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.