Discovering the Silent Killer

Indifference. Websters dictionary defines this word as lack of interest, concern or sympathy.

J.D. Powers and Associates just released the results of a survey that found 31% of financial advisors were indifferent about their work and have no strong attachment to their firms.? Without a connection to their firm, these advisors are likely to be open to discussions with competitors.

There is a silent killer lurking in the midst of our organizations. Could a third of your clients be classified as indifferent?

http://dnabehavior.com/Company%20Values%20Resize.jpgOne of the biggest challenges with identifying indifference is that we usually judge our clients through our own viewing lens.? That is not always objective. Or we point to our annual client surveys.? But there is a risk that you can have lots of data and not see what it is saying.

Indifference can translate into business risks.? The first is that the client will not stick to their financial plan and that will present problems for you in the form of difficult conversations and unrealized goals.? In addition, the client will not add money to their account or provide any referrals.? Finally, the client is open to conversations with other advisors and the ultimate risk is losing the entire relationship.

What can you do to combat the silent killer?? Start by asking a lot of questions to get beneath the surface of a client. Human differences are really the hidden obstacles in any relationship.? It takes time but you will uncover the behavior and emotions that lead to authentic engagement.? Next, be sure to adapt your communication style to that of your client. You might be excited about sharing all the market data when in reality your client is happy with the concrete, bottom line results. Finally, customize your products and services to your client.? A lengthy newsletter is not necessary to clients who prefer picture, graphs and bullet points.

All of these recommendations may seem small. But small changes produce big results.?? Keep in mind that it is in understanding behavior that leads to customer engagement.? When your clients are connecting with your firm at a deeper level, there is no room for indifference.

Learn how you can objectively uncover and navigate the different financial personalities of your clients by visiting the Financial DNA website.

Regulator Getting Into the Minds of Consumers

During the past 10 or more years the field of behavioral finance has been gradually moving from theory and sporadic discussion to a more main line topic with increasing attention in the last few years being given to its practical application in every day consumer decision-making around financial products and solutions.

Now, behavioral finance has been given a significantly increased level of importance at a practical level with the UK regulator publicly expressing its views. In this regard, the Financial Conduct Authority in the UK has recently issued Occasional Paper No. 1: Applying behavioural economics at the Financial Conduct Authority – Click here to view the paper.

behavioral finance, financial regulator requirementsClearly, this paper signifies that the UK regulator will be taking a greater behavioral finance direction in its overseeing of financial services. The subject of human behavior in financial services can now progress past investment risk profiling to knowing all of the behavioral biases that a consumer has in making financial choices, and relating those to product suitability.

The paper details the need for advisors to get deeper into the minds of consumers for helping them manage their behavioral biases to reduce mistakes and also mitigate the mismatch between a products declared function and the consumers actual use. More specifically it points out how advisors and clients are mostly blind to their biases and mistakenly trust their intuitions. Even advisors familiar with different type of biases find it difficult to spot how their biases affect a particular decision. In effect, the paper highlights the need for understanding the broader financial personality at a deeper level which is the inherent foundation of Financial DNA. This goes beyond the traditional risk profile which is singular in nature.

The question is how long will it before other regulatory authorities go down a similar path? Given the increased focus of regulators around the world on product suitability it may not be that long. The UK regulator in the past few years has been a clear leader with others looking to what they do.

What does this mean for advisory firms? In essence, firms will have to revisit their advisory processes particularly in the area of knowing the clients behavior. There are existing regulations and compliance obligations for knowing the client and product suitability. However, firms will have to do a lot more in their discovery work in the future to meet what will be increasing regulation and oversight in this area. Perhaps, it is time for firms to start preparing now? Our experience, is that firms who provide a great discovery experience are able to enhance client engagement. So, whilst the behavioral approach of the regulator may seem like a burden it can be converted to a sustainable revenue opportunity through greater client engagement.

To learn more about how the different behavioral biases of each investor and advisor can be discovered using an independently validated process, please visit the Financial DNA website.

Hugh Massie Presents at Genworth: Navigating Financial Personality Risks

How are you navigating the different behavioral styles and emotions of your clients?

In this inspiring presentation, Hugh Massie shares compelling research and behavioral finance insights to illustrate how discovering your clients’ financial personality (i.e. their Financial DNA) will help them to manage the investment, financial and relationship risks that have a significant impact on their financial planning.

3 Keys to Get You Ahead of Your Competitors

Do you feel as though you are always running to catch up?? Here are 3 Keys to get you ahead of your competitors.

financial advisor tools, financial advisor solutions, client engagement tips, financial behavior, behavioral finance, financial personality, client behaviorAdvisors want to deliver excellent advice, they want to see satisfied clients, and they work hard to inform themselves to be able to give this level of service.

