Popular behavioural finance workshop/conference topics
Purpose
- To raise awareness and create a common understanding about behavioural finance concepts that are relevant for financial advisers and related professionals.
- To then discuss strategies to address and to apply those insights to improve the way advisers formulate and communicate their advice.
What you get
- Interactive workshops conducted in-house, either face-to-face or digitally. They can be delivered around a boardroom table or as part of an offsite/conference.
- Content that is tailored for financial advisers and has been refined and enhanced in response to feedback from thousands of advisers across Australia.
- A mix of research insights, fun thought exercises and practical applications.
What you don't get
- Behavioural finance 101. (Most advisers have had at least some exposure to behavioural finance concepts already).
- A discussion of 'biases' that are interesting but that aren't relevant or useful for financial advisers. (If you can't use it, lets not waste time on it).
- A dry lecture. (The sessions tend to be pretty interactive and are peppered with examples).
- Pop psychology that lacks a credible academic grounding. (Let's not make stuff up)!
Individual workshops
1 x up to 90 minute workshop
Price: $5k + GST + travel costs (if necessary)
Choose 1 of the topics below.
Discounts apply when booking multiple presentations of the same session (such as where you would like a session held in each of a number of different locations).
Package
4 x up to 90 minute workshops
Price: $15k + GST + travel costs (if necessary)
Create a behavioural finance learning program for your advisers by choosing 4 of the topics below.
Discounts also apply when booking multiple presentations of the same session.
Topic 1: The pychology of information overload and complexity
How to make sure your clients pay attention to, read and listen to your advice.
Why clients sometimes draw the opposite conclusion from what their adviser intends.
Overview
Covered in this session
Applications & outcomes
A challenge advisers face when engaging with their clients is how best to convey concepts that might feel complex and difficult to many clients. When doing so, the risk is that clients become overwhelmed by too much information and are confused. As a result, they can disengage, do nothing or misinterpret the advice they receive.
It is easy to say that advisers should try to keep things short and simple, but sometimes the nature of the issues being discussed means that a thorough and detailed explanation is necessary. Sometimes it's required by law, and sometimes by the Code of Ethics.
How can advisers use psychological concepts to help cut through the complexity?
Through a number of interesting psychological studies and fun case study examples for advisers to try themselves, this session will demonstrate how advisers can apply psychological insights in the way they communicate with their clients.
Concepts discussed include how to attract clients' attention to the most important points, how to frame advice in ways that align with the simple mental shortcuts that clients typically apply, how to identify and address potential sources of confusion, and how to 'layer' and 'chunk' advice into digestable pieces that don't overwhelm clients.
This session will help advisers to improve the effectiveness of their emails, their powerpoint presentations, their investments reports, their statements of advice and their client conversations.
As a result clients will be more likely to read or listen to the advice they receive, more likely to understand it, and more likely to implement it.
The session will also help advisers to comply with their ethical obligations to 'have reasonable grounds to be satisfied' that the client understands their advice, and to not (inadvertently) mislead the client.
Topic 2: The psychology of ethical advice
The psychological issues advisers need to understand to properly comply with their ethical obligations.
How to make sure your client really understands your advice.
Overview
Covered in this session
Applications & outcomes
The Code of Ethics imposes a number of obligations on advisers that go beyond otherwise applicable legislative requirements. For example, disclosing information to clients is not sufficient if the adviser believes that the disclosure will be ignored or misunderstood; advisers now must also 'have reasonable grounds to be satisfied' that the client understands their advice.
Complying with these obligations often require applying psychological insights - to understand how clients are likely to interpret the advice and information provided to them, as well as to identify the implicit blindspots that are inherent in clients' explicit statements and requests.
Complying with the Code of Ethics also requires advisers to understand their own 'personal biases' and to be able to dispassionately view their own behaviours through the lens of a disinterested third party. Doing so requires a high level of self-awareness and a working knowledge of how their subjective assessments can be distorted by subconcious cognitive processes.
- This session explores the ethical issues that can emerge as a result of decision-making biases. These biases relate to the way the client thinks, the way the adviser thinks, and from the way they communicate with each other.
- For example, how can advisers use psychological insights to help identify when what the client says isn't what they really mean? If the client says that they understand your advice, do they really? When they say they want limited advice about a specific issue, what other things have they probably overlooked? And when they say they have told you everything that is relevant, what are they likely to have forgotten about?
