Financial DNA: Discovering Your Unique Financial Personality for a Quality Life 0471784206, 9780471784203, 9780471788157

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Financial DNA® Discovering Your Unique Financial Personality for a Quality Life

Hugh Massie

John Wiley & Sons, Inc.

Financial DNA®

Financial DNA® Discovering Your Unique Financial Personality for a Quality Life

Hugh Massie

John Wiley & Sons, Inc.

Copyright © 2006 by Hugh Massie. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey Published simultaneously in Canada No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 7504470, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions. Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. Designations used by companies to distinguish their products are often claimed as trademarks. In all instances where John Wiley & Sons, Inc. is aware of a claim, the product names appear in initial capital or all capital letters. Readers, however, should contact the appropriate companies for more complete information regarding trademarks and registration. Financial DNA® is a registered trademark of Coddington Finance Corporation Pty Ltd. For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002. Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. For more information about Wiley products, visit our web site at www.wiley.com. Library of Congress Cataloging-in-Publication Data Massie, Hugh. Financial DNA® : discovering your unique financial personality for a quality life / Hugh Massie. p. cm. ISBN-13: 978-0-471-78420-3 (cloth) ISBN-10: 0-471-78420-6 (cloth) 1. Finance, Personal. I. Title. HG179.M34663 2006 332.024—dc22 2005027761 ISBN-13 978-0-471-78420-3 ISBN-10 0-471-78420-6 Printed in the United States of America 10 9 8 7 6 5 4 3 2 1

Contents

FOREWORD

vii

Chapter 1:

The Birth of Financial DNA

Chapter 2:

The Life Path of Chris Coddington in Becoming a Wealth Mentor

19

Understanding Your Financial Personality for Empowerment

31

The Process of Discovering Your Financial DNA

45

Understanding Self First to Unlock Wealth

61

Building a Great Relationship with Your Advisor

81

Interacting with Your Advisor for Great Discovery

98

Chapter 3: Chapter 4: Chapter 5: Chapter 6: Chapter 7:

v

1

Contents

Chapter 8:

Connecting Your Financial Propensities to a Robust Financial Plan

118

Understanding Where You Came From to Go Forward

143

Finding Your Purpose, Passions, and the Vision for Your Life

159

Couples Removing the Barriers to Making Financial Decisions

174

Unlocking Family Dynamics for Greater Family Wealth

185

Chapter 13:

Successfully Working in Business

205

Chapter 14:

Linking Your Life to Your Financial DNA and Keeping on the Path

219

Chapter 9: Chapter 10: Chapter 11: Chapter 12:

ACKNOWLEDGMENTS

235

INDEX

253

vi

Foreword

I

do not believe that it was accidental that Hugh Massie has authored Financial DNA®. While observing him closely for the last four years, it is evident that he is a man with a passion—even more, a calling—to create a better process for financial decision making. From his experience as a wealth advisor, Hugh had an insight that each person is wired uniquely in a way that affects every relationship and decision—especially financial decisions. He saw that this information was crucial for effective communications and relationships among family members and with financial advisors. It seemed providential that a businessman from Australia would come to Atlanta, Georgia, to meet with Jerry Mabe and me to learn about the RightPath behavioral profiles. What Hugh didn’t know at the time was that my introduction to behavioral assessments some 12 years earlier came from the leading family financial counselor in America, Larry Burkett.

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Foreword

Larry had used assessments with couples as a way to understand areas such as decision-making style, risk tolerance, optimism, need for control, and similar behaviors. It was while working for Larry in his not-for-profit financial counseling organization that I began to research and validate assessments for career guidance, teamwork, and leadership development. When Hugh explained his vision for Financial DNA, it seemed more than coincidental that he was taking up this mantle at the same time that Larry, a man about whom he knew nothing, was fighting his last battles with cancer and heart problems. I found myself uniquely positioned between these two financial visionaries. From exposure to Larry’s work, I knew Hugh’s idea would not only work but that it could revolutionize relationships between investors and advisors and was the key to sound family financial planning. The power of Financial DNA is that it gives accurate insights into human behavior in a way that people willingly take ownership for not only their strengths but also their struggles. This awareness helps them find congruence between their passions, values, and their decisions and behaviors. Furthermore, it promotes transparency, thus lowering the barriers to meaningful dialogue, and it opens the door for clear communications, lasting relationships, and sound decisions. By relating financial decision making to the powerful concepts of human behavior, Hugh has broken the code for understanding our Financial DNA. In this book, he shows us how we can all tap into this life-changing information. —LEE ELLIS, cofounder of RightPath Resources

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Chapter ONE

The Birth of Financial DNA

M

ost of us in today’s busy and turbulent world are on a discovery journey, searching perhaps more than ever before for the meaning of life and our place in the world. In one way or another, we are all asking the same questions: • What should I be doing to achieve a successful life? • With whom should I have relationships? • How can I make a better contribution? • What are the activities I should be participating in? • How can I have more money? In the end, many of us are simply looking for a quality life that stems from how we integrate all of life’s choices— including our financial decisions. For some, this is more about finding the magic money-making formula that will be sustainable for the rest of their lives, and for others the

1

Financial DNA

priority is finding their life purpose. I believe a quality life means successfully integrating finances into a balanced life, and in so doing, having the courage to live according to your unique design, in harmony, and without regret. Even if you can find answers to all of the above questions, then your actions are often determined by whether you have enough money, or rather your perception of what is enough money. For many of us, the perceptions of money trigger powerful energies that drive positive and negative behavior which can get in the way of making optimal wealth creation decisions. The confusion and stress can even block us from seeing our real financial needs and goals. Further, I am sure many of you are stuck with a lot of misconceptions from society, the financial world, the education system, and your families about successfully creating wealth. I know because I was there, too. This book is dedicated to giving you a new perspective for thinking about financial matters and then practically demonstrating a fresh approach for you to find the right direction to pursue the goal of creating a quality life for yourself.

The Success Formula: Understanding Your Unique Financial Personality Code “Wealth comes in many forms, and is not limited to greenbacks or the numbers in a bank account. Health is wealth. The love and support of friends and family is wealth. Knowledge is wealth. The service that others offer, the products we use—all are forms of wealth. Defining our wealth on the basis of bank

2

The Birth of Financial DNA

account numbers alone creates an artificial experience of poverty. It is artificial because every day one lives and is supported by the universe. This is cause for thanksgiving.” —John G. Boldt

So why do some people appear to achieve success and everything they want in life, while others fall short? What sets people apart? Success requires a superior and objective understanding of who you are so that you can communicate effectively for aligned relationships with others. Then with this greater knowledge of yourself you can develop your life purpose to set the boundaries for your life and hence be equipped to consistently make committed financial decisions. This is the surest path to achieving your goals and fulfilling needs (see Figure 1.1). To begin the journey to a quality life, you need to gain a greater understanding of your unique financial personality code—your Financial DNA. Discovering our Financial DNA is important because we are all uniquely wired to make financial decisions. Life is not linear. How we each get to our goals will vary because our financial personalities are unique. What works for someone else might not be right for you. Many of the traditional self-help programs and investment books prescribe a one-size-fits-all approach to success and prosperity. This book is about helping you discover your own unique formula based on how you are wired. It will also show you how to use a disciplined process to link that formula to the quality of your life. I sincerely believe this will provide you with greater peace of mind and longterm success.

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Financial DNA

Figure 1.1

Accelerate Your Quality of Life

(© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

What will be outlined for you in this book is the Financial DNA Discovery Process I formally began to develop in 1999. Since then, many clients and advisors around the world have participated in the process. Some have been as young as 18; some as old as 80. It is never too early nor too late to discover your own financial behavior and learn to make better decisions for your life. Certainly, at any time you are making a major life or financial decision, knowing your Financial DNA will be a foundational first step. 4

The Birth of Financial DNA

I am sure the concepts behind how and why we make our financial decisions are somewhat mysterious and rather daunting for many to think about, let alone pursue. But they don’t have to be. My goal is to show you how we have cracked the code of Financial DNA and how you can adopt a user-friendly framework to decode and then understand your own financial behavior more easily. Your attitude toward money and wealth creation, and ultimately a quality life, will depend on your relationship with yourself and others. The starting point to discovering your money and wealth attitudes is to understand who you are, and then the environment, values, and education that have shaped you. I’ve heard people say, “Oh, I don’t care about money.” What they usually mean is that they don’t care much about personal possessions. They think that caring about money is greedy, materialistic. Nevertheless, in all likelihood they do care about security, education, health care, retirement, free time—all of which are tied to money. Differences between family members are not always about money as such, although the emotional forces that are triggered by the perceptions money creates will expose differences. For couples and families, understanding and having buy-in to the source of similarities and differences is significant, and this means that understanding the behavioral styles of each family member is important. Otherwise the risk is that each person will work around the other, resulting in financial decisions that are not aligned. So the Financial DNA approach that I recommend involves addressing personal understanding before starting on the money issues. Getting this right will pay off in the long term. Understanding yourself will have positive 5

Financial DNA

benefits for all aspects of your life, including helping you better understand others and gaining clarity about the financial issues you have.

Observations about Financial Decision-Making Patterns As an international wealth mentor, I have had the opportunity to observe a range of clients from all over the world with various levels of success in making financial decisions personally and in business. Over the years, I have watched as some clients and investors continuously made good investment decisions, even those decisions that went against the trends of the day. There were other clients and investors, however, who continually made poor decisions that minimized their investment returns. What was worse was that some clients and investors made the same kinds of mistakes time after time. Others repeatedly swung between good and bad decisions, not knowing why. I have seen clients and investors fail to remain committed to investments although they were chosen as part of a long-term plan. This piqued my curiosity, and I set myself on a journey to discover why and how people make financial decisions. What I found in my research was surprising in its simplicity and logic. Whenever a person seeks financial advice or asks a financial question, there is generally a life question triggering it. In effect, the financial personality is in operation, continuously processing life and financial issues on an integrated basis. Further, what I came to learn is that a primary driver of each person’s financial personality is a natural, hard-wired behavioral style that deeply impacts every aspect of how each individual processes life. This is 6

The Birth of Financial DNA

what prompted me to develop a new model for delivering financial services.

A New Starting Point: A Focus on Human Behavior Fundamental to my business philosophy of understanding people before numbers is the belief that you cannot truly understand people (including yourself) without understanding human behavior. Also, it is my belief that the greatest source of wealth creation is the development of your human capital for which understanding your behavioral talents is key. By adopting a human behavioral approach of this nature, life is able to be put at the center of the financial plan and not money. Hence, through truly understanding yourself first you can get a much greater alignment to a financial strategy tailored specifically for you—one that will lead to success and a quality life. Every facet of making financial decisions involves some aspect of human behavior. Human behavior is what drives us and is the core of our unique financial personality code. Of course, there are external factors (such as market risks) that need to be addressed in making financial decisions, but most influences are related to human behavior in some way, including our relationships with family members, business associates, and our advisors.

The Science: Building on Years of Work “All science is concerned with the relationship of cause and effect. Each scientific discovery increases man’s ability to predict the consequences of his actions and thus his ability to control future events.” —Lawrence J. Peters

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Financial DNA

While scientists have spent decades trying to unravel the genetic code, the exploration of financial behavior through the analysis of human actions is a relatively new science. Over the centuries, others have looked to probability, rational decision making, economic and quantitative risk theories, all of which have made up the broad subject of behavioral finance.This work comes mainly from a numbers and markets perspective and rarely takes into account the complexity of people.There have also been a variety of great thinkers and researchers looking at the psychology of people, but most of them have stopped short of financial decision making. Nonetheless, all of this very valuable work has paved the way for the next generation to understand why people think, act, and react to financial issues the way they do. In the past six years, I have been humbly walking with and in the footsteps of experts from all over the world in the area of human behavior. Their knowledge and support, with my own experience and research added into the mix, brought me to a vision of how the understanding of financial decision making could be brought to a new level. The key was to make the behavioral information objective and easy to understand. People cannot apply what they do not understand.

The Birth of Financial DNA Was No Accident The power of this new vision prompted me to address the idea of how a systemized program for understanding human behavior could be incorporated into a low-risk system of personal wealth discovery and financial education that anyone could use. In developing a new product, one

8

The Birth of Financial DNA

sometimes finds that a formula has been around for a long time, but the right combination of packaging, people, and timing enables it to emerge into everyday life (such as with the telephone moving to the mobile phone). While there had been plenty of personality-type systems developed, little of what I saw satisfactorily provided an accurate, userfriendly, and memorable framework for understanding how or why we make the financial decisions we do. Yet this seemed to me to be a field for which there was universal interest and therefore provided an incredible opportunity to develop a new solution. I believe with Financial DNA there was a necessary convergence of circumstances, along with my own life, business, and investment experiences that brought me to see how a new program could be successfully developed and brought to market. Why Financial DNA? Why me? By following the process outlined in this book, I found my own Financial DNA—a part of which was becoming a wealth mentor to guide others to find their own Financial DNA and to become more financially empowered. This is my passion and how my talents can best be used, which has now become my life purpose. Of course there are many strands of my Financial DNA, including my preferred communication style and the structure of my investment portfolio for which there is a comfortable balance between my emotions and rationality. For me, it is the clarity of focusing on my life purpose, knowing how I am uniquely hard-wired to make committed wealth creation decisions for the long term and learning to adapt my communication for building relationships that have drastically improved the quality of my life.

9

Financial DNA

The New Discovery Process “As a general rule, the most successful people in life are those who have the best information.” —Benjamin Disraeli

Through the Financial DNA Discovery Process I will teach you to own your decisions and to take personal responsibility, first by providing a highly reliable and validated assessment process to objectively predict your financial decision-making behavior. Next I will teach you how to follow that up with carefully structured facilitation programs that will liberate and guide you to consistently make empowered financial decisions aligned to the core of who you are. The facilitation process involves guiding you to identify your unique talents, aptitudes, and preferences, to find your life purpose, to follow a passion with a realistic vision, and to stick with it. The three areas that can cause problems are: (1) the discipline to continually use your unique talents, (2) the commitment to the core values essential to your life purpose, and (3) the right personal, financial, and accountability structure to put around that life purpose, passion, and vision. If you are not doing what you enjoy, what you are truly passionate about, you won’t be doing it for long. You need purpose and passion to stick with a plan when the going gets tough. If you want to predict how you will behave in the future, you need to know how you behave under pressure. It is when we are under pressure that we are most truly ourselves, for better or worse. This is what the Financial DNA Discovery Process is about. As your financial and professional advisors share in this information, the advice you get will be much better, as well. In the

10

The Birth of Financial DNA

following chapters, you will see how this process is fully revealed.

The Power of Using Objective Information: Do Not Make Assumptions “Combine intuition with analysis. You should work with the best analytical and intuitive processes, so that you can refine your mental models and apply them more effectively. Look for ways to combine the best of your head and your heart in making decisions.” —Power of Impossible Thinking by Yoram (Jerry) Wind, Colin Crook, and Robert E. Gunther

The Financial DNA process is born from the philosophical position that we are all uniquely wired, beginning from the time of conception. While it sounds obvious, the point is that no person should be made to feel boxed-in, which can happen easily because people typically make assumptions about one another. In the world of finance and investment, a numbers or transaction approach is typically adopted without really understanding the person inside, resulting in that person effectively having to metaphorically wear a suit that has been incorrectly measured. Most people just follow their intuition—what they believe they have learned about their own behavior and that of others. Little analysis is done; but we all need both intuition and objective analysis. The Financial DNA Discovery Process is the predictive analysis, which if done up front will enable you to work with your intuition and make your learning about your own behavior and that of others much more powerful.

11

Financial DNA

When people are under pressure, very often their emotions crush their rationality, and the outcome is faulty decisions.We need to objectively understand far more about our financial personalities and how our behavioral styles drive our financial decision making. Most of us, regardless of how successful we are, have some blind spots about ourselves and those that we do not identify may become barriers to our success. With the new mind-set and structured approach I am advocating with Financial DNA, you will no doubt see things much faster and more accurately than you could possibly otherwise. Ultimately, Financial DNA enables you to make wiser long-term decisions that will shorten your road to success.

Why the Financial DNA Discovery Process? “Many people climb the ladder of success only to find it leaning against the wrong wall.” —Stephen Covey

I believe Financial DNA can liberate you to make more empowered decisions for your future. You will ultimately have peace of mind from the greater knowledge Financial DNA brings you and the greater understanding that others with whom you interact will have. The process can first help you to: • Uncover the rational and emotional stimuli in your decision-making style • Identify your behavioral predispositions regarding financial decisions

12

The Birth of Financial DNA

• Uncover the influences of your environment, values, and education • Discover your talents, passion, unique gift, and life vision • Determine your communication terms • Identify differences with others to build more prosperous and aligned personal, family, and business relationships The Financial DNA reports are insightful and intended to be motivating and nonthreatening. The information from the reports then can be used to help you build a quality life by facilitating the following outcomes for you: • Building an effective communication framework • Developing money clarity and clarity of life purpose • Developing a road map for the next stage of your life • Setting a balanced life framework • Finding your financial comfort zone • Implementing committed wealth creation strategies • Reducing stress by living who you are and using your natural talents • Better managing your time and money • Pinpointing the right financial decisions • Reducing costs and losses resulting from poor choices Everyone who participates in Financial DNA will have a slightly different but equally valuable experience. The

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Financial DNA

insight provided may liberate you by revealing something that you never knew or by confirming an idea on which you were unsure whether to act. It may confirm that you’re on the right path and so give you the confidence to stay there.

About This Book: The Starting Point of Your Journey to Financial Liberation “A man will become better when you show him what he is like.” —Anton Chekhov

This book is not intended to provide you with all the answers. Deep down you actually already know most of them. However, what it will do is provide you with the framework to bring your master plan to the surface and then start you on a path of building a quality life. Also, it is my objective that advisors will be shown how to introduce and facilitate Financial DNA, providing their clients enhanced financial planning experiences. I have used real-life case studies throughout. While the people and situations are real, I have fictionalized them to ensure anonymity. The main character of this book is Chris Coddington, a financial advisor who transformed his approach to providing wealth management services through the discovery of his own Financial DNA. We take a deep look at how his Financial DNA and where he is in life today have been shaped and how he has used this self-discovery for creating a quality life for himself and his clients. The principles explained in relation to Chris are equally applicable for any person regardless of vocation or position.

14

The Birth of Financial DNA

I also introduce Helen and Tony Jones, who are clients of Chris, to demonstrate how an advisor (or any professional person or coach) can facilitate Financial DNA with an individual client and to show the more complex dynamics of a married couple. You will see how different Helen and Tony are and the potential financial decisionmaking issues that their differences cause. Chris has a brother, Richard Coddington, who is almost polar opposite in behavioral style and financial personality. I explore their lives to see why their differences emerge and how they have both been propelled forward into their very different lives. The family circumstances are significant, especially the role that their mother, Jane Coddington, played. I will also explore the development of a behavioralbased portfolio for Paul Wilson, another client of Chris Coddington’s. This case study will show you the oneclient, one-portfolio approach based on the unique financial personality of each person. I have also outlined a family succession situation for the Williams family that exposes family dynamics. Finally, we look at some team dynamic analysis for Chris’s team and also how Chris successfully facilitates a difficult client situation in which the partners of Techscape Partners do not understand each other. The interactions in which these characters are brought together, each demonstrate the powerful impacts of behavior on how people act and relate to each other and, as a consequence, make financial decisions in everyday situations. I am sure you will see some of yourself in these characters. This should provide interesting reflection.

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Financial DNA

At the end of each chapter is a series of coaching tips that will help you develop your thinking and bring more understanding of who you are and your true motivations for making financial decisions. As you read through the book you will receive more clarity on how to respond to the matters you are asked to reflect on. Also, I introduce some interesting books from other authors whom I have read to give you further guidance in developing a new thought process toward the next stage of your life and how money fits. Some of these books are about personal finances. Some are not. But all are listed to help you navigate the bridge between who you are and your financial decisions. After reading this book, it is my hope that you will stop viewing financial decisions as just a money matter. I am hoping that you will recognize financial decisions as life decisions for which you need alignment to a life purpose and to make those decisions you must understand how you have been hard-wired. This will enable you to develop much greater insight and to truly integrate your financial decisions with your life journey for an overall quality life. Your Turn Take Your Quality Life Pulse—Where Are You? • Where is your life going well right now? • What is your greatest strength? • What is the purpose for your life? • Do you know your passions?

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The Birth of Financial DNA

• Do you know the meaning of wealth in your life? • Do you know where your quality life “sweet-spot” is? • Do you know how to realize your potential? • What are the best and worst decisions you have made? • Are your business and family relationships aligned? • How do you want to be remembered?

Recommended Reading The Power of Impossible Thinking: Transform the Business of Your Life and the Life of Your Business by Yoram (Jerry) Wind, Colin Crook, and Robert Gunther. This book will motivate and guide you to change your mental models and make smarter decisions based on reality and not on an obsolete model of reality. Hopefully, it will help you get unstuck by seeing things in new ways, which will give you more confidence to take advantage of opportunities and not create perceived barriers. After all, we are all limited by our imagination and how we process our life experiences.

Getting the Most Out of This Book Taking the Financial DNA profiles is not mandatory to benefit from this book. However, if you know your profile and then read the book you may be even more compelled to take some life review steps. To participate in the Financial DNA Discovery Process you can start by completing the Financial DNA path profiles (stage 1 of the appraisals) online at

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Financial DNA

Figure 1.2

Uncover Your Financial DNA®

(© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

www.financialdna.biz. The profiles can be completed online or filled out on paper and submitted to Financial DNA representatives (local or international). The profiles will take around 20 to 30 minutes to complete, and you will get immediate feedback (see Figure 1.2). I would encourage you to show your Financial DNA to people close to you who will be impacted by the decisions you make. Show it to your spouse or partner, your adult children, financial advisor, and business colleagues. See if they think your profile is an accurate reflection of who you are.

