Hello everyone. My name is Doctor Daniel Crosby and I'm joined today by my colleague, the hardest working man at Orion Kade de Nazario Acres. And we are going to run you through three of our new behavioral finance tools that we are so excited to share with you today. But before we get started in earnest, I want to give a little. Bit of a business history lesson because the annals of the world of business are filled with the stories of brilliant companies who were solving the wrong problem. I'll begin with Kodak. I think it's little understood that Kodak actually developed the digital photograph. Kodak actually developed digital photography that ended up putting them out of business, but they didn't see that it was the future. They developed it. They put it to the side Why They focused on their more traditional film elements of their business and then were undone by their own creation. There is famously Blockbuster, where I think many of us spent a wonderful Friday evening trying to figure out what to watch with a date or a friend. Blockbuster famously had the opportunity to to buy net Netflix for $50 million and past thinking that they would squash them under their thumb. And again. Doubling down on old school VHS in the hand rather than digital and streaming and mail to order DV D's. And then there's BlackBerry, who at one time had the vast preponderance of market share in the smartphone category, but instead directed their efforts at improving their physical keyboard and laughed at the iPhone when the iPhone jumped on to the scene. So wonderful companies at the time, blue chip companies, filled with smart people, but they all had one thing in common. They were solving the wrong problem. We don't want to be Kodak. We don't want to be BlackBerry. So I think let's look at what the right problem is for people like us to solve. Well, there's a couple of ways that we can arrive at the answer to what is the right problem. And one way to arrive at that is to. Ask ourselves what do our clients want? And the study from Accenture that came out last year had some pretty fantastic results for for my book when it comes to what clients want from an advisory relationship. So the number one thing that clients said they wanted from their relationship with their an advisor was someone who understands me. The second most common response was someone who shares my values, and the third most common response was someone who I can vibe with and connect with. Socially little unexpected these results, and if we're not careful, traditional discovery processes don't maybe give us what we need to meet what our clients are asking for. Another way to see if we're solving the right problem is to ask what works. So Merrill Lynch in 2016 conducted a meta analysis, which is just a fancy way of saying a study of all the studies They looked at the study of all the studies of how advisors add value. And the good news is that every part of your daily work is additive to clients lives. Everything from the blocking and tackling the sort of old school stuff to the more behaviorally relationally oriented pieces that we're talking about today adds value, but it doesn't all add the same amount of value. What I'm calling the old school pieces of this game. Things like asset allocation, tax alpha asset allocation, product selection. These add value in about the 30 to 60 basis point range. But if we go over to the behavioral side of the Ledger, we see that the least additive piece of behavioral intervention is actually more powerful in boosting client outcomes than the most additive traditional help, right? So something like tax management, which adds 62 basis points. Worth of value and leads. The old school side of the Ledger is still not as powerful as client assessment, which clocks in at 65 basis points. A third way of sort of arriving at what problem should we be solving is by asking clients what keeps them up at night, and a recent survey was pretty telling to me about what is keeping clients up at night. Unsurprisingly, in a world of inflation, right, the number one thing keeping clients up at night was money. But what surprised me were the number two and the number 3 responses. The number two response was work. The number three response was the economy. So we've got money, the place where I make my money and the place where I spend my money. Very clearly financial concerns are top of mind and we can improve our clients lives by addressing these. And #4 was love relationships. People are worried about keeping these relationships strong, sometimes worried that these relationships were fraying. So it's clear that love and money are two of the things that worry our clients the most, so. What do we do about this? Well, we at Orion wanted to arm you to help solve the right problem and by way of quick review. Right by way of quick review. We know that clients want someone they can connect with socially, someone with whom they share values, and someone who understands them deeply. We know that they're benefited by behavioral interventions more than typical product based interventions. And we know that people are worried about these things. So we've come up with a tool that helps you understand your clients and have better conversations with them based on a deep understanding of who they are as an individual and who they are in relation to a spouse, a child or a loved one. So again, getting at this problem, money and love, as we suggested in that last slide, when they get together, when the number one thing and the number two thing that we're most worried about comes together. Together, unsurprisingly, it's a pretty