There’s an ample body of academic research that financial advisors could turn to in order to figure out why, say, a prospective client seems so eager at first to retain their services and then suddenly goes cold on them.
However, going through those studies to read up on such behavioral traits as client over-optimism and empathy gain, and then figuring out how to counteract them, can be a laborious and time consuming process; one that, understandably, many advisors may not be inclined to do, says David Greene, a managing partner at Atlanta-based Greene Consulting.
“The research is all out there and it’s great, but in our experience with advisors, we’ve seen that it’s best to provide a direct application of the academic perspective rather than leave it up to interpretation, and to tie the research up in a practical way that advisors can use,” Greene says.
That’s why Greene Consulting has teamed up with Keith Van Etten, former managing director at U.S. Trust, Bank of America Private Wealth Management in Boston and a consultant in the field of behavioral finance and alternative investments, to develop an educational program for financial advisors that synthesizes the nuts and bolts of behavioral finance research in a practical and easy-to-apply manner.
The online course, which consists of five different and sequential modules, will launch in early March and one of its main focus areas is the behavioral aspect of the advisor/client relationship. The course is designed so advisors can optimize behavioral finance theory to its fullest practical application, Greene says, and give their client relationships the depth that they require, at a time when relationships are even more important than ever.
Neither advisors nor clients are wired in the same way, and beyond that broader division, individual brains also work differently, Greene says. Clients tend to resist the input and direction of advisors, who have to then figure out why and how best to counter their behavioral biases and bring clients around to taking a more rational approach toward investing.