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Chapter TWO

The Life Path of Chris Coddington in Becoming a Wealth Mentor

T

he story of Chris Coddington’s life is unique because he is the product of his particular circumstances and experiences. However, there is a consistent pattern in Chris’s life and in the way he makes decisions, including his financial decisions. This is true for all of us. There is no doubt that the financial and life decisions Chris has made have been driven by the natural behavioral style with which he was born and which became ingrained from his early life experiences. Of course, Chris’s financial personality continues to develop as his preferences evolve. However, by and large there are core behaviors that are, and always will be, ingrained. Chris has agreed to share his life and behavioral style in this book because the personal story of one’s life journey is the starting point to being understood by others and then earning the chance to understand others. I believe this is a foundation for financial advisors so they can demonstrate to clients they have walked the same path they are asking clients to take. 19

Financial DNA

The Early Years: The Events Shaping Chris’s Unique Financial Personality There was nothing unusual about the birth of Chris Coddington in May 1966 in Falls Church, Virginia. His parents had been married for five years, and his father, John, aged 38, worked as a lawyer while his mother, Jane, aged 30, ran John’s office. The couple was well established, busy, and happy. Jane and John looked forward to the birth of their son. Nearly 18 months after Chris’s birth, John became ill. His doctors thought it was a virus and advised him to cut his practice to part-time and take it a little easier. When Chris was not even two years old, John suffered a complete collapse. This time, the diagnosis was devastating— inoperable cancer. Making matters even more difficult, Jane had given birth to the couple’s second child, Richard, just a few weeks earlier. John’s health deteriorated, and he could no longer work. His practice closed, and Jane found herself caring for her dying husband and her two small children at the same time. Seven months after that final diagnosis, five months past Chris’s second birthday, John died at home. Everything had changed. Chris hardly knew his father as the vibrant healthy man he had once been. Richard basically never knew his father. These early years were very pivotal to the development of both Chris and Richard’s natural hard-wired behavioral styles—styles that determine the core self for life. (This is explored further in Chapter 9.) Jane Coddington made a life for herself and her boys,

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The Life Path of Chris Coddington

although the first three years of being a widow were a blur of grief. She often pulled into herself, emotionally drained, yet pushed herself to attend to the boys’ most basic needs. During this period and as the boys grew older, Chris’s paternal grandmother, Rose, took a major interest in Chris. But only Chris. Her interest seemed to be in recreating John’s childhood, to replace the son she had lost. She was controlling and critical of Jane, only adding to the grieving widow’s burden as she actively favored Chris and ignored Richard. In turn, Jane tried to give Richard the extra love and attention she felt he was missing from Rose. This caused Chris to feel his mother favored Richard. As if she did not have enough to worry about, Jane faced money worries. John had owned an investment property, and that property continued to provide some income to the family after his death, but it wasn’t enough and could not provide for the life that Jane wanted for her and the boys. Jane had always had a keen interest in modern art and was encouraged to start her own business by her accountant and her father. In 1970 she opened a gallery, running it for 30 years before selling it and retiring. Jane’s business gave the family a level of security, and it provided a purpose that was a welcome diversion. As the business grew into its own, so did Jane. She turned her attention back to her boys, receding into herself less and less. Jane knew what kind of men she wanted her boys to become. She wanted them to be caring and useful to society, kind, and successful. Richard found his way more easily. From an early age,

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Financial DNA

he was naturally kind and empathetic, excelling in his studies and in sports. Chris had a tougher time. As a child, he was selfish and easily frustrated when he didn’t get his way. That frustration often turned to aggression during his early years. As a toddler, Chris had a tendency to pick fights with Richard if Richard had what Chris wanted. (Interestingly, Chris can now reflect back and connect this to his behavioral profile and see how he has had to learn to manage this struggle over time.) Chris developed more slowly than his younger brother, and Jane had to anticipate what he should be doing and get him to move to what she considered the next phase of life. A kindergarten teacher pointed out to Jane that Chris had obviously suffered a tragic loss. She helped Jane learn how to guide Chris in the directions in which he needed to go. Education was of the utmost importance to Jane, and she made sure her boys went to a good, private, all-boys school. Even though the boys were at a good school, Jane made sure Chris maintained his focus. Becoming a boarder at the age of 11 really helped Chris learn independence and how to stand up for himself. When Chris was 14, Jane got him a private tutor for Sundays and holidays, which was when Chris began to really come into himself. The tutor helped Chris organize his thoughts and meet his commitments and deadlines for school. The tutor helped Chris find a way to learn. At school, Chris was fascinated with the humanities (history, economics, social sciences). Upon reflection, Chris can see that his interest stemmed from the fact that these subjects

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The Life Path of Chris Coddington

were about people and the world we live in. This early interest in people has now come full circle in his peopleoriented career. Learning was not natural to Chris (as it was to Richard), but the tutor showed Chris how to develop this skill. Chris was taught how to learn, work hard, persevere, and work toward a goal. This achieving discipline is well entrenched in Chris today. He ended high school on a high note, having drastically improved his class standing, and he had no problem getting into college. He graduated college with distinction and no shortage of job offers. Around the time Chris was finding a new way of being in the world, Jane met a man and remarried. Chris and his stepfather, Tom, always got along. Chris thought of him as a friend, a caring male role model who never tried to be a father. For that, Chris was grateful. The two remained good friends until Tom’s death in 2001.

Becoming an Accountant: Getting Foundational Experience While still at college, Chris took a summer job in an accounting firm and knew immediately he was on the right path with numbers. At this time, he also entered some real estate deals. Though Chris always had a natural ability with real estate, he knew that buildings and property would continue to remain an option as a wealth creation vehicle for him, so he made a strategic decision to pursue accountancy because that would provide him with a meal ticket and a foundation to any future business pursuit.

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Financial DNA

At 22 years of age, Chris took a job with one of the top accounting firms in the world in Washington, D.C., near where he grew up in Virginia. He stayed with the company for nine years, moving from Washington, D.C., to London, to Hong Kong, and back to Washington, D.C. Each move meant a drastic change—in people, culture, environment, and knowledge requirements. Chris enjoyed the adventure, enjoyed throwing himself into completely foreign territory and learning to succeed. All those years of having to work so hard paid off. Chris found wells of resilience that surprised even Jane and Richard (who followed his childhood dream and became a doctor). Chris found huge success with the accounting firm. Money, prestige, and international business opportunities were his. Yet he knew he was missing something. He thought maybe he was missing more independence and the potential of an even greater opportunity that could only come from going into business for himself. Jane agreed and encouraged him to go out on his own. So Chris quit the accounting firm and started his own business. He had long wanted to be a financial advisor to families and business owners. One of Chris’s assets was that he had been a client (through investing his own money) and also an advisor. Not many people have been on both sides of the fence. Chris didn’t know how to do it, but he wanted to make financial advising a safe place for people—not just all about transactions. Chris wanted financial planning to be developmental for people so they could start by understanding their talents and have a platform from which to

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The Life Path of Chris Coddington

realize their dreams. He could see that many people were not performing to their financial and human potential.

Pursuing the Dream: Setting Up Business on His Own In August 1998, Chris successfully started his own wealth management company. While financial success was immediate, Chris still didn’t feel the passion he had hoped having his own business would engender. He still felt there was something lacking in the services he delivered. Further, Chris realized that while he made money, he did not find personal wealth. He felt business was an empty experience. In July 2000, a friend of Chris’s asked him what his passion was exactly, and Chris answered that he wanted to be a strategic advisor to educate and guide people to make better decisions from the inside out. He wanted more than to be remembered for successfully managing people’s investments and their accounts. Also, his passion was a lot more than making money, and money would come if he had his purpose right. After more reflection during the following weeks and through asking others, including some clients, what they thought he was good at, it became obvious that people came to Chris for his rational and strategic mind in guiding them to make key life decisions with clarity and in the process help them manage their emotions. They did not come to him only because he had great investment and financial skills. They also came to him because they felt safe; they knew they could trust him. From this Chris realized that he had some unique talents for being a strategic

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Financial DNA

personal advisor and this is what he was passionate about. Chris had discovered his unique gift was being what I call a wealth mentor. This all connected for Chris when he looked back at his successes in his career in the accounting firm and his underlying interest as a child in understanding what motivated people to make the decisions they do. Chapter 10 presents greater depth about the specific process of how Chris uncovered his unique gift and life purpose. After coming to this realization, a whole lot more energy came to Chris, and there was a new buzz around him. Immediately, he knew he had articulated what he was truly about, who he is, and of what he could be proud in his business. Being in the wealth management industry could now have meaning. In the longer term it would also become more profitable. That discovery led Chris to start working out how he could reposition his business around his values and life purpose. He began to research what processes were available and how he could use them in his new approach. His instincts were telling him that clients were looking for a new style of client-centric service, which would become a growing trend in the financial services industry. After two years, Chris did not find any solution that he believed in. Most of the behavioral tools he found were unreliable and superficial risk-profiling instruments or psychological assessments that were not appropriate for general application in delivering financial services. Nevertheless, he continued to expand his business, taking on new clients and dabbling with new ways to connect with them, including asking different sorts of questions about their lives.

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The Life Path of Chris Coddington

The Next Stage of the Journey: Chris Connects to Financial DNA In early 2002, an associate suggested that Chris should start going to conferences and networking with other industry players for exposure to new concepts. It was at one of these conferences in late 2002 where Chris saw a whole new dimension to financial planning being discussed, with lots of keen interest from the attendees. The presenters called it life planning. (Others now call it interior finance or financial planning done well.) This is where Chris was introduced to Financial DNA and where he found what had been missing. The unparalleled depth in which a person’s unique financial personality could be so easily decoded and put in simple layman terms was the hook for Chris. Also, Chris could see that Financial DNA could be used as a way to build a relationship with his clients through improved communication. He could see that in his own personal financial and business dealings, trust was lost when no one gave him options with which to work. Therefore, no decision was made or the relationship simply died. Chris knew that everyone had a preferred way with which to be communicated, and this would be the key to building trust, particularly when under pressure with financial issues. Chris decided to make Financial DNA the foundation of his business, and the way for him to differentiate his advisory services with clients. At this time, the Financial DNA Discovery Process was ready for market, and there was no better time to roll out Financial DNA in the United States with so many

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Financial DNA

financial advisors and industry consultants talking about the importance of life issues but not necessarily having easy-to-use, transferable solutions. So Chris Coddington went through training and, with some coaching, became a Financial DNA wealth mentor. The starting point of Chris’s training was undergoing the Financial DNA Discovery Process himself. This in its own right was a transformational and developmental experience for Chris. In creating a vision to live and work with his passion, Chris changed his business to one of wealth mentoring. He went from financial advisor focused on managing investments to wealth mentor, using Financial DNA as a strategic advisor to help his clients first learn about their own behavior, financial preferences, and life plan in order to make committed wealth creation decisions and communicate effectively. Today Chris has a thriving wealth management business with clients of all levels of wealth. Some clients come to Chris for his strategic financial advice, knowing he will not make assumptions about who they are. They know he uses Financial DNA to objectively uncover that. Others come to Chris only for a pulse check and financial life mapping, choosing to retain their existing advisors as money managers. Some families come to Chris when they have significant decisions to make. Chris is very passionate that families should understand their similarities and differences because he has seen how failure to do so is the seed of destructive decisions. He also presents workshops where he shows participants how they can build wealthier lives from the inside out.

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The Life Path of Chris Coddington

Chris is proof that an accountant-trained financial advisor can transform his mental model to deal with life’s real issues in the context of financial planning. It doesn’t take a degree in psychology. Your Turn Review Your Life and Abilities • What are your unique talents, skills, and competencies? • How do your talents connect to your passions? • What are your strengths and struggles? • What values, beliefs, and preferences drive your life and financial decisions? • Have you ever thought about asking your parents, siblings, and friends what they thought of you as you grew up? • Have you asked your work colleagues and business associates what they think your greatest talent is? • What can you learn from listening to others?

Recommended Reading Unique Ability: Creating the Life You Want by Catherine Nomura, Julia Waller, and Shannon Waller (based on a concept by Dan Sullivan, founder of The Strategic Coach) This book will really help you focus on finding what your unique ability is and how knowing that can help you transform your life based on the essence of who you are and what you’re about.

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Financial DNA

Unique ability = Talent (What you do) + Passion (Why you do it) Everybody has a unique ability. It is factory installed (i.e., the essence of your talents have been at play in your life since childhood: it is just a matter of recognizing and applying them). You will find that when you apply your unique ability, your life will really click and you will produce amazing results. This book provides some great exercises and ways to help you find your unique ability and build an action plan to help you apply it every day. Mind Gym: An Athlete’s Guide to Inner Excellence by Gary Mack with David Casstevens The difference between success and failure is in our minds. This book is a fun and easy read that is full of wisdom and provides plenty of coaching tips about how to focus and manage our minds for success. While the stories are all sports related, they are clearly relevant to any aspect of our lives. Some of the clear messages in the book include: visualize success, know who you are, know what your talents are, prepare well, and trust yourself. None of this is easy; however, it is important to get yourself into the mind gym when you are trying to envision and build a quality life. To make great decisions, you have to be in the right frame of mind.

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Chapter THREE

Understanding Your Financial Personality for Empowerment

J

ust as biological DNA (deoxyribonucleic acid) is composed of combinations of proteins arranged in a double helix (like a twisted ladder) forming the building blocks of life, your Financial DNA is composed of many behavioral traits connected to form the building blocks of your financial decisions. Understanding the concept of Financial DNA is the key to your financial empowerment and life fulfillment. Learning about yourself may be an impetus to change, or it may provide the freedom to really open up to another human being. Understanding takes away a lot of the insecurities that plague so many of us in our daily lives. Understanding increases personal confidence and decreases guessing. We are now going to explore what Financial DNA truly means so that you have a better foundation for understanding your own financial personality and can get more out of the discovery process that unfolds in the rest

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Financial DNA

of this book. You will see how Chris Coddington’s life story has been shaped by his Financial DNA, which can provide a basis for your own reflection. The Definition of Financial DNA Every person inherently has a unique financial personality code. A person’s natural-born behavioral style is shaped into a financial personality by their personal environment (including history, experiences), values, and education. Behavior will impact every financial, business, work, and life decision that a person makes. (© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

Our Financial DNA is made up of the genetic characteristics we inherit from our parents (our biological DNA) and from the very early stages of learning in our lives. This is our naturally motivated behavior. Beyond natural behavior, our Financial DNA is also made up of the learned behavioral characteristics in our financial decision-making processes, which we sometimes carry as baggage. Our learned behavior comes from how we have processed our environment and life experiences through the drive of our naturally motivated behavior. In other words, we are pretty much born with our natural behavior. This explains why two different people will generally experience the same event differently. How we interpret that natural behavior

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Understanding Your Financial Personality

in the course of life leads to a lot of our learned behavior. The combination of both natural and learned behaviors goes a long way toward explaining our unique financial personality code and, even more basically, who we are. But just as traits determined by our biological DNA are maximized or minimized by our environment, so are our financial decision-making traits. In summary, it is a combination of our genes and our life experiences that comprise who we really are. When we make financial decisions, 95 percent of the process is understanding how we are wired, and 5 percent is understanding money and the financial issues.

The Meaning of Behavior, Not Psychology This book is continually focused on behavior and its impact on how we make financial decisions. Let’s start with a simple model for understanding behavior. Behavior refers to how you act, perform, conduct yourself, and operate, as well as how the outside world sees you behave. Personality refers to character, traits, behavior, qualities, individuality, and persona. Personality is broader than just behavior. Behavior is a driver of personality, but behavior is not totally your personality. To understand your personality, you also need to understand the impact of your environment and experiences, including:

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Financial DNA

• Family • Education • Career and business • Finance Your financial personality is therefore one part of your overall personality, driven by how you have processed your environment and financial decision-making experiences through your natural behavioral style. There is another term—psychology—that is also used a lot in the broader discussion of the subject of personality. Without going into detail, psychology is more about one’s state of mind, self-perceptions, point of view, beliefs, and feelings. It is generally applied to understand and help people resolve their issues. To no small degree, psychology is a subjective science. I work with some great psychologists, in particular Dr. James Gottfurcht, wealth consultant, financial coach, and president of Psychology of Money Consultants in Los Angeles, California. Dr. Gottfurcht specializes in the fields of money psychology, relationships, and empathy, providing services to individuals, couples, families, and financial advisors, as well as training other professionals in this field. Despite our different approaches and styles, we understood immediately the complementary nature of our work. We found that our behavioral and psychological processes combined synergistically in discovering financial obstacles and solutions for both clients and advisors. Dr. Gottfurcht has successfully blended Financial DNA into his work and says:

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Understanding Your Financial Personality

I have been using Financial DNA as a behavioral discovery program to complement my Psychology of Money Process. This enables me to not only understand a person’s current psychological condition around money but also uncover his or her natural behavioral style in making financial and life decisions. The different insights that emerge increase the power of my therapy and coaching.

The Financial DNA Discovery Process focuses primarily on behavior and financial personality and is not intended to be a psychological process.This was one of the appeals for Chris Coddington. Financial DNA adopts a more positive standpoint. Furthermore, with the measurable, validated human behavioral analysis and user-friendly interpretation framework, he did not have to become a pseudopsychologist to make it work. Also, it could be easily understood by his clients. Chris could also see that the Financial DNA Discovery Process was uniquely constructed and far more indepth than other personality and risk-profiling instruments in the market. So many of them were situational, hence not predictive, and left people saying, “So what?”

How Your Financial Personality Is Shaped: Nature or Nurture? “No law or ordinance is mightier than understanding.” —Plato

The discussion of whether it is nature or nurture that shapes personality (and hence financial personality) has

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Financial DNA

caused debate for many years. In reality, the two are linked. The key is in how nature and nurture interact throughout a life. What we know is that the development of personality is dynamic, constantly changing because of the changing environment and new experiences of each day. However, naturally motivated behavior does not change. This is why we say naturally motivated behavior is hard-wired. It is the core of who one is (see Figure 3.1). Different facets of your personality shape your financial personality. Your financial personality is ultimately comprised of your passion, attitudes, relationships, environmental experience, beliefs, financial knowledge, values, and emotional intelligence (EQ)—all combined with your natural behavioral style. All of these elements form your unique financial wiring—your Financial DNA.

Figure 3.1

The Drive of Natural Behavior upon Personality

(© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

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Understanding Your Financial Personality

The facets of your behavior are drivers that combine to define your purpose, vision, needs, and wants, which ultimately govern the financial path you take. In turn, your financial personality impacts every financial, business, work, and life decision you make and the decisions of those with whom you interact. Furthermore, most of the decisions you make have financial consequences. A key to success is understanding and accepting this interrelationship. You cannot get away from the impact of financial decisions and money in your life. This is true regardless of how you relate money to a quality life. When Chris realized this for the first time, it reconciled so much for him because he finally began to see why he and his brother Richard are so different. Right from the start they saw life differently and to this day make vastly different types of financial and life decisions. Also, it explained to Chris why at times he could not understand the decisions of clients like Helen Jones and Paul Wilson, who, as we will see later, have very different behavioral styles from Chris.

The Interaction of Nature and Nurture: Continual Development While the development of your financial personality is continual, it helps to examine it through discrete stages. First, your Financial DNA is made up of your natural behavior—your genetics and your experience, education, and environment, from birth until about the age of three. This is the most significant period in the development of your brain—your hard-wiring. What is absorbed in this

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Financial DNA

period becomes ingrained and is very difficult to change. Chris believes his high level of independence and ambition comes from the impact of the loss of his father when he was 2 years old. Richard was far more protected from this experience, which led to his more harmonious nature and desire for stability. The next important phase of development is learned behavior from experiences, the family, and education from the age of about 3 years to about 15 years. For Chris, this stage was when he learned a lot from watching his mother become an entrepreneur. He saw she was very good with money. By watching his mother, Chris learned both how to be practical with money for everyday life and the importance of making money work for him. These experiences have become ingrained, too. The experiences and circumstances from age 15 also contributed to Chris’s development, but definitely have become less ingrained. The learned behaviors from these later life experiences can change, and they also depend on your preferences based on the stage of life. However, what is often also seen is the masked behavior that comes across in normal, everyday life. Chris knows that he has had to work at understanding the impact of his choices on others, to slow down and be more empathetic. Sometimes, under pressure, the restraint is too much. However, with coaching, he can see positive change happening. The primary difference between natural and learned behavior is that in a crisis, under stress (often caused by money or relationships), or even in a moment of excitement, most of us revert back to our natural, enduring behavioral style. That is where a behavioral flip can take

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Understanding Your Financial Personality

place. If you think you are seeing unusual behavior in another person, it is actually that person’s natural behavior taking over. Think about the apparent change in someone under pressure. For instance a person who is normally patient suddenly makes a rash financial decision or is rude or pushy. It is this natural behavior that we tend to know the least about. However, it is that part of who we are that is the most stable and capable of being predicted. Learned behaviors and preferences cannot really be predicted because they will change.

Seeing Beyond the Tip of the Iceberg to Navigate Below the Surface “A moment’s insight is sometimes worth a life’s experience.” —Oliver Wendell Holmes

In reality when we first meet someone, most of us only see 10 percent of who the person really is (see Figure 3.2). Most of what we see is in fact learned behavior. This is the tip of the iceberg. We form our opinions of others based on verbal and nonverbal communication, as well as anything else detected by our own internal radar (otherwise known as intuition). In reality, without having a process to ask the right questions it can take a decade to find some things out, if ever. As the guests and crew of the Titanic learned, the 90 percent part of an iceberg you can’t see can sink the ship. To see below the surface, you need a balance of both intuition and objective analysis from structured questions. In fact, having an objective process can enhance your

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Financial DNA

Figure 3.2

Financial DNA Revealing What Is Below the Surface

(© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

intuition. Natural behaviors and a lot of other drivers of your financial personality (such as education, maturity, attitudes, and experiences) are usually sitting below the surface and cannot be seen. Financial DNA was designed as an objective process to show the entire iceberg, not just the tip that others see. A good example of the difference between what you initially see and the behavioral drivers below the surface is evident when Chris actually completed his profile for the first time. On meeting him, from his cool and introverted nature, you would assume he was extremely cautious

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Understanding Your Financial Personality

about investments. However, the Financial DNA path profiles rated Chris extremely high on his Adventurousness score. You could perhaps assume that he is adventurous from what he might mention about his previous decisions, but you would never know for sure.