combustible mix. We've got nearly 2/3 of people in a recent survey who think that there are significant other overspins in some significant way. I know that's true of my own relationship. I live in mortal fear of my wife discovering how much I've spent on sneakers, baseball cards and guitars. I know that she would be in that 63% answering that I spend too much. We've got more than 1/3 of millennials who again, are not young kids at this point. Millennials are basically 40 years old at this point, so and the largest part of our workforce. So more than 1/3 of millennials fighting about money weekly in a full. 12% of couples say that they've never had a fully functional, constructive conversation about money. So into this fray, right into this problem, the series of problems and solutions steps the BeFi20. The B 520 is a first of its kind financial personality assessment that again gives you a deep understanding of who your client is. And who they are in relation to someone else important in their life. Now, what's cool about the BeFi20 is we jumped in to study one thing and walked out with quite another thing. The original research I conducted around putting the BeFi20 together was a survey of a few 100 Canadians. And Americans that looked about what that looked at what they fought about when they fought with their partner, about money. And what we found is that 5 consistent themes emerged. But as we conducted interviews and qualitative appraisals of these same people, we found that the reason that conflict was occurring around these five was because they were deeply held values. And what's fascinating is that many of us grow up in environments and household and families where however we grow up and whatever our early lessons about money, we assume that that's just what normal looks like and that that's how everyone moves through the world. And that oftentimes these values are called into question when they **** up against the values of someone else we care about and with whom we are in a relationship. So let me spend just a minute talking about the five categories in the B5 twenties. So the first of these categories is communication. And this one's probably a little unsurprising to you because after all, money is just one of those things like politics and religion. That we aren't always comfortable talking about in polite social circles, and this sometimes generalizes to even someone with whom we are in a relationship. So we find that some people are very comfortable and very direct and how they speak about money, while other folks are a little bit more shy, a little more reserved, and a little bit more withholding and how they speak about money. The second of these values is worry. Our results indicated that some folks just don't think about money that much. They just don't worry about it that much. They're pretty happy, go lucky. They don't think about it that much. Others, money is a constant source of concern, a constant source of worry. And while this can have some relationship to levels of wealth, it doesn't always. Sometimes very wealthy people continue to think about and worry about money either through very dramatic clip, while others who are less well resourced give it no second thought. So this is sort of an interesting one, a bit of interesting information for you to have about your client and it also correlates with risk taking behavior. The third of these is function and. I know that no parent should have a favorite child, and yet here is mine. Function is just beautiful to me. I'm so glad this came out in the research because I've seen it in my own life and the lives of the people we serve. Function is simply Do you believe that money is best used to enjoy today or to secure tomorrow? Is money best used to live in the moment to seize the day? Or is it best used to to store, to protect against an unknown tomorrow? Now, as I think as I present this to you, I imagine you're thinking two different things. First of all, you're probably finding yourself in in one camp or the other. I certainly find myself in the in the security side of that Ledger. But you're also thinking, you know, Daniel, these are these are both important. And if you're thinking that, you're absolutely right. And I want to use this to illustrate a truism about the BeFi20, which is that it's a non pejorative, non judgmental assessment of client preferences. There's no good answers. There's no bad answers. For each end of all five of these continua. There are pros and cons that we report out in our reporting and will help you have a conversation with your clients about it. Okay A Happy Life is a blend of these two preferences and all five of these preferences. But I think sometimes it's most easily seen with function that a happy life and a life well managed balances the tendency to spend money to enjoy the day and also to to protect for a rainy day. The fourth of these is orientation. This is whether wealth is viewed as an individualistic or a collectivistic good. What do I mean by that? If you think about a family, right? Let's say that your sister or your brother or your one of your grandparents needs a little financial assistance or your nephew is a little short on college money. Would you help them out? Would you see that as part of your obligation to help them out? Right. Some people say yes, some people say no. And again, there's no right or wrong answers here because it is. It is important both. To put on your own oxygen mask 1st and to be responsible for your own financial life. But we also know from the literature there's a great deal of joy to be had when spending money on others, giving