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NavigatingFinancialPersonalityUnderstandingandManagingBehavioralBiases

August2017


FeaturedHostDNABehavior– FinancialDNA

• LeonMoralesChiefRelationshipOfficerleon.morales@dnabehavior.comwww.linkedin.com/in/leondna

• TrippRockwellChiefMarketingOfficertripp.rockwell@dnabehavior.comwww.linkedin.com/in/tripprockwell

LeonMorales

TrippRockwell


Today’sWebinarObjectives

• DefinewhatareBehavioralBiases

• HowBehavioralBiasesimpactInvestordecision-making

• HowyouasanAdvisorcanusethisinformationtohelpClientsachievetheirgoals


Source:The93.6%QuestionofFinancialAdvisors,MeirStatman,2000

93.6% 6.4%

personality styleemotions passions

reaction

excitement

opportunism

Communication preferences

listening fear optimism

anxiety past experience Investments

speculation confidence

PortfolioorBehavioral Management?

93.6%offinancialplanningisBehavioralManagement


FinancialPersonality3Components

AdvisorClientCommunication

GoalsandSpendingBehavior

FinancialPersonality

RiskProfileand

BehavioralBiases


ClientsWillReactDifferentlytotheSameMarketEvents


KnowYourClientYourFiduciaryRole

YouridealclientHowtoCommunicate

Email,Phone,orMeeting?+more

RiskProfileLossAversionPatternBiasNewnessBias

+more

GoalsAnd

Spending

HardWired

Behavior


PollQuestion#1

AreyoucurrentlyusingaBehavioralFinancetool?


Sources:(1)TheAdvisorsAlpha:PuttingaValueonYourValue,Vanguard2015(2)ModellingbasedonSchwabRIASurvey2015,AdvisorImpactUKResearch2012

ValuePropositionBehavioral Approach

ClientValue:

150bps1peryearonAUM

FirmROIValue:

50x2 ++fromincreasedreferrals,retentionandshare

ofwallet


Quicker,MoreReliableMethodtoPredictHowWillClientsReacttoLife,Business,MarketEvents?


BehavioralFinanceBiasesUncoveredWithFinancialPersonalityDiscovery

11

IrrationalInvestors

ImprovedDecisions

BehavioralFinanceBehavioralFinanceistheapplicationofpsychologytofinancialbehavior.Thepremiseisinvestorsarenottotallyrationalbeingsintermsofmakingperfect

financialdecisions.

FinancialPersonalityDiscoveryAreliablepredictionofhowirrationalfinancialdecisionsaremadecanbeobtainedthroughobjectivefinancialpersonalitydiscoverysothatinvestorbehaviorbiasescanberationallyunderstoodandthenmanagedasa

platformformakingaligneddecisions.


• ConsolidatedView• OverTrading• OptimismBias• RiskTaker

• Spender• HerdFollower• Instinctive• StatusQuo

• RiskAversion• LossAversion• FearofRegret• DispositionEffect

• Saver• MentalAccounting• PatternBias• BenchmarkFocus

UniquePersonalitiesBehavioral BiasesandNaturalBehavior


PollQuestion#2

DoyouunderstandhowBehavioralBiasesimpactInvestor(andAdvisor)

decision-making?


SpecificMeasurementofBehavioralBiasesEachPersonHasSomeLevelOfEachBias


ConnectingFinancialDNANaturalBehaviorFactorstoBehavioralFinanceBiases

ChrisCoddington

ConsolidatedView

Herdfollower

Overtrading

Controlling Fearofregret

Optimismbias

Overconfidence

Benchmarkfocus

Lossaversion

Dispositioneffect

Mentalaccounting

PatternbiasInstinctive

Riskaversion

Newnessbias

Statusquobias

15


ChrisCoddingtonStrategist

Powered by DNA Behavior®

Financial DNA® Natural Behavior Discovery

Financial Talent DNA Report for:Chris Coddington on 14-Mar-12

Provided by your advisor: Chris Coddington

Your Natural Financial Planning Approach to Closing the Behavior Performance Gap for Building a