Getting Objectivity “In their calmer moments, investors recognize their inability to know what the future holds. In moments of extreme panic or enthusiasm, however, they become remarkably bold in their predictions. During such times, reality is abruptly transformed into that hypothetical future where the outcome is known. These are rare occasions, to be sure, but they are also unforgettable. A switch from doubt to certainty defines major tops and bottoms in the stock market.” —Peter Bernstein, Against the Gods

We all have strengths, struggles, and blind spots. Some of us (like Person A in Figure 3.3) tend to overestimate our strengths and underestimate our struggles. This kind of person thinks he has a reasonable handle on things. He is also likely to think that those who are different are wrong. People who fall into this category tend to have some blind spots, which means they concentrate more on others’ struggles than on their strengths while offering themselves the opposite benefit. This syndrome can be very true of investors in bull markets and financial advisors who believe they can intuitively understand people and make consistently good investment decisions for their clients. If this kind of person does not have sufficient awareness, he could make some mistakes.

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Financial DNA

Figure 3.3

Objectivity

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

Others of us (like Person B in Figure 3.3) tend to underestimate our strengths and overestimate our struggles. Person B also has some blind spots. This kind of person can hold herself to an impossibly high standard while cutting others some slack. This type of person tends to avoid risk and internally nag. Sometimes it can just be a lack of confidence. These folks are representative of investors in bear markets or those who have suffered some other negative event or outcome. Financial DNA promotes objectivity in discerning what kind of person you are (and measures the degree and intensity of behaviors). It helps us to identify strengths, struggles, and blind spots more realistically. While many of us realize we have blind spots, we tend to discount them unless we are objective.

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Understanding Your Financial Personality

Your Turn Identify the Alignment between Your Learned and Natural Behavioral Styles • Where are your learned and natural behaviors in alignment? • If there are differences, is that positive or negative for your decision making? • If an event with negative financial consequences occurs tomorrow, what will your emotions be? • Do you notice differences in your own behavior as circumstances change? • Reflect on the time you were last under pressure and answer the following questions: • Did you always listen to others, or did you hear your own agenda? • Did you always enjoy relating with others, or did you do so only to get ahead? • Did you always help people in need with feeling or because you thought you should? • Did you always organize yourself, or only when you had to? • Did you always make calculated decisions or just go with the flow? • Did you always try out new ideas, or did you run with what you know works?

Recommended Reading Man’s Search for Meaning by Viktor E. Frankl

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Financial DNA

This book—a memoir, self-help book, and psychology manual—is the story of Viktor E. Frankl’s struggle for survival during his three years in a Nazi concentration camp and, partly because of his suffering, how he developed a revolutionary approach to psychotherapy known as logotherapy. At the core of his theory is the belief that people’s primary motivational force is the search for meaning. This book is a reminder of the responsibility each of us owes to finding the right answers to life’s problems and to fulfilling the tasks that are constantly set before us. Our answers must consist not of talk and meditation but of right action and conduct. The Psychology of Money Consultants web site, www .psycholog yofmoney.com. The site has an abundance of complementary information about the unique Psychology of Money process developed by Dr. James Gottfurcht. This is a proprietary model for understanding rational and irrational financial behavior and for enhancing financial success. You can also purchase Dr. Gottfurcht’s CD and workbook program that will walk you through the Psychology of Money process.

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Chapter FOUR

The Process of Discovering Your Financial DNA

N

ow that you have the foundational concepts of Financial DNA, the next phase is to begin the process of actually discovering it. Perhaps you could perceive the Financial DNA double helix is complex, and you doubt the ability to discover yours. My aim is to help you remove the layers of mystery with a userfriendly and simply structured process. It is a process because this is something you have to do step by step to see it all unravel (see Figure 4.1). Unfortunately, to learn anything worthwhile there are no shortcuts. Uncovering your Financial DNA means identifying the foundational behaviors, aptitudes, and preferences that form the basis on which you can build wealth, consistent with your life plan. The process of discovery will draw out the naturally motivated and learned behaviors that drive your decision-making processes and determine whether these traits currently align with your financial, business, work, and life directions.

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Financial DNA

w

Figure 4.1

Financial DNA® Discovery and What It Uncovers

(© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

The Route to Success: Asking the Best Questions in the Best Way If you want answers, you have to ask questions, but knowing the right questions to ask and how to ask them is no easy task. The discovery phase of a relationship (that whole getting-to-know-you phase) tends to trigger emotions in both clients and advisors. Whether you are asking questions of someone else or of yourself, emotions surface from your own experiences. Hence, advisors also have to deal with their own behavioral styles and money baggage when dealing with clients. For some, the impact of their emotions is subtle, and for others, there will be more feelings 46

The Process of Discovering Your Financial DNA

depending on the question and their personalities. These questions will in turn affect the ability to think, communicate, and connect with others. The resulting pressure can impact the responses that are given and the rationality of the financial decisions that are made. Chris Coddington has found that he is very logical and rational in the way he asks questions. In some cases, because of his behavioral style, he has to make a concentrated effort to adapt (i.e., be more empathetic and show more understanding and sympathy), although it is not always easy for him to do so. Under pressure in the more emotional situations with clients, he becomes more withdrawn and finds it difficult to ask the questions he wants to. Those who are the opposite of Chris can be too emotional, and for that reason they do not get to the right place, either. The Financial DNA Discovery Process is a highly structured and yet user-friendly process that provides the best opportunity to ask the right questions the right way for optimal outcomes. The process will uncover your financial personality—some of which will be familiar to you; others not so much. But nothing that appears in a Financial DNA report should completely surprise you. Most of us have a fairly good idea of who we are, at least subconsciously. Whether we can articulate this knowledge is another matter entirely.

How You Participate: Completing Profiles You participate in the Financial DNA Discovery Process by completing a series of personal appraisals or profiles. Each profile has a structured set of questions for you to respond to. There are a total of 13 profiles that can be completed in 47

Financial DNA

three independent stages. You do not have to complete all of the appraisals at one time. Rather, completing the profiles can be treated as a journey of discovery. Some people only do the first stage; others do the first two stages; some do all the profiles in one sitting; others complete the profiles progressively over a number of months or even years. Each profile addresses different aspects of your financial personality and can either stand alone or be used together for a more thorough understanding. Accessibility and ease are two of the driving forces behind the design of the Financial DNA Discovery Process. The profiles can all be completed online or filled out on paper and submitted to Financial DNA representatives (local or international) for processing. After completing stages 1 and 2 of the process online, you are instantaneously provided with comprehensive behavioral analyses. The reports are prepared with easyto-understand language so that you don’t have to wade through technical jargon to get to your financial decisionmaking insights. The outcomes generated from the stage 3 profiles provide a greater level of depth and can be provided in a report or in consultations, depending on the circumstances of your participation in the process. In some cases, these profiles are done in workshops with groups of people, families, or even coworkers. Financial DNA wealth mentors are available to discuss your Financial DNA reports to help you integrate the core of who you are and your financial plan. A Financial DNA wealth mentor is a financial advisor (like Chris Coddington) or other professional who has been through

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The Process of Discovering Your Financial DNA

a training process in the Financial DNA Discovery Process and is committed to the values of Financial DNA.

The Three Stages of the Financial DNA Discovery Process The three independent stages of the Financial DNA suite of profiles are: the Financial DNA path profiles (stage 1); Financial Directions (stage 2); and CompleteINSIGHT (stage 3). Each of the three stages uncovers important aspects of a person’s unique financial personality. The process allows for a deeper understanding of behavior, multiplying the positive impact on the personal relationship with financial decision making. Figure 4.2 illustrates

Figure 4.2

What the Process Uncovers

(© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

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Financial DNA

the relative depth of discovery reached by each stage in the process. The three stages of the Financial DNA Discovery Process are processed and measured in different ways. Figure 4.3 shows a snapshot of each stage. Stage 1: Financial DNA Path 4 and Path 6 Profiles

The path profiles use a web-based engine to measure, score, and produce path profile reports. This stage of the process involves two appraisals that work together and usually take about 20 to 30 minutes to complete. Responses are calculated and measured in Financial DNA’s secure online server, with client reports available immediately. The path profile reports come in two stages: the Path 4 profile report followed by the Path 6 profile report. The Financial DNA Path 4 and Path 6 profiles provide insightful,

Figure 4.3

Three-Stage Discovery Process

(© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

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The Process of Discovering Your Financial DNA

predictive, and reliable data about naturally motivated (hard-wired) behavioral styles. They can be used to improve interactions with others and facilitate self-discovery. The process has been extensively tested through more than 75,000 assessments and validated by Lee Ellis with a team of consultants associated with the University of Georgia’s applied psychology department. Further, the early use and development of the assessment process was carried out in a financial advisory setting. Completing both the Path 4 and Path 6 profiles offers the most comprehensive applications of this stage. However, it is not mandatory. The findings of Path 6 offer crossvalidation of the findings of Path 4 and additional depth. Path 4 provides the benefit of understanding the behavioral traits, which is certainly important from a developmental point of view, but Path 6 gives you more behavioral insight. Another component of this stage is the Financial DNA comparison report. This report provides the key financial relationship characteristics between two people and is useful for spouses, parents and children, business partners, clients and advisors—any two or more people who want to understand their differences and generally work together better in making financial decisions. Most people who participate in the Financial DNA Discovery Process complete the Path 4 and Path 6 profiles first. Then once they are comfortable, or depending on the need, they proceed to the following two stages. Stage 2: Financial Directions Appraisal

The Financial Directions appraisal usually takes around 45 minutes to an hour for most people to answer. Upon 51

Financial DNA

completion of the Financial Directions appraisal, your results will be immediately analyzed through a web-based engine, and you will receive a report detailing your financial preferences and learned financial behaviors in 18 categories broken down into 63 strands of your Financial DNA. However, there are some optional, qualitative questions that address your environmental experiences. These are not scored or measured against other respondents. The qualitative aspects of the appraisal form the basis of a discussion with your wealth mentor. You may even choose to have an in-depth report produced based on the qualitative responses. The report includes detailed information on the following strands of your financial preferences: • Your preferred level of control over investments— with advisors and with associates • The level and type of information you require • Your decision-making style • Your preferred method and delivery of advice • Your investment knowledge and confidence • The type of education you require • The results and goals you seek in investments • The type of relationship you expect with advisors • Your values in relation to investing • The type of communication you expect from an advisor • Your financial management focus

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The Process of Discovering Your Financial DNA

• The level of risk you are prepared to accept in an investment setting • What motivates your investment strategy • How you react to losses if and when they occur • What asset classes you know and understand • What investment propensities you hold To reiterate the theme of the Financial DNA approach, the key to your inherent financial success and realization of financial potential is to start from within, to understand and reconcile natural and learned behaviors, and then align investment strategies to them.

“I have found the Financial DNA Path 4 and Path 6 profiles very enlightening in discovering who clients are in terms of their core behavioral styles. The Financial Directions phase has given us much greater insight into how to match client behavioral styles to their investment plans and for providing a very helpful framework for pinpointing the issues that need to be addressed in consulting with clients.” —Gary Klaben, Coyle Asset Management

Analyzing Your Financial Behavior: Cracking the Code To simplify the analysis process for advisors and clients, we have developed the Financial Behavior analysis, a powerful one-page summary of financial behaviors and preferences. In effect, this analysis is one’s Financial DNA. To get this analysis you must complete at least stages 1 and 2 of the

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Financial DNA

Financial DNA process. (Chris Coddington’s Financial Behavior analysis appears in Appendix A.) The Financial Behavior analysis provides a reconciliation of predicted natural behavior uncovered in stage 1 by the path profiles and learned financial behavior and preferences uncovered in stage 2 that have been built up over time through environment and experiences. This gap analysis identifies areas that are in alignment and potential blind spots. Chris Coddington found that the Financial Behavior analysis provides clients with objective insights into their own investment styles and can be used as a more robust and objective foundation from which to build financial plans that are integrated to a client’s life purpose and wealth creation goals. At the same time, the analysis determines appropriate wealth mentoring and education strategies. The analysis also gives Chris a clear and easy-to-use framework to discuss potential blind spots and a mechanism to link the behavioral discovery to a financial plan. Overall, these insights can then help clients improve areas with which they are unhappy and make investment decisions based on what’s right for them. Stage 3: CompleteINSIGHT

As a participant in CompleteINSIGHT you have access to 10 appraisals that uncover in more depth the drivers of your financial decision-making processes. Each of these appraisals is a stand-alone series of questions to help address a specific aspect of one’s unique financial personality. They only reveal what you want them to reveal.

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The Process of Discovering Your Financial DNA

Checks and balances within the appraisals help to identify important inconsistencies. The CompleteINSIGHT stage of Financial DNA is different from the preceding two stages in that no specific report is immediately produced as a result of responses. However, the responses are used as a method for a client and a wealth mentor to understand deeper financial drivers more completely. Sometimes participants in the Financial DNA process only complete one of these appraisals in an area that they want to focus on. Some simply are not ready to do the whole lot. Whatever the reasons, the level of involvement is completely selective. The 10 CompleteINSIGHT Appraisals are: 1. The Passion and Vision Appraisal helps you identify your passion so that you have the right starting point to make valid decisions that will maximize your potential. Then a vision can be articulated that will turn that passion into practical concepts in terms of how you live in the world. 2. The Personal Environment Appraisal reveals the different life experiences and environments that have impacted your financial decision making to date. 3. The Values Appraisal uncovers those values that are most important to you in making your investment, work, and life decisions. 4. The Future Needs and Wants Appraisal identifies your future needs and wants so that your financial strategies can be aligned to your goals and financial drivers.

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Financial DNA 5. The Financial Astuteness Appraisal assesses your level of financial astuteness so that you can identify those areas where you need more education to deal with your investments and realize your financial potential. 6. The Futurity Appraisal uncovers your objectives and motivations regarding succession planning, intergenerational planning, and philanthropy. 7. The Financial Behavior Appraisal uncovers in depth what risks you are prepared to take with your investments, enabling you to structure specific investment strategies that carry a risk level you are comfortable bearing. 8. The Investment Products and Strategies Appraisal uncovers those investment products and strategies you understand, are interested in, and with which you are comfortable. 9. The Financial Mind-set Appraisal explores your rules of conduct for dealing with money, investments, and advisors. 10. The Current Financial Position Appraisal is a detailed financial fact finder to ascertain where you are today financially.This appraisal is typically completed after you have uncovered your Financial DNA and are ready to move forward and determine a wealth creation strategy. A wealth mentor will typically help blend and document the information gathered from these profiles into a Financial DNA quality life financial plan. There is a customized Financial DNA workbook for this purpose (Figure 4.4). You can complete the workbook on your own. The 56

The Process of Discovering Your Financial DNA

Figure 4.4

The Financial DNA Quality Life Financial Plan Workbook

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Financial DNA

following chapters include tips on putting together a Financial DNA quality life financial plan. After you have participated in the Financial DNA process, I encourage a partner or spouse, family members, and business associates to begin the discovery process, too. The information gathered can then be used to help invest with a partner or spouse, an investment associate, or other family members with greater knowledge of each other’s similarities and differences. In our experience, this will bring more harmony to relationships and make financial relationships more profitable and rewarding. Remember that many relationships are destroyed because money has exposed negative emotions. “Money cannot buy peace of mind. It cannot heal ruptured relationships or build meaning into a life that has none.” —Richard M. DeVos

Where Is Your Life Now?: Wealth Creation Review One step that can be taken before completing the Financial DNA profiles to start the discovery process is the wealth creation review, which is a simple process of examining where the quality of your life and financial wellbeing are now and what changes you will need to make in order to synchronize all areas of your life. How you identify and then make the changes will be largely determined by your behavioral style. There is no doubt for some people there will be some areas that can be improved. It is a short self-assessment with 20 questions that takes 5 to 10 minutes to complete.

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Chris Coddington has found the wealth creation review to be quite effective when used in the first or second meeting with a new client and usually he has him or her do it on the spot during the meeting. The review prompts good, useful discussions. Your Turn How to Get Started—Get the Objective Information • To see how the whole Financial DNA Discovery Process works, visit our web site at www.financialdna .biz and review the About Financial DNA section. • Where is your life now? Complete the wealth creation review. • Start uncovering your financial personality with the Financial DNA Path 4 and Path 6 profiles and then progress through stages 2 and 3, as you wish, in your own time. • You may take the profiles by ordering them online. • You can request that a Financial DNA wealth mentor contact you after you have taken each of the profiles.

Recommended Reading Transitions—Making Sense of Life’s Changes by William Bridges This book provides excellent insight into strategies for coping with the difficult, painful, and confusing times in our lives. It helps us make the transitions less distressing, less disruptive, and more productive. All of us have gone

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through at least one transition and will go through more. The book shows how change is situational and transitions are more psychological. Transitions are not so much about the events themselves but rather the inner re-orientation and self-redefinition that we have to go through to incorporate those changes into our lives. How we come out the other side of difficult transitions will often dictate future success and, in the end, how we look back on our lives.

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Chapter FIVE

Understanding Self First to Unlock Wealth

“Your paradigm is so intrinsic to your mental process that you are hardly aware of its existence, until you try to communicate with someone with a different paradigm.” —Donella Meadows

S

o far in this book, I have discussed the components of behavior and the rationale for understanding your own in the broader context of your financial decision making. In particular, I have emphasized that understanding your naturally motivated behavior is the starting point to wealth creation. I work with the approach that you cannot have a successful relationship with someone else unless you first “know thyself.” This is equally true in the financial advisory setting between advisors and clients. It could be very dangerous for advisors who do not objectively know themselves to rely solely on their intuition to understand their clients. The risk is that their radar will not be reading the client properly, which could cause a serious error in judgment.

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The Starting Point “Extremists think ‘communication’ means agreeing with them.” —Leo Rosten

I have been lucky enough to work with Lee Ellis, whom I consider a mentor. When Lee first saw my profile, he called it extreme. “You tend to see yourself as having it all together,” Lee told me at the end of our first meeting. “While you have some talents that are real strengths, perhaps you could benefit from learning about your blind spots.” Statements like this can sting, but if you know that the person making them cares about you and understands your profile well, then the feedback can be accepted and respected. The ultimate development experience can then take place.

Understanding the Financial DNA Path Profiles: Getting the Objective Truth “Assumptions are the termites of relationships.” —Henry Winkler

To make this more practical, I am going to help you navigate the Financial DNA path profiles. First, here are some important points to understand about the path profiles: • They measure normal hard-wired behavioral traits only. • They are not psychological or IQ instruments.

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• They do not identify baggage or learned behaviors and preferences. • They remain stable over time, regardless of age (providing you are over 15 years old) or the amount of money you have. • The outcomes are the same regardless of whether you are male or female. • There are no good or bad profiles. • Profiles should not be used to label people. • No financial or life decision should be made solely on the basis of the profiles. • Profiles should not be used by themselves for asset allocation. • Overall, profiles are accurate 90 percent of the time for 90 percent of people. The Financial DNA Path 4 profile provides a general, yet precise, framework to analyze 16 distinctive financial profiles. Understanding these profiles is similar to understanding the traditional behavioral types that surround us each and every day. While society has trained us to recognize traditional behavioral types instinctively (due, in no small part, to the painful experiences most of us had while trying to fit in at high school or in our families), there is no similar learning process in the financial world. Figure 5.1 shows typical Path 4 graphs for each of the 16 profiles. A brief snapshot of each of the 16 Financial DNA Path 4 profiles is summarized in the following. We will

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Figure 5.1

Typical Path 4 Graphs

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

then see how people with these profiles behave and how they make decisions in a range of situations: 1. Adapters like Chris’s mother Jane Coddington (Chapter 9) are compliant, respectful, and courteous. They are conservative individuals who are professional and demanding of accurate, detailed, and well-thoughtout advice. They also tend to be loyal but may feel the need to be all things to all people. 2. Administrators like Melanie Hilton (Chapter 13) are discerning and harmonious facilitators. They have a persistent, matter-of-fact, and predictable style that is well balanced. They also have high standards of administration and service. 64

Understanding Self First to Unlock Wealth 3. Analyzers like Tony Jones (Chapter 11) are investigators who examine and scrutinize. They are decision makers who move forward from detailed and wellthought-out, proven material. They are also characterized by an organized and predictable style. 4. Cautious Thinkers like Grahame Johnson (Chapter 13) are vigilant, logical, and fastidious. They are highly organized and analytical. Decisions are based on previous performance, security, and thorough analysis. 5. Deep Thinkers like John Smith (Chapter 13) are logical, stable, and think things through carefully. Driven by security, these people seek stability and a proven track record. Open to education, they commit to strategies that have been well-thought-out and consider such strategies to be means to financial goals. 6. Detailists like Carol Benjamin (Chapter 13) are diligent and fastidious thinkers. They may want to rely on or expect analysis rather than venture into unknown territory. Security and accuracy are the foundations of their decision making. Structured and respectful, they gravitate toward tradition over innovation. 7. Directors like Alexander Burberry (Chapter 13) are assertive, visionary ringleaders. They focus on results and are energetic motivators. These confident people know what they want and where they are going. 8. Drivers like Sarah Williams (Chapter 12) are logical, determined, and driven by results. Fast-paced, demanding individuals, drivers are excited by change, logical in relationships, and sometimes abrupt. 65

Financial DNA 9. Encouragers like Alan Eckhardt (Chapter 13) are easygoing, amiable promoters. They are enthusiastic and focused on the team. They are also easily persuaded and keen to please. 10. Harmonizers like George Williams (Chapter 12) are supportive, tactful, and encouraging. They are friendly and thoughtful and may need a confidence boost. 11. Motivators like John Williams (Chapter 12) are vigorous and decisive promoters. They are highly energized people who make quick, instinctive decisions. Fun to be around, they enjoy living in the fast lane. 12. Networkers like Helen Jones (Chapters 6 and 7) and Paul Wilson (Chapter 8) are resourceful, inventive, and instinctive. They are gregarious people who see wealth creation as a necessary stepping-stone in their upwardly mobile lifestyles. 13. Researchers like Tom Smart (Chapter 13) are studious, analytical investigators. They are cautious and require time to explore, investigate, and test advice before accepting it. 14. Strategic Thinkers like me, Chris Coddington, and Brian Williams (Chapter 12) are evolutionary, visionary entrepreneurs. We are highly charged and creative but have our feet firmly set on the ground. We are well able to realize visions. 15. Stylish Innovators like Mary Williams (Chapter 12) are sharp, demanding, and on the cutting edge. They demand leading, highly sophisticated advice. They are also ambitious and conscious of image and standing. 66

Understanding Self First to Unlock Wealth 16. Supporters like Chris’s brother Richard Coddington (Chapter 9) are dependable and loyal advocates. They make decisions based on history and security, and are highly practical and reliable.