charitably being philanthropic or helping people who are less fortunate. So again, finding balance around orientation and then finally importance, we found in our study that for some people. Money is deeply central to their concept of self, and that accumulating, making and accumulating wealth is a way of keeping score, and that it's an indicator of a life well lived. It's an indicator of success. Other people see it as entirely orthogonal to personal success and don't see it as important at all. So again, no right or wrong answer there, but it is a meaningful source of distinction. So as Kade will show you in just a moment, the BeFi20 gives you. Reporting across each of these five areas lets you know where an individual sits across them, and if they take it in concert with a loved one or someone with whom they have frequent interactions, they will be plotted relative to one another across these 5 dimensions. Where they are the same, we will give suggestions for overcoming that uniformity of thought where they are different. We will give tips for having conversations that are that are gentle and constructive around these differences. So the coolest thing in the last piece I'll say about the BeFi20, The coolest thing to me about the BeFi20 is that it is an absolute Swiss Army knife of a solution for financial advisors. It has obvious implications for deep discovery and early client meetings. Go back to that Accenture study. We want to work with someone who gets us and someone with whom we share values. This is not the kind of thing that always gets unearthed and articulated and codified and packaged in a discovery meeting, but it does. With the BeFi20, you're going to learn deeply who your clients are. You're going to be able to share that back with them. And I can personally attest that there is magic in this process of understanding someone. With whom you've just met and let me say again that the B Fry 20 is a 20 question assessment that takes just under 3 minutes to take on average. So there's a lot of understanding bang for your buck there and we think it's a real value in those discovery meetings. Secondarily, we have personalized planning. Which is the number one thing advisors have been asking us for here at Orion in our most recent tech surveys. You want bespoke, custom tailored solutions for your clients. This kind of thing gives you deep insights into an end of one who that person is at the most fundamental level and allows you to tailor your conversations and and your interventions thusly another powerful piece of this. Is that it allows us to engage the non CFO spouse. We know that in most couples typically one of the partners is more invested in and has a deeper understanding of the mechanics of things like planning, investing and saving. Right. But the other member of that couple is just as important and we know all the research on how frequently non CFO spouses and children get rid of their advisors after a lifetime of being ignored. The BeFi20 is different. It's different. It's not a stock, it's not a bond, it's not a performance report. It's deep, it's relational, it's familial and focus and allows you to gain the interest in the connection of that non CFO spouse or that child, right. It's something you can have a conversation with your clients if you don't want to use it in that initial discovery meeting or if you're using with a client you've had for for years. It can be a non performance, non market value add at that quarterly or biannual meeting. Instead of going over with the S&P 500 did, take a moment to deepen that relationship, to connect with them to show an interest in who they are and what they value rather than rehashing tired talking points about what the market's done and then finally. And one of the coolest pieces to me is that this can be a way to engage with folks who are not yet your clients, right? This is better than inviting them to have a steak dinner. Once you've gone through this with someone or a couple and you say, look if you enjoyed this, let me know if you have any friends who might wanna, you know, find out about their financial personality too. It's a foot in the door. It's a way for you to generate leads by offering value to people for free who are not yet your clients, showing them that you care before you even have that first handshake or that first meeting. So again, one simple tool, less than 3 minutes to take 20 questions and a world of good that it does. But enough theorizing, Enough of me talking about it. I'm going to kick it over to Cade who's going to walk you through sort of the meat and potatoes of the BeFi20 and show you the tool in all this glory. Thank you so much Doctor Daniel. I appreciate the introduction and the kind words and I share in your excitement for BeFi20 and we are really excited about all of the conversations that are sure to come and all the great knock on effects that you will experience in your practice. So without further ado, let's jump into a demo of BeFi20. Let's talk BeFi20-BeFi20 of course, was created by Doctor Daniel Crosby and its original intent was to address potential financial conflict between couples. Now it's use case is much wider. We believe that this is appropriate for really any two people who find themselves in some kind of financial relationship to each other. That could be business partners, that could be friends, that could be parents and adult children, that could be, of course, romantic partners, and it could just be individuals who are curious about uncovering some insights about the relationship to and disposition around money. So the question we see and are attempting to