- Psychological concepts and examples covered in the session include 'the curse of knowledge', 'the illusion of transparency' and a number of 'attribution errors' in the way people interpret the meaning and intent of the communications they receive. Also covered is research about why clients often fail to understand and respond to warnings, and how clients can draw different conclusions from communications that advisers thought were clear.
- The psychological issues with adviser self-assessments are also discussed, including how advisers can more objectively assess their own competence and the value they provide, and whether they are likely to be influenced by a conflict of interest.
The concepts discussed in this session can be applied across an adviser's business, including in the explanations they provide clients during their face-to-face conversations, in their Statements of Advice and other written communications, in the types of questions they ask clients, in the way they scope their advice, in the way they plan their professional development, and in the way they structure their fees.
Advisers should come away from the session with a more robust approach to complying with the Code of Ethics and to delivering good client outcomes.
Topic 3: The psychology of risk profiling & risk communication
When what clients say about their risk appetite isn't what they really mean.
The different ways advisers can frame their conversations about risk.
Overview
Covered in this session
Applications & outcomes
Advisers would be aware that a client's risk tolerance is central to much of the advice that they provide. But risk is a difficult concept for many clients to grasp and to think about objectively. When completing a risk profile questionnaire they can quite honestly say that they would see a 20% market decline as a buying opportunity, but when this scenario actually eventuates they panic and want to sell their investments nonetheless. Failing to account for the psychological concepts related to risk can mean misinterpeting a client's real risk appetite and, therefore, to providing inappropriate advice.
The other half of the risk-equation is how advisers communicate risk-related issues to their clients, how they set expectations and articulate possible outcomes. A failure to communicate risk effectively can lead to difficult conversations when clients' expectations about the risks they believed they were exposed to are contravened, and when they fail to reach the goals they thought were attainable.
This session discusses the psychological challenges advisers face in understanding and measuring clients' risk profiles. The roles of 'loss aversion', probability weighting systems, 'salience', 'familiarity', and 'hot' versus 'cold' emotional states are covered. Given these issues, what types of questions should advisers ask to solicit the most realistic view of a client's risk profile?
Also discussed is the relationship between risk profiles and different personality traits, as well as the differences between men and women's approaches to risk, and differences across other demographic cohorts. How can advisers use these insights to get a richer and more robust appreciation of a client's true risk profile?
Because risk means different things to different people, advisers can frame and communicate risk in different ways to different clients. But some things can create confusion. Examples are provided of vague labels and terminology that are commonly used but that convey little meaningful information to clients.
Examples are given of how advisers can use a series of increasingly broad frames in their client communications, and how they can distinguish between the way risks are perceived, how they are felt, and the financial and tangible impacts they have.
This session will help advisers to refine the questions that they ask clients when assessing their risk profiles - either as part of the risk profiling questionnaires they use, or as part of the associated conversations that are used to clarify and explore clients' responses to those risk profiling questionnaires.
This session will also help advisers to communicate risk-related issues as part of their face-to-face and written communications. As a result, it will help them to avoid the confusion and anger that can result when clients experience risks that they weren't expecting.
As a result of this session adviser will also be better able to satisfy their obligation in the Code of Ethics to 'have reasonable grounds to be satisfied' that their clients understand the risks related to their advice.
Topic 4: The psychology of goal setting
How to help clients articulate goals that really matter
How to advise clients with vague or changeable goals
Overview
Covered in this session
Applications & outcomes
In addition to risk, the other half of the risk-return equation relates to clients' goals and objectives. But here too a number of psychological issues lurk. Clients can have difficulty predicting their future wants and needs. They can set goals that they think they want but then later change their mind. In this case, advice previously provided might now be inappropriate and might need to be reversed.
Or clients can set goals but then fail to take the actions necessary to achieve them. In this case, advice that was previously provided might not have been implemented and might therefore have been ineffective.
Or clients can set goals that they reach but that still leave them feeling dissatisfied, arguably undermining the ultimate purpose and benefit of the advice they received.
If the value of financial advice is in helping client to reach goals that matter to them, and if doing this contributes to client satisfaction and retention, then advisers need to be able to address these types of issues.
