Changing Lives with Powerful Questions

Today, I listened to a great presentation by Tal Ben-Shahar who teaches positive psychology at Harvard University. Interestingly, his 2 courses have been rated the most popular in the university. No wonder, he is so motivating.

The message he delivered was that if you want to change the reality of people's lives then you need to change the questions you ask them. The right questions can change people's lives. This is when miracles happen.

Think about when your life changed or you made a major change in your life. Was it because someone asked you a great question? Very often it is. I know many of my significant life choices have been prompted by a great question. Furthermore, I remember the people who asked me these life changing questions.

How do you ask these life changing questions, or what we call in our business powerful questions? They must be positive or what is often referred to as appreciative. Always come from a positive angle or the person's strength, regardless of what the situation is.

If you want to be more structured or scientific about it, then you can have the person complete a behavioral profile first. Then you know their areas of strengths and interests to which the questions can be directed.

The same approach can be followed with a person in any area of your life: whether it be clients, team mates or family members.

Know Thy Investments

The primary foundations of Financial DNA are "Know Thyself" and Know Thy Client". However, what I have not spoken up much before about is "Know Thy Investments". For both the advisor and the client this is absolutely critical to successful investing. Who at some point has been caught in an investment they did not fully understand and lost money? Usually, they are the "smart" investments that offer lucrative returns and/or tax breaks.

In recent times, I have had discussions with many advisors and investors who have been caught with an investment that they did not fully understand. You should forgive yourself because even the best investors have been caught at some point. This point is not just about "ponzi schemes" but also bona fide investments.

Market declines like we have had in the past year usually expose the cracks. When the market is going up the holes can often be covered up. Some of these investments are so complex that not even the creator or manager even understands them fully, let alone the advisor recommending it.

I have always said to my clients: "If you do not know what is inside the sausage do not invest". Until a year or so ago, I did have some doubts as to whether I had been too conservative and that I was the fool for not riding the trend. Well now I am very relieved. A good example of this advice was 5 years ago when I told a very wealthy retired couple not to invest in a hedge fund that they had been offered by someone who was trying to impress them.

I do not believe most people know what they have invested in other than the belief they will make a lot of money. Many hedge funds rely on very complex models and very fine margins. Also, many change their strategy after you have invested. So that what you have invested in is not underneath the same investment as what you exit. I also know that many investors and advisors did not understand how leveraged with debt our financial markets were. All of these complex products usually have a lot of debt in them. So when the market declines, the fall can be accelerated because everyone has to get out quickly.

If you are an investor, now is a great time to review all of the investments in your portfolio and check that you truly understand them. Also, does your advisor understand your investments? Can your questions be confidently answered? I also think advisors need to take stock and totally understand what they are offering their clients. You really need to get behind the "research" reports.

Redeploying Your Talents

The current financial crisis is bringing to light a huge workplace shift. For many baby boomers, they only had one career or expected to have one career. The thinking of this generation was that upon getting your qualifications you had one career - working up the ranks often in the same company. Today, it is expected that the Gen Y's will have 10 or more careers. They will job hop. Although, this may be more difficult to do in the current circumstances.

With the financial crisis many people of every generation are having to re-evaluate their career to survive. Some career paths will simply go. What happens to the talent? How do people change careers? For many the big issues will be financial by being locked into the "debt trap" and being faced with relocation.

The first step for re-evaluation is going to be mindset. People will have to look inwards to themselves and see how their talents can be redeployed. Coaching or mentoring may help because we all have blind-spots and will need a confidence boost from another person's wisdom. The point is that many of us are capable of changing careers and still getting paid a reasonable income. The truly wealthy person is one who can confidently see that they have the potential for 2 or more careers. Of course, when there is financial pressure it is harder to see this because of the emotions that get triggered from panic. So, the key is to get people to take a step back and look at their talents which are the greatest source of their wealth.

As an example, I was talking with a friend of mine not long ago who is a leader in a bank. After some thought and discussions he has come to see that with his business knowledge and leadership experience he could successfully work in other companies. These other companies may not be in banking, but he can nevertheless redeploy his talents and make a great contribution. Even this week I have talked to 2 different groups of entrepreneurs about how they can re-examine their roles in their own businesses taking a similar approach. For some of them, it could positively change their business as they will get back in touch with their talents which are the real source of their productivity.

So, I really encourage you to look at your talents and see how by redeploying them you may find new opportunities. Be prepared to think creatively and beyond where you are now. A key part of this is not to let money be an immediate barrier. Look at the potential redeployment opportunities first. Then when you have your list, the economic denominator can be brought in as part of the decision-making process. The experience of doing this will be nothing short of liberating and powerful. You may even work in a job you are truly passionate about for the first time!!

Understanding Client DNA Behavior Under Pressure

When I was a financial planner and even before that a CPA, I had regularly observed that people's behavior and decision-making patterns changed when they were under pressure; the pressure often being caused by money and relationships. This observation was fundamental to my thinking when I was building the Financial DNA Discovery Process with my team. We wanted to know what a person's natural instinctive behaviors are as this would be key to predicting how they would really behave when there were difficult times and/or difficult decisions had to be made.

This plays into the research we recently did of 100 advisors with AUM over $50million. 70% of them said that they were surprised by their clients’ reactions. Why? Well, it is the natural DNA behavior taking over based on genetics and our very early life experiences which shape the neural pathways in the brain. In the good times, we all operate out of learned behaviors based on experiences, education and values. Hence, we have a greater chance of managing our emotions in favor of rationality. Under pressure, that switches.

It was interesting to read the Wall Street Journal Article on Saturday April 4 by Jason Zweig titled: "Influence of DNA on Your Investing Style in Troubled Times". Whilst different methodologies were used to discover this DNA behavior than we use, the conclusion is much the same. Zweig made the following point based on his own interview with Dr. Ahmid Hariri at the University of Philadelphia: "There is always a tug of war inside each of us between nature and nurture. But during scary times like these, says Dr. Hariri, "environmental stresses can play a critical role in unmasking any underlying biases determined by your genes." In other words, bear markets give nature the upper hand. It is now harder than ever to stick to the disciplines that can override your genetic impulses, but it also has never been more important".

So, now more than ever is the time to truly discover your client's DNA behavior and help them from the inside-out to achieve higher financial life performance.

Should You Be In The Business?

I have had some interesting discussions in the past week with financial advisors and managers of advisors. With the financial downturn everyone is evaluating where they are at. The big question being asked is: "Should you be in the business?"

My feeling is that over the next 1 to 3 years many current advisors will give up or be forced out. When you think there is research showing that 89% of clients are considering switching advisors there is much to think about. The financial services landscape is going to change dramatically. There is no easy street any more. Those totally committed to the industry with the right business model will prosper greatly if they stay with it.

So, getting directly to the point, whether you stay in depends on the answers to the following fundamental questions:

1. What are your talents and expertise?
2. What are you passionate about?
3. What is the vision for your life?
4. What is your purpose?
5. To what extent is money a primary driver of your decisions?

Financial down turns will always bring out what your true desires are. Everything in your life gets called into question particularly when your income goes down and there are angry clients to deal with (rightly or wrongly).

Taking a positive approach, this is a great opportunity to really discover what you love about being a financial advisor and re-create your niche. However, you are going to have to be very committed to work through the changes but it will be exciting and career/business changing.