answer throughout this assessment is what does money mean to you? And it's true that each of the. Financial personas that you will see will bear a slightly different signature depending on the responses. Now, I don't want to patronize you again and you know, read you these questions word for word, but just so that you can get, you know, a fairly vague impression at least, of how some of these questions are posed and what we might be aiming at in terms of insights. So this is the result of. And individuals BeFi20 assessment, there they get a a financial persona and of which there are 10. Each of them have a different description. So there's a qualitative description here around, you know, what are some of the signatures of this particular financial push, excuse me, financial persona. And then we get the five different categories communication, worry, purpose, use and importance. And we get a description, but also we get an indicator of where the the person who took the assessment, you know, where they ended up across these different Spectra. So in this case, with respect to communication, this user is just slightly left of center in terms of their hesitancy versus comfort and that would be a useful thing to know. Both for them and for you. As you organize next steps and just start to form some expectations of each other in the scope of your engagement. I'll Scroll down to the bottom and show you just a couple of things. Number one, you can always retake the assessment #2. There are two different ways to share and compare this first. Compare option is explicitly for the purpose of generating a comparison, and I will show you exactly what a comparison between two people looks like in just a moment. Just keep in mind the second option. It really just allows a person to share this out with someone who they think might benefit from, you know, going through this assessment themselves. But it would not generate a comparison. So to generate a comparison you just enter you know, someone's name here and their e-mail address. And click send, you know the the invitee would receive an an e-mail and a link. They would click the link. They would go through a short registration process and go through the assessment themselves. Now at the completion of the second person's assessment, a comparison report would be generated. So this client has, you know, quite a few comparisons and this is their landing page where they can manage their comparisons. They can, you know, remove any comparisons or remove any kind of, you know, pending comparisons. So I'll exit that management mode, but I will just click on one of the reports. This is, this is the result of two people having both gone through the assessment. What's different about this report is that you get a similarity score and I'll just take a moment here to highlight the fact that. Although these two in this example that you know these two individuals are highly similar, that is not necessarily a good thing. Nor is it a bad thing if if these two individuals were were quite dissimilar. It's really more about the insights and the action steps, how people organize themselves around their their values, their money values. So different descriptions these these descriptions now are based more around. Two individuals rather than in the context of a comparison rather than just one. And of course we have some tips and insights. So here we can see what they need from you with respect to communication. They need conversation around money framed in terms of shared values and concerns. And because they're similar, they have the same needs for each other. In addition, we have some start talking and start acting tips and of course the share and compare options. Are also available on the comparison report. You can toggle between an individual's report and any comparison report that's been generated. This is also available as a PDF and and many advisors have made good use of that feature. So that is is BeFi20. It's such a fun project. We are, you know, really excited about the the great feedback that we've heard. We cannot wait. To hear your feedback about the tool and hear some of the stories about how you've been able to to work these conversations into your financial planning process. Thank you so much, Kate, for that wonderful demo of the BeFi20. Now I want to launch into a second cool behavioral tool we've developed for you here at Orion and this we call Protect Live Dream or affectionately PLD. So PLD is based on a well studied, well demonstrated psychological tendency called mental accounting. So mental accounting is really just what it sounds like, which is our tendency to partition or bucket money into different mental accounts and for our behavior with those accounts to change depending on how we have mentally accounted for it. That's a little hazy. Don't worry, we're going to get very specific for you here. But when it comes to our minds, we basically have 3 buckets for our wealth. One thing, one desire, we have one bucket is we want safety. We want to avoid the worst case scenario. We do not want to be poor. That is a sort of preappointed, very natural hardwired bucket. The second piece we know from seminal work done by Lopez many years ago is that we want potential, right? This is the live piece, right? If safety is protect, we want to live. We have to meet our daily needs. We've got food, shelter, water, all the daily grind of financial realities that have to be met. But we're not comfortable just not being poor or meeting our daily needs. All of us have a third bucket that's hardwired into our brains, and that's that we dream a little bit. We're