The Financial DNA Path 4 and Path 6 Behavioral Factors The Financial DNA Path 4 profile considers four factors of behavior, while Path 6 considers six factors of behavior (the first four correlate to those in Path 4 but are not entirely the same). As Figure 5.2 shows, the Path 4 and Path 6 pro-

Figure 5.2 Financial DNA® Path 4 and 6 Behavioral Factor Comparison (Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

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files are intended to cross-validate each other, which is useful for confirming accuracy and gaining more insight.

How the Financial DNA Path 4 and Path 6 Profile Scores Are Measured The following is a brief summary of the Path 4 factors (with their corresponding Path 6 names in parentheses); further detail is provided in Chapter 7. 1. Control and Agenda (Accommodating and Directing): This factor measures your need to control the agenda, your willingness to be assertive, and your desire to make decisions (Dominance in Path 6: Compliant and Dominant). ACCOMMODATING

Mid-Range

Compliant

DIRECTIONS Dominant

2. Interaction with Others (Reserved and Engaging): This factor refers to your openness in expression, transparency, and ease in relating to strangers (Extroversion in Path 6: Introverted and Extroverted). RESERVED

Mid-Range

Introverted

ENGAGING Extroverted

3. Conflict and Pace (Objective and Harmonious): This factor rates your need for harmony, ability to be patient, and desire for stability (Compassion in Path 6: Detached and Compassionate).

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OBJECTIVE

Mid-Range

Detached

HARMONIOUS Compassionate

4. Order and Detail (Spontaneous and Methodical): This factor considers your need for structure, concern for details, conscientiousness, and desire to prepare (Conscientiousness in Path 6: Unstructured and Structured). SPONTANEOUS

Mid-Range

Unstructured

METHODICAL Structured

The Financial DNA Path 4 is like an X-ray, whereas Path 6 is more like an MRI scan. Path 6 takes the profiles into more depth by adding the following two factors. 5. Adventurousness (Cautious and Adventurous): Ranging from those who are careful and cautious to those who are daring and prepared to take chances, as well as ambitious with a competitive attitude toward goals. Cautious

Mid-Range

Adventurous

6. Innovation (Concrete and Abstract): Ranging from those who like to be more concrete (dealing with the practical and what is already established or proven) to those who like the abstract (dealing with new concepts and solving problems). Concrete

Mid-Range

Abstract

As you will see in Chapter 7 and from the previous summary, Path 6 also has subfactors that provide substantial

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additional depth and the why of the behavior. The subfactors tell a lot more about a person’s decision-making propensities. Figure 5.3 illustrates how the Path 4 scores are measured on a horizontal continuum. The Path 6 factors and subfactors are similarly measured. Your score for each factor will fall somewhere on the continuum. For each factor, 20 is the lowest score and 80 the highest score with the distribution of scores reflected by the bell curve in Figure 5.4. When you go through the Financial DNA process, you will get numerical scores for each of the factors. Mid-range for our purposes is made up of scores between 45 and 55. Low range is 20 to 44. High range is 56 to 80. The further a score is from 50 (either

Figure 5.3 Analysis

The Financial DNA® Path 4 Factor Measurement and

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

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Understanding Self First to Unlock Wealth

Figure 5.4

Distribution of Scores

(© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

higher toward 80 or lower toward 20), the stronger that trait is in your naturally motivated behavioral style and, consequently, a stronger driver of your financial personality. The traits with the highest and lowest scores are the ones that impact your profile the most and will be the most apparent in your behavior. One-third of people fall into each of the three ranges— left, mid-range, and right. So if your score falls to the left or right of any factor, a third of the population is somewhat different from you and a third is your complete opposite. Not many of us have scores to the extreme left or right of the bell curve. Each factor also comes with traits that have strengths and struggles. Strengths are talents that come naturally. They cannot be learned. Skills are what you learn, and knowledge is what you acquire from experience. To maximize your potential in any aspect of your life, including 71

Financial DNA

your finances, and to live with less stress, the first step is to use your natural talents as much as possible. For instance, Bill Gates has been very successful in founding Microsoft because he has focused on his talents of taking new ideas and transforming them into user-friendly applications. Tiger Woods knows his strengths are his long-game and putting, which is what he practices the most, whereas his sand play is not his strength. On the other side, your struggles are normally the opposite of your strengths, or even your strengths overused. Struggles are traits that can be overcome by hard work and focus. (We deliberately do not express struggles as weaknesses so people do not feel judged or shut down by the process.) However, it will take a lot of effort to overcome your struggles as this is in effect going against how you are hard-wired. Learning skills in areas where you do not have natural talents will not maximize your productivity. This is what leads to stress and discomfort, and certainly less than optimal performance. Overcoming your struggles can be equated to swimming upstream. So, we recommend that you be aware of and manage your struggles so that they do not become weaknesses and blind spots that could do damage. Traits that fall in the mid-range tend to be more flexible. If your traits fall within the mid-range, it is easier to move left or right within a given factor than it would be if you scored in the strengths or struggles ranges. Extreme traits (highest to the right or lowest to the left) are essentially defining characteristics. However, keep in mind that the scores reflect natural behavior. Behavioral traits become more apparent when under pressure.

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For instance, when you are stressed or there is a significant change in your circumstances, you are more likely to revert to your natural behavior. Examples of these types of situations are when you have: • Investments that suffer a significant, sudden loss • A business that is going bankrupt • Job difficulties or redundancy • A stressful relationship with a family member • Unanticipated expenses putting pressure on your finances This does not mean that the scores are irrelevant unless you are under pressure, just that you are more easily able to modify or adapt your natural behavior in a stress-free environment through your learned behavior, passions, and values.

The Transformation: Chris Understands His Own Financial DNA Path Profiles “How I got here is pretty simple in my case. It’s not IQ, I’m sure you’ll be glad to hear. The big thing is rationality. . . . It gets into the habits and character and temperament, and behaving in a rational manner.” —Warren Buffett (Fortune magazine, July 20, 1998)

You may well ask what understanding strengths and struggles has to do with financial decision making, and how that

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relates to success. A good deal of the answer is in the preceding quote. Like many people who have been successful and fulfilled, Warren Buffett found a way to cultivate the strengths he possessed and put them to work. More important, he then had the discipline and courage to make following his strengths a habit. For instance, he turned his natural patience into his now-famous twenty-year perspective that leads him to invest only in companies who he can confidently forecast results for the next 20 years. Similarly, he puts his trusting nature to work by carefully vetting the senior managers and then becoming very hands-off in letting them manage the companies. The first step in Chris’s own transformation was to go through the process himself. What he found astounded him. Extracts from Chris’s Financial DNA path profiles are shown in Figures 5.5 and 5.6. What was powerful for Chris was that he could see how his life unfolded and why he made both good and bad

Figure 5.5

X-Ray: Financial DNA® Path 4 Profile

(© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

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Figure 5.6

MRI Scan: Financial DNA® Path 6 Profile

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

decisions. Facts he had never been able to articulate about himself very precisely and suddenly became clear. Seeing his Financial DNA Path Profile and associated behavioral traits laid bare on the page liberated him to embrace those aspects of himself that matched the man he wanted to be. At the same time, with greater awareness he saw his struggles and how he could start to adapt his behavior to compensate for them when necessary. His mother, Jane, noted that this was a renaissance in Chris’s behavior and his attitude toward helping others. The human values that had always been hidden with introversion and a rational behavioral style now started to be seen consistently. In reality, the emergence of these values enabled Chris to redirect how his natural talents are used. His core natural behavioral style had not changed but some aspects of his overall personality had.

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One of the biggest issues for Chris was a naturally low level of trust. He realized that this was part of his natural behavioral style. Importantly, this actually meant he did not trust himself. Just becoming aware of this and where it came from was a big step forward for Chris, resulting in him placing a high value on being trusted by his clients, much more than making money. “It is impossible to go through life without trust: That is to be imprisoned in the worst cell of all, oneself.” —Graham Greene

Chris knows the key to his life will be in the relationships he has—maybe because relationships are the part of his life that do not come as easily (certainly not as easily as numbers). The Financial DNA path profiles confirmed to Chris that he is a visionary, pioneering type of person; very driven by goals and relentless when on task. He could see he is the kind of person who, when he understands a situation or opportunity, will take risks that few others dare take, and he will be able to handle these risks at an emotional level. At the same time, he can be extremely cautious when the path ahead is unclear. This ability to stand back and observe makes Chris a good teacher. In the accounting firm, he ran training programs, sensing he was good at it but not really knowing why. He now knows it was because he paid attention to everything a trainee said and did, and intuitively moved in a direction that would enable learning for that individual on her unique terms.

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Chris has also always thought of himself as rather antisocial. He has never been the kind of person to walk into a party and make it hum. He does, however, enjoy meeting one person at a party and making a connection. Social situations are always draining for him, but Chris didn’t understand why until he saw his Financial DNA path reports. Rather than using his energy to run around, mingling with lots of people, Chris’s way is to watch, observe, and give himself space to see what is going on. Chris was relieved to see that his tendency to withdraw from people is the way he protects himself. His profile showed a low level of sympathy and a high level of detachment. This means he is likely to retreat in emotional situations. This made sense to Chris’s rational and analytical mind. He accepted the analysis because the behaviors can be precisely measured and validated. It was the perfect fit. His life started to make sense. As discussed in the following chapters, the Financial Directions (see Chapter 8) and CompleteINSIGHT profiles (see Chapters 9, 10, 12, and 14 for how they are each used) complete the picture of a person’s total financial personality.

A Greater Understanding of Clients: Serving Them on Their Terms Chris knew his clients came to him for understanding, for wisdom, not just so that he could make them more money. He also knew that if he understood his clients better as people, he would ultimately make them wealthier in a whole-life sense (including money). The problem for Chris was that while he enjoyed being

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around people and getting to know them, he was not naturally compassionate—he did not naturally feel others’ emotions and dealt with his own very internally. He was more likely to keep others’ emotions outside himself so that he might better solve problems. Detachment was good for the financial side of his business, but generally a struggle for mentoring. Financial DNA proved to be the perfect bridge, allowing Chris to see exactly how to deal with clients on their own terms. The process showed him whether a client needed more financial information or more encouragement; whether he or she needed gentle guidance or direct suggestions. It helped him to understand his clients’ comfort levels with risk and to define client goals—both personally and professionally. Chris was able to help clients find balance in their lives. While Chris is fairly intuitive when it comes to understanding his clients’ stage of life, the Financial DNA process provides an objective framework for everyone to understand where the behavioral insights are coming from. For Chris, understanding his own Financial DNA profile was a fundamental starting point to understanding others. His life experiences of being thrown into new situations gave him resilience and an ability to understand a wide range of people. His experiences of jumping into new situations developed his quick mind and taught him how to ask the right questions to learn what he needs to know. One of Chris’s biggest fears is not knowing the impact of his actions on others (e.g., not being aware of a person’s feelings, having an argument and not knowing where he stands with the person, or delivering tough love to a client

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when he is unsure that it is the right approach). You could say that these are Chris’s blind spots. The reports clarified these elements of his behavior, allowing Chris to articulate what had only before been a vague notion. Financial DNA validated Chris’s innate abilities and offered him a way to assess clients in a completely objective fashion—no judgments. There are no good profiles or bad profiles, only unique profiles. It is that uniqueness that provides each of us with our strengths and struggles. Within these strengths and struggles lies the foundation for our connection with others and the framework to develop ourselves. By being open and honest with his own profile and by being willing to admit his own struggles and strengths, Chris found a level of client trust he had never known before. The idea of transparency, of “knowing me, knowing you,” became a defining element of his wealth mentoring business. Your Turn Understand Your Own Financial DNA Path Profiles • Revisit the questions at the end of Chapter 2. • Have the Financial DNA path profiles opened your eyes to behavior that was not as noticeable before? • What are your two most dominant traits from the Path 4 and 6 profiles (those scoring closest to 20 on the left side or 80 on the right side)? • Look at the subfactors in your Path 6 profile report. What are the three most dominant (those scoring closest to 20 on the left side or 80 on the right side)?

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• How do these dominant traits impact your overall behavior and what you do best each day? • What do you believe are your major blind spots? • How have you learned to adapt to others close to you?

Recommended Reading Leading Talents, Leading Teams by Lee Ellis While this book has been written for leadership and teams, it does put a powerful spotlight on human behavior and provides outstanding insight into the behaviors identified by the RightPath profiles. The RightPath profiles assessment models are foundational to the Financial DNA Path profiles. Advisors will also find that many of the leadership and team development principles are applicable because they lead clients and run businesses. Investors will find these principles are applicable for any person and any relationship.

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Chapter SIX

Building a Great Relationship with Your Advisor

F

inancial DNA is not just a wealth creation discovery process; it is also a relationship development tool. We have designed Financial DNA and its reports to help people have better relationships and greater understanding in their financial relationships with advisors, business partners, family members, and even professional colleagues. By understanding one’s self and viewpoints more objectively, people can naturally begin to see others (including advisors) in a more objective light. When advisors participate in the Financial DNA process as well, clients will gain even deeper insights. All of this results in a much faster transfer of trust in the advisory relationship. One of the keys to building trust in the advisory relationship is to be able to recognize the gap between what the advisor said and what the client heard (Figure 6.1). Of course, this becomes more difficult when the client is a couple, as they are likely to have different behavioral

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Figure 6.1

The Challenge—The Expectation Gap

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Building a Great Relationship with Your Advisor

styles. The issue is to recognize how each person is different and therefore how they will process what has been said in a different way. If these differences are not understood and addressed then there will be expectation gaps which ultimately cause the problems with at a minimum both the client and advisor being disappointed.

Building Trust More Quickly Based on Understanding “Wells University is committed to positioning financial representatives on the leading edge of client discovery and practice enhancement. We are working with Financial DNA because it provides an intelligence platform to accomplish this goal and builds a relationship culture in the financial services industry. Many successful financial representatives understand the need to manage their clients’ expectations and behaviors prior to repositioning their assets. Financial DNA fosters a deeper mutual understanding, assists in the client management process to produce more effective communication, and drives more committed financial decisions.” —Doug Buce, Vice President, Wells University

Remember, Financial DNA is all about understanding self and others. When an advisor and client participate in the process together, you not only make mutual understanding and communication easier, but your relationship has the potential to become much more effective more quickly and therefore more valuable. This is because:

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• The advisor understands the client better and makes recommendations on what fits the client and not what fits the advisor’s perception. • By communicating on the client’s terms, the advisor can communicate more effectively and in less time. • Both client and advisor ask the right questions. • Client and advisor can understand the client’s true investment behavior more thoroughly. • Financial goal setting becomes clearer. • The Financial DNA process can result in a fullquality life financial-planning process. • You learn to understand differences. Susan Bradley, a leading financial planner who I have had the great fortune to work with in recent times, has been an industry champion when it comes to getting much “I have embraced Financial DNA as a key part of the Women, Meaning, & Money program. In particular, I have found Financial DNA to be a very powerful process that enables great discovery communication to be developed and is an important part of building great relationships. Further, the process liberates the women in my program to immediately start talking about areas of their lives and their experiences that they would not otherwise have shared. This is key to the world of what we call ‘interior finance,’ where we are helping people get to their core and setting direction for their lives.” —Susan Bradley, CFP, founder of Women, Meaning, & Money

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greater recognition of how both the advisor and the client will have a better relationship and ultimately get better results if the communication channels are developed.

Chris Coddington Connecting to Helen Jones in the First Meeting We now follow how Chris Coddington connected to his new client Helen Jones, who came to him for financial advice after being referred by a mutual friend. Chris says, like many financial advisors, when a client comes to see him the normal first question is financial or investment related, or simply, what should I do with my money? However, Chris knows from experience that there is likely to be a life issue or a transition prompting the client’s visit, and this is really what he needs to know about before getting to the money issues, which can bring up a lot of emotions. So he took the following approach with Helen, as with all of his clients. In the first meeting, Chris asked Helen some openended questions: • What has prompted you to come and see me today? • What would you like to achieve by the end of our time together? • Anything else you would like to happen? • If you were to successfully work with me, what do you expect from our advisory relationship over 12 months and then, say, five years? • What do you expect of me personally?

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Normally these types of questions reveal alot about the issues and are a starting point for how Chris will work with new clients. Then Chris has a number of open, leading questions that he typically asks new clients to check their immediate needs. He asked Helen the following questions: • Have you got an (enduring) power of attorney? • Have you got a will? • When do you want to retire? • What do you see as your next life transition? • What is your main concern right now? • What do you see as your ideal life? • Do you have a personal expenditure budget? • Do you currently have professional and financial advisors? What is your relationship with them? In addition, Chris checked Helen’s quality life pulse with the questions laid out at the conclusion of Chapter 1. All of these questions helped Chris work out where Helen was in her life and with her finances, her attitude to wealth, her money feelings, the balance of her relationships, and priorities. Also, Chris had Helen spend 10 minutes doing the wealth creation review (Chapter 4) in the first meeting. Chris then had a better starting point for determining the focus of the services that needed to be provided. He

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Building a Great Relationship with Your Advisor could tell if she needed an emphasis on education, development, financial review, or investment planning.

Introducing Financial DNA to Helen Chris knew that the key to doing a good job for Helen was in understanding her. In fact, philosophers since Socrates have said that being understood is the number one need of people. This has also been supported by research of financial advisory clients (i.e., research provided by Investment Advisor in April 2001). Rather than spending years earning Helen’s trust and getting to know her better (if ever), Chris used Financial DNA to do the same thing in a fraction of the time. Chris normally waits until the second half of the first meeting to explain Financial DNA to a new client. With Helen, he did it after asking the questions previously outlined and as part of explaining his overall wealth mentoring service to Helen. The message Chris gave Helen was that he wanted to understand her as a person, and that by understanding her naturally motivated behavior and her financial preferences he could be a better wealth mentor for her and overall help her build a quality life. Also important, Chris explained that they would learn how to communicate with each other, which would be the key to great discovery and dealing with each other in good times and bad. I know that there are other advisors who sometimes introduce Financial DNA before the first meeting. This certainly focuses the content of the first meeting, as Bruce Woodcock comments:

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“As a financial advisor who truly enjoys getting to know his clients, Financial DNA® has been invaluable to me. The first reason has to do with potential clients who take it before we even meet each other for the first time. I have found it sets the proper tone for our meeting . . . it effectively ‘primes the pump’ for us both to be on the same track of learning about each other, rather than talking only about ‘the money’!” —Bruce Woodcock, Bruce Woodcock Financial Services

When introducing Financial DNA Chris often uses a diagram (Figure 6.2) to show where the process will start and finish and the areas that can be covered, including: • The Financial DNA profiles for understanding • Discussion and exercises for development • Documentation for action and accountability

Figure 6.2 The Vision: Connecting Behavior to the Quality Life Financial Plan (© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

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There are many benefits for a client undertaking the Financial DNA Discovery Process. Chris always explains to clients first that the process will help them pinpoint an optimal pattern of decision making—where their emotions will be most in synchronization with their rationality. He goes on to tell them how the most powerful outcome he has seen is probably the least tangible—liberation. People have discovered something they did not know or were not sure how to reveal (or were even afraid to reveal). For some, it is simply confirmation that they are on the right track—no small feat. That confirmation is powerful if it stops the person from hesitating or making a wrong turn. In the end, either way it offers peace of mind. Making behavioral changes or having greater confidence in a strategy comes when you know where your actions are coming from. You can’t change what you can’t see. Another life-changing outcome of the process is goal and money clarity—providing direction. The first step to money clarity and knowing your life purpose comes from understanding yourself and your life plan. Pam Williams is a financial advisor with whom I have had the pleasure to work in the past couple of years. Pam has embraced the clarity that Financial DNA provides and has created an ideal workshop environment for her clients. Many people make financial decisions based on outside noise, but the Financial DNA process tunes you into your own station. It builds a stronger foundation because it starts from within—with your DNA pattern. The process highlights differences between people, and with this awareness it enables a better framework for

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I focus on helping my clients define “true wealth” and assist them to build clarity, passion, and vision in their lives. Financial DNA has helped me with my core expertise, blending of Interior and Exterior Finance, integrating behavioral attitudes that often drive success or failure around money and merging this with traditional aspects of wealth education, conservation, and meaningful life goals. This then leads to committed and confident lifelong decisions around all aspects of wealth. I find all the components of Financial DNA to be of great value to my individual clients and also for the workshops I present to the executives of large corporations and nonprofits across the United States.” —Pam Williams of Navigating Wealth

making decisions. If the advisor does not have enough information about a client or the information is inadequate, then the whole planning process becomes flawed. The process starts off with the wrong inputs, and there is a high chance of wrong outcomes. You can see that if Financial DNA is not introduced into the planning process then the plan is designed on limited knowledge and more guesswork. The result is the plan can take longer to complete and will be less accurate. Also, because behavioral style is not known, it can take longer to get buy-in. The next problem comes later, in monitoring the plan. If a client is not comfortable, it will be harder to stay committed to the plan, which usually involves more work for the advisor. Also, the investment returns can be limited because switches are made at the wrong time.

