your customers behavior and communication style. This holistic knowledge of your customer will fundamentally improve how your organization interacts with customers. Taken a step further it allows businesses to match sales people and advisors to the communication and decision making style of their customers.

For more information, visit the Communication DNA website.

10 Behavioral Strategies for a Successful Year-End

With the end of the year?approaching, it’s time for a review of your business performance in 2012.

What were your favorite strategies for improving personal and business performance this year? What did you accomplish and what are your goals for 2013?

The following 10 behavioral strategies?will?lead you through to a successful year-end and help you plan for the new year.

  1. Demonstrate customer appreciation based on knowing what motivates each customer.
  2. Complete an organizational talent review to determine whether each of your employees is using their unique talents.
  3. Review your team members’ communication styles as well as the strengths and blockages within your team.
  4. Evaluate current levels of customer engagement in your services.
  5. Know what motivates each employee to implement a non-financial employee rewards program.
  6. Build customer workflows that manage each customers expectations and meet their service needs.
  7. Review your leadership legacy.
  8. Learn how each of your family members likes to be communicated with.
  9. Address the amount of risk you are currently taking in your investment portfolios.
  10. Reflect on your Quality Life goals.

To learn more about our DNA Behavior solutions for addressing these areas, contact us at

5 Great Reasons for Understanding Customer Communication Styles

The landscape for businesses is becoming more fast-paced, high-tech and competitive with each year. Customers are expecting personalized offerings based on their interests, customized experiences based on their preferences and efficient service delivery on their terms. They want to resolve problems with a simple phone call… or by sending an email, starting a LinkedIn discussion, Tweeting or online chatting. Solutions should be available quickly and without the expense of much effort.

customer service experience, client engagementWhether it means expanding the social networking team to ensure every post on their Facebook page is responded to or taking a closer look at the User Experience to optimize navigation of their website, more and more businesses are putting processes in place to meet the increasingly high demands of customers. And theyre not only doing this to ensure business growth ? businesses are taking these steps to safeguard their survival. These businesses understand the importance of keeping customers happy. They know that serving the customer as the customer wants to be served produces a boost in brand appeal as well as the bottom line.

Reaching customers through the right channels and having a user friendly website may make it easier for the customer to connect with your business ? but how is your business doing once the customer actually connects; when interacting with the customer?

When the customer received a response to their support ticket did it make them feel relieved or stressed, and did the email campaign you just sent out provide just the right amount of information or discourage recipients with too much?

Unless you know the communication style of each customer you wont be able to answer these questions. Think about how technology can help you solve this problem by identifying the communication style of each customer and employee across the business to deliver an automated process for customizing the customer experience and increasing customer engagement.

The benefits of having this behavioral data about your customers are many, but here are some of my favorite reasons for understanding customer communication styles:

  1. Its makes customer segmentation simple. Knowing the communication style of customers allows for automatic segmentation of your lead and contact base. Some customers will want very detailed information while others will want a few bullet points. When you know which customers are which, you can split them into their appropriate groups and serve them accordingly.
  2. You can provide a customized experience. One size fits all may work sometimes but custom-fit is preferred always. When you know each customers communication style, you can easily structure your approach and message in a way that appeals to them. This will raise their level of interest and engagement.
  3. Customers will like talking to customer service. Now that you know the communication style of each customer and employee ? you can match them.? Imagine if each time a customer call or email came in, it was automatically routed to an employee with a similar communication style. The result is a more productive and comfortable conversation. This is a great way to make your customers feel more connected to your team and therefore your business.
  4. You can make workflow management work for each customer. Setting up workflow processes can be a guessing game. Should leads receive monthly calls from the sales team or a marketing email each week? When you know the service preferences of each customer you can say goodbye to guesswork because workflow guidelines for each of the 4 communication styles have already been defined. Allocate your time and money to the most effective strategies for each.
  5. You can market intelligently. As someone who is passionate about marketing and advertising, I have always had an appreciation for businesses that make an effort to truly understand their customers as the customer will be better served as a result.

