POWERED BY YOUR FINANCIAL FOOTPRINT BEHAVIOURAL ECONOMICS REFRAMING
POWERED BY YOUR FINANCIAL FOOTPRINT BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
THIS IS THE SECOND OF FOUR MODULES… Introduction to behavioural economics • Attention grabbers to explain what it is and its value Reframing • New and existing client meetings to focus on advice Consistency • Showing how best to use existing provisions Loss motivation • Value through tax and risk management 2 BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
OUR AIM • Share insights into some typical Behavioural Biases that may drive clients emotional responses at ‘advice meetings’ • Help you better understand the buying brain so you can better articulate your value • Support you in delivering a profitable and sustainable service that clients truly value 3 BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
OBJECTIVES Understand at least 1 key behavioural bias that drives decisions to help a client better understand the value you add Demonstrate how to implement at least one example of using this Agree an commit to an appropriate implementation plan 4 BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
OBJECTIVES Your objectives and challenges? In the initial parts of client meetings (new & existing) 5 BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
REFRAMING 6 BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
REFRAMING QUESTIONS 7 BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
TWO CANDIDATES ALAN: BEN: • intelligent • envious • industrious • stubborn • impulsive • critical • impulsive • stubborn • industrious • envious • intelligent 8 BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
TWO CANDIDATES ALAN: BEN: • Most people viewed Alan more favorably than Ben. • The initial traits in the list change the very meaning of the traits that appear later. The stubbornness of an intelligent person is seen as likely to be justified and may actually evoke respect, but intelligence in an envious and stubborn person makes him more dangerous. • Sequence matters because the halo effect increases the weight of first impressions, sometimes to the point that subsequent information is mostly wasted 9 BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
HEAR WHAT YOU’VE BEEN MISSING! I am concerned about my standard of living when I do not want to work so hard I want a better home for my family and am concerned about not paying more than I need to in order to get it I don’t love my kids…but if you could reassure me that my existing provisions are OK should the worst happen that would be alright I want my hard earned money to work as well as possible for me until I want to spend it I want a decent standard of living when I do not want to work as hard 10 BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
OUR COMPETITORS… 90% 11 BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
OBJECTIVES Product to Advice transition Showing value and accelerating connection 12 BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
YOU RAPPORT PROFESSIONAL RAPPORT? & THEY WANT THE WHY OTHERS • Experience • Expectations • Objectives 13 BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
THE WORLD IS CONNECTED… BUT ONLY COMES ALIVE WHEN SALIENT 14 BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
REFLECTIVE STATEMENTS CONNECT THE 2 PARTS • What do we mean by a ‘reflective statement’? • What is the power of using them? • What are the dangers? • What is the impact on empathy and client connection? 15 BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
PRODUCT TO ADVICE Link these products to advice areas ISA Pension JISA / CTF IHT Wills Life Cover FIB CIC Income protection Key person insurance Mortgage Buy to let 16 BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
PRODUCT TO ADVICE conversion – new clients Reflective statements. . • What I am hearing you say is…. • So I am guessing …. E. g. ‘I just want to sort my pension’ = “Ah, so I am guessing it is about ensuring you maximise your standard of living when you do not want to work so hard? ’ 17 BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
PRODUCT TO ADVICE ISA Pension JISA / CTF IHT Wills Life Cover FIB CIC Income protection Key person insurance Mortgage Buy to let 18 BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
HOW DOES THAT CHANGE FOR EXISTING CLIENTS? ? 19 BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
YOU RAPPORT PROFESSIONAL RAPPORT – EXISTING CLIENTS? & THEY WANT THE WHY OTHERS • Experience – how have they found it so far? • Expectations – about what we do for our fees? • Objectives – sense check the purpose 20 BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
PRODUCT TO ADVICE conversion – existing clients Reflective / purpose statements. . e. g. ‘I just want to see how my pension is doing’ = “yes, seeing how we are progressing is important. To gauge the success, lets remind ourselves objectively of the reasons that made us start this in the first place” … “yes, and to put that performance into context, so we can judge it, lets remind ourselves of the purpose of doing this’ 21 BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
? ? ? How will you remember to implement this? 22 BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
FRAMEWORKS Introduction Guidelines (using Trust components) Template 23 BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
WE ALSO HAVE SOME EXAMPLE WORDS FOR YOU • It aims to provide some prompts and examples that you can personalise and implement in your own style • It is not designed to be memorised, scripted and repeated verbatim • It is designed to stimulate your thoughts and process, so a client can understand better the value that you add 24 BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
REAL PLAY EXPERIMENT TIME • If you wish to explore further we have included real play scenarios • You can focus just on the area covered in this module…or • You can link the three areas of ‘reframing – consistency – loss motivation’ together in the same scenario if you wish 25 BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
YOUR KEY LEARNINGS? More of: Less of: Start doing: Stop doing: 26 BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
REFERENCES Kahneman, D. (2012). Thinking, fast and slow. Penguin Books. Retrieved from http: //library. city. ac. uk/record=b 1526364 Kahneman, D. , Tversky, A. , & Tversky ’, A. (1979). Prospect Theory: An Analysis of Decision under Risk. Source: Econometrica, 47(2), 263– 292. Retrieved from http: //www. jstor. org/stable/1914185 Luise, V. (2005). Facts and Fears: Understanding Perceived Risk. In Policy and Practice in Health and Safety (Vol. Supplement, pp. 65– 67). https: //doi. org/10. 1007/978 -1 -4899 -0445 -4 Slovic, P. , & Lichtenstein, S. (1983). American Economic Association Preference Reversals: A Broader Perspective. Source: The American Economic Review, 73(4), 596– 605. Retrieved from http: //www. jstor. org/stable/1816560 Slovic, P. , & Peters, E. (2006). Risk perception and affect. , 15(6), 322 -325. Current Directions in Psychological Science, 15(6), 322– 325. https: //doi. org/10. 1177/03063127067078012 Sunstein, C. R. , Zeckhauser, R. , & Ramsey, F. P. (2011). Overreaction to Fearsome Risks. Environ Resource Econ, 48, 435– 449. https: //doi. org/10. 1007/s 10640 -010 -9449 -3 27 BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
DISCLAIMER This presentation has been prepared only for the recipient and date shown on the front page. It is not intended for any other persons and should not be relied upon by other persons. This presentation has been prepared for information purposes only and is not a solicitation or an offer to buy or sell any security. It does not purport to be a complete description of our investment policy, markets or any securities referred to in the material. The information on which the presentation is based is deemed to be reliable, but we have not independently verified such information and we do not guarantee its accuracy or completeness. All expressions of opinion are subject to change without notice. Any reference to the Quilter Cheviot model portfolio, which is used for internal purposes, is purely illustrative and should not be relied upon. The figures quoted do not include charges. Investors should remember that the value of investments, and the income from them, can go down as well as up and that past performance is no guarantee of future return. You may not recover what you invest. Changes in exchange rates may have an adverse effect on the value, price or income of foreign currency denominated securities. Levels and bases of taxation can change. Investments or investment services referred to may not be suitable for all recipients. Quilter Cheviot Limited is registered in England with number 01923571, registered office at One Kingsway, London, WC 2 B 6 AN. Quilter Cheviot Limited is a member of the London Stock Exchange and authorised and regulated by the UK Financial Conduct Authority. 28 BEHAVIOURAL ECONOMICS ‘REFRAMING’ MODULE
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