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A Reality Check: The Home Truths In getting a client like Helen to understand what the core issues are in financial life planning and ultimately building a wealthier life, the following home truths are a good reminder of what needs to be focused on. Chris suggested to Helen that she reflect on them and what they mean to her: • The more money, the more complications for your life. • Money triggers emotions that can destroy poor relationships. • The tension between time and money impacts your relationships. • You can’t choose your family, but your family will impact your decisions. • Your life purpose is foundational to committing to a financial plan. • Women make, on average, 70 percent of financial decisions. • Eighty percent of your issues are about your life and 20 percent are about financial planning.

The Advisor’s Terms of Engagement I have seen Financial DNA introduced into the client engagement in a number of ways by different advisors. The when and how depends on the advisor’s existing service model and processes. Some introduce the profiles to get a quick snapshot of the client, and others use the whole

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process outlined in this book to provide a comprehensive experience in terms of gaining insight and developing and educating the client. Chris Coddington explained to Helen Jones that as a fee-only advisor he would incorporate the cost of the Financial DNA profiles into the cost of the overall service in preparing the financial plan. In addition, Chris mentioned that he offers an introductory quality life financialplanning discovery package, which is conducted over three meetings and is more along the lines of financial education emphasizing the human capital, life, and internal issues that will be driving or blocking a person’s financial potential. This is far more in-depth and adopts a greater developmental approach rather than just building understanding. Usually, a separate fixed fee is charged for this service. Many of Chris’s clients see this as an investment in their future. So to build understanding, Chris asked Helen at the end of the first meeting to go through the Financial DNA Discovery Process. Helen was very keen to participate and thought, “This is just what I need, and it may also help my marriage. No professional person has ever asked to understand me before.” At the beginning of a relationship with a new client, Chris sends an engagement letter that includes the following: “Making the time we spend together more effective and helping you to reach your goals is very important to me. In order to provide you with the best service I can on a long-term basis, I would like to understand you better. I need to better understand 92

Building a Great Relationship with Your Advisor

what drives your decision making and how to communicate with you on your terms so that we can more quickly build the trust necessary to have a deeper conversation. Building wealth is actually about first understanding your own rational and emotional zones and inherent aptitudes. I can help you to more consistently follow a pattern of decision making that will lead you to success and fulfilling your dreams with a lot more comfort. This starts with understanding your behavioral style. For this reason, I ask my clients to complete the Financial DNA Discovery Process to help you and me develop an objective understanding of your needs. Many of my clients have truly appreciated the clarity this process has brought from the uncovering of new information that helps their financial decision making. I will provide you with my Financial DNA profile as well, so that you know I have also walked this path and to build my relationship with you.” Another way that some advisors introduce Financial DNA to their clients is through a group workshop. This can be done at a client appreciation event or by conducting a more educational event.

The Right Advisor–Client Chemistry: Matching Behavioral Styles “You may be deceived if you trust too much, but you will live in torment if you do not trust enough.” —Frank Crane

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I have learned that establishing the right client–advisor relationship is critical to getting the best outcomes and for the advisor having a healthy business. Also, I have learned that just because a client has a pulse and a bank balance, that does not mean he will be a good client. Likewise, just because an advisor has a CFP and is well qualified that doesn’t necessarily guarantee a good fit. You want an advisor you can trust. Advisors also want clients they can trust and who will accept and respect their styles of service. This is something about which Chris has been upfront with Helen in establishing their relationship. So often the selection process is based on a referral— this advisor did a good job (competencies) and is a good person (character). Is that enough? It gets the advisor and client to the first meeting, but that’s it. Ultimately, the success of the relationship will depend on the behavioral style of both the client and advisor—how they interact with each other, particularly under pressure. Financial DNA enables both the client and the advisor to determine whether there will be a fit. While all combinations of behavioral styles can work together, different combinations require different levels of behavior modification. Is the advisor willing to make the adjustments necessary to work efficiently with the client? Advisors have been learning that in order to build a lasting relationship and earn trust with their clients, they need to be empathetic before advising them. They also need to model trust by revealing more of who they are. Trust must go both ways. Advisors feel much more comfortable providing financial advice if they are confident that clients truly understand their service delivery styles. A

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client should expect that the advisor will reveal his or her Financial DNA. Are the advisor and client results- or relationshiporientated? This will drive a lot of the behaviors and style of relationships. The difference is obvious through the profiles. How to work with those differences takes a little practice. A good advisor is willing to do the work and adapt, starting with discovering those differences himself. One of Chris’s terms is that he will not take on clients if they do not want to go through Financial DNA. I have said to other advisors, who have been reluctant about asking clients to participate in Financial DNA, that most people see it as fun, beneficial, and actually love to talk about themselves. So there is little to lose. The fact that they will not participate is perhaps an indication of who they are and their own issues.

Helen and Chris Moving Forward Together When Helen did her Financial DNA path profiles, Chris took a look at them to confirm whether he was the best person to be her advisor and how he would adapt to her style. Chris gave Helen the same opportunity. In the final analysis, both knew there would be some adapting to be done: • Chris was concerned about Helen shopping the advice around, being undisciplined in sticking to plans, and having an adequate level of realism about goals. • Helen was concerned about Chris being too rational and pressuring her, being too cool, not appreciating

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her lifestyle needs, and focusing too much on presenting her with details. In any case, they decided that they could overcome the struggles and the relationship could work with mutual commitment. Your Turn Review How You (Advisor or Client) Choose a New Advisory Relationship • What suitability process do you follow? • How important is it to feel understood? • How will you measure the relationship: good quality of interaction or the results? • How do you rate the importance of personality and chemistry? • Do you have shared personal and business values? • How much time and money are you prepared to spend?

Recommended Reading What Clients Love: A Field Guide to Growing Your Business by Harry Beckwith This book is rich in marketing content and stories to provide you with the lessons from Beckwith’s own mistakes and those of other companies. Even if you are a client and not in business, this book will help shape your

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thoughts as to how a great advisor should build a relationship with you. It explores the loves of clients that are shaped and altered by four social changes: • More Options and Information Overload • The Decline of Trust • The Rise of Invisibles and Intangibles • The Wish to Connect Then it provides you with guidance on how to build a better business and discusses the most valuable traits of people that clients love. Being open and revealing is key and foundational to the Financial DNA approach.

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Chapter SEVEN

Interacting with Your Advisor for Great Discovery

C

hris knew that Helen was 34 years old and had been married to her husband, Tony, for 10 years, and the two had a three-year-old son. Helen ran a business out of her home, painting used furniture for sale in boutique shops in her town’s arts district. Because her business performed better than she had expected, she was just beginning to venture into the world of financial investment.

The Knowing Me, Knowing You Process To build trust, Chris discussed his own reports with Helen. Then the two compared their financial personalities. I call this the knowing me, knowing you process, and Chris has found it to be very powerful. The knowing me, knowing you process demonstrates to the client that the advisor is authentic in having walked the journey that clients are being asked to travel. It also removes fears of what Financial DNA is about. What has been exciting is

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how this simple technique has opened up clients and liberated advisors to perform at their best.

“We had a successful, entrepreneurial couple who had been our client for two years. Periodically, our work with them seemed to get off track and neither we nor the clients were moving forward with a committed approach to their financial plan or strategy. Then we introduced the Financial DNA Discovery Process to these clients. With this objective information at our disposal, we shared our profiles and reviewed theirs with them over dinner one night, which led to a very positive interaction. Through this review and exchange we determined that the couple both needed substantially more detailed written information, research, and investment options in order to implement their plan enthusiastically. The pressure has gone and the trust and commitment have grown because we now know what they truly want.” —John Hillman, Lincoln Financial Advisors

Connecting Helen to the Profile In facilitating the debrief of the profile, Chris started by asking Helen a very simple question: How do you feel about your profile? What Chris has found is that most clients want to talk about themselves. Helen was no exception. Taking this approach makes the facilitation easier as the advisor is not put in the position of having to ask threatening questions or make assumptions. Helen was naturally triggered by the profile reports to voluntarily open up a lot about herself. Further, Helen revealed some

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Financial DNA early experiences with money and also some more recent cases where there had been mistakes made.

Chris Understanding Helen’s Communication Style A question Chris asked Helen at this early stage was: “How do you want to be communicated with?” Chris knew that this would be very important to the facilitation process. One of Chris’s favorite Financial DNA tools is the My Unique Profile (MUP), which he asks clients to complete after they have done their Path profiles. This is a way for his clients to validate the Path profiles and to express how they wish to be communicated with. The MUP is a quick snapshot that Chris keeps on file for each of his clients. In return, he gives his own MUP to each new client. Very often Chris also hands out his MUP to prospective clients as a way of connecting with them in a different way. The MUP serves as a cheat sheet for all those involved, streamlining the communication process and therefore the financial planning discovery process. Figures 7.1 and 7.2 illustrate MUPs for both Chris and Helen, respectively. You can see how different they both are and how they will have to adapt to each other accordingly. Many clients have found the MUP to be very powerful because it has been an easy way to get across to the advisor how they wish to be communicated with, and it is fun to do. Helen asked Chris to “Resist the temptation to prematurely edit my ideas” and “Use graphics and verbal communications.” Chris used it to say “Anticipate my immediate responses and quick fixes” and “Remember my

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Figure 7.1

Chris Coddington’s My Unique Profile

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

Figure 7.2

Helen Jones’ My Unique Profile

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

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need to analyze.” Chris also commented that if his advisors had remembered to “Offer me options so I can decide” then he would have had far more trust to open up to them and commit to their recommendations. Also, many clients see they can use the MUP as a means to start a conversation with someone close to them (at home or at work) about how they feel or are being communicated with. The MUP allows for a less emotional exchange outside the heat of the moment.

Chris Understanding How Helen Is Wired and Learning How to Adapt “Relationships of trust depend on our willingness to look not only to our own interests but also the interests of others.” —Peter Farquharson

Chris and Helen are very different people. Chris is results oriented, while Helen is relationship oriented. Chris is naturally directing and challenging, driven by results and strategic planning. Trust does not come easily for him. He is all about the bottom line and can be a bit impatient. His challenge will be spending enough time with Helen to make her comfortable. As the advisor, he will need to remember to look at her MUP every time he has an interaction with her. Helen’s engaging nature leads her to be more freewheeling and trusting. Also, the excitement and optimism such behavior can show may lead Chris to think Helen is a risk-taker. In reality, this is not necessarily the case. Her natural tendency toward spontaneity makes it hard for her to focus on the task at hand, and she is not likely to set the

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agenda for what she needs. Her challenge is staying focused and getting results. Despite these huge differences, the advisory relationship can work if the two understand their differences. Since Chris is the advisor, it is his job to adapt his behavior to meet Helen’s needs. As you can see from the Financial DNA Path 4 comparison graph in Figure 7.3, the primary differences between Chris and Helen are that Helen is more accommodating, while Chris is more directing (Factor 1: Control and Agenda) and Chris is more methodical while Helen is more spontaneous (Factor 4: Order and Detail). Helen hired Chris because she saw him as a details person—he can take care of it all and is a safe pair of hands. Helen isn’t a big fan of details; she just wants the big picture. Certainly, she will be turned off by a detailed, written

Figure 7.3 Financial DNA® Path 4 Comparison Graph (Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

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financial plan and extensive research reports. For Chris, this will be challenging because he would more naturally provide detailed plans and research reports. In addition, it will be an effort (a necessary one) for Helen to stand up to Chris. Conversely, Chris will need to listen a lot more than he is used to in order to ensure Helen’s comfort with his advice. Because Helen is a people-person, she won’t just blindly take Chris’s advice—even if she trusts him. She will go to her network of friends, clients, and colleagues to validate his suggestions and get their ideas and opinions on Chris’s approach. While Chris might get frustrated with this, he needs to be patient and remind himself that the focus is on Helen. From my experience with Financial DNA and wealth mentors using the process, delivering the advice on the client’s terms has been one of the most significant factors in building trust. However, the advisory process is also improved if the client is able to understand who the advisor is and what his needs are in order to effectively provide services.

Understanding Chris and Helen’s Path Profiles in More Depth The blended profile means the behavioral characteristics that typically occur with a given blend of the four factors. The closer a person’s scores are to the blended profile factor scores, the closer the report should fit the person. If a person’s score differs from the blended score in a factor, then that score should be interpreted accordingly. As you can see from Figure 7.4, both Chris and Helen

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Figure 7.4

Financial DNA® Path 4 Blended Profiles

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

are reasonably typical for their Strategic Thinker and Networker blended profiles. (Yellow represents the typical blended Profile; red represents Chris and Helen’s unique scores.) However, Chris tends to be significantly more engaging and somewhat more objective than the typical Strategic Thinker. Helen tends to be slightly more accommodating, engaging, and objective than a typical Networker. Figure 7.5 compares Chris and Helen’s Path 6 scores. Again we see the differences in Factor 1 (Control and Agenda in Path 4; Dominance in Path 6) and Factor 4 (Order and Detail in Path 4; Conscientiousness in Path 6), but we also see a large difference in Factor 2 (Interaction with Others in Path 4; Extroversion in Path 6)—larger than in Path 4. We also see a significant difference between the two in Factor 5 (Adventurousness). From the Path 6 profiles, we get a clearer picture of both Chris and Helen, and what their unique financial decision-making styles are. Chris is highly adventurous, and though Helen is a more innovative thinker, she does not share Chris’s desire for adventure. Because of his introversion and calculating decision-making style, we might

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Figure 7.5

Financial DNA® Path 6 Profiles

(© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

assume that Chris is not a risk-taker, but assumptions are dangerous. Chris’s detailed and confident nature allows him to calculate risks with precision, and therefore he is comfortable leaping because he knows there will be wins and losses, and he can handle those ups and downs. Helen is engaging and spontaneous and might appear to enjoy something risky because it is exciting. Actually, she is just impressionable when it comes to goals and opportunities and more likely to leap without looking. However, her lower adventure score shows emotionally she has problems with the consequences of taking chances.

A More In-Depth Analysis of the Path Profiles To really understand where Chris and Helen are coming from, it’s important to take their Path 4 and 6 path profiles

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apart for a more in-depth analysis. You can see from Figure 7.5 that the two have some fairly significant differences in their behavioral styles. What does that really mean? Let’s look beyond the numbers. Figure 7.6 shows a breakdown of Chris and Helen’s Path 4 factors. Notice from the comparison graph that Chris scored in the directing range of Factor 1 (Control and Agenda), while Helen scored in the accommodating range. However, Helen’s need to be accommodating is not as strong as Chris’s need to be directing (as evidenced by each score’s distance to the left and right from the midrange of 50, respectively). With Factor 2 (Interaction with Others), both Chris and Helen scored in the engaging range, with Helen scoring higher and showing that she is more engaging than Chris, who tends to be more reserved (see Figure 7.7).

Figure 7.6

Control and Agenda

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

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Figure 7.7

Interaction with Others

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

With Factor 3 (Conflict and Pace), Chris and Helen both scored in the objective range, with Chris being more objective than Helen, who tends to be more harmonious (Figure 7.8). With Factor 4 (Order and Detail), Chris scored in the methodical range, while Helen scored in the spontaneous range (Figure 7.9). Now let’s move on to the Path 6 profiles. Breaking down Chris and Helen’s scores for the six Path 6 factors shows some differences not found in Path 4. For Factor 1 (Dominance), Chris is more dominant, while Helen tends more toward compliance. Accordingly, Chris is more assertive, independent, and blunt, though Helen is close to him in independence (Figure 7.10).

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Figure 7.8

Conflict and Pace

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

Figure 7.9

Factor 4: Order and Detail

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.

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Figure 7.10

Terminology: Dominance

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

For Factor 2 (Extroversion), Chris is more introverted, and Helen is more extroverted. As we would expect, Helen is more enthusiastic, social, and verbal (Figure 7.11). For Factor 3 (Compassion), Helen is more compassionate, while Chris tends far more toward detachment. His outward behaviors will appear less sympathetic, supportive, and tolerant than Helen’s (Figure 7.12). For Factor 4 (Conscientiousness), Helen is more unstructured, while Chris is more structured. Chris prefers precision, organization, and achievement (Figure 7.13). For Factor 5 (Adventurousness), Chris is extremely adventurous while Helen is more cautious. Accordingly, Chris is more daring and ambitious (Figure 7.14).

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Figure 7.11

Terminology: Extroversion

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

-

Figure 7.12

Terminology: Compassion

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

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Financial DNA

Figure 7.13

Terminology: Conscientiousness

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.

Figure 7.14

Terminology: Adventurousness

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

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For Factor 6 (Innovation), Helen prefers the abstract, while Chris generally prefers things more concrete. Helen is more imaginative and resourceful. As a client, Helen will more likely adopt new solutions and products faster than the more concrete person, who needs more validation from experience and observing it working for others (Figure 7.15). When all is said and done, Path 6 tells a lot about how Chris and Helen will make financial decisions and will go a long way toward helping them see what is truly below the surface.

-

Figure 7.15

-

Terminology: Innovation

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

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What We Look For in the Financial DNA Path Profiles “Everything that irritates us about others can lead us to an understanding of ourselves.” —Carl Jung

Before each client meeting, Chris prepares a Path 6 Insights Dashboard on each client and compares himself (see Table 7.1). For Chris this is the vital information emerging from the scores that he really needs to know. This will help him manage the meetings and quickly determine his direction for managing the client’s expectations and providing advice.

Table 7.1 The Path 6 Insights Dashboard

Chris

Helen

Trust of self and others

Low

High

Relationship, or results-driven

Results

Relationships

Risk propensity

High

Medium

Setting and pursuing goals

High

Low

Resistance to change

Low

Low

Ideas-driven

High

High

Financial management

High

Medium

Need for Information

Low

Low

Spender

Low

High

Need for control

High

Low

(© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

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Profile Debrief Process Summary: Accelerate Your Financial Plan In summary, Chris follows a five-step process to debriefing the Path 4 and 6 profiles to ensure that both he and his clients gain the maximum benefit from the process and understanding the behavioral drivers: 1. The Advisor–Client Match: To confirm whether there is a fit. 2. The Information Exchange: To determine how to communicate with each other and what the respective roles will be in the planning process. 3. The Desired Position: To understand goals and manage expectations based on understanding hard-wiring. 4. Investing Style: To identify and write down talents in how you make investment decisions based on the Path 4 and 6 path profile reports (and the Stage 2 Financial Directions report if completed). In essence, this is the unique investment pattern that you will remain committed to. 5. Disciplined Execution: To define accountability in the relationship and the overall process for making decisions and managing the financial plan.

The Next Stage of Financial DNA Now that Chris has gone this far with Helen, he has a very good idea of how she is hard-wired. Helen will have already shared a lot about herself, which will be valuable

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information for managing their relationship and completing the financial plan. In the next chapters, you will learn how stages of the Financial DNA Discovery Process unfold and how wealth creation is integrated to the behavioral analysis. You will also see the various applications for which the process can be used. Your Turn What Is Your Communication Preference? • Complete your own My Unique Profile (go to our web site at www.financialdna.biz). • You may elect to have your MUP converted to a business-card-size format for easy distribution to advisors, family, teammates, and even friends. • Show your MUP to your financial and professional advisors. Insist on this communication when they provide you with services. • Ask your advisor and those close to you to do the Financial DNA Path 4 and 6 path profiles and then to do their MUPs.

Recommended Reading The Millionaire Next Door by Thomas J. Stanley and William D. Danko The surprising insights shared in this book have been gathered from years of research about millionaires and the secrets behind their success. If the term millionaire

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Interacting with Your Advisor for Great Discovery conjures up images of fast cars and big houses, The Millionaire Next Door will probably change your perceptions. This is a great book for those who think millionaire status is beyond their grasp. One of the keys is discipline, and this will be more difficult for those who have a Financial DNA more naturally orientated toward being a spender.

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Chapter EIGHT

Connecting Your Financial Propensities to a Robust Financial Plan

T

he meaning of money is hotly debated and is addressed by experts in different ways that reflect the experiences of their own journeys (i.e., the money messages they have received and learned and, in turn, the message they want to give). So I am not going to define the meaning of money as such, but simply deal with it from the perspective that we have to make decisions about its use, and these decisions have consequences.

The Meaning of Money and Your Behavior “Nature is not affected by finance. If someone offered you $10,000 to let him touch your eyeball without blinking, you would never collect the money. At the very last moment, Nature would force you to blink your eye. Nature will protect her own.” —Dick Gregory

There is no doubt that money can get in the way of rational thinking because of the emotions it triggers. However,

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keep in mind that people have personalities and money does not. In fact, money does not care. Money is a powerful energy that is a huge driver of both positive and negative behavior, but it does not itself define behavior. However, what we do have is a relationship with money primarily driven by our naturally hard-wired behavior and secondarily by our experiences and relationships. In trying to understand financial personality, you should avoid asking about money too soon in the discovery process. It can generate confusion or stress, which will slow down understanding the core self. After all, a person’s natural behavioral style has little to do with how much money one has, because core behavior is still the same. This is why I suggest you start out with the Path 4 and 6 path profiles, so that you can achieve this clarity before discussing money per se. If Chris Coddington were to receive a windfall of money, it could be predicted, based on his naturally motivated behavioral style, that he would retreat inward and develop a rational strategy. Helen Jones would be more likely to tell the world and even spend some of it before a plan is formulated. While money does not drive a person’s natural behavioral style, it certainly may be an influence that impacts their financial personality. That is why after the Path 4 and 6 path profiles are done Chris asks his clients what their money attitudes are. The responses run the gamut and include guilt, fear, security, power, opportunity, embarrassment, saving, and building. These answers will reflect some of both the natural and the learned behaviors from how clients have processed their experiences.

