Supercharging Client Engagement With Digital Financial Personality Profiling

Greg Davies Oxford Risk Head of Behavioral Science London 30 March 2021

Supercharging Client Engagement With Digital Financial Personality Profiling

Where it is used in client engagement efforts at all, technology tends to focus on the administrative aspects of advisors learning about their clients, while treating those clients as robots. Greg Davies, Head of Behavioral Science at Oxford Risk, explains how technology can be blended with behavioral science.

Personalities don’t have an “off” switch. Different facets of our psychologies may turn their volume up or down depending on the environment, but they never tune out completely, even when we wish – and act as if – they would.

Many a cool head has wholeheartedly believed in the power of a perfect plan. A plan that need only be put in place to all but guarantee safe passage to journey’s end. This is why the course of every career, every fitness regime, and every true love has always run so smoothly. It’s why everyone who’s ever joined a gym has a glistening six-pack and can press a hippo over their head, and we’re all comfortably retired in our 40s.

The trouble with cool heads is that they make plans for other cool heads, when in fact they should be making plans for heads blinded by emotional reactions, and temporarily less capable of dealing with a stressful world.

Selecting good investments is important, but achieving good investment outcomes is more so. Our financial circumstances can clash with our financial personalities in such ways that – psychologically – the person who set the course is not the one who will have to stick with the journey. A future expected return looks a lot less tempting when viewed through the lens of immediate anxiety.

Comfort and confidence
Good investment outcomes require more than only good investments. They require an ongoing series of good investment decisions. Good decisions are made from a place of comfort and confidence. You can’t fire a cannon from a canoe.

The recipe for comfort and confidence is different for each investor. The only universal is that ignoring these differences can be costly. If we’re out of the markets, we could be reluctant to get in, and sit on cash at an unseen, but very real cost of foregone returns. If we’re in, we could be too keen to get out, or to tinker, scratching itches with trigger-happy trades that can be cured only with time, and which inevitably lead us to buy high, and sell low.

Just as we each react in different ways to different diets based on our genetics, our lifestyles, and our health goals, so too with investing. We find comfort in different things in different situations. That could be preferences for a certain type of investment, content or style of communication, or what guidance we get along the way. Beyond avoiding financial sugars, healthy investment prescriptions should be highly personal.

Buying stories
Personal sentiments may feel too nebulous for the numbers-driven world of investing. Yet investing is a human activity, and humans buy stories, not numbers. The right story gives us the comfort we need to stick with a plan, to engage with guidance, and to keep our eyes on our long-term objectives, amid the shouts of short-term stresses.

Oxford Risk has a long history of using academic insights and extensive empirical validation to assess financial personality and preferences on multiple scales. Advisors using our tools benefit from enhanced client engagement driven by scores on 15 distinct aspects of financial personality. These play vital roles in:

•    assessing comprehensive suitability;
•    highlighting cases of vulnerability;
•    guiding product selection;
•    tailoring client communication and decision-making processes; and
•    revealing attitudes to responsible investing and philanthropy.

Our latest research and its application in real-world settings shows how these insights can enable hyper-personalized solutions at scale, helping investors to be as comfortable as possible, as effectively as possible.

Our need for comfort, like our personality, cannot be turned off. It has to be catered for. Preventative prescriptions beat costly cures.

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