Quality Life

Performance Risks Performance Success Factor

Propensity to TakeInappropriate Chances 98% 2% Safely Manages Risk

Likelihood to be EmotionalWith Losses 1% 99% Risk Tolerance

Can Lack Boundaries 2% 98% Bottom Line Results Focus

May Set Overly AmbitiousGoals 99% 1% Builds a Content Life

Can Easily Change Plans 4% 96% Pursues Goals

Tendency to be FinanciallyDisorganized 31% 69% Follows Budgets

May Have a High Desire toSpend 8% 92% Saves Money

Can Lack Attention to Detail 5% 95% Researches Information

May Not Listen Carefully 99% 1% Relationship Driven

May Take Control ofDecision Making 93% 7% Delegates to Advisor

Build on your natural performance success factors and minimize your performance riskswith wise advice and wealth mentoring.

Your Financial Planning Performance Success Factors Relative to the Population

Your Financial Planning Performance Risks Relative to the Population

This Financial DNA report provides a high level summary only of your natural behavioral strengths and struggles forfinancial performance with limited explanation. It is not intended, nor is it suitable for making life, financial and investmentdecisions in isolation. Should you require additional explanation and/ or resources please request access to our more

detailed Financial DNA reporting. Before making any life, financial or investment decision, we recommend that you seek thewise counsel of a wealth mentor or advisor.

Page 1 14-Mar-12 Chris Coddington - Strategist © 2016 DNA Behavior International ID#26380


ChrisCoddington’sDNAUltimatePerformanceGuide

ItemsfromtheTop2Factors:

Factor1–3Strengths,2Struggles,3PerformanceKeys

Factor2–2Strengths,1Struggles,2PerformanceKeys

17


CarolBenjaminRelationshipBuilder

Financial DNA® Natural Behavior Discovery

Financial Talent DNA Report for:Carol Benjamin on 04-Oct-11

Your Natural Financial Planning Approach to Closing the Behavior Performance Gap for Building a

Quality Life

Performance Risks Performance Success Factor

Propensity to TakeInappropriate Chances 76% 24% Safely Manages Risk

Likelihood to be EmotionalWith Losses 82% 18% Risk Tolerance

Can Lack Boundaries 97% 3% Bottom Line Results Focus

May Set Overly AmbitiousGoals 58% 42% Builds a Content Life

Can Easily Change Plans 46% 54% Pursues Goals

Tendency to be FinanciallyDisorganized 92% 8% Follows Budgets

May Have a High Desire toSpend 73% 27% Saves Money

Can Lack Attention to Detail 76% 24% Researches Information

May Not Listen Carefully 27% 73% Relationship Driven

May Take Control ofDecision Making 14% 86% Delegates to Advisor

Build on your natural performance success factors and minimize your performance riskswith wise advice and wealth mentoring.

Your Financial Planning Performance Success Factors Relative to the Population

Your Financial Planning Performance Risks Relative to the Population

This Financial DNA report provides a high level summary only of your natural behavioral strengths and struggles forfinancial performance with limited explanation. It is not intended, nor is it suitable for making life, financial and investmentdecisions in isolation. Should you require additional explanation and/ or resources please request access to our more

detailed Financial DNA reporting. Before making any life, financial or investment decision, we recommend that you seek thewise counsel of a wealth mentor or advisor.

Page 1 04-Oct-11 Carol Benjamin - Relationship Builder © 2016 DNA Behavior International ID#37094


RecognizeHowBehavioralBiasesInfluencingRiskTakingManagetheOverallImpactofBiases

DispositionEffectMentalAccounting

LossAversionPatternBiasFearofRegretStatusQuoBasisRiskAversion

BenchmarkFocus

ConsolidatedViewHerdFollowerOverTradingInstinctiveControlling

OptimismBiasOverConfidenceNewnessBias

FinancialPersonalityRisk CanIncreaseRisk-

Taking

NeedtoManageExpectationsDown

CanOver-InfluenceCaution

NeedtoIncreaseDecision-MakingConfidence

19


FinancialPersonalityInsightsRiskPropensityandTolerance


SuitabilityRequiresConsiderationofManyRiskFactorsTheKeyElementsofFinancialDNARiskProfileDiscovery

KeyInvestmentRiskElements

TerminologyDefinitions FDNANaturalBehaviorDiscovery (Level1–Automatic,Instinctive)