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The Financial DNA Discovery Methodology: Finding Your Comfort Zone “Currently, there is enormous distrust beginning to build toward the financial services industry. The question is if we will be willing to make the changes necessary to give investors the best possible financial information, including the assessment for risk. . . . Through developing scientifically sound instruments for assessing risk tolerance and mandating the use of these instruments, the industry might just repair its credibility while more competently informing investors.” —John Gilliam, Division of Personal Financial Planning, Texas Tech University

Risk is a part of everyday life. You take a risk crossing the street, getting in your car, or catching a bus. Some people are more willing to take risks. Some think taking risks gives them an emotional charge that little else matches. Others play it safe in every area of life, from crossing the street to furnishing a home. Also, risk is one of the most used and highly misunderstood terms in investing. And it’s used in a variety of contexts—market risk, inflation risk, volatility risk, capital risk, information risk, people risk, risk profiling, and risk tolerance. It’s little wonder, that to the average investor, the term can be confusing and even frightening. We use the Financial DNA Discovery Process as a highly validated means of objectively discovering investment risk propensity and using that information for making more empowered financial decisions and for building a behaviorally based portfolio. The key is ensuring that emotions are always in synchronization with rationality— keeping people in their comfort zones based on truly

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knowing their Financial DNA. As emphasized in this book, the Financial DNA profiles can also mitigate risk by helping people to understand human behavior.

What Is Your Hard-Wired Risk Profile? The Financial DNA, Path 6 profile, measures your natural, inherent, and enduring risk profile. This risk profile includes both your: • Propensity for risk (or adventure) • Risk tolerance These are two different behaviors, and appreciating the difference is very important in understanding the makeup of your financial personality. Whether your natural risk profile level is high, medium, or low, you’ll display that predisposition in every area of your life. Likewise, the Path 6 profile determines the natural level of risk or adventure you’re likely to seek in investment and money matters. The degree to which you act on your natural risk profile will also then depend on your learned behavior— the behavior shaped by experiences, values, and education. So sometimes a person with a higher risk profile will not always take the high-risk course because of an experience, although the first thought may be to do it. Your natural propensity for risk, as measured by Factor 5 (Adventurousness) in the Path 6 profiles, can be more specifically explained through the measurements of the following factors:

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Financial DNA • Daring: Your willingness to take chances and speculate. Investors who are higher in the daring factor will tend to pursue a lot of opportunities throughout their lives with less certainty of success. If you are one of these investors, this can cause a lot of change in your life with financial ups and downs. On the other side is the low end of the daring scale. If you score on this end, it may mean you do not take advantage of many opportunities unless there is a certain prospect of success. • Ambition: Your willingness to pursue goals. Those with a higher ambition score will be more driven to set goals that, if achieved, will have the consequence of changing their lives significantly. These subfactors provide a lot of information. Sometimes both subfactors are high, but often one subfactor is higher and the other lower. For instance, in the case of Chris Coddington, his scores in both of these subfactors are very high, which means he can take audacious risks to pursue very lofty goals. However, some of Chris’s clients have a lower daring score and a higher ambition score, which means that for the few chances taken they will be very driven to make the outcome successful. Generally, your Factor 5 (Adventurousness) score represents the outer level of risk you will be prepared to take (although in some instances you may be able to take greater risk with substantial specific experience or education in that area). Very often people who have a higher propensity for risk make decisions that trigger a lot of changes in their

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lives and their investments. In these situations, it is important to understand whether the person can live with the consequences. What we know is that, behaviorally, propensity for risk is not the same as risk tolerance. Risk tolerance is about the ability to live with the consequences of decisions—resilience. Factor 3 (Detached and Compassionate) of the Path 6 profile measures the ability to rationally and emotionally accept change and the ability to adapt to change. Further, the Path 4 and 6 path profiles give very reliable insight as to how one behaves under pressure. Therefore, these profiles provide an understanding of the ability to manage the consequences of high-risk decisions. This is crucial for goal setting and for working with any financial or professional advisors. Natural risk tendencies are unlikely to change significantly in a lifetime. Your risk comfort level is based on how you see the world, your place in it, and what charges your emotions. The whole point of uncovering all of this behavioral information in this way is to truly pinpoint and measure where your emotions will be in order to help you to stay committed to a decision.

What Are Your Learned Risk Preferences? “It’s better to do nothing with your money than something you don’t understand.” —Suze Orman

The second type of risk measured by the Financial DNA Discovery Process is your learned and situational risk preferences as measured by the Financial Directions appraisal

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(stage 2). The level of risk with which you are comfortable is influenced by your environment and experiences (your family’s investments in businesses, real estate, mutual funds), attitudes (such as attitudes toward saving), your financial history (as well as social noise), values (philanthropy, lifestyle, or family security), and education. If you lack confidence in your own financial astuteness, you may have learned to take a lower-risk option with regard to investments. Or you may be particularly knowledgeable about money and investments, and your learning has taught you to see investment risk as a necessary tool to leverage investment strategy. In the latter case, you will probably have a higher learned risk score. Or you may simply have had extraordinary luck with your investments and perceive yourself as a high-risk investor. (The reverse can happen with bad experiences or in a bear market.) This could in fact be a blind spot that may lead to trouble later if not understood. Unlike your natural and enduring risk tendencies, your learned and situational risk tolerance can change over time as your knowledge and experience grows. For some people, while they are natural risk-takers, their propensity is moderated by factors such as having a family to support, poor health, being in the retirement phase, and generally becoming smarter about investing in what they understand and are comfortable with. Importantly, mature, naturally higher risk-takers do not jump at everything they see. There will only be a few asset classes with which they are truly comfortable. That is a key part of their Financial DNA. Once they know this, you may then see a higher risk course being followed.

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For instance, I have seen families whose members have a propensity toward commercial real estate investments. They will always take chances with this type of investment, but any investment in equities causes discomfort as soon as the market moves downward to any degree, leading to rash decisions. It is vital for a client and any financial advisor with whom she works to understand her inherent tolerance of risk, because under pressure this is the level of risk tolerance to which she will revert. If the portfolio of a cautious investor were to lose 15 percent of its value overnight, the investor might well worry, watch the market, panic, and cut losses by selling as soon as possible. However, should the same event happen to a very adventurous or adventureprone person, that investor may relish the opportunity to invest more money at a lower entry price.

What Are Your Financial Aptitudes? The Financial Directions profile also measures aptitudes for certain asset classes, investment knowledge, and need for investment and financial education. This is helpful because we have found that if a client wants to invest beyond his natural risk profile, he should only invest in those asset classes in which he has an inherent aptitude and significant understanding through education and experience. Both ends of the risk scale, Cautious and Adventurous, have strengths and struggles associated with them. Neither approach is correct all the time. However, being aware of inherent risk tendencies and education can help a client align investment strategies to Financial DNA, which

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includes predispositions and attitudes toward risk. This creates more committed and, ultimately, more successful investment decisions.

Emotions Crushing Rationality: The Amygdala Hijack “Money is a terrible master, but an excellent servant.” —Phineas Taylor Barnum

When a decision we have made is outside our risk profile or a recommendation is communicated to us outside the zone of how we are wired, the emotional center of our brain—the amygdala—sends off a negative signal, triggering an irrational (knee-jerk) reaction. We call this an amygdala hijack. Money and relationships are the biggest pressure cookers in most of our lives. They are the areas that are most likely to cause an amygdala hijack. The consequence is usually a sudden shift to a poorly-thought-out but less scary decision. While we may be more comfortable with the decision, the outcome is not likely to be improved, but the amygdala hijacking doesn’t end there. When we make a poor decision, future decisions can be dictated by fear and loss of clarity. Blind spots—those nebulous areas between who we are and who we say we are—can begin to dictate decisions. The goal should be to get the best information upfront, so blind spots are replaced by useful information, trust, and understanding. It all starts with trust in self and then advisors to get the information needed. That trust only comes with understanding oneself and being understood by advisors.

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Through an understanding of Financial DNA, you can reroute your decisions to be consistent with the ingrained pathways that have been formed in your amygdala. The amygdala is triggered by any sense of danger, including misunderstandings stemming from how a message has been communicated or the content of that message. When the amygdala reacts, negative emotions overwhelm the prefrontal lobe of the brain and the result is often irrational behavior. When there is understanding, the prefrontal lobe of the brain reacts and positive emotions flood in. The result from that flood of emotions is usually rational behavior. Synchronizing emotions and rationality is key to successfully building a financial plan to which one can stay committed.

It’s All about the Setting: Change the Perception of Risk Something that has always amazed me is the way the same transaction with exactly the same risks can be perceived differently by different investors. Some agree to buy; others say no; others just don’t trust what has been communicated. In a rational world, wouldn’t everybody perceive the risk of the transaction to be the same if the same information were presented in the same way? I think they would. Of course, this is a separate issue to whether in fact the risk profile of the transaction is matched to each person’s risk profile. I want to reiterate that this is not about IQ. What it really comes down to is the simple fact that people have different hard-wired learning styles. We have seen with the

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Financial DNA Path 6 profile how learning styles differ and that it is often necessary to reframe how a transaction is presented. In the perfect world, a new hedge fund should be presented to Chris and Helen differently for them to make a rational decision. It would be very possible for Helen to perceive little risk in a new product because of her abstract learning style and buy it, although the fund could have a higher level of risk than is appropriate.

Applying the Information Discovered: Building a Portfolio for Paul Wilson “Poor is the man who does not know his own intrinsic worth and tends to measure everything by relative value. A man of financial wealth who values himself by his financial net worth is poorer than a poor man who values himself by his intrinsic self-worth.” —Sidney Madwed

Paul is a 48-year-old seasoned investor. A former investment manager at an international funds management firm, he now runs his own wealth management business focused on communicating investment ideas and philosophies to clients through seminars, leaving the financial planning to his team. He remains an active and passionate investor in industrial stocks. Paul’s Financial DNA Path 4 profile is a Networker, which is quite different from Chris as a Strategic Thinker. As indicated by the Path 4 and 6 profile graphs (Figure 8.1), it would not be appropriate to assume that Paul would have a higher risk propensity than Chris. Paul participated in the Financial DNA process out of curiosity more than anything else. After seeing what the first stage of Financial DNA, the Path 4 and 6 profiles, said 128

Connecting Your Financial Propensities

Figure 8.1

Chris Coddington and Paul Wilson Path Profiles

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

about his low inherent tendencies toward risk (low Daring score), he began to change his tune about the power and accuracy of the process. Paul had participated in quantitatively based risk profiles before, but the results, which were always that he was a high-risk investor, never sat well with him (see Figure 8.2). Financial DNA uncovered that Paul was prepared to accept the price volatility of his stocks, but his inherent predisposition to risk was quite low. This analysis more closely matched how Paul saw himself. However, when you look at risk tolerance, it is very high for both Chris and Paul based on their Factor 3 (Detached and Compassionate) scores. Therefore, providing Chris and Paul make financial decisions that are within 129

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Figure 8.2

Chris and Paul—Natural Hard-Wired Risk Propensity

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

their Financial DNA patterns, they should be able to live with the consequences (see Figure 8.3). Even though Paul only invested in one asset class (industrial stocks), he viewed his strategy as low-risk for several reasons: • He researched companies well before investing in them and only invested in those companies whose balance sheets and business models he understood intimately. • His stock portfolio was diversified across 20 companies and several diversified funds. • He only invested in those industries that had historical success.

Figure 8.3

Natural Hard-Wired Risk Tolerance

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

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• His stock market investments protected him against the inflation risk that comes with many low-risk, lowyield investments. • He had a long-term strategy that protected him against day-to-day and even year-to-year volatility risk in the stock market (which he declared was not a risk at all since he never intended to sell his investments). Paul’s other outcomes of Financial DNA were nothing he hadn’t expected, but he found the results liberating because they confirmed that the success of his investment approach had largely been because he had invested over a very long period with a great deal of alignment and commitment to his investment principles. Also, the Financial DNA profiles confirmed to Paul why he had made the career choices he had. He knew he would be a square peg in a round hole if he were in roles that required detail.

Further Discovery on Investment Preferences: Introducing Financial Directions Clearly, Chris has been able to determine that the differences between the way he and Paul are hard-wired are significant. Now, because of Paul’s interest in finding out more, Chris had him complete the Financial Directions profile, stage 2 of the Financial DNA Discovery Process. What this showed is that Paul considers equities to be the safest investment available. This safety is important to him, and despite his extensive financial services industry experience, his spontaneous nature means he does not need extensive detail. He is simply looking for the portfolio to do well over the next 20 years. 131

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Conversely, though Chris was trained as an accountant, he has prior experience as a property investor and developer. He is willing to take significant risks in property if there is a good chance of success, and if he can control the deal. He is not comfortable without extensive detail, research, and due diligence because he is methodical. The main difference between Paul and Chris resides in their asset aptitudes. Paul is more comfortable in equities, whereas Chris’s natural comfort zone lies in real estate. If it weren’t for the Financial Directions profiles, they might not know this about each other and might talk around each other’s interests for a long time. However, since the two know of this difference from the outset of their relationship, Chris can guide Paul in a direction that suits Paul, not Chris. The detailed report shows Chris more about Paul’s financial personality than what is revealed from the Path 4 and 6 profiles. The following extracts from the Financial Directions report show Paul’s: • Learned behaviors and preferences regarding risk • Asset aptitudes • Other behavioral factors, such as emotional decision making, optimism, confidence, investment values, motivation, and results/rationality • Other portfolio allocation factors, such as need for control, goal orientation, investment values, and investment style Chris then compares those results to his own profile to be sure he is meeting Paul’s needs rather than his own

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(see Figures 8.4 through 8.11). This knowledge helps Chris be clear about his own strengths and struggles so that he best represents his client and does not recommend a portfolio that reflects his own Financial DNA.

A Behavior-Based Portfolio: Fitting Paul’s Financial DNA “If money is your hope for independence, you will never have it. The only real security that a man will have in this world is a reserve of knowledge, experience, and ability.” —Henry Ford

The Financial DNA Discovery Process includes a portfolio design model that uses the behavioral outcomes identified from the Financial DNA path and Financial Directions profiles as the starting point. In the case of Paul Wilson, Chris determined his innate preferences and behaviors through Financial DNA. The model then creates the portfolio from the inside out matched to those preferences and behaviors. The first stage of creating Paul’s portfolio is asset allocation—choosing the percentage of different asset classes. The choices Chris makes with Paul are based on

Figure 8.4

Situational and Learned Risk Profile

(© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

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Figure 8.5

Asset Aptitudes

(© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

Figure 8.6

Other Behavioral Factors

(© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

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Figure 8.7

Other Behavioral Factors

(© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

Figure 8.8

Other Behavioral Factors

(© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

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Figure 8.9

Other Behavioral Factors

(© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

Figure 8.10

Other Behavioral Portfolio Allocation Factors

(© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

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Figure 8.11

Other Behavioral Portfolio Allocation Factors

(© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

Paul’s asset risk-return preference indicators, emotional decision-making behavior, asset allocation needs, asset propensity indicators, and investment knowledge (see Table 8.1). Based on Paul’s Financial DNA, Chris would recommend a portfolio weighted much heavier in domestic equities and lighter in property than he did in his own portfolio. Also, Paul’s portfolio is not quite as diverse as Chris’s, yet it is more suited to his financial personality. The risk and investment strategies for each asset class are based on Paul’s investment values indicators, investment strategy style indicators, investment control indicators, and risk and emotion indicators.

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Table 8.1 Step 1 Asset Allocation—Outcomes

Paul

Chris

Domestic Equities

65%

Domestic Equities

20%

Property

15%

Property

35%

Cash/Bonds

20%

Cash/Bonds

10%

Alternative Assets

0%

Alternative Assets

International Equities

0%

International Equities

10%

Own Business

0%

Own Business

20%

100%

5%

100%

(© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

Step 2 of the process is determining an investment strategy based on the types of risk and investment strategies within each asset class. Paul’s investment strategy is based on mutual funds, which have a value style. Chris prefers to hold his investments directly and to adopt a more aggressive growth strategy, with appropriate levels of borrowing (see Table 8.2). The result of all this work and behavioral analysis is a portfolio perfectly suited to Paul’s financial personality—a portfolio to which Paul can fully commit for the long term. Some advisers use this behavioral analysis to compare the outcome to a more traditional Modern Portfolio Theory approach, and then analyze the differences with the client to determine the appropriate course to take. This behavioral portfolio analysis is the foundation of a successful financial plan. However, some investors

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like Paul have this analysis done for other reasons, as well. The behavioral portfolio allows for an independent check on a portfolio’s pulse and insight into what decision to make next. Many people have found it useful to take the behavioral portfolio to their financial advisors for a plan review. Even if all the process does is confirm that things are on the right track and no changes need to be made, this is still of great value. Sometimes the best advice is to do nothing.

Your Turn Review Your Portfolio • How was your portfolio developed? Is it based on a traditional modelling approach and assumptions about you, or does it reflect you from the inside out? • Are there aspects of your portfolio with which you feel uncomfortable? • Have you looked at which asset classes you understand the best and in which you have the most interest? • Have you had good and bad investment experiences (outcomes) in the past few years that may be impacting your decisions? • What changes to your investing style could you make? If you would like to discover more about your Financial DNA, you can participate in stage 2 of the process by taking the Financial Directions profile.

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CHRIS

1.8 Sector Diversification No

1.6 Indexing? No 1.7 Leverage No

1.4 Research Focus Total potential long-term return 1.5 Managed Funds vs. Direct Holdings 20% funds & 70% direct investments

1.1 Diversification Requirement Concentrated portfolio 1.2 Capitalization No specific requirement—depending on opportunity 1.3 Yield Requirement No specific requirement

1. Domestic Equities Primary Objective Strong total return over the long term

(© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

1.3 Yield Requirement Medium to high, with foreseeable stability 1.4 Research Focus Company financial strength & stability 1.5 Managed Funds vs. Direct Holdings 65% selected funds & 35% direct investments 1.6 Indexing? Yes—20% in index funds 1.7 Leverage Conservative gearing levels permitted (100% to 140% Invested) 1.8 Sector Diversification Yes

1. Domestic Equities Primary Objective Stable income stream + market rate capital 1.1 Diversification Requirement Well-diversified portfolio 1.2 Capitalization Primarily large cap blue chips

PAUL

Table 8.2 Step 2 Investment Styles—Outcomes for Equities

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(© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

2. Property 2. Property Primary Objective Primary Objective Alternative to listed equities when the Strong total return over the long term comparative yield between the two asset classes is attractive 1.1 Managed Funds vs. Direct Holdings 1.1 Managed Funds vs. Direct Holdings 100% managed funds Primarily portfolio of direct investments 1.2 Listed Property Trusts 1.2 Listed Property Trusts Yes (100% of portfolio) No 1.3 Property Syndicates 1.3 Property Syndicates No Yes (portfolio allocation depending on opportunity) 1.4 Property Development Projects 1.4 Property Development Projects No Yes (portfolio allocation depending on opportunity) 1.5 Direct Property Purchase 1.5 Direct Property Purchase No Yes (portfolio allocation depending on opportunity) 1.6 Research Focus 1.6 Research Focus Yield outlook Comprehensive—all considerations 1.7 Leverage 1.7 Leverage Various—depending on deal structure & Conservative gearing levels permitted taxation considerations (100% to 140% invested)

PAUL

Step 2 Investment Styles—Outcomes for Property

Financial DNA

Recommended Reading Against the Gods: The Remarkable Story of Risk by Peter L. Bernstein This book provides a very intellectual, and yet readable, historical explanation of risk and how the development of modern society as we know it has come from learning to understand risk, measure it, and weigh its consequences. Further, the book highlights that as human beings we are faced with choices every day. These choices reveal a great deal about us. You will see that the evolution of understanding risk has progressed from probability theories to include the need to understand patterns of human behavior. This explains why people make different decisions when offered the same choices and how choices can change if the reference points and framing of the choices are changed.

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Chapter NINE

Understanding Where You Came From to Go Forward

“Every day you may make progress. Every step may be fruitful. Yet there will stretch out before you an ever-lengthening, ever-ascending, ever-improving path. You know you will never get to the end of the journey. But this, so far from discouraging, only adds to the joy and glory of the climb.” —Sir Winston Churchill

I

n order to understand where you are going, you need to first understand who you are. In order to understand who you are, you need to understand where you came from. Your values, education, and environment all interplay in a complicated way that helps determine the makeup of your financial personality.

Environment and Experience: Your Baggage “You are a product of your environment. So choose the environment that will best develop you toward your objective. Analyze your life in terms of its environment. Are the things

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around you helping you toward success . . . or are they holding you back?” —W. Clement Stone

The environment in which you have lived and in which you currently live is a major factor in determining who you are and the decisions you make. Your level of education, your job, and the makeup of your family are part of your environment, but so are your experiences. The Financial Directions appraisal asks some initial questions in these areas. The Financial DNA Personal Environment appraisal (which is an appraisal in CompleteINSIGHT—stage 3 of the Discovery Process) then draws out more in-depth information about the positive and negative life-changing experiences (separated between those that occurred before you turned 18 years of age and those that occurred after). How often you moved in your life and how far, your family’s financial status when you were growing up, your attitudes about your family’s financial status, whether you inherited money, whether your parents lost a lot of money, how often you travel and for what reasons, your leisure activities, your investment history, your view of your spending habits—these are all part of your environment. Understanding your environment is the first step toward developing strategies to help you move toward the next stage of your life.

Chris’s Lifeline Another exercise I recommend is the lifeline exercise. This is a very thought-provoking yet nonconfrontational exercise to trigger your own perception of your life journey.

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Chris has plotted his life from birth to his current age of 39 years, covering four specific areas: • Family and personal life • Education • Career and business • Finances The lifelines are shown graphically in Figure 9.1, and provide great insight into the story of Chris’s life. Overall, Chris believes that he has had a good life (notwithstanding a slow start because of his father’s early

Figure 9.1

Name: Chris Coddington

(© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

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death). He has a positive attitude and now believes that with a clear knowledge of his purpose in life the best years are yet to come in business and his personal life. This drives him to explore the world for the right connections and new opportunities. He also now does a lot of self-education, which is a natural part of his career. One area Chris recognizes he needs to develop more is his own personal and family life, and this is reflected in the graphs. As you will see, understanding Chris’s lifelines is key to understanding the journey that has impacted the continual development of his Financial DNA. We now take a deeper look at the life journey of Chris and his family.