aspirational. And it's not that just that we want to avoid low levels of wealth. We also simultaneously want to be reaching for high levels of wealth now. Many advisors who fail to take advantage of goals based wealth management platforms like Protect Live Dream bucket things into one large bucket and that loses valuable conversational surface area for breaking out and segmenting wealth and having different conversations about the wealth that meet these very particular needs. If a client comes in feeling scared and wanting safety or protection, we want to let them know that we thought of that and addressed it. If they come in during a bull market and they want to know what we are doing to reach for the stars, we want to be able to show them that we have addressed that as well. PLD helps us do all three things by intentionally. And consciously segmenting these things, these buckets in the way that align with our preexisting brain structures and allowing us to give our clients our best. So there's three things that we're going to talk about. 3 reasons why we think Protect Live Dream works so well. A little Daniel son, a little Daniel son. Action for from Daniel. I hear Peter Sutera singing softly in the background here. So the first truism about behavior is that anytime we can roll with it, we want to roll with it, right. We call this in martial arts the. Curricular theory of self-defense, which is in martial arts and karate, we learn if someone throws a punch at you, rather than trying to cold block that punch, we want to roll with that resistance, roll with that exertion by our opponent, and let it hurt them. How does this pertain to human psychology? Well, I've already talked about the ways that we naturally engage in mental accounting. This is, in the most basic sense, not rational, right? Because a dollar is a dollar is a dollar. But yet we know that we do this. And so instead of trying to convince our clients that mental accounting is not rational, we should know that they do it. We should roll with it, and we should just help them mentally account for their money in ways that benefit them. The second one is that we want to use emotion in our favor. So I have included here quite selfishly a picture of my family to to talk about one of my favorite bits of research I've ever come across. So I hope you enjoy seeing the people I love so much and the reason why I get up and go to work every day. Right, so study was done in Canada years ago that separated people, low income earners into two groups. One was a control group who got no intervention. Easy enough. And the second group was hooked up to an electronic banking system where anytime they logged in to make a purchase or a withdrawal or a deposit, it flashed up a picture of their family for five seconds before they were able to transact any business. So just like you see my family here, it would flash up a picture of their family before they were able to transact business now compared to the control group. The people who saw a picture of their family for five seconds before they made a banking move saved more than twice as much, even among this group of low income savers who didn't have a whole lot to save. So a second truism that's related to the first is money is inherently emotional. It just is in my research for the behavioral investor. I cite research that shows that thinking about money makes us more emotional than any of the other big hot topics. Politics, sex, death, religion, all of it. Money reigns supreme in its ability to make us emotional, and these preferences we feel for dreaming or aspiration or safety or protection are quite emotional. But we can be owned by that emotion and lead it to help us make a good decision, excuse me, we can be owned by that emotion and have it lead us to a bad place where we're chasing returns or going to cash to try and achieve that safety. Or we can use a goals based investing platform like Protect Live Dream to increase again that conversational surface area and show clients that in good markets and bad we are always meeting these needs with a portion of our assets and thus using that emotion to our benefit. Right. So I want to talk about some of the literature around this. Another firm that will remain unnamed undertook a study during the great financial crisis where they actually had a a brand new goals based wealth management platform and they were able to compare that. They were able to compare and contrast that with their traditional one bucket, unnamed accounts. And they found that when it came to liquidations, people were 12 times less likely to liquidate when they had a named account, including a safety account. Because that safety account effectively scratches that itch for protection and allows us to say yes, things are scary right now, but you have sufficient assets to ride out the storm. We knew this day was coming, we planned for it and you don't have to worry. So powerful real life example of how the psychology of bucketing can work. And then the third thing that I want to talk about that makes PLD so powerful is that it must be embedded in our conversational and our planning framework. I think sometimes advisors want to have conversations sort of on the surface. With clients about, hey this, you know, here's our one bucket. But you know part of this is for safety and part of this is for aspiration and part of this is for X and part of this is for Y. But I would suggest to you that it has to be embedded and it has to be baked into the fiber of how we report out our our business to our clients and how we speak to our clients simply because of the way that we forget. Ebbing