Guest blog – Neil Bage: This will happen again; be prepared. Know your clients. Segment
Written by Neil Bage on 16/04/20
The last few weeks have shown the importance of communicating with clients when markets fall/correct/crash/temporarily decline*. Phone calls and emails have been tremendously comforting to many clients.
But, what if we could do even better the next time this happens? What if we could tailor our communications to a granular level delivering exactly what each client needs, when they need it, in a way they will engage with it?
In this week’s guest blog, Neil Bage explains how to make this a reality.
*delete in line with your existing biases and preferred language
Those who have heard Be-IQ speaking at events, know that the phrase “behavioural bias tsunami” is used to describe what happens in our brains when we are making decisions. But what do we mean by that?
We’re all impacted by behavioural biases, be it cognitive biases or affective biases. They are a mainstay of the decision-making process. When we are making decisions, our biases are unconsciously activated and impact that process; arriving not one at a time like little wavelets, but combining all at once, like a tsunami.
This is crucial to understand because this behavioural bias tsunami, which ebbs and flows with ever-changing biases, manifests itself in the very behavioural characteristics that make us, us!
For example, Probability Neglect, Confirmation Bias, and Framing all combine to impact a person’s judgement (a person’s ability to evaluate different sources of information and to draw sensible conclusions from the facts and evidence available to them).
But there are two extremes to judgement. At one end you have someone whose biases are strong, making them more “persuadable” in their judgement. At the other, is someone whose biases aren’t as strong, meaning they are more “discerning”. Knowing this alone changes everything, from your communication and marketing strategy, all the way through to your education and investment strategy.
You see, a person who is persuadable can’t simply be presented with information on the expectation that they will cognitively process it in the way you assume it will be processed. They will look at the information and make a decision based on the words you use and the context you use them in. They won’t look for more evidence, and they won’t dig deeper on the facts and figures to make sure they have the full picture. The opposite is true for someone who is more discerning in their application of judgement.
But who is who? Who in your client bank has strong Probability Neglect, Confirmation Bias, and Framing? Who has weak Probability Neglect but strong Confirmation Bias and Framing?
Who has strong Framing, average Confirmation Bias, and weak Probability Neglect? From a communications perspective alone, these are three very different people.
But again, I ask, who is who?
Judgement is only one of our behavioural characteristics. There are others, one of which is Composure. Again, made up of several behavioural biases, our composure is the capacity to control our emotions, feelings and desires, especially in difficult circumstances.
You won’t be surprised to learn that composure and judgement impact each other, and they impact the other characteristics we all have, too. So, if you are more emotionally charged (composure) then you’re more likely to focus on negative framed information (judgement) than you would otherwise be. Again, this is crucial to understand, especially in difficult circumstances… like now!
It’s reasonable to suggest that what we’ve all experienced recently in the world’s financial markets will happen again. It may not be as bad, although it’s also reasonable to suggest that it could be just as bad, or potentially worse. It’s not a case of if it happens again, but when.
This therefore points to an obvious course of action for us all – and that is to prepare ourselves and our clients for the when.
Putting in the effort now to gain a deeper understanding of ourselves, our clients, and our entire practice means that we are uniquely prepared to get on the front foot, be proactive, and communicate more effectively and efficiently when that time comes around again.
Picking up the phone and speaking to all of your clients one-to-one, emailing them all, or jumping on video calls to talk to them, are all great ideas… this time around. But imagine if each message was tailored to the individual you were communicating with. Imagine knowing that the messages you are giving are landing exactly as intended, and are being unconsciously processed in a way that is beneficial to that client?
Well, understanding their behavioural biases and characteristics allows us to do just that. It allows us to know who to speak to, when to speak to them, and what to speak to them about. It allows us, for the first time ever, to segment an entire client bank by behaviour.
It’s at times like this that the benefits of segmenting clients by behavioural characteristics become obvious. A client bank of 200 clients will have a real mix of behaviours and therefore an approach to quickly and accurately identify people with similar behavioural characteristics can only ever be beneficial.
This approach, this way of segmenting is highly valuable all of the time, not just during periods of increased market volatility.
In a given situation, one particular segment of your client bank will be absolutely fine, whereas another segment will become emotionally vulnerable. Everyone has their own unique emotional triggers, and this manifests itself in their behaviour.
Gaining an insight in this way allows us to spot who matters most at the time it most matters. It allows Financial Planners, especially in times of heightened stress and anxiety to be wholly proactive, targeting the segments of their client bank that are the greatest risk both to themselves and their financial wellbeing.
Join the movement
Being human means that at certain times in our life, we will show vulnerability. Armed with the right insight, Financial Planners can at least step in and help those who are emotionally vulnerable navigate the bumpy parts of their financial journey and ensure that the ultimate destination, financial wellbeing, is kept well and truly on track.
This can uniquely be achieved through two services from Be-IQ. A free mobile app called BEAM, and a new-generation behavioural analytics dashboard, BEACON.
BEAM: Created by experts in both psychology and user experience, the free BEAM app is a set of fun, engaging, and revealing behavioural bias games, connecting self-awareness with financial wellbeing.
BEACON: The BEACON dashboard visualises behavioural insights through slick graphics and contextualises it with original content written by experts in behavioural science and psychology.
We are offering a 30-day trial of BEACON for you to experience the power of behavioural insight. To learn more and to take advantage of this special offer, please click here.
We believe BEAM and BEACON are key tools for planners but don’t just take our word for it:
Adrian Murphy, CEO Murphy Wealth: “Be-IQ’s tools are a game changer when it comes to decision-making and helping clients understand their behaviours!”
Tom Morris, Ovation Finance: “An incredible piece of software. The info provided on the BEACON platform is mind-blowing”
Pete Matthew, Meaningful Money: “Loving BEACON from Be-IQ. What an incredible tool it is going to be for advisers to fully understand their clients’ responses, especially in times like this!”
Coaching with behavioural insight webinar
Be-IQ’s Neil Bage and Chris Budd from the Initiative for Financial Wellbeing have teamed up to produce a series of three webinars training financial advisers and planners on behavioural finance issues, introducing coaching skills, and looking at financial wellbeing theory.