FDNAFinancialPersonalityDiscovery(Level2– LearnedSituationalBehavior)

RiskNeed Riskrequiredtomeetfinancialgoals

FDNA IPS+FinancialPlanningSoftware


RiskCapacity Financial abilitytoenduretherisksofportfoliolosses



RiskPropensity Willingnesstotake risk Yes Yes

RiskTolerance Willingnesstolive withlosses Yes Yes

Loss Aversion Maintaininvestmentsindownmarketsandnot crystalizelosses

Yes Yes

Risk Composure How clientwillbehaveinacrisis FDNAMarketMood Yes - FinancialEQ

RiskPerception/ProductPerception

Judgementaboutseverity ofriskincurrentclimate

Inherentlynotmeasuredasclientgutfeel

Inherentlynotmeasuredasclientgutfeel

RiskPreferences Personalevaluation ofriskpreference

No Yes

RiskProfile Aggregate oftheabovefactorsforachievinggoals

FDNA IPS+ClientConversation

FDNA IPS+ClientConversation


PollQuestion#3

IfRiskPropensityisthewillingnesstotakerisk.

WhatisRiskTolerance?


HowtoInteractwithClientsAdaptingtotheirNaturalBehavior

Advisor and Client Compatibility Matrix

Ultimate Performance Guide


HowWillYouManageClientEmotionsinVolatileMarkets?


PollQuestion#4

Canyou,asanAdvisor,useBehavioralFinancetounderstandClientpersonalitiesandhelp

themachievetheirgoals?


BehavioralFinanceResourceTourandMonthlyFeatures

http://financialdna.com/behavioral-finance-resources/

• OurfocushereatDNABehaviorin2017is“activeengagementoftheclient”. InordertotrulyprovideafiduciaryroleanAdvisorneedstoknowtheirclient.

• IntheUSAourgoverningbodyFINRAandtheDOLaremovinginthatdirectiontostrengthentheactiveengagementtoensurethatclientsarereceivingsuitableguidance.


FinancialDNA®forFinancialPersonalityInsightsUsingaBehavioralFinTechPlatform

ATailorMadeSuitforEveryClientSince2001,wehavebeenprovidingfinancialservicesbusinessesworldwidewithasinglecloud-based“FinTech”platformwhichdeliverspracticalandscalablebehavioralintelligencesolutionsto“Know,EngageandGrow”everyadvisor,employeeandclientonlineforthebuildingofaclient-centeredbusinesswhichdelivershighperformance.


TheScienceBehind“SwissWatch”DNASystems

Powerful and Unique Client

Centered Behavioral Solutions

Delivered in 123+ Countries and 11

Languages

Forced Choice Assessment

Measuring 64 Behavioral

Traits

60+ Man Years of

Development Investment Since 2001

Independent Validation by

Team with 100+ Years of

Experience


PollQuestion#5

OtherBeFi topicsyou'dbeinterestedinlearningmoreabout?


FeaturedTheBehaviorallySMARTWebinarSeries

August’sNextFeaturedWebinar:

Becoming ACertified Wealth Mentor

Tuesday,August22nd@11AM

https://register.gotowebinar.com/register/4650649796216817666

TransformingtheFinancialAdvisorRole- BecomingaCertifiedWealthMentor

Whatisgettinginthewayofclient-centeredsuccess?Uncheckedbehavioralresponsesdrivingdecisionmaking.

Wewillguideyouonhowtopredictplanningriskstriggeredbybehavior(bothyoursandyourclient’s):

•Advisorscanonlyengage40%oftheirclients,leavingtheother60%under-served•Investoremotionalreactionstomarketvolatilitycausesportfoliolossesof7.45%peryear•Advisorbiasescauseunder-performanceby1%- 3%peryear


Questions?ContactUs

FormoreinformationaboutFinancialDNA

Contact:DNABehaviorInternational5901PeachtreeDunwoodyRdSuiteA375Atlanta,GA30328(866)791-8992

[email protected]

http://financialdna.com/trial-leon-morales/


• ReadourBlog:http://blog.dnabehavior.com/• ListentoourPodcast:

http://behaviorallysmartmoney.libsyn.com/

• Pleasefollowourgroups:- LinkedInatFinancialPersonalityInsights- Twitter@FinancialDNA

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