The First Step to Become Behaviorally Smart

What is the first step in becoming behaviorally smart?

Self- Awareness.

Why is this so important?  Because it shapes three very critical components of the financial planning process.

1. Listening to clients

You need to be fully present with your clients at all times. This requires you to listen at many levels at once: the words, the tone of voice and body language, their emotions, and even their self-talk and beliefs about their situation.  And it involves using both your head and your gut. Further, you have to empathetically demonstrate to the client you have listened.

What most advisors don’t factor into the listening equation is their own biases.  You have to discern whether what you are sensing is a bias you have or whether it’s something you can share with the client.

Becoming aware of your biases means you need to understand how you listen, what you listen for, what we include and what we exclude.

In reviewing the Financial DNA Natural Talent Report with one of my advisors, his score showed that he was low on listening.  At first he was very defensive as he prided himself on being an intent and purposeful listener.  As we continued to delve deeper, he admitted that he tended to “tune out” when he felt the conversation was not directly relevant to the goals of the discussion. The other point is that we tend to listen better on certain topics that are relevant to us – for some it is risk taking and ventures, others it is lifestyle and family. A big bias to keep in mind when listening to clients!

2. Guiding clients

When you are highly attuned to your client, it is more likely that you will ask a powerful question or make a direct observation that prompts the client to think more deeply.  You will know you’ve asked a powerful question when the client responds, “That’s a great question” or maybe the client becomes quiet and reflective while they are having an “aha” moment.  There is real joy when you guide the client to the goals and solutions that are perfectly tailored to their own unique personalities.

What does your client really want to do in retirement? Are they just giving the same answers as everyone else or does this have passion for them?  If you are a very goal driven advisor, it may be difficult for you to set aside your bias as you talk with a client who doesn’t live their life by goals and who seems to be “all over the place”. Some more feelings based clients do not even respond to the word “goal” because it is too rational. guiding clients behavioral finance

As an advisor, if you can ask one great question a year then you will build engagement that is sustained for a long time, if not, a life time.

3. Building client portfolios

As an advisor, you are likely to have different risk taking and risk tolerance levels than your client.  This lens can sometimes shade your view and how much you empathize with clients that are completely opposite from your approach.  Having an objective system that measures the financial, investment and financial personality risks can help keep you on track in conversations with clients and keep your bias in check.

Think about a couple who have divergent risk profiles and then overlay your own risk profile. Navigating the differences can make for a very difficult conversation if you don’t take the time upfront to ascertain this information using a holistic process.

The behavioral side of the business is not “soft” anymore. It has some real hard-edged monetary consequences.  Especially when you consider that 93.6% of the financial planning process is the behavioral management of the clients.  Just be sure your behavioral bias is not standing in the way of building lasting, trusting relationships with your clients.



Peggy Mengel – Vice President, Human Behavior Solutions Advisor at DNA Behavior

Specializing in financial services, Peggy uses behavioral intelligence to help businesses navigate human differences to unlock performance potential. DNA Behavior helps grow behaviorally smart businesses and financial advisors worldwide to increase competitive advantage using the most reliable behavioral discovery and performance development systems on cutting-edge technology platforms.

Visit the Financial DNA website to learn more about becoming a behaviorally smart advisor.

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