House famously showed that we forget 90% of what we learn in the first three days if it is not recommunicated and made personal. PLD is technology custom built for those two things. We're going to personalize these buckets to the clients wants, wishes and desires and values. And we're going to use that and reinforce it over time, reminding them that we are always working to protect them, help them live day-to-day while also achieving their dreams. But as always, I'm too theoretical. We now to kick it back to Cade, to bring us back down to earth and show us how PLD works in practice. Let's talk about Protect, Live Dream. Protective dream turns on the idea of mental accounting, which is the tendency or the propensity to treat equally fungible dollars differently based on the way that we're mentally or emotionally framing them. Now, this is, you know, no value judgments at all. This is not a good or a bad thing, and if it were a bad thing, then we would all be guilty of it. So this is just something that we know people are doing and what we're trying to do is identify. Any gaps between, you know, reasonable decisions and and and rational decisions. Now that that distinction between rational and reasonable is not mine. That's Morgan Houses. He wrote a book called The Psychology of Money, which is fantastic, but protect, live, dream is is a is a way for advisors and clients to come together and speak the same language. Think of this like it is a behavioral balance sheet. Now we have, you know, a traditional balance sheet, which is a wall of numbers. And it shows a lot of different data. And this is different, right? This, this is, this is a way to really show and highlight the purpose behind the money. Now something we're really passionate about at Orion is making our technology personalized and customizable. And Protect the Dream is no different. So I'm just going to show you what that looks like really quickly. I'm going to click this edit asset bucketing icon. And that brings me to a template for, you know, for this specific client, for Kurt. So if Kurt has, let's say he's got charitable inclinations. And so instead of Protect Live Dream, we're going to, we're going to name it Protect Live Dream and charity. There we go. I'm going to add a fourth bucket and call it charity. I'm going to just copy and paste some text here just so you can get a sense of what it would look like. And then if I Scroll down I can drag and drop accounts and assets from one bucket to the next. And I can do this at the level of the account or the asset right? Like I could drag and drop a primary residence if I wanted to, but also if you have. Linked accounts that have individual positions. We can select just individual positions and move them from bucket to bucket. So at every level we're able to you know show assets in in the bucket where we want them to to reside. If I like those changes I will go ahead and hit save and you can see when I return back to the the the landing page my changes have been applied and saved. Another couple of pieces of functionality here. We have a What Ifs menu, so if you have access to the financial planning tool, you can model some changes to the profile. In this case, I have modeled a real estate sale in the year of 2035 with some resulting proceeds. I'll go ahead and apply that to the plan and right now we are looking at present values that are pulled, you know directly from the balance sheet or from linked accounts. But I can flip also to the year where this, the transaction would occur and now I'm looking at future values and I can come down here and check that the real estate transaction has been reflected. So that which used to be a real estate investment, now the proceeds have been deposited into an investment account. You can also come here to profile and accounts and you can make changes to the accounts in terms of where they reside by default. Right here at the Asset Bucketing tab. So you can either exclude it from Asset bucketing, you can see which which bucket it would live in by default and and move it around here as well. As I mentioned with the other tools, this is also available as a PDF and the way that I navigated to to PLD was at the goals results. And then we have a dedicated protective dream tile. We also have dedicated workflows. In our data workflow menu, so for the the 3D risk profile BeFi20 and and Protect Live Dream as well. Thank you Kate for that elegant demonstration of how Protect Live Dream can help our clients and how it looks in real life. The final behavioral finance tool that I want to talk with you about today is our 3D risk tolerance questionnaire. What? What do we need 3 dimensions for? What do we need 3 dimensions for? Well, it turns out that we have referred to risk tolerance as a monolith. In our industry historically. But when we dig into the research, risk is more multifaceted than we sometimes appreciate. So let me just spend a moment breaking down the different dimensions of risk on route to helping you all understand why A3 dimensional look at risk is so important. So risk tolerance truly understood. Is someone's long term willingness to make risk reward tradeoffs in an unemotional cold state K. This is someone's long term willingness to make risk reward tradeoffs, and it tends to be pretty stable over people's lifetime. The second of these is risk capacity. This is how much risk they can afford to take. This one is a little bit harder to move the needle on because it's driven by things like level of wealth, age. And goals, right? Goals being sort of the easiest lever to pull there. But you know, all else equal, someone