    Communication DNA: Customize Your Messaging
    The more clarity you get on what matters to your customers, the easier it is to design, develop and position targeted marketing messages and advertising campaigns. So as you uncover behavioral information about your customers, systematically apply it to each level of your marketing programs. This includes simple segmentation for email campaign lists, customization of email templates and an overall measurable improvement in your marketing performance.

What are your top reasons for understanding customer communication styles?

To learn more about customer engagement with Communication DNA, click here. Contact us to get started at

If you are a current Salesforce CRM customer, Communication DNA is also available in the Salesforce Appexchange.

Investors Eat the Behavior of Advisors

When discussing financial planning issues, there is so much talk about investor behavior. However, rarely does the discussion get to the advisors behavior. Our recent whitepaper: Dealing with Financial Planning Risk ? Directing Portfolio Decisions or Navigating Human Behavior opens up the discussion on the importance of advisor behavior as the advisor is the behavioral guide of the client.

Have you ever considered how much the advisors behavior impacts the investor’s performance? The reality is that advisors are human as well. They have strengths and struggles which impact their decision-making and how they respond to the financial markets. Even more important is that advisors need to realize that their behavioral style could be different to that of the clients, and therefore they have to be aware of what this means. ?You can also learn more by visiting the following blog by Samantha Allen:?

Research shows that some advisors themselves have a myopic loss aversion resulting in extreme caution. Then there are other advisors who have extreme over confidence and can be blinded about the potential dangers of the strategy they have recommended. There are also advisors who just get stuck in their own strategy because that is what they know and believe in but do not know how or when to adjust. Ultimately, the problem can become that the clients portfolio starts looking like the advisor.

Our experience has also been that if the advisor has high levels of personal awareness then they have a greater chance of managing the influence of their behavior on the clients portfolio. This ability is increased if the advisor uses an objective behavioral discovery process for themselves and the client. This will help the advisor more clearly and confidently navigate the differences.

If you take the graphic below which compares the behavioral style of Chris Coddington? as the advisor and Helen Jones as the client you can see the differences that have to be navigated.

Financial DNA Comparison Report

Chris is a driven pioneer and risk taker who will be focused on performance. But will he push Helen too far out of her Content lifestyle zone? Will Helen be able to control herself when she hears new ideas at the dinner party?

To learn about your style, complete your Financial DNA assessment and then start seeing how different you are to clients. Please visit

If you would like to access the whitepaper: Dealing with Financial Planning Risk? – Directing Portfolio Decisions or Navigating Human Behavior“, click here.

Management Principle: System Irrationality

Today’s management term is geared toward team and corporate outcomes but imagine if we applied the principle below to our communities and to government at large? How would it change life around us?

The truth is most of the topics we discuss in this blog also apply to our families, neighborhoods, and most all other contexts of life. I hope you think beyond corporate as you contemplate today’s principle.

System Irrationality. System irrationalities reveal themselves when we think, plan and build processes one way, then get unexpected outcomes as a result. One clear and predictable example is the way in which we incentivize people. If we hope, for example, to engage directors who will develop next generation leaders through a deliberate mentoring approach as part of a succession process, but only incentivize them with financial reward for increasing business, then we shouldn’t be surprised when no leaders emerge to replace them. It’s human nature. We will reap what we reward. Imagine Navy Seals who are trained to guard and protect themselves only, when under attack. How effective will they be at achieving complex missions? They are rather shaped with engrained thinking to protect their companions first and worry about themselves last. They accomplish almost superhuman feats as a result.

As professional leaders, we can have access to similar results by utilizing the appropriate human incentives. When organizational leaders understand and employ the secrets of selflessness, true teamwork will occur that will have lasting, sustainable corporate impact.

Coaching questions: Where are you experiencing system irrationalities and getting less than desirable results? What inspirationally-based human incentives can you apply to cultivate hoped-for outcomes?

Read more coaching principles from Dean Harbry on the Internal Innovations website.