Financial DNA - Discovering Your Unique Financial Personality for a Quality Life

Last week I was working with one of our Certified Wealth Mentors with my role to offer some behavioral insights on some difficult client cases. The cases were difficult because of the clients’ attitudes not only to financial decision-making but also to life. These cases reaffirmed to me how much trust is core to all dimensions of every client situation. This is why when we redeveloped our DNA personality system in the past year we made trust a new stand-alone personality factor.

Often when we talk about trust it is in the context of our role as trusted advisor and building open relationships with clients. Certainly, this is an important dimension. Talking about trust in this way is fine. However, the heart of truly understanding trust and to knowing our clients is to know where trust comes from. There are a number of very important dimensions to trust that we all need to know. Let me ask you the question: How much do you trust yourself? Trusting yourself is the starting point of building sound relationships and also making sound decisions. Your own level of personal trust will determine whether you will trust others and then whether others will trust you. So, if you want to know whether your clients will trust you, reflect on your own level of self trust and then learn about their self trust.

No matter the industry, providers of products and services are always saying something to the effect of: "You are blind as to who is going to walk in the front door for their first meeting with you. As you work with the client a bit you have a greater collection of knowledge but still not the whole picture. It can still take 10 years or more to really know who you are dealing with". Do you truly know the life and financial motivations of your clients? Their deepest desires? Do you know their risk tolerance? Do you know what types of products and services they want?

In recent weeks we have strongly focused our messaging around "business transformation". In particular, the need to address the client experience that is being provided in order to transform. So often, leaders regularly talk about getting the right people on board, developing the team and the leadership, having the right product, focusing the business plan, improving execution etc. These are all important dimensions; however, they are not all of it.

For advisors, growing your financial planning business is about getting more of the right clients who you can profitably serve on a sustained basis. This means you must have financial planning clients who will pay for the value you provide and will allow you to do so efficiently and with minimum wasted energy. I am sure this sounds logical and for many financial advisors this will sound obvious. The question is: are you acquiring clients and managing relationships as well as you can?

Have you considered what is going to propel growth in your business in the coming months and years? Schwab conducted a research study in March 2009 which shows the greatest 3 enablers of growth are:

1. Closing the deal with prospects - 75%

2. Maintaining quality service - 73%

3. Adding new technology for scalability - 67%

So what is your strategy for closing more prospects more quickly and improving client service?

The theme at this week's FPA Conference in Annaheim centered on trust. Becoming the trusted advisor is not a new idea however, it is increasingly talked about.

The question is how do you become the trusted advisor? How do you accelerate trust in your advisory relationships, and for that matter in any relationship?

Building trust is directly related to how you behave in relation to others. What many do not know is that the starting point for trust starts with your behavior. If you do not trust yourself, then you will not trust others and others will not trust you. What we have learned from research is that some people are not naturally wired not to trust and hence will always have more inherent difficulty in building trusted relationships. So, these skeptical people have to be more conscious in developing trust with clients (and their team).

In my work with entrepreneurs and family business owners there are quite divergent views about whether to bring children into the family business when they are young adults, or even at any stage. Some say never and others have a desire to perpetuate the family association with the business. There are cases for both. Of course, rationality plays into it and the family legacy.

In my own case, I had to work through many of the issues because our family had a pastoral (cattle ranching) business which I eventually managed for a number of years. I enjoyed it from a business perspective but ultimately did not have the passion to make it a life long endeavor. My brother was not interested at all.

The big issue is, do the children want to be involved in the business? Then importantly, what is their passion for the business?

Risk tolerance is a much talked about area in financial planning and it is one core component of an investor's unique financial behavior - what we call their Financial DNA. It is so fundamental that we are always talking about it and making decisions with reference to it.

A huge difficulty has been reliably measuring an investor's risk tolerance. One of the problems is that an investor's risk tolerance is assessed today but then a portfolio is developed for the long term which has to cope with fluctuating markets. Do you truly know what your client's risk tolerance for the long term is? How much of your assessment of the client's risk tolerance is based on current situational factors and their emotional impulses today about the market? Then add in the fact that a person's risk tolerance may differ across different asset classes. Of course, an advisor's own risk tolerance can color the situation resulting in the client "eating" the behavior of the advisor. There have been lots of examples where a group of advisors addressing the same case facts at the same time will come up with different risk tolerance assessments for the client.

After more than 10 years of studying financial behaviors, including risk, and performing research based on our online profiles Financial DNA Resources has now launched our "Behavioral Portfolio Report". You can download a copy of it here: http://financialdnaresources.com/FinancialDirections.

In recent times I have done a lot of talking about your "success impediments". What is getting in your way to success? A lot of the time it is our own mind. We allow negative thinking to get in the way. This will be true at any time particularly when times are tough and we are fearful. Or it will happen because we have limited experience or a lack of confidence. However, we should never let the big thoughts go away.

Last week I participated in a learning program for fast growth businesses conducted by Verne Harnish (founder of Gazelles, Inc) who is world renowned as "The Growth Guy". Verne has run training workshops for and coached many great entrepreneurs all over the world. He has a very straightforward approach to helping an entrepreneur stay focused.