being younger and someone being wealthier leads them to have greater risk capacity. They have a greater capacity to take risk based on being a little younger, being a little wealthier, and perhaps having goals that are more in the moderate range. Some measures, Some industry measures look at risk tolerance, Most look at risk tolerance, some look at risk capacity. But dare I say, very few, if any, look at risk composure in a scientific way. So risk composure is the likelihood that a short term emotional reaction to the markets will dislocate your long term preferences. Basically, this has to do with the lens through which we are viewing markets. The emotional lens through which we are viewing markets can lead us to perceive a market as more or less risky. So the $1,000,000 question is, does risk tolerance change? If you ask most academics, they would tell you no. If you ask most financial advisors, they would tell you yes. And so how do we reconcile these, this seeming incongruity between the folks in the ivory tower and the folks in the trenches? Well, again, we have to revisit our terminology. Does risk tolerance change? Not much over a lifetime, but does risk taking behavior change? Absolutely. So go back to the great financial crisis or the tech bubble or if you will the COVID Lows, right? Think about someone who calls their financial advisor during the COVID lows and says sell everything. Like Get Me Out of here, I want to go to cash if you calmed that person down for a moment and said. Do you think you should be doing this? You know, do you think you should be doing this? This is a theoretical situation by the way. Do you think you should be doing this? Do you think this is wise? They would probably tell you no, I don't think this is what I should be doing. That's the risk tolerance speaking. That's their long term attitudes, right? In a cold emotional state. But they might then say, but I don't care, I'm too stressed out, do it anyway. That's the risk composure speaking. So the risk composure is effectively that client's level, that that client's proneness to stress, anxiety and worry. That's the accompanying likelihood that's going to lead them to misperceive a market at a time of volatility. I won't read this whole quote to you, but Michael Kitsis has a number of of excellent pieces on Risk Composure and the value of incorporating Risk Composure into a risk assessment process. And so basically what Kitsis says is what I've just said, which is Low Risk Composure is what leads clients to sell at the bottom, to sell at exactly the wrong time. So hopefully not too pedantic, me walking you through these three dimensions of risk. Because I think it's important for us to get on the same page, to have the same language, and understand that the only thing that matters? Who cares about theoreticals? We are measuring risk taking behavior and we know that some clients risk taking behavior is more likely to change than others. And so we would be wise to measure the dimension that that lands on that piece, which is Risk Composure, right, Risk Composure. Many of you who have heard me speak before know about my 3 E's right, my 3 E's for for improving client behavior. The first of these is education. We need to teach our clients how markets work. And one of the things that our clients need to understand is that on average over the last 100 years, there has been a market correction every single year. On average, the markets down 1415% at some point in any given year. Educating them to the realities of volatility helps to inoculate them against a negative future outcome. The second piece though is the environment. And the environment is actually the portfolio that they are sitting in. And what we need to do is tweak our portfolio not to maximize returns, but to maximize anxiety adjusted returns because we know that the best portfolio for a client is not spreadsheet optimal. Right. It's not spreadsheet optimal, it's behaviorally optimal. The best portfolio for a client is the one that maximizes returns to the point where they can live with it to the point where they can take the ride and stay on the journey. That's where the 3D RTQ is valuable in tweaking that environment to maximize the likelihood. Have a good outcome and that last piece is encouragement. You talking counseling with that client, helping them in a time of panic. That's why we developed the Orion Advisor Academy to help give you the communication and the empathy skills to to encourage those clients in a hard time. But again, as ever, I'm going to kick it back to Cade. He's going to help you understand practically what does the 3D Risk Tolerance Questionnaire look like? Like, how can you use it and how can you better understand risk in your client's lives from every angle? Let's talk about risk. I think we're all familiar with a traditional risk tolerance questionnaire, which is, you know, a great tool and and I would say sometimes limited or even limiting. Risk tolerance is great at capturing exactly what the name suggests which is tolerance. But we believe, you know, risk deserves a much thicker story to be told and and that's where our 3D risk profile comes in. So our 3D risk profile is a slightly extended assessment that seeks to measure not only tolerance but also wants to capture capacity and composure. So capacity would be the ability to take risk. Based on goals and a timeline and composure which is you know much more behavioral element is the composure in times of volatility and change. So think of it as the experience that someone has in the process of taking risk. So we'll start here. First, we gather a risk