Basically, the basics.

Not too long ago, we had an epidemic at work. “Basically” crept into conversations as the filler word and before we knew it, that word had became contagious.

The filler word epidemic was not a random coincidence. We had started to get into a rather deep topic and in the attempt to explain complexities, we ended up abusing the word that the urban dictionary has taken a dig on. Apparently that word’s popularity goes way beyond our company.

In the world that is cluttered by information, we humans perpetuate the load by adding personal interpretations, opinions and frameworks. It is not deliberate but a living example of the human’s limited cognitive capacity and thus inclination for mental shortcuts (or heuristics). Ironically, while the user of the heuristic gains subjective clarity and shares his learning, the recipient struggles to integrate the new information with more Google-searched sources. Not until he finds his own mental shortcut to understand and share the now convoluted reality in his own way, and of course, peppering statements with “basically”.

Once in a while, some enlightened individuals would offer the clarity of their minds and help people take a step back. At least I was among the grateful lot who, after reading Daniel Drescher’s “Blockchain Basics: A Non-Technical Introduction in 25 Steps”, could finally partake genuinely in the geeks’ excitement about block chains. I also appreciated the session where Li-Ling Ch’ng, the Head of Capital Markets from a law firm, reminded us to go back to basics and compared conventional funding options to explain the pros and cons of security token offerings.

In our work, we confront the basics of what make us human. We build financial (self-)advisory journeys and constantly grapple with simplicity and paranoia. From time to time, we pull back and ask ourselves, “What is the basic motivation for someone to go through our journey?” Many industry veterans would advise me to keep it short and sweet. Buy insurance in less than 10 minutes! They assure that this would shake up the industry. The invention of instant noodles was felt the same way in the 20th century though now the same noodles are declared harmful.

In the Reiss Motivation Profile® (RMP), a scientifically valid, peer reviewed and standardized assessment of what motivates any person, speed or simplicity definitely does not count among the sixteen universal motivations. Rather they are the means to the expression of our motivations. Don’t we take the time to browse online for the things we like? But for matters that are more obligatory than satisfying, such as payment, we just want to get it over and done with. Surely, we do not want to keep up the perception that financial advisory journeys are obligatory and not satisfying. By visiting the basic human motivations, we found the sweet spot in our product development.

Thankfully, the word epidemic did not last over a month. All it took was a brave (and irritated) soul to point out the abuse and a few good laughs to cure everyone of the disease.

What do you want?

What do you want? Few can answer this affirmatively. Many are clear what they do not want. They cannot however articulate what they want.

Why is this question challenging? It might be greed. We want a lot of things but unfortunately our resources are limited. It might be the lack of imagination. We only know what we know and do not realize other possibilities. It might be the lack of self-awareness or even self-security. Few tire of personality tests, no matter how unscientific – pleased to be validated, even hoping to be surprised.

The goal-based journey frivolously installed in too many self-directed financial planning assumes we know what we want. When would you like to retire? When you retire, do you imagine spending more or less than today? Frankly, many of us do not even know what we will be doing the next year, let alone imagine the retirement years.

It’s not all despair. It’s about asking the right questions in the right sequence. Financial planning is not done for the sake of it. Financial planning is the means to attaining the life that we are at ease with. Life is in harmonious balance only if we manage the expressions of our internal values consciously. For example, the person who spends beyond his means may turn out to thrive on others’ acceptance. Financial planning for him should be based on managing the need for acceptance. Enforcing disciplined savings would backfire. Asking how much he wants to spend during retirement years would truly end in despair.

So, dear self-directed journeys, do not ask what I want. Ask what motivates me. Take the time and effort to know me.

See the big Picture

Albert (a fictional character) took a mandatory risk profiling questionnaire with his banker. He was profiled as someone with very high willingness and ability to take risks. He also had substantial investing experience. Accordingly, he was deemed suitable to take on very aggressive portfolios.

If you are Albert’s banker, what would you do?

  1. Follow the questionnaire results and recommend him very aggressive portfolios
  2. Have further interaction with him to understand his natural behaviour

Realistically, we expect most people to choose option 1. It is after all a compliant process. Option 2 may even be viewed as unproductive for sales.

However, let’s say you now spend more time to interact with Albert before recommending any portfolios. You uncover more personal information about Albert.

It turns out that Albert values independence very much. He likes to travel alone because he does not like to follow others’ plans. Of his own accord, he is a freelancer.

Does this new piece of information change your investment recommendation for him?

Albert assures you that he is a very decisive person. In his words, he does not like to over-analyse and believe that in life, one should “just do it”.

Would you still stick to the aggressive portfolio recommendation?

It takes an astute advisor to caution Albert of his multiple blind spots in his investments and recommends preventive measures. Being independent, he is self-confident of his own judgement and insists on his own way. Not a fan of deliberation, he tends to act (almost) instantly. In stressful times such as a stock market crash, he can be expected to become too impulsive and stubborn for his own good.

We have made some very important assumptions in this story. We assume that you ask Albert the right questions to elicit relevant insights about him. We also assume that you have managed to piece the clues together to form the big picture. Lastly, we assume that you have the gut instincts and/or experience to realise the investment implications.

Without these assumptions, you would still be a compliant banker for Albert by choosing option 1.

However, a systematic tool-supported process to uncover Albert’s intrinsic values would have helped you fulfil our assumptions with confidence to deliver value to him.