Looking at Your Own Journey First: The Coddington Family “Success is a journey, not a destination. The doing is often more important than the outcome.” —Arthur Ashe

Although Chris and his younger brother, Richard, were born only 22 months apart and were raised in the same house by the same mother, their perceptions of their lives and the paths they have taken are vastly different, and these differences showed up quite early in their lives. Chris was interested in numbers, and particularly with money, from an early age. His mother, Jane, says she used to joke that if she wanted him to get better at math, all she had to do was put dollar signs into all the equations. She tells how he used to create companies with him as CEO and his board as various stuffed bears and other toys.

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He seemed to think only about business. This was evident from the way he saved money and played with Lego blocks and later games such as Monopoly. He wanted to be involved in every family financial decision from a very early age. Chris loved to construct buildings, but it was more than just stacking Lincoln Logs. There was no doubt building a business empire was his focus. The question was how and what the foundation would be. Chris learned that getting in touch with his childhood dreams, activities, and interests is powerful because with courage they can be self-actualized and lived within who he is. He found a strong message in the following quote: The wisest keeps something of the vision of a child. Though he may understand a thousand things that a child could not understand, he is always a beginner, close to the original meaning of life. —John Macy

While Chris explored his interests in business, Richard found his calling in medicine. Jane describes Richard’s empathetic character as evident from early childhood. He was the type of boy who took care of others without thinking about it. He was always thinking about others (a learned behavior for Chris that took much longer to show). No one was very surprised when Richard decided to become a doctor. A key event in the lives of both boys was the death of their father a couple of months after Richard was born. Chris grew up feeling he needed to lead, to keep things stable and to do it on his own. After all, his mother was

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busy with her own grief and a new baby. Richard felt he could take care of his mother by offering her moral support and by helping around the house. Jane says she saw much of her husband’s patient temperament in Richard. There was no doubt for Chris that the Path 4 and 6 profiles clearly reflect how different he was from his brother. Jane says the only thing the boys had in common was the love of tennis. Having the differences measured and presented in the objective Path 4 and 6 profiles was a powerful experience. The key drivers of the differences are clearly some genetics and how the brothers processed their early life. Chris is a Strategic Thinker. Richard is a Supporter. As shown in the Path 4 graphs (Figure 9.2), these two profiles are nearly opposite. Richard is accommodating; Chris is directing. Richard is more reserved, while Chris is more engaging (though neither scored particularly high or low here, meaning these behaviors aren’t exactly defining attributes). Richard tends toward being harmonious; Chris is highly objective. The one area they share is Order and Detail (Factor 4)—an asset to both of their careers. In the end, Chris could see that the profiles also explained his tendency not to be trusting of himself or others, and for Richard to be highly trusting. This was a huge development point for Chris, and again liberating to see where it comes from (see Figure 9.2). When we delve deeper into their behavioral styles using Path 6, we find Chris and Richard have a little more common ground. Both enjoy a slightly more structured environment, though flexibility is still the rule of the day, and both do a good job with either abstract or concrete

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Figure 9.2

Chris and Richard Coddington Path Profiles

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

ideas. However, Chris is still much more detached than Richard’s more compassionate tendencies, and he is much more adventurous than his more cautious brother. It is no wonder that Chris is seen by many as highly rational and yet would also take a chance in starting his own business along a more pioneering path, while Richard enjoys the more tried-and-true scientific approach of medicine. Richard knew what he wanted to do and worked toward it in one long, consistent line. He is now a doctor, married with two children of his own. Financial security is of paramount importance to Richard in looking after his family. A stable life is important to him, and therefore he takes a cautious approach to managing his money. Chris had a tougher time finding his way. A slow

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starter, a late bloomer, Chris didn’t start to realize his talents until he was nearly out of school, and he didn’t really come into his own until he began his own business. Once he found his calling (helping others make more empowered financial decisions), there was no stopping him. Jane is now immensely proud of both her sons and marvels at the different paths they took to the same place—happiness and helping people.

A Client Story: The Money Baggage of Mark Peters Chris Coddington shared with me a good example of a family financial experience, one which impacted a client named Mark Peters. In fact, Chris has dealt with similar circumstances quite a few times. Mark’s father, Roger, had gone from riches to rags when Mark was nine years old. The experience colored Mark’s financial decision making, and at age 38, he cashed in shares in his employer’s company and became very secure financially. When he did his Financial DNA profiles, his Path 6 analysis showed he was naturally in the top 5 percent of the population for taking chances and also for risk tolerance. He was similarly ambitious with setting his goals. However, in completing his Financial Directions profile, Mark had indicated a very low risk preference for his investment portfolio. On finding out about this gap (and that it was mainly coming from a negative childhood circumstance), Chris was able to take a different approach with Mark. What Chris now knows, that he would otherwise not, is that Mark would have a long-term drive for above-average performance from his portfolio. In the long-term he would 150

Understanding Where You Came From to Go Forward

not be satisfied with less than average returns. Chris was able to discuss this with Mark and initially structure his portfolio with a prudent allocation of some higher yielding and higher risk investments to help Mark get comfortable with where he should be. Chris worked to manage Mark’s long-term expectations. The goal was to carefully build up the long-term level of risk and higher returns from Mark’s portfolio with him understanding it. There are good and bad stories in everyone’s history. As an advisor, knowing these stories from clients’ lives can really help. Chris has learned that by asking questions that are positive in nature (while acknowledging some questions that address the negatives are necessary) and showing more empathy with his clients, the stories come out automatically. Being prepared to reveal something of himself, no matter how serious or quirky, has made a huge difference in his business and his life. Very often, once the Financial DNA Discovery Process is talked about a little, key experiences are brought up by the client. Most people love to talk about themselves and want to share their stories. When Chris shows that he wants to hear and reveal, his clients share with him more easily.

Your Values: The Rules by Which You Live “Character is that which reveals moral purpose, exposing the class of things a man chooses or avoids.” —Aristotle

People have many crossroads in their lives, and these include life stages and transitions. The Financial DNA Values appraisal (a CompleteINSIGHT appraisal) presents 151

Financial DNA

you with the opportunity to clarify your values and reconnect to your vision, your life, and wealth creation plans. Chris spends a lot of time with his clients talking about this appraisal when they essentially want to review their lives. The Financial DNA Values appraisal helps reduce the myriad of activities in your life to a few essential functions, and this is an excellent way to reach the core of what you value most in life. These core values are your driving force. The following are the kinds of subjects you would consider while doing the appraisal: • Have you ever wondered why you are alive or for what purpose you were placed on the earth? • What is important to you—relationships, wealth, achievement, religion/spirituality, socializing, politics, health, leisure, business? • Not sure what’s important to you? Consider what you would die for. The things for which you are truly willing to sacrifice your life are likely driving your life, whether you are aware of them or not. • How do you identify success? The Financial DNA Values appraisal uses simple statements such as: • Saving for my children’s education is very important to me. • “Having it all” means great wealth. • If I knew the meaning of life, I would be able to plan my finances more effectively. • Investing is only about making money. • If I had more capital, my life would be better.

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How do you feel about these statements? How do the statements and your corresponding feelings reflect your values? • Take these questions one step deeper and imagine you can overhear people speaking at your funeral. The people to whom you are listening are from your work, your social circle, and your family. What do you hear them saying? But more important, what do you wish they were saying, and how do you become the kind of person about whom they would say such things? What actions can you take in your life to ensure your legacy? • Are you working within your values? Not sure? Here’s one question that will lead you to the truest answer: If you had 10 times the salary you have currently, would you keep working? Chris was taught the principle that “the love of money is the root of all evil.” This has been a very significant boundary for him, notwithstanding his fascination for business. In reality, Chris’s business-oriented values are centered around making a contribution to business and helping others to become empowered and realize some of the opportunities he has had the good fortune to experience. Saving some money for a rainy day has always been a concern, but making a difference is what drives him. Remember, values are a very important part of what drives you. What do you value? How many of us say we value family but seldom spend time at home? How many of us say we value independence but work jobs that seem

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more like prison sentences? In these cases, it may be we don’t recognize our true values. Or it may just be that we aren’t living our lives in accordance with our values.

Education: Your Financial Astuteness “Education is the best provision for the journey to old age.” —Aristotle

When we think about education, we tend to think about school, and surely in your financial life, school is part of the equation. How far you journeyed in traditional education venues (high school, college, graduate school) says something about you. But what? If you completed college, does that mean you are dedicated, disciplined, enjoy learning, or does it simply mean you do what is expected of you? Does your high school diploma explain your hunger for knowledge, or does that diploma explain why you are afraid of numbers? The Financial DNA Financial Astuteness appraisal (a CompleteINSIGHT appraisal) breaks down your level of financial knowledge but also gives insight about your behaviors, your attitudes toward education, and the areas in which you want and need to learn more. The Financial Astuteness appraisal helps you clarify your objectives when it comes to financial decisions. Are you concerned about the impacts of taxation on your investment returns? Is liquidity a driving force? Are you afraid of the volatility of financial markets and the economy? Understanding your objectives is crucial to understanding your behavior and your financial well-being. The appraisal delves into your understanding of financial concerns. How much do you know about real estate, 154

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banking, financial services? From watching the daily news to reading about markets, from researching investments to searching the web for recent financial information—what is your level of understanding and where do you get your information? Furthermore, when it comes to your knowledge of the financial world, do you rely on your own research or on the advice of others? Do you prefer professional advice or the word on the street? If you choose to go with professional advice, do you want an advisor who provides daily management of your finances? Do you want detailed advice on every investment or strategic advice only? Are you the kind of investor who wants to be involved with every decision, or do you want your advisor to make decisions for you? How much do you want to know about the research? Where do you want your money to go? Real estate, venture capital, managed funds, international markets, antiques, jewelry, art? What is your comfort level with your understanding of each of these areas? These are not the kinds of questions you want answered through trial and error. Think about them before investing; think about them based on your past behavior and feelings. Consider your behavior when it comes to finances. What have been your strengths (follow-through, instinct, intellect)? What have been your weaknesses (fear, following trends, bad advice)? How much of your success and failure have been due to your actions, the actions of others, and acts of God? Separate your knowledge from your behavior and stack that up against all the factors you can’t control (the markets, the economy, the weather), so you can see where you can improve and where you need to be more realistic. 155

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Once you have an understanding of your behavior, look closely at your investment preferences and put some serious thought into what you want your portfolio to look like. Think about where you want to see your money and why. Chris has always seen a person’s level of investment experience, knowledge and education, as significant in his advising efforts. This is not saying he believes academic qualifications are necessarily important—there are many very successful investors who have had very little formal education. However, the level of relevant financial education often tells him how much confidence a client may have in making financial decisions. Ultimately, a person’s practical investment and financial experience is important. Nevertheless, just because someone is an accountant, attorney, or stockbroker does not mean that person is a good investor. To what extent has your own money been on the line? Have you made and lost money?

Moving Forward: Rethink Your Mind-set and Retool “Every person takes the limits of their own field of vision for the limits of the world.” —Arthur Schopenhauer

Our backgrounds shape our mental models, which impact and limit how we think about the future. Now is the time to sit back, reflect, and explore ways to open up your world by thinking differently. Relying on the old ways is not always the best option. Doing one thing differently could be all it takes.

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Of course, money is a potential barrier for all of us. Even those with a lot of money have fears about the future and making change. Financial DNA can help you unravel your fears and work out the optimal path ahead. Your Turn Connecting or Disconnecting Your Background to Your Future Decisions • What are the events in your life that may be having an impact on your financial decision making today? • Review the ups and downs and critical turning points of your life by completing your own lifeline. • What are the guiding values that drive your financial decisions? • Do you have the education you need to get where you want to be? • What is one change that you could make to your life in the next week that would start you on a new path?

Recommended Reading The Road Less Traveled: A New Psychology of Love, Traditional Values, and Spiritual Growth by M. Scott Peck This book is challenging and will stimulate you to look at yourself and who you truly are. You will be shown the reality of the life you have led so far and perhaps some of the whys of the successes and failures that have shaped your life. Certainly, you can use this book as part of the

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development process to move forward. You should treat reading this book as part of a lifelong journey of growth. Also, you may want to read: The Golden Ghetto—The Psychology of Affluence by Jessie H. O’Neill This book is about the extraordinary life of its author, clinical psychologist Jessie O’Neill, as well as the stories of her clients, interviewees, and friends. The Golden Ghetto is also a wake-up call to millions of people who are struggling with “affluenza,” a dysfunctional relationship with wealth and money, or the obsession with making it, from the granddaughter of Charles Erwin Wilson, former president of General Motors and Secretary of Defense under President Dwight D. Eisenhower. The Golden Ghetto addresses the problems and differences of the lives of those who are born into wealth with those of most Americans and is engaging reading regardless of whether the reader was born with a silver spoon—or a wooden one.

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Chapter TEN

Finding Your Purpose, Passions, and the Vision for Your Life

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xploring and defining your purpose, passions, and vision adds both power and understanding. Figuring these out deepens your understanding of who you are. Writing them down adds surprising power to your life.

Life Purpose: Reflecting You at the Core “This is our purpose: to make as meaningful as possible this life that has been bestowed upon us; to live in such a way that we may be proud of ourselves; to act in such a way that some part of us lives on.” —Oswald Spengler

This is not the longest or most technical chapter in this book, and yet it is ultimately the most important. It is absolutely crucial to your ability to implement committed wealth creation decisions that you first identify your life purpose. Your life purpose will reflect who you are—from your genetics, unique talents, skills and knowledge, life experi159

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ences, values, education, and everything else that could have gone in the hopper to mold you. Some of us figure out our life purpose by writing it down, some even frame it, and others work it out and simply remember it. The main point is that you identify and articulate a life purpose. It has been my observation that those who write down their life purpose are far more committed to living it. This is because they more easily are able to integrate their purpose into their daily agenda and have greater discipline when making decisions. By living your life purpose habitually every day, your results will compound through the positive momentum created from the increased focus and the reduction of distractions and costs of poor decisions, financial or otherwise. “Thoughts lead on to purposes; purposes go forth in action; actions form habits; habits decide character; and character fixes our destiny.” —Tyron Edwards

Defining your life purpose allows you to set the framework for making all of your future financial and life decisions. You can set budgets, plan to buy and sell homes, acquire material possessions, fund your children’s educations, plan charitable giving, choose your career, retirement activities, and any other family or personal decisions. When opportunities arise, your statement of life purpose is a good reason to say no if the opportunity is not consistent with your goals and values. “Firmness of purpose is one of the most necessary sinews of character and one of the best instruments of success. Without it genius wastes its efforts in a maze of inconsistencies.” —Philip Dormer Chesterfield

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Understanding Chris Coddington’s life purpose was key to my decision to work with him because I knew a lot of time would be involved for both of us. He also needed to know mine. We spent some time on this, and as a wealth mentor, I guided him a little as others had me. Now, when Chris meets a new client, he gets to the area of life purpose quickly. Whether the client knows his or her life purpose is very helpful in determining where to start and what services are needed. The truth is laid out, and then the best guidance and advice can be provided from the start. There are other great financial advisors who adopt a similar approach, like Jerry Black: The Financial DNA Discovery Process is now an integral part in our approach to planning from the client’s life perspective and helping our clients achieve their life purposes. The process has enabled us, and our clients as well, to more quickly get to know their unique financial personality, aptitudes, and talents. The process has also helped to further deepen the quality of the long-term relationships we strive for with our clients. —Jerry Black, CFP, Legacy Planning Group

Before doing the hard work of reflecting and documenting your life purpose, it is important that you philosophically understand more about: (1) living a life with passion and (2) laying out your vision. This is providing you have first done a full life review to discover your talents, strengths and struggles, aptitudes, skills, and values as covered in the earlier chapters of this book. 161

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Live a Life with Passion: What Energizes You “My passions were all gathered together like fingers that made a fist. Drive is considered aggression today; I knew it then as purpose.” —Bette Davis

Passion is what gets you going. It provides vitality. Passion sustains you in the face of failure. It provides endurance to the purpose for your life. Some people are driven by singular passions that define their entire lives. Others jump from project to project trying to find what might make them rich. Still others find themselves consumed by lives of bills and errands, kids and commitments, with never a moment to even think about what they want. Even for this latter group, passions exist. They could be bubbling just under the surface waiting to be released. Unrealized or simply unrecognized, buried passions sap energy. Finding your passion and then finding ways to incorporate that passion into your everyday life can be a difficult process. It can also be invigorating. Living with passion colors every aspect of your life so that even the most mundane acts become flushed with purpose. You’ll find you are more efficient as you work toward the times that light you up. Chores, errands, appointments—everything becomes streamlined out of necessity. The necessity of passion. “Passion ignites every chamber of our being. We are beholden to our senses for that electrifying experience.” —John D. Rockefeller

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by step through your interests to clarify just what makes you hum. This process becomes even more powerful when you learn to connect your passion to your talents as uncovered by the Path 4 and 6 path profiles. This is exactly what Chris Coddington found out in transforming himself from a financial advisor focused on managing investments to a wealth mentor concentrating on strategic advising.

Laying Out Your Vision: Setting Your Direction “Vision—It reaches beyond the thing that is, into the conception of what can be. Imagination gives you the picture. Vision gives you the impulse to make the picture your own.” —Robert Collier

Just as eyeglasses or contact lenses clarify what you see, Financial DNA clarifies what you do and what financial decisions you make. Seeing what you want is the first step—finding your passion, but it is vision that takes that discovery from a want to a plan. Vision is what allows you to flesh out a two-dimensional life of commitments to a three-dimensional life of vitality. Having a clear vision can deliver your life purpose by bringing your passions from the realm of your dreams to the realm of your waking life.

Getting Real and Reflecting: Doing the Hard Work Yourself “There is an art of which every man should be a master—the art of reflection. If you are not a thinking man, to what purpose are you man at all?” —William Hart Colleridge

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Chris has found that once your life review phase is done the following steps are the best way of connecting who you are and your life plan to your life purpose. The first step that Chris has his clients follow at this time is to complete their Personal Life Inventory. In essence, this is a SWOT analysis to set out your: • Strengths: Identify inherent strengths that have contributed to your success to date (including talents, skills, and knowledge) • Weaknesses: Identify personal weaknesses that have held you back to date • Opportunities: Identify future events that may impact your wealth creation strategy • Threats: Identify any foreseeable threats that may impact the next stage of you having a quality life After completing the Personal Life Inventory, Chris will ask clients to pinpoint their talents. This is done by selecting the strongest talent from each of the six primary factors in the Financial DNA Path 4 and 6 reports. The talents identified should also line up to what is included in the Personal Life Inventory. The next step in the process is to identify passions. The Financial DNA Passion and Vision appraisal (a CompleteINSIGHT appraisal) is a series of questions designed to help identify: • Your personal definition of passion • What really drives you in your life

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• The kinds of careers that line up with your passions • What sort of legacy you want to leave behind • What activities energize you and spur you on • What kinds of investments or financial practices truly interest you • Which people you look up to in your life • What subjects inspire you The result of answering all these questions is a wellbalanced, complete view of one’s passions. The knowledge gained, combined with more questions, provides insight into vision. By the time the Financial DNA Passion and Vision appraisal is finished, one is ready to start the process of connecting together all of the elements that build a life purpose. After identifying passions, identify the unique gift. Your unique gift is what you are uniquely designed to be the best in the world at (talents) and love to do (passion). You do this by reviewing your behavioral talents and passion to create a statement as to what you are or could be the best in the world at doing. Note, you may still need to learn new skills and acquire knowledge. Next create a vision statement. Can you say in 25 words or less what you want your life to be? Do you want to be CEO of your own company? Do you want to be a millionaire? Do you want to be the kind of person your children look up to? Any of these can be a part of your vision statement. Think about childhood dreams, some conversations you have had with family and friends, sad

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and happy moments, successes and failures. You will probably find the answer here, and may even have an “Aha!” experience. “Cherish your visions and your dreams as they are the children of your soul; the blueprints of your ultimate achievements.” —Napoleon Hill

Then develop a mission statement. This is a simple declaration of how you will achieve your vision. It can be a sentence, a paragraph, a page—whatever it takes to explain your mission in life. Ask yourself the following questions (answer in future tense—“I will . . .”): • What character traits do I most want to embody? • What values do I want to express with my life? • In what ways do I want to improve my life? “Any ideas, plan, or purpose may be placed in the mind through repetition of thought.” —Napolean Hill

A key step is now to write a statement of the core values by which you will make decisions and this will govern how you live and interact with others. In identifying your values you can complete the Values appraisal (refer to Chapter 9). Incorporate your values into your life purpose statement. “The longest journey is the journey inward.” —Dag Hammarskjold

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Finding Your Purpose, Passions, and the Vision Now you can write a life purpose statement. There are no rules in defining your life purpose. It can be as simple as: • I will be the best spouse and/or parent I can be. • I will support others to reach their goals. • I will be an entrepreneur and change an industry. • I will write books that open up people’s minds. • I will be a leading contributor to my sport. • I will be a great financial advisor and serve my clients to the best of my ability. Chris knows that this life purpose statement will guide all of his future decision making and will keep him on track to reach his goals and live a quality life. “Unless a life is activated by sustained purpose, it can become a depressingly haphazard affair.” —Richard Guggenheimer

Chris facilitates clients through finding their purpose in various ways and forums. Sometimes it is a one-on-one discussion in his office during a scheduled meeting; other times it is done on a group basis in a seminar or off-site retreat. The group setting can provide a lot of inspiration, although it does not have the same intimacy. “People who labor all their lives but have no purpose to direct every thought and impulse are wasting their time—even when hard at work.” —Marcus Aurelius, Meditations (translated by Gregory Hays)

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Chris Coddington Has Done the Hard Work “All our dreams can come true—if we have the courage to pursue them.” —Walt Disney

Chris’s Talents

• Strategic visioning • Interacting one-on-one • Highly objective and results driven • Reliable implementation • Taking appropriate risks • Creative problem solving

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Chris’s Passion

“My primary passion is to provide strategic advice to families and business owners so they can make empowered financial decisions from the inside out based on knowing the core of who they are. I am also passionate about recreation (especially tennis and skiing), bridge, and reading books about people, families, and business.” Chris’s Unique Gift

“My unique gift is guiding people to achieve personal clarity by providing highly objective solutions to enable them to reach their maximum potential.” Chris’s Vision Statement

“I will play a leadership role in the financial services community through the establishment of an advisory firm that implements a wealth creation process to guide people to make decisions from the inside out.” Chris’s Mission Statement

“My mission is to be committed to delivering on my philosophies and values by providing people with the necessary strategic advisory services, behavioral assessment tools, and educational programs to enable them to build a balanced life and maximize their financial potential. I know from this platform, many people will be able to achieve improved results on a consistent basis through being able to make more empowered wealth creation

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decisions. Hopefully, this will also reach many young people so they get the guidance they need earlier to live their dreams and discover some realistic pathways for doing so.” Chris’s Values

“My values are to be a highly reliable person who first seeks to understand and then through a trusted relationship based on mutual sharing help those people who are prepared to learn and better themselves.” Chris’s Life Purpose Statement

“I will first honor my family, friends, and team members in everything I do. I will empower people and families to implement committed wealth creation strategies aligned to the core of who they are. I will help people understand their innate behaviors, financial preferences, and their life plans. I will educate and guide many people to uncover their unique talents, aptitudes, and interests in order that they may build from the inside-out a balanced life.” Chris Coddington’s Personal Brand

Who are you? (What you want to be remembered as— your identity.) • Wealth mentor and Strategic Thinker • Educator of many people in finance and business in the United States

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• Fair, diligent, and successful in life through helping people and families realize their dreams What do you do? (How do you explain your work to strangers when you only have about the time of an elevator ride to attract interest and have more questions asked?) • I am a wealth mentor, who guides people and families to make empowered wealth creation decisions from the inside out through a greater knowledge of their inherent talents, aptitudes, and interests. How do you do your work? (What is your unique process?) • As the starting point to my services, I apply a proprietary process known as Financial DNA to uncover a person’s unique financial personality and thereby liberate them to pursue their unique life plan. What are your skills? (Core competencies) • Strategic thinking and complex problem-solving skills • Knowledge of human behavior in a financial context • Ability to implement visions • Ability to guide people to make decisions • Investment experience in my own right and as an advisor • Life experience living in different countries

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Your Turn Now It Is Your Turn to Dig Inside • Re-review your reflections on your life and abilities (Chapter 2) and where you came from (Chapter 9). • Re-review your Path 4 and 6 profiles to truly focus on the significance of your talents and how they play out in your life and could be more productively applied. • Reflect and identify your passions and vision for the direction of your life—you can do the Financial DNA Passion and Vision appraisal. • Write your vision statement and mission statement. • Write and commit to a life purpose statement and develop your personal brand. • Take your time with all this and take the opportunity to speak with your mentors, advisors, friends, and family.