capacity score and I won't patronize you by reading you all the questions. I I really just want to make sure that you can get, you know, a vague impression of of the experience and the look and feel. In the process. We can confirm our risk capacity score and we'll move on to tolerance. I presume that most people watching this have gone through a very similar risk tolerance questionnaire. We can choose our comfort based on a couple of different scenarios that get presented. After tolerance, we move on to composure. Now really take note of, you know, sort of the tone and how some of these questions are pitched the the the information that we're trying to tease out. So we're talking about stress and worry and calmness under pressure, our sense of control, how easily bothered we are. Emotions. So we have a Risk Composure score and I'll just pause quickly here to mention you know that a lot of advisors use this Composure score as a way to proactively check in with their clients. So we we know that folks tend to think about, you know, making rash decisions during times of uncertainty and. Some folks have decided, you know, part of our advisor community has decided that this is, this is a good indicator, you know, to to create a call list or to a check in list. So when things are, you know, turbulent, you have a sense of your clients and prospects who would really appreciate a call or check in because we know that there may be less composed than some of their, you know, some of their. You know, the counterparts who have nerves of steel perhaps. So I just want to point out, you know, that's one of the applications of this, of this metric. So I can go ahead and generate a score. You can see these three different scores broken out here on the bottom. And then we get an aggregate 3D risk profile. I'll go ahead and submit that. And because I've already created models, I can go ahead and tether my risk profile to, you know, a moderately aggressive strategy. This is just, you know, for the sake of for example. So I'll go ahead and confirm that while we are here, I just want to point out how I got here. Within Orion planning, you can come to the profile and then Risk profile item here on the left. Now if you come into the application settings by clicking the hamburger menu on the right and then settings, you can just easily confirm under the My Settings tab which risk assessment you're going to use. So there's a little drop down here under Risk Questionnaire. The the 3D risk profile is available. Also the the Orion Questionnaire which is a you know a seven question risk tolerance questionnaire which you're welcome to use as well. Additionally, if you'd like to use a different assessment for a different client that that is different than just the the the firm default, you can come here to client settings and. You can choose on a client by client basis which risk profile you would like to use for that particular client. Thank you Cade. Well, thank you all for your kind attention today. I hope you've enjoyed my theoretical rundown of each of these three tools and Cade's nitty gritty there in the trenches demonstrations of how they all work and how they can better your lives and your clients lives. But we want to, we want to leave you with a little bit of a game. A little bit of a contest. If you use any of the three tools that we have mentioned on today's webinar, you will be automatically entered into a drawing that will take place in the last day of July of this year and you will be entered into a drawing for one of three, dare I say, incredible prizes. The first prize will be a virtual presentation from yours truly to your clients, where we will break down. The 10 Commandments of Investor Behavior. This is my favorite client facing presentation. Clients love it. It is a humorous and engaging way for them to understand why they do the things that they do. And I promise you it's going to leave your clients in a better place. They will leave better educated and better behaved than than when we started. The second prize will be you and I myself in the second place. Winner will consult. For one hour, you can ask me any questions you have about behavioral finance. I will be at your service and give you all of my best thinking on how to apply behavioral finance to your practice and third prize, We have 3 copies of my book, The Behavioral Investor. There will be three third prize winners named the Best Investment Book of 2018 and a comprehensive look at the biology, psychology, Neurology of of. Human behavior when it comes to money and when I think you're really going to dig. So anyway, we think the tools are draw enough. We hope you love them. But it doesn't hurt that you might win something cool that can help your clients deepen your own understanding or give you something to throw on the night stand. Thank you so much for being here. Thank you for being clients. And we hope that you've learned a little bit today that'll help make you 1% better tomorrow. Thank you. _1719278461323

Become a Triple Threat: Grow Your Client Relationships with Investment Management, Financial Planning, & BeFi

Get ready to be introduced to three Behavioral Finance infused tools - the 3D Risk Profile, Protect, Live, Dream, and BeFi20 - all designed to help increase your client engagement.

Join Dr. Daniel Crosby, Chief Behavioral Officer, and Cade DeNazario Akers, CFP, Product Manager, Financial Planning, as they show you how to use these tools that are now built into the Orion technology you’re already using every day. You’ll walk away ready to:

1433-OAS-5/24/2023

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