Personalities & Compartmentalisation in the Client-Financial Advisor Relationship

Advice / Finance and Investing

Personalities & Compartmentalisation in the Client-Financial Advisor Relationship
Olufemi Feyisitan, Member, Partner, Nigeria

Possibilities of bias is actually common to both the client and advisor, but the advisor needs to be cognisant of biases with self and manage its presence in clients..

Theories that try to apply psychology to understanding client behaviours for the application or recommendation of suitable investments are almost as diverse as the amount of financial products available on the market. Literature is filled with classic descriptions of personality which include terms like Sanguine, choleric, melancholic, phlegmatic; including Macgregor’s theory X & Y, and whilst contemporary description such as the Nurturer, Mechanic, Artist, Protector etc. can neither be found lacking nor few. - (see High Level Description of the Sixteen Personality types)
Despite this proliferation of theories, most appropriate is the face to face interview or discussion between the client and the advisor. Face to face contact between the client and advisor allows direct information flow, perception of both facial and gesticulate expressions, the opportunity to witness immediate effect in-terms of impact and feedback with a strong possibility of opportunities to modify, clarify or a complete discard of aspect of the original message.
Personally I believe there should be no restriction on the type of questions used but for better results a structured format that will serve as a loose basis for directing the Information gathering process is recommended. Needless to say, tangential information that might be applicable in the future is usually passed on at such occasions. There is a need to listen for responses to key points of discussion as well as a note down of other responses that might show or reflect the thinking process of clients.
The initial intent is to acquire information about issues and circumstances that will establish, develop, aid and impact the client-advisor relationship. These include – financial and personal situations of the client, goals and aspirations, risk and return ability and capacity, investment horizon and medical or health issues etc. Without doubt this is broad enough. But there is a need for caution on the part of the advisor, knowledge of the various personality classifications might be helpful in understanding clients but compartmentalisation of clients based on these theories is not without its drawbacks.
Thus, the possibility of bias is actually common to both parties but the advisor needs to be cognisant of biases with self and manage its presence in clients. .

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Other Views by this Author: Religion, Faith and Dogmatic Thought Modes | Necessity for a Mutually Beneficial Relationship Between the Advisor and Client


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