Behavioral Science Technology for Advisors

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Technology demonstrates its greatest value when it is designed with a laser-focus to solve for strategic business and client needs. It should function as an empowering enabler much more than just being the latest bright, shiny tech tool. When built for ease of use, deep communication, hyper engagement, and automated deployment, technology can help create a personal compact to align advisors with clients and prospects.

To further explore this tech dynamic, the Institute for Innovation Development recently talked with Institute member Leon Morales, Managing Director of DNA Behavior International – developer of  the world’s only all-in-one cloud based “Behavior Tech” platform. He has been working on how this platform can be deployed inside organizations for online behavioral management solutions to Know, Engage and Grow every employee, advisor and client. We discussed how behavioral technology can support the evolving nature and changing value proposition of financial advisors into a more holistic model of advisors serving as client behavioral coaches and mentors.
Hortz: Your firm has been applying behavioral science research with management leaders and financial advisors for decades now through training and education. Why the need for a technology platform?
Morales: The fact that drives us, from a 2002 Harvard study and our subsequent research, is that 87% of business issues are communication related.  We are focused on solving the problem of managing differences between people in real-world business settings. Every interaction is an opportunity to adapt behavior if someone can first understand their natural DNA behavioral style and understand that of others.

DNA Behavior has been the leader in applying behavioral science to business problems since 2001 and started creating tech tools like a mobile app to encourage this process. However, because of our fast-paced world and apps changing continuously, there has been lower adoption of separate technology apps by advisors in the past 5 years. We realized back in 2015 that we needed an integration gateway – a way of integrating behavioral science into the advisor’s business processes – to make them immediately accessible and built into the advisor’s way of doing business.
The goal was to enable an easy way for advisors to customize Behavioral Experiences which drive various forms of human performance acceleration and engagement. Our CEO Hugh Massie and team developed our tech platform to incorporate the behavioral discovery process into an advisor’s practice. With this powerful tech platform, an advisor can navigate differences among people, leverage advisor strengths, and provide actionable solutions for their client challenges. All to better serve and build trust in a more meaningful and effective manner.
Hortz: How did you go about converting behavioral science into a technology?
Morales: Back in 2001 when Hugh Massie created the company, we believed that behavioral tools and information needed to be at the fingertips of advisors and other business leaders. Otherwise reports just sit in desk drawers, in files, and are not easily remembered or used.

We now have, with technology, the capability to empower advisors with validated, practical behavioral insights on clients to create customized personal and relationship experiences in real time. With powerful technology, this behavioral solution is now easily scalable across teams, families, firms and other organizations. So, we made the strategic decision in 2015 to build an ecosystem of behavioral tech platforms that used a “behavior chip” at their core to power these platforms, along with the unique experiences they would create.  Now that chip – the behavioral piece of the puzzle – can be plugged into an advisor’s or advisory firm’s systems.
Hortz: How exactly do you validate behavioral insights and then apply them to deliver what you term as “real-time” behavioral management solutions?
Morales: We use a forced-choice questionnaire and it takes about 10 minutes for most people to complete. This questionnaire was designed with researchers to measure in-depth behavior – very accurately and reliably. The results do not change over time.
The questionnaire uncovers over 200 behavioral insights and they can be made actionable. This is where a firm can use specific insights in real-time during meetings or to assist in coaching/mentoring as other examples.

In fact, we have a client that started with us in 2003. Her client base has remained essentially the same. No client has re-taken the profile and the results are still accurate. That is the inherent value of working with validated data. She saves 2-hours per client per year using our insights and can stay focused on her client’s most important needs and goals. And, as she hires new staff, the new staff is sent into our system to review the DNA Reports and Dashboards to get to know the client quickly rather than spending countless hours in meetings and appointments to learn how best to engage with them.
Hortz: Can you explain your API strategy and training you provide for financial firms?
Morales: DNA Behavior API solutions have been bringing validated behavioral insights to large international banks, insurance providers, wealth managers, technology companies, government agencies, utilities and others. For those not familiar with application program interfaces (API), this means the human performance acceleration capabilities pioneered by our team are now part of larger (enterprise) systems and therefore part of the infrastructure of an overall business.
It’s that behavior chip again: Imagine a behavioral “chip” deployed directly inside organizations of any size, making business infrastructure and culture what we call behaviorally smart. This is an incredible efficiency and enables the exponential power of behavioral insights that Hugh sought.