Often they are running to catch up with the latest social media, latest gizmo, the latest must read book that remains sitting on the night stand unopened for months, the latest financial industry guru declaring how best advise clients? All very frustrating and unfulfilling but more importantly, unproductive.

So what is the answer to becoming a behaviorally smart advisor?

  • It is all about navigating human differences to match the advisor to the client and provide appropriate solutions for them.
  • It is all about uncovering all of who a person is
  • It is about knowing who your competitors are AND what they have to offer

Some simple thought provokers:

  • Have a conversation with your clients, forget about advising or selling for a short while – just converse
  • Share something of your story, it will be relaxing and itll encourage them to talk. As the advisor, you are the leader: leaders go first
  • Many people often won’t initiate sharing something personal, but are far more likely to do so in response to someone sharing some of their story first
  • Listen for clues, watch for reaction, understanding their needs and values
  • You are now building trust – you are now laying foundations upon which to match a product /advice

3 Keys:

  1. Uncover. Use conversation to build trust by identifying the human behaviors which lead to the differences in your style with the client and within family groups. This will remove the hidden obstacles, and build more confidence in the advice you give.
  2. Navigate. Understand the power of the written, spoken, visual word and make sure the client hears/understands the message.? If you understand your clients communication keys, thats brilliant, but if not focus on the cues provided to you, then you can navigate them through your message/s.
  3. Match. If you are part of a larger group, use this information to match advisor to clients to more easily gain? deeper levels of engagement. If you are in a small practice look for ways you can adapt your approach to match the clients needs.? Add an additional ingredient by ensuring you as the advisor and your client have shared values.? Non-aligned values produce poor results.

For more information on how you can Uncover, Navigate and Match to build sustainable business performance, visit the Financial DNA website.


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Whats Certain is Uncertainty

As a financial advisor, you have done a good job of helping your pre-retired clients dream, define their ideal goals and manage a portfolio to achieve those goals. But that may or may not have anything to do with their reality. Why?? Because so much of retirement requires managing the mental, social and physical aspects and each of your clients is a unique individual.financial personality, behavioral management, retirement planning

Helping your clients plan for retirement requires you to use a whole brain approach to financial planning.? Consider these facts recently released by the Employee Benefit Research Institute: 57% of U.S. workers surveyed reported less than $25,000 in total household savings and investments excluding their homes.? 28% of Americans have no confidence they will have enough money to retire comfortably.

Beginning with the left-brain side of the business, you are already starting with a deficit: a lack of money and confidence.? Pre-retired couples assemble their budgets and that action alone can bring on a lot of uncertainty. Like the markets, people dont like uncertainty. How does it feel to live on the withdrawal side when your clients have always lived in the accumulation phase?? What about the possibility of another Great Recession?? Are health care costs really that high?? How do I know how much to plan for home repairs?

That left-brain conversation can take a sharp turn into the right-brain hemisphere.? A client may confide in you that even though they never liked their job, at least it gives them a sense of purpose. The reality is that when people don’t feel they are doing something meaningful, they become bored and pessimistic. Failure to address things like how much time they will spend together, changes in household responsibilities if one retires before the other, or how their golden years will be affected by financial issues such as supporting an aging parent can quickly remove the luster and shine from their golden years. Couples can, and probably will, have different priorities and attitudes about retirement and that identifying those differences is critically important to their compatibility, and success in retirement.

The emotional side of retirement coupled with the numbers side can add up to stressful conversations during your meetings with pre-retired clients.

So how do you continue to create a priceless unique experience for your pre-retired clients?

By understanding where to focus the conversation depending on the type of client sitting in front of you.? If your client is primarily a goal-setter, then helping them with ideas to redirect their time, energy and talents into new ventures will help reduce the tension.? An information seeker will need more details and research on retirement ideas and will probably be more at ease with identifying and following detailed cash flow projections.? Your client who is more lifestyle oriented would do better with you telling stories about your other retired clients who have successfully made that transition. And, finally, a security seeking clients mind will be at ease when you combine both their feelings and very concrete, specific ideas about retirement.

financial planning process, client confidence, advisor trustHelping your clients prepare for retirement requires you to move from the clients outer world to their inner world with grace and ease.? Instilling confidence and a sense of certainty in these uncertain times is your number one priority.? And to do that, you need to have a heightened self -awareness to show both your logical, and emotional side.? Your payoff is loyal clients who will stay with you and provide referrals for life.

For more information on how you can determine the financial personality of your clients to guide them in all financial planning conversations, visit the Financial DNA website.