Mr Bage notes that younger advisers are more likely to embrace behavioural science than their older counterparts.
“What’s interesting about millennial advisers is that they come from a very different place to start with, they’re happy to talk with people about self-help and self-awareness, whereas some of the older ones don’t see the behavioural side as fundamental,” Mr Bage says.
Are you listening?
So what types of behavioural science are currently being deployed? In short, there is a range – from simple communication skills to ‘gamified’ technology. In terms of the former, Mr Bowen-Nielsen says an important part of the training offered by his firm, and a practice that underpins sound financial planning, boils down to little more than listening. While this sounds like a simple behaviour to get right, in reality this is not always the case.
He explains: “An example we often give is that [intermediaries] should focus on the person not the problem. Advisers are trained to fix problems, to come up with solutions, and they’ve got a whole product set behind them to support that, whereas we start from, ‘how much do you understand this person who’s in front of you? How do they think? How do they make decisions? What are their preferences?’”
He adds that spending more time listening to a client and understanding their behaviours may be trickier than it would first appear. That is because advisers can often identify the right products for any given client in a very short space of time.
“Sometimes it’s a confidence thing with younger advisers; they want to prove themselves by offering solutions and ideas very quickly,” Mr Bowen-Nielsen says.
“When a client walks through the door, within two or three questions the adviser can pretty much know what solution needs to be given, because they’ve got hundreds of clients, [and] worked with them for many years. The rest is technical. That’s a trap even really experienced advisers can fall into.”
Other techniques look to harness technology rather than advisers developing their soft skills. Mr Bage’s company has developed a game-based app that aims to let providers such as banks to draw out clients’ behavioural tendencies.
Towards the end of this year Be-IQ will launch two new services that have been developed over the past five years: one for consumers and one for advisers. Mr Bage explains that both will take people through a series of behavioural bias tests: “A lot of these were lab-based psychology tests that we’ve worked on with psychologists to build into an online, very quick gamified enjoyable method.
