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

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 adv

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.

When one looks at business, it is easy to miss or not appreciate the importance of private businesses and entrepreneurship. How often do you look to the larger public companies for opportunities, marketing and jobs? Probably a lot. This is what many first think of doing.

I have just read KPMG's Swiss Financial Services Newsletter for August 2008. The newsletter provides very sharp insights into the increasingly complex international needs of high net worth individuals. The outcome is that the consulting team will need to have a greater global outlook and more sophisticated approach to the technical and human issues impacting the HNWI client.

In recent months I have written a few blogs about corporate governance and business risk management. I have expressed the view that many of the corporate problems we have today are related to ineffective board governance. It has been interesting being in Europe for the past 2 weeks where this subject has come up in many discussions with business leaders and in the press. Clearly, the topic of corporate governance is high on the agenda. It needs to be because this is the source of so much corporate damage.

Back in March of this year, I wrote a blog about managing the human risks in your business. This issue has not gone off the radar screen. Identifying the human behavior risks in your business is critical to success. Every person has natural "blind-spots" which, if they go unchecked, can lead to individual performance failures, team failures, leadership failures and ultimately significant business problems. Regardless of the size of your business, the behavior of your people will influence the result. The influence will be higher the more senior the person is in the business. Look at why some major companies have failed in recent years - it is not the poor economy or financial markets, rather they have exposed the fundamental issues, particularly the behavior of leaders.

At the moment, more than ever, the whole notion of trust in every aspect of our lives is important. For many, trust is very low, if not shattered, with our leaders, advisors, partners and family members. Furthermore, trust in ourselves is low, which is the core of the issue. If your business and personal relationships are not working as well as you would like, or your performance could improve, see whether it is because your trust is low. “Relationships of trust depend on our willingness to look not only to our own interests but also to the interests of others.” – Peter Farquharson My starting point with trust is always to ask 3 questions: How much do you trust others? Do you feel others trust you? Importantly, do you trust yourself?

In the past few weeks we have had a number of people contact us who are starting some form of business partnership together. Most of the time their request has been to find out more about their differences. Some of the typical issues they are seeking to understand are: 1. What are our different talents? 2. What should our role in the business be? 3. What areas do we have to watch out for? 4. Do we have shared values and purpose?

In recent years there has been a lot written about how wealth created by the first generation (the entrepreneur) is lost by the third generation. Often the second generation has also added to the wealth. Then the third generation has lost it through being irresponsible, idle or simply making poor decisions. Research from a range of sources is consistently showing that this is happening in over 70% of family wealth transfers. A significant aspect of intergenerational wealth loss is related to the fact that the financial and estate plans do not adequately take into account the human issues involved.

Today, I listened to a great presentation by Tal Ben-Shahar who teaches positive psychology at Harvard University. Interestingly, his 2 courses have been rated the most popular in the university. No wonder, he is so motivating.

The primary foundations of Financial DNA are "Know Thyself" and Know Thy Client". However, what I have not spoken up much before about is "Know Thy Investments". For both the advisor and the client this is absolutely critical to successful investing. Who at some point has been caught in an investment they did not fully understand and lost money?

The current financial crisis is bringing to light a huge workplace shift. For many baby boomers, they only had one career or expected to have one career. The thinking of this generation was that upon getting your qualifications you had one career - working up the ranks often in the same company. Today, it is expected that the Gen Y's will have 10 or more careers. They will job hop. Although, this may be more difficult to do in the current circumstances.