Another area we benchmarked in the State of Client Understanding study is how advisors engage the broader client family—spouses and adult children, in particular.
One of the Behavioralist’s key tools is a new class of client diagnostics based on behavioral economics. Behavioralists use these tools — which have clients play decision games instead of answering questionnaires — to understand their clients’ actual or likely behaviors with a level of precision and insight that clients would have no way to self-report. To boot, these methods are free of the survey biases that plague risk tolerance questionnaires, and represent the highest scientific standard in client diagnostics.
As I mentioned in my last post, we spotted a very high performing segment of advisor we came to call the Behavioralist. These advisors blend soft skills with new, behavioral client diagnostics — and they are dramatically outperforming their peers. (see chart below)
I’ll cut right to it. We conducted a unique, international benchmarking study of financial advisors, and I want to share some of the key findings with you, starting with this blog post (with more to come). If you’re an advisor reading this, the data-backed findings have implications for the quality of your client relationships, the health of your business and your own personal fulfillment!
The findings are striking—we’re talking differences of 50% to 100% in metrics like client willingness to recommend, referral rates, net client growth rates and advisor job satisfaction.
Risk taking is the main lever pulled by financial advisors around the world to contribute to financial well-being. But when do you pull it? And what are the implications?
Professor Shachar Kariv shares the differences between stated and revealed preferences, and their power in the shared goal of financial advisors to put clients first.
Warren Buffett famously quipped, "Only when the tide goes out do you discover who's been swimming naked." Well, with market volatility spiking like it is, the tide is decidedly OUT. If you're a financial advisor, and you don't know which of your clients are loss averse, you've been swimming naked.
Tim Buckley of Vanguard made headlines last month pointing out his team’s latest research report on advisor value. In it, Vanguard encourages advisors to move their focus from portfolios to people. Of note, the report points to client behavioral coaching as the largest potential contributor to a client’s advice experience – nearly 150 bps, and the only remaining advisor function that is free from the threats of automation.
On Christmas Day in 1895, William Roentgen—the inventor of the x-ray—sent an x-ray image of his wife's hand around the world. (Note: you don't want BillyR as your Secret Santa...weird taste in gift giving).
Our purpose is helping professional advisors integrate insights about humans (read: clients) into their financial advice to make it more relevant, engaging and robust.
The insights we will highlight come from serious behavioral economics – the marriage of standard economics and cognitive psychology.