Updated: May 5, 2020
Events and markets cannot be controlled, but how we manage our reactions to them can be. Achieving results is about how we predict and manage our behaviors.
It is key that we understand you and your goals. Measuring and discussing your financial behaviors is the first step for us to get to know you. Your financial behavior describes how you make decisions about money, your communication style, how you react to market events, and what motivates you to achieve you goals.
Independent Research shows that 93.6% of financial planning is behavioral management of the client and 6.4% is tactical investment management. The role of the financial planner is to know the client for helping them define their quality of life goals, and then ensuring their emotions do not get in the way of the planning strategy for achieving those goals. This is the foundation of our belief. Behavior drives Financial Planning Performance.
The traditional approach to addressing risk in the financial planning process is to measure investment risk propensity on a singular and situational basis. Our belief is that there are 3 primary segments of financial planning risk which need to be objectively and reliably measured based on how the client will behave on a long term basis. This includes their investment, financial and relationship risk behaviors. The failure to reliably measure and manage each of these financial planning risk categories can play a significant role in a client not making the right decisions for achieving their Quality Life goals.
Our “understanding people before numbers” approach starts with discovering the unique life and financial decision-making patterns that make up your financial personality – your "Financial DNA“. Your financial personality includes not only your situational investment risk propensity but also all of their predictable natural DNA behaviors which remain stable over time and instinctively take over decision making when you are under pressure and therefore strongly influence decisions. We use a pioneered Force Choice Scoring Model which has been academically proven to be the most reliable psychometric approach to accurately identifying predictable behavioral patterns. This overcomes the weakness of traditionally used scoring models which lead to inflated self-perceptions.
The DNA Financial Planning Performance Solutions will help us:
More deeply discover and manage the financial planning performance risks relating to your your investment, financial and relationship behaviors.
Increase engagement and provide customized experiences.
Navigate human differences and emotions causing blockages to effective decision-making.
Provide a structured financial planning process based on behavioral insights to keep you focused.
Financial DNA Natural Behavior Discovery
The Financial DNA Natural Behavior Discovery Process takes 10-15 minutes to complete. You will receive a 1 page Financial Talent DNA Report. The reports provide behavioral insights to assist in building a customized financial plan by reliably predicting how the you will consistently make life and financial decisions based on their natural "hard-wired" behavioral motivations and perspectives. The report also includes insights on the your risk taking propensity and risk tolerance which are applied to determining your investment portfolio.
If you are as fascinated by behavioral finance and the Financial DNA process as we are and you believe Modern Wealth could help you, please schedule an Intro Call!
Also, feel free to take the Financial DNA test here!