The 'Behavioral Economy': Money Attitudes Drive Decisions
In my travels I notice how many employees – across myriad organizations – are growing noticeably more frustrated with their leaders. They also express frustration with the leaders who advise them.
People I meet on the speaking circuit tell me they worry about being led by leaders without vision, where trust is broken, and resources managed badly. Others are concerned about their financial advisors and the degree to which the advisors’ personal approach to money influences the advice they are being given.
This got me thinking about my world and the decisions I make as the leader in my business. What are my key drivers and how does my behavioral style and approach to money inform these business strategies?
For perspective, my key drivers are:
- Success for the business and my people;
- Clear vision and direction so others can follow;
- Absolute integrity and transparency; and
- To make thoughtful, considerate decisions.
Digging deeper into my role as a leader, I found myself thinking through my personal approach to money and decision-making. I began to see that every business decision I make has its foundation in my financial personality made up of: Who I am as a person at the core Natural DNA level, and my personal financial preferences, attitudes, beliefs, experience and experiences. That is what is known as my Financial DNA.
I believe I have enough people to whom I have made myself accountable that would correct me if they thought my decision making was flawed. But, what about the people I pay to advise me? What are the drivers of their decision making?
Financial advisors role in my life
Without understanding the inherent behavior of my financial advisor and them understanding mine, how can I be sure their personal approach to money impacts (or does not impact) the decisions they are making on my behalf? How can I be sure the advice given is authentic, reliable and dependable?
Extrapolating this thought: All leaders and advisors are surely the sum of their own personal drivers, their biases, their experiences and who they allow to influence their world.
Understanding that money is the basis upon which all decisions are made adds a whole new dimension to the need for advisors and their clients to dive deeply into one another’s behaviors. This then reveals, at the beginning, the areas of behavior that need to be managed. Further, it reveals the differences in terms of one another’s approach to decision making.
Without a comprehensive understanding of what influences decision making there could be adverse consequences to the advice given to clients. Financial advisors are under pressure to deliver results. This pressure could force advisors to revert to hardwired behavior resulting in a problematic disconnect that spontaneously emerges in decision-making. (Our innate behaviors are most surfaced during times of stress.)
Every relationship that requires one party to advise or lead the other should begin by undertaking a scientifically based behavioral discovery methodology to reveal decision making styles. Based on the outcomes, the advisor-client relationship is formed on a level playing field from the outset.
In the financial advisory world, we are fully conscious of bias. Those who have gained an understanding of their own behaviors will recognize how to manage bias as they deliver advice.
Savvy leaders and the behavior-money connection
Nonetheless, not every industry is aware of the role attitudes play in impacting money and money in impacting decisions. But in the new behavioral economy, those business leaders, financial advisors and board members who are now recognizing the influence of behavior and money attitudes on their personal and business performance are taking action to understand more about the subject.
They recognize the importance of understanding their financial behavioral style. They know that this insight informs every strategy they formulate, and that every decision they make will be influenced and driven by their approach to money.
Bringing this message home
Think about your approach to money. How deeply does this mindset impact the decisions you make? You may well think you know yourself and your financial personality. You may think you understand how to manage your behavior and money attitude.
But remember, pressure and stress cause us all to revert to what is our norm. Our innate behavior(s). Behaviors we may not even be aware we have or exhibit.
Don’t be alarmed if your behavior-money learning curve takes some time. I’ve studied this for 19 years, have just written a book about it (Leadership Behavior DNA: Discovering Natural Talents and Managing Differences) and I still continue to learn more.
All told, and whether managed well or not, we all have a button that can be pushed that could greatly impact decisions we make based on our personal approach to money. Embrace your money attitude and begin to recognize the same in others, especially leaders and advisors.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.