This session discusses the psychological challenges advisers face in engaging with their clients about their goals. If an adviser believes that a client's stated goals wil not ultimately make the client happy or satisfied, that the client won't feel motivated to achieve their goals, or that the client is unlikely to stick to their goals, should the adviser help the client to set different goals? Would the client expect to receive this advice? Even if they did, advisers obviously need to be careful that they don't use leading questions to railroad clients into goals that are not genuinely their own.
For advisers who seek to have a deeper conversation about a client's goals, this session discusses a number of relevant psychological issues, including the challenges of 'affective forecasting' (ie the ability for clients to predict what will make them happy); ways to get more 'happiness' for every dollar a client spends; the role of meaning, purpose & self-efficacy in motivating clients to take action towards achieving their goals; and distortions in the way clients predict their likely future life circumstances and preferences.
Insights from this session will allow advisers to have deeper conversations about their client's goals. Ultimately that should lead to greater client satisfaction and retention.
By ensuring that their advice leads to the achievement of genuinely satisfying goals, the sesion will also help advisers to comply with the test in the Code of Ethics: 'will your advice and recommendations improve the client's financial well-being'?
Topic 5: The psychology of financial education & action
Why financial education is often ineffective at changing client behaviours.
How advisers can deliver more effective client education and better influence them to act.
Overview
Covered in this session
Applications & outcomes
Financial education provides a paradox. On one hand, people with poor financial literacy tend to make poor financial decisions. But on the other, the evidence from a large number of studies of financial literacy initiatives demonstrates that providing people with financial education typically results in little or no measurable change in people's financial behaviours or outcomes.
Despite this, financial education can play an important role in a financial adviser's client engagement. Financial education can help to ensure the client understands the advice they receive and can help build trust in the adviser and their advice.
But when educating clients about making appropriate choices, advisers need to avoid the minefield of well-intentioned but failed financial literacy iniatives. Advisers need to educate clients in ways that they will actually understand, engage with and respond to.
This session discusses the evidence about financial education - what works, for which types of decisions, for which types of clients. What are the psychological barriers that advisers face when providing their clients with financial education? These include barriers to learning as well as the problem of 'knowledge decay' (ie forgetting). There is little point educating a client about something if they have forgotten the lesson by the time it comes to apply it.
Potential solutions that are discussed include the importance of the providing financial education in short bursts that are delivered 'just-in-time'. Also the need for advisers to focus more on their clients' financial skills, motivations and behaviours, rather than just their financial knowledge; otherwise the client is likely to suffer from a 'knowing-doing gap'.
More generally, this session discusses ways that advisers can motivate their clients (who already know what they should do) to actually act in their own best interests. Strategies related to savings and retirement planning are discussed.
Insights from this session will help advisers to educate their clients as part of their face-to-face conversations, their advice documents, their on-going communications, and their webinars and seminars.
By translating advice into action this session will help advisers to satisfy the test in the Code of Ethics: 'will your advice and recommendations improve the client's financial well-being'? Can unactioned advice that isn't implemented achieve this?
And by helping advisers to provide effective financial education, this session will also help advisers to satisfy the ethical obligation to 'have reasonable grounds to be satisfied' that their clients understand their advice.
Topic 6: Effectively implement behavioural finance into your business
Addressing the practical issues that advisers face in applying behavioural finance insights.
Answering any common questions that emerge in implementation.
Overview
Covered in this session
Applications & outcomes
Advisers face a number of practical and psychological challenge in implementing the strategies discussed in each of the preceding sessions. For example, sometimes they need to overcome their own decision-making blindspots and biases (that are well hidden from conscious awareness). It is difficult to overcome what you are not aware of!
Similarly, sometimes advisers need to address issues that a client is not aware of and has not asked about. Raising these issues might initially make the client suspicous of their adviser's motivations.
And sometimes advisers need to challenge the goals that a client currently believes are important but hasn't properly considered. It can be difficult to ask a client if what they say they want is really what is important to them.
This session is intended to be the final in a series. Participants will be asked to share the challenges, success stories and issues they have faced in applying the concepts discussed in previous sessions.
The session will allow opportunities for advisers to discuss potential strategies in a small group setting (eg around tables), and to share their ideas with the broader group.
This session will help advisers to address any implementation challenges they face when applying the principles and strategies that were discussed in the earlier sessions.
This session will help to ensure that relevant psychological strategies are embedded in advisers' businesses and advice processes, and that the benefits are fully realised and are substained into the future.