Blue Chip Issue 89

CLIENT ENGAGEMENT | Behavioural finance
BLUE
CHIP
in both South Africa and the UK. The title is a pun on Assets Under
Management and the strapline is, “Turning a money business into
a people business”.
Without trying to summarise an entire conference in a short
article, here are some of my notes and take-outs from HUM SA
2023, which will give you a sense of the topics that were discussed:
• When it comes to identifying scams, a clear red flag is when
they promote a supposed “new way to build wealth”. The reality
is that there is no “new way”, and the traditional method still
works beautifully. You simply need to contribute to a diversified
portfolio and give it enough time.
• Behavioural coaching is about understanding the clients’
emotional drivers. This approach has led to different product
recommendations such as advising a wealthy retiree who was
terrified of running out of money to take a guaranteed annuity,
even though there was very little chance that they would run
out of money.
• The most value you can add to a client is simplification.
• Don’t refer to coaching because many people don’t want to be
coached. You need to make it fun.
• When you start working with a client, you’ll be in a “fix phase”
that is fun for both you and your client because you are problemsolving
and implementing solutions. However, once everything
is in place, you’ll move to the “fine phase” where things can
become boring. If you don’t intervene here, there is a risk of
drifting apart. To prevent this, you need to move to the “flourish
phase” where you get new insights and set new goals so that you
return to the “fix phase” and repeat.
numbers, objective analysis and optimising solutions (managing
money), but they are very bad at understanding people’s emotions
(managing people). This means that AI will become a threat to
advisors who manage their clients’ money and will complement
those who manage their clients.
So, whether you choose to join the movement towards behavioural
coaching or whether you want to future-proof your business from
AI – you need to think about turning your money business into a
people business.
To see how far you are on this journey, think back over the last
year and count the number of investor roadshows vs the number
of seminars on the psychology of money that you attended. I
suspect that this will show that most advisors are managing their
clients’ money rather than their clients. That’s okay because the
shift is a process and not an event. So long as you choose to make
the shift from managing money to managing people.
: Fairbairn Consult is a Licensed Financial Service Provider and a member of the Old Mutual Group.
Now let’s consider the impact of AI. In 2017, I completed an online
course through MIT to understand the impact of AI. At the end
of the programme, I wrote an article called “What do artificial
The most value you can add
to a client is simplification
intelligence and robo-advice mean for financial advisors”, which
you can read on my LinkedIn profile. My conclusion was: “We
should see AI as an ‘employee’ that is amazingly efficient, always
consistent, gets smarter every year, never forgets anything,
doesn’t need sleep, is never sick and doesn’t expect an annual
bonus. And one last thing, we need to think about the skills that
advisors will need to thrive in a world where technical financial
planning skills are no longer the primary requirement.”
This may have been truer in 2017 than now, as AI has
jumped significantly since then with the advent of generative
content. These jumps will continue over and over, which
means that AI like Chat GPT 10 will become a genuine threat
to jobs at some point.
Before you despair, let’s think about AI’s strengths and
weaknesses. Machines are very good at research, crunching
Guy Holwill, Chief Executive, Fairbairn Consult
www.bluechipdigital.co.za
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