Minimize prejudice during client meetings

Implicit prejudice, sometimes referred to as “unconscious prejudice,” arises from the associations that automatically come to mind about people based on social group membership, a professor of marketing and behavioral science, equity, diversity, Kate White, Senior Associate Dean of Inclusion, says at the Sauder School of Business at the University of British Columbia.

These associations may be based on identity markers such as gender, age, race, and socio-economic background. They affect how advisors work with clients.

For example, many advisors have been taught to perform risk assessments based on client age, and Shari Hensrud, vice president of risk and analysis at Auburn-based fintech company Riskalyze, California. Recollects. Younger clients take more risk and older clients take less.

However, advisors need to distinguish between their ability to take risks and their willingness to accept them. Therefore, a 25-year-old may be more capable of taking risks for a longer period of time, but this does not necessarily mean he is willing to be ready to take significant risks. There is none.

“In general, prejudice does not take into account the emotional side,” Shari Hensrud specifies, and it is the emotion that leads people to make mistakes as an investor.

There is also a general misunderstanding that women are more risk averse than men.

“Looking at Google’s” Women’s Aversion to Loss in Investment, “you’ll find that many headlines highlight the fact that women are less willing to take risks when it comes to investing,” said Deputy Practical Management. President Alice Ambology said. At CI Global Asset Management in Toronto. In our experience, women who have a clear understanding of their investment goals are, in fact, willing to take risks as needed. »»

The biggest potential impact of bias is that clients may receive bad advice or advice that is not tailored to their needs. This can create a lack of confidence in the investment industry as a whole, Alice Ambology warns.

“We all need enough self-awareness to understand that we all have some form of natural prejudice,” she emphasizes.

The challenge is to understand what these biases are and how they work in relation to the customer.

Here are some strategies to help minimize prejudice when dealing with customers.

Recognize your prejudice

According to Alice Ambrosie, the first step in minimizing bias is to acknowledge the presence of bias. “If you don’t know where to start, you can’t change,” she says.

When she works with a counselor, she often finds that their first tendency is to say that they have as good a relationship with women as men.

“It may be in the top 10% of their business portfolio, but when you actually break it down, you often find that the numbers are clearly distorted. [hommes] As a major relationship, “she reports.

Alice Ambrosie encourages you to review your business portfolio and determine who you will have a key relationship with when servicing a couple. When she examines her interactions with a heterosexual couple, she may find that her relationship with a woman is weaker than she thought.

One way to deal with this imbalance is to meet each partner individually. This can change the dynamics.

“They may have different goals and concerns than their spouse,” said Alice Ambology. And if no one takes the time to delve into this question, there is a risk that the advisor will act on unfounded assumptions. »»

You can also survey your clients to see if they are happy with the level of attention and care they receive, such as demographic questions about age and gender.

“If you find that a particular customer cohort behaves differently than other cohorts, it’s [la preuve] Analyze “Bias”, Alice Ambology.

Ask free-form questions

As counselors gain experience, they tend to ask less structured questions during discovery meetings, says Alice Ambology. Even if you go further in your career, it’s important to continually evaluate your process.

Free-form questions can reveal details about long-term planning and risk tolerance. Alice Ambrosie suggests asking questions such as “What are your career goals for the next 10 years?” And “Are there any health issues we should be aware of for you and your family?” “. These questions will help you start a conversation.

Jackie Porter, Certified Financial Planner at Carte Wealth Management in Mississauga, Ontario, says she met a woman who felt disliked by other advisors.

In such cases, when the advisor says: The client simply answers “yes” because he does not want to be confused or determined to need explanation.

“If you beat someone, you certainly don’t ask them for understanding or ask them if they need more explanation, and you endanger yourself in terms of knowing your customers,” Jackie said. Porter warns.

Counselors should always encourage questions, confirm their understanding during the discovery meeting, and ask questions that require more than a “yes” or “no” answer, says Jackie Porter.

slow down

According to Kate White, bias is more likely to affect us if what psychologists call “System 1”, that is, if the brain is functioning with automatic and quick thinking. She describes System 1 as a way to take mental shortcuts and make quick decisions.

When you’re in System 2, pay more attention, think carefully and reasonably. In this situation, biased thinking is less likely to occur.

“We can’t always think carefully,” says Kate White. We often do things with autopilot and go fast. Maybe we’re busy with time or a little distracted. All of this has the potential to move us to Thinking System 1. “

Learning these two different types of thinking and recognizing when bias can occur is a good start. If you find yourself heading for System 1, take a moment to think about it and ask yourself if the problem needs further investigation. Experts will suggest.

Break down prejudice

If White thinks the customer is treated differently based on the customer’s identity, consider practicing “anti-stereotyped images”.

For example, if you find yourself serving a woman with the prejudice that saving for your child is a top priority, one way to break that prejudice is to remember the example of challenging stereotypes. It is to keep it. You might think of another client who gives other goals a much higher priority than saving for her child. The goal is to evoke an example that goes against your implicit prejudice, advising Kate White.