The training for embedding this behavioral engagement capability is easy to implement and learning and reinforcement is quick. One training approach we use is to have an advisor or business leader have 5 of their family and friends take the questionnaire.  Once they see the reports, they instantly start recognizing these insights and it leads to successfully learning the program without a lot of in-class training that would take them away from their clients.  DNA Behavior has self-learning, online training and in-class training options.
Hortz: Can you give us some examples of how you see advisors are more successfully applying behavioral principles by using the platform?
Morales: We have many use cases in small, medium and large Enterprise firms using these same behavioral insights by integrating the DNA API into their business systems.  One that stands out for me is from a large national bank implementation in Sydney Australia that has now become a standard application.
This bank created a Goals 360 program using the questionnaire and behavioral insights to build an end-to-end solution whereby the client and spouse use a digital experience to work with an advisor to select goals and to keep on track for their long term investing.  The Goals 360 program can then “nudge” the client if there are spending patterns or other activities that could risk those goals.

Hortz: What new tools or enhancements are you planning for your tech platform that can further help advisors more strategically engage their clients?
Morales:  In our DNA Ecosystem, we have a network of partners that can offer behavioral apps to enhance the performance of managing differences in personal and business engagements. Our goal is to have 50 ecosystem partners in the DNA Network all having a unique client experience.
As an example, we have one partner that has a meeting app which allows a screen-pop of key behavioral information showing strengths/struggles for the person you are engaging. This ensures you are focused on those client behavioral issues and goals during the meeting.  Another application is a recruiting firm for advisor and staff hiring that ensures the person is the right fit for the role and firm culture.
Our vision is to enable over one billion people to know in real-time how best to relate to and deal with one another on their personal terms – from the first interaction and even if they are not in close proximity as in today’s new virtual environment.

Hortz: Based on all your behavioral research knowledge and practical cross-industry application to real-world business needs, what best advice can you give financial professionals about incorporating behavioral science into their business models and operations?
Morales: There are a number of key business benefits for advisors in using a behavioral science approach. One was actually measured and quantified in a major Vanguard Study in 2016. The study determined that an advisor can deliver 150 bps of net return above what the client could do themselves by behavioral coaching and managing the client’s behavioral biases.
Another important fact is that a deeper “Know Your Client” threshold is increasingly becoming a heightened standard in the industry than was previously required. Deeper behavioral understanding means that you will be able to engage with the client, the spouse and intergenerational family connections in more effective ways. Our research determined that it is also a great time saver making meetings and conversations 40% more effective and efficient by knowing what and when to key in on most important topics for a client. Using technology to embed this behavioral process into your business just brings further efficiency and effectiveness to client relationships.
This all leads to the most important element crucial for advisors which is building Trust.  Connecting deeply with a client on their terms is vital to having a long-term client relationship. The bottom-line is that building the behavioral element into an advisory practice is a win-win-win with improved outcomes for the advisor, the firm and the client.

The Institute for Innovation Development is an educational and business development catalyst for growth-oriented financial advisors and financial services firms determined to lead their businesses in an operating environment of accelerating business and cultural change. We position our members with the necessary ongoing innovation resources and best practices to drive and facilitate their next-generation growth, differentiation and unique community engagement strategies. The institute was launched with the support and foresight of our founding sponsors – Pershing, Voya Financial, Ultimus Fund Solutions, Fidelity, and Charter Financial Publishing (publisher of Financial Advisor and Private Wealth magazines). For more information click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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