Recommended Reading Sudden Money: Managing a Financial Windfall by Susan Bradley with Mary Martin While this book has been written to help people maximize wealth and minimize stress and confusion in handling a sudden windfall (such as inheritance, divorce, an insurance payout, or lottery winning), it is equally applicable to those who have lost money or are in a life transition (such as retirement or business sale) or generally want to reflect on where they are at before making a financial

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decision. This book will teach you how to manage the emotional complexities of the situation in which you find yourself. You will be shown how to become emotionally centered within your own life direction before committing to financial decisions for lasting wealth. You can also find out more about the processes that Susan Bradley uses to help her clients take the inward journey and her Women, Meaning, & Money training programs through her web site. Susan Bradley’s web site address is: www.womenmeaningandmoney.com.

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Chapter ELEVEN

Couples Removing the Barriers to Making Financial Decisions

“It is unfortunately very true that, without leisure and money, love can be no more than an orgy of the common man. . . . Instead of being a sudden impulse full of ardour and reverie, it becomes a distastefully utilitarian affair.” —Charles Baudelaire

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aking investment decisions can be hard enough for individuals, but for couples the process can become even more complex. Think about the process that we have just gone through for one person. Two people means two histories, two sets of hardwired behaviors, two sets of learned behaviors, two levels of financial understanding, two levels of risk tolerance, two levels of . . . everything. Sometimes this means twice as many brains; sometimes it means twice as many headaches.

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When Two Make Decisions, the Differences Get Exposed “Money cannot buy peace of mind. It cannot heal ruptured relationships or build meaning into a life that has none.” —Richard M. DeVos

The saying “opposites attract” is often true and frequently so in the case of couples’ investing preferences. There seems to be a natural tendency for one member of the couple to take care of the finances. After all, having two people performing the same job is seldom constructive. One person may be in charge of bills or investing or saving or purchasing or all of the above. Or the different financial duties and responsibilities may be split. Either way, there are probably areas where you or your partner excel, areas where you are comfortable making decisions.While this is a good thing (division of labor certainly makes sense), it can also lead to conflict. There are simply some decisions that should be made jointly. Retirement plans, investment strategies, even charitable giving play into a person’s sense of self. These areas tend to bring out the differences in each other’s Financial DNA. If you and your partner are generally in sync financially, you may never notice. However, try investing or planning for retirement outside your partner’s risk-taking comfort zone or giving to a charity you don’t both support, and those differences can become huge.

Removing the Myth: Money Is Not the Problem We’ve all heard that the number one subject couples argue about is money. Anyone who has been in a relationship for

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more than about a month knows that most arguments tread deeper water than what we see on the surface. Arguments about money can be about fear, control, power, selfperception, gender roles, jealousy, old wounds, insecurity, greed, anger—they are seldom really about what’s in the bank account. Most of it just comes down to poor communication and not being aware of behavioral differences, which is a fundamental relationship issue. When there is plenty of money, positive emotions may mean real problems get hidden. Conversely, money can be the catalyst that brings up negative emotions that ultimately destroy a relationship. Couples dealing with financial issues need to take into account the feelings, perceptions, and behaviors of their partners. However, most of us don’t grow up knowing how to read these important cues. Money is not something commonly discussed at the dinner table. It is not a subject most of us learn about at home. If we do learn, it is doubtful we learn about money as a couple’s issue. We may get lessons in how to save or invest; we might learn the value of a dollar through a job or allowance; we may even be privy to the economics of the household. What we don’t learn is how to take our individual money and our individual decision-making preferences and combine them with someone else’s. No matter how much a couple has in common, the financial decision-making process of one partner may seem completely foreign to the other. What might be the ideal asset class for you may feel uncomfortable and uncertain for your partner. While one of you may judge an investment based on how certain its returns are, the other may

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judge it on its potential for growth. It can be difficult to find a balance and adapt to one another’s investment preferences—but that is precisely what the Financial DNA Discovery Process can help you do. Financial DNA gives you and your partner objective insights into each other’s investment propensities. It helps open channels of communication and understand the reasoning behind investment behaviors. It also allows a financial advisor to understand both partners better, thereby giving more aligned investment solutions to maximize wealth creation potential, and ultimately then having a quality life. Importantly, Financial DNA can be administered to get these objective insights about financial behaviors before the discussion of money potentially brings up emotions that may cloud individual needs.

A Couple Needing Help: Chris Coddington Working with the Joneses Let’s go back to Helen Jones. As we know, Helen had participated in the Financial DNA process with Chris. Now she wanted her husband, Tony, to take part in the process, as well. When she originally went through the process, Tony claimed he was too busy to participate. Helen, excited about all she had learned, kept bringing the subject up with him, but he didn’t want to talk about it. While the couple had never been particularly good at discussing money, their discussions were now becoming hostile. When Tony eventually agreed to see Chris about Financial DNA, he told Helen it was just to get her off his back. Research conducted in November 2002 by Branding

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Chemistry, an Australian social research firm, claims that at least 70 percent of financial decisions are made by women (this is universal). From choosing household appliances to paying the bills, women are more involved with finances than most people thought. Often participants ask me in workshops how I facilitate a couple through the planning process. In general, I facilitate primarily through the woman because whether she is a dominant personality, she is often the decision maker. Even if the female partner is more passive, saying “no” can be, in its own right, exercising control. Philosophically, I try to get the couple to a place where I know she is content and he feels respected. Chris uses this approach as well and was happy to talk with Helen first. Understanding Helen made it easier for him to help the couple find and reach their long-term goals. Here is the letter Chris sent to Tony before their initial meeting: “While I have heard about you through Helen, there is certainly more we can learn about each other. I see our relationship as a journey. I appreciate that you have some significant decisions to make regarding transitions in the near future. Sometimes this can be very difficult, particularly when there are many needs to prioritize and vested interests to satisfy. Further, your own emotions about the issues will be important. I do not want to give you advice based on assumptions from what I have heard. For both of us, getting more in-depth, objective information about your needs would be very beneficial.This will give you clarity to make committed decisions for the long term. 178

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As you have no doubt heard from Helen, I ask all my clients that they participate in my service by completing the Financial DNA Discovery Process to bring objectivity in changing times. Many of our clients have truly been given clarity by this process and received important new information that has helped their financial decision making. So that you know I have walked this path and to build my relationship with you, I will give you my Financial DNA profile as well.” The Joneses were at a crossroads in their investment strategy. Several years prior, they had invested all their savings in a property development project that had produced a profit, albeit a disappointing one. Their proceeds from this investment, however, were subsequently lost in some bad stock speculations and a failed business. In addition, they both found it difficult to save money, budget, and administer their finances. Helen was, by her own admission, frustrated with Tony, who repeatedly proposed investment strategies that Helen felt were too risky. In her own words, she would “rather tread water than embark on an investment with any risk whatsoever.” Most revealing for Helen and Tony was seeing how very different their approaches to financial risk were. Very clearly, Tony set the agenda with financial matters and at times did not listen to Helen. So Tony was never looking to see if Helen was content. Also, the Path 6 profile in stage 1 of Financial DNA uncovered a very high risk propensity and risk tolerance in Tony but caution in Helen’s approach. This information immediately enabled Helen to understand her husband’s need for adventurous investments, 179

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Figure 11.1 Getting Below the Surface—Taking Ownership of the Source of Differences Helen and Tony Jones Path Profiles (Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

and, with Chris’s help, it also assisted Tony in understanding Helen’s hesitancy in all things financial. This difference had previously caused a great deal of conflict between Helen and Tony, but by objectively learning about one another’s natural motivations, they were able to understand each other’s behaviors, preferences, and dislikes more easily. Finally the two were able to talk about each other’s financial issues in a constructive, objective way. This type of discussion became easier for Helen because she now felt respected. Never at any time did Chris have to play the role of marriage counselor, because the profiles brought out everything the couple needed to know and brought it out

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with clarity. Most important, the couple learned that Helen measures the advisory process in terms of the relationship, while Tony measures it in terms of results. Tony was excited about what he was learning and eagerly went on to complete the Financial Directions appraisal. Interestingly, both Helen’s and Tony’s Financial Directions appraisals showed they had low financial astuteness. It quickly became apparent that they both needed education in investments. They both had a strong preference for property investing, however. After education in different investment options, they began to take a more holistic view of their long-term investment strategy. It was even more apparent that Helen and Tony had very different investment styles and preferences. Tony, an aggressive growth investor, preferred to take sizable risks in investments that had potential for very high returns. Helen, however, preferred security. Furthermore, both the Joneses had a highly emotional approach to making investment decisions. Helen’s emotions were fueled by her fear of loss, whereas Tony’s were fed by his desire to make a killing. This got in the way of his more naturally rational style. The profiles revealed that both had significant life experiences in their formative years, well before they were married, that had a big impact on the development of their financial personalities. Tony had a father who never recognized his achievements, which motivated him to take chances and be recognized as successful. Helen’s parents declared bankruptcy when she was six years old, and therefore she had a real need for security for her family. While both knew of these circumstances, they had not really discussed them.

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The Next Step: Education and Continuing Facilitation It was clear that as things stood, it would be very difficult to create an investment strategy that met the needs of both Helen and Tony. However, Chris knew that if he could just keep the two learning and growing in their self-awareness, he could get them where they wanted to be. After discussing their Financial Directions reports with Chris, Helen and Tony realized they needed help in achieving their financial potential, and they asked Chris to mentor them through the quality life financial planning process. Chris was eager to help and set up a program whereby regular meetings were supplemented with homework exercises. Chris knew that if Helen and Tony could learn to value each other’s natural traits their differences could become an asset. Their combined perspectives would offer a more complete picture of a given situation. Plus, their understanding of their differences (the key being understanding) would enable them to improve communication, anticipate areas of potential conflict, and make them a stronger couple. Chris helped Helen and Tony become a stronger financial team. He reminded them that strong partnerships can be built by bringing together diverse talents and styles, such as their own. Differences can be an asset if capitalized or they can become a liability if allowed to divide. Mutual respect is important because it is the key to trust, and trust is the foundation of sound financial partnerships (it sure doesn’t hurt romantic partnerships, either). Maintaining respect can be a challenge when differences of opinion or style arise. Chris helped Helen and Tony see the

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need to appreciate each other’s strengths and accept and work around each other’s struggles. The message he kept coming back to was: “Seek first to understand, then to be understood.” After mentoring by Chris, Helen and Tony were able to do better than reach a compromise in their financial plan. Through education, understanding, and mentoring, they were able to formulate a plan that fully met Helen’s need for stability and a reasonable degree of certainty and Tony’s need for aggressive growth. Now they had boundaries for Helen’s contentment and Tony’s self-worth. With new insights into both property investing and the stock market, Helen and Tony, with Chris’s help, formulated concrete goals and a plan to reach them. Chris was also able to help the Joneses establish their own family company for restoring and developing properties. With this residual income established, Helen and Tony used their new understanding of the benefits of the stock market to embark on a 20-year investment plan managed by Chris. All this, combined with Helen’s growing furniture design business, means that Helen and Tony are well on their way to their goal of early retirement, which will be amply funded by their growing investment portfolio. Your Turn Understand the Similarities and Differences between You and Your Partner • What differences have you noticed in how you and your partner treat money?

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• What are the strengths and struggles you see in the communication between you and your partner? • Have you and your partner discussed your wealth creation needs and attitudes toward money? • Do you and your partner understand each other’s prior experiences that may be impacting today’s decision making? • Have you and your partner worked out a plan that brings together your wealth creation strategy and to which you both can comfortably commit? • What financial education do you and your partner need?

Recommended Reading Smart Couples Finish Rich: 9 Steps to Creating a Rich Future for You and Your Partner by David Bach For any couple, regardless of how long they have been together, this book has many significant messages about how to handle money together. This book teaches women and men to work together as a team when it comes to money. The entire family can benefit from this book. You can use this book as a personal road map to a financial destination. This dovetails well into the Financial DNA Discovery Process where you start with a deeper understanding of each other’s behaviors and decisionmaking style before delving into setting a financial direction as a couple.

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Chapter TWELVE

Unlocking Family Dynamics for Greater Family Wealth

“Call it a clan, call it a network, call it a tribe, call it a family. Whatever you call it, whoever you are, you need one.” —Jane Howard

F

inancial decisions are seldom made in a vacuum. Your decisions impact the lives of those around you, especially the members of your family. Just as you should make decisions in alignment with your life and financial personality, if you are in a family (as most of us are), you will be helped by working toward alignment with family members, as well. Maybe you are helping parents with financial decisions or teaching children how to respect money. Maybe you and your spouse are establishing a budget or starting a family business. Maybe you are concerned about a child’s college fund or planning for adult children to take over the family business. Whatever phase you are in, whatever your concerns may be, your decisions can only be helped by

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understanding your financial personality as well as those of the people closest to you.

The Family Relationships: Key to Financial Decisions Family wealth, whatever the level, is driven by the quality of the family relationships. This is because family financial decisions are generally dictated by those relationships. Nowhere do money issues become as intense among family members as they do in family-owned businesses. Many times, the real issue—the issue intensifying family interactions—is not the money. Rather it is trust. Trust is the currency of the family unit. A family unit can only be truly wealthy and lead a life of unity and prosperity with trust. The foundation for trust is developing great family relationships. The starting point is for each family member to be liberated in the knowledge of who he is and what she is supposed to do. When you look at the different behavioral styles in the family, you can see that some family members have inherently lower levels of natural trust. If they are unaware of this, there is a chance that behavior will breed distrust throughout the whole family, which is the seed of disaster.

Getting Objectivity in the Family “A family is a unit composed not only of children but of men, women, an occasional animal, and the common cold.” —Ogden Nash

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Financial attitudes of children are in part determined by their own inherent financial personalities, but also the influences of their parents, the broader family unit, and other environmental forces. Family members need to understand each other’s upbringing, current circumstances, and future goals and plans. Objectively understanding each other’s financial personality is the first step. Now you may think you know your family. You’ve probably pointed out each other’s faults more than once. How did that go over? Very few of us like to hear criticism. Even fewer of us will tolerate what we hear as criticism from family members. So how do you get to the kind of understanding needed for financial decisions? Simple— participate in an objective framework for discovery. Financial DNA offers an unbiased portrayal of financial personality—no hidden agenda, no assumptions, just science. The Financial DNA profiles can point out things with impunity that you could never safely bring up.

Using the Financial DNA Discovery Process: Getting Below the Surface “In every dispute between parent and child, both cannot be right, but they may be, and usually are, both wrong. It is this situation which gives family life its peculiar hysterical charm.” —Isaac Rosenfeld

When it comes to families, the approach of Understanding People Before Numbers comes in three stages with the Financial DNA Discovery Process.

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Stage 1: Stage 2: Stage 3: Family Relationship Financial Direction Futurity Communication Information Decision Style Control Measurement Stress Risk Financial Fears

Attitudes Fears Asset Aptitude Investment Style Management Motivation Values Emotion

Mission Statement Succession and Continuity Legacy Philanthropy Strategy and Action Leadership Life Balance Governance

The profiles for stages 1 and 2 of the Financial DNA Discovery Process are the same as they would be for an individual. Each family member completes the profiles, and each shares the information with the others. This allows every member of the family to understand the talents, behaviors, and communication styles of all the other members. It also allows each family member to plan for closing the gap between who he is and what he says. These two stages allow family members to understand where each came from and where each is. Stage 3 involves the family members completing the Futurity appraisal (a CompleteINSIGHT appraisal) to consider succession planning and determining where the family is going. This stage enables each member of the family to plan for his future through coming to an understanding of personal passions, vision, values, and purpose. The family should also identify the passion, vision, values, purpose, and mission for the family unit as well (in a similar way as an individual or commercial business would).

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Emotions: Getting in the Way of Family Rationality “The family is changing not disappearing. We have to broaden our understanding of it, look for the new metaphors.” —Mary Catherine Bateson

According to a recent Gallup poll, in the next 10 years succession will occur in over 50 percent of businesses. However, currently only 30 percent of family businesses survive to the second generation. Only 15 percent make it to the third generation, and 3 percent to the fourth generation. Studies all over the world have produced similar results. Transferring a business to the next generation can be an emotional issue for all involved. So many of us have been taught to keep emotions out of business that too often we just try to sweep emotional issues under the carpet and move on as if they did not exist. This is sheer foolishness regardless of how hard it is to address these issues. Family members have different natural behaviors and preferences. These differences mean each family member processes family life and any family financial decisions differently. The problems pop up when the different behavioral styles are not truly understood. This is when we see emotions crushing rationality—the amygdala hijack (see Chapter 8). The only way to deal with the emotional issues is to accept them from the outset with a strong foundation for communication.

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Chris Coddington Using Financial DNA with Families Chris is a big believer in Financial DNA’s ability to get to the heart of who people are, and he is comfortable taking his clients through the process. Before Financial DNA, he hadn’t felt particularly comfortable going past the numbers with his clients. He asked just enough questions to get a plan done and have a rough picture of the family issues. After all, he wasn’t a behavioral expert; he was a financial advisor. Financial DNA gives Chris a user-friendly, reliable method to know his clients on a deeper level. The process provides him with objectivity, depth, and speed that works regardless of his people skills, experience, or emotions. The same questions get asked in the same order with every client. It is a plug-and-play way to understand how each person is wired. When he started working more and more with families, he thought he’d be putting the process to the test. To his surprise, the structured methodology worked just as smoothly. The reason it worked was because Financial DNA enabled Chris to build trust in the family with an open approach that allowed each person to be heard through being asked exactly the same questions, which were processed in the same way. The process provided a very high level of transparency and objectivity, which is so necessary in a setting that is as fragile and volatile as a family. Of course, whether there is success in the end also depends on every family member being committed to the family unit. However, if the family members know there is a clear

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process that everyone participates in equally, then the chances of success are greater. In some cases, Chris has found that initially not every family member has agreed to do Financial DNA. Nevertheless, he gets the willing ones to do it as this provides insight and can mitigate the fears of the others.

The Williams Family Dynamics The Williams family came to Chris when they hit an impasse in their discussions as a family about succession planning. After meeting with the family, whose members were remarkably difficult to deal with, Chris sent the following letter: “I have been considering our relationship, and I am concerned about my ability to meet your needs to the level we all want. There could be many reasons for this, including our natural ability to communicate with each other or my ability to fully understand and meet your needs. I have recently introduced into my business a new process known as Financial DNA, which has truly revolutionized my ability to uncover the decisionmaking behavior of my clients and help them build a quality life. This has also enabled me to communicate better with my clients and in some cases even assign another person in my practice who is better suited to handling the account.

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If you are agreeable, I would like you to do the Financial DNA profiles because I believe they will provide all of us with very positive insights and make our relationship more effective. So that you know I have walked this path and to build my relationship with you, I will give you my Financial DNA profile as well.” The broader issues in the Williams family were not new to Chris as he had seen them before, although the actual family dynamics are different each time. Chris has learned to see that for all families, regardless of wealth, times of transition are emotional and behavioral dynamics are a significant factor in making financial decisions and in future family harmony. The patriarch of the family, John (age 65), wanted to retire, and he and his wife, Mary (age 62), were ready to start distributing the family’s wealth and responsibilities. The couple wanted to see an equitable distribution for their three children: • Brian (age 37) was a divorced accountant with one young daughter. He worked as a tax accountant for one of the largest companies in the country. • Sarah (age 35) was a single MBA graduate working in a division of her father’s business. • George (age 33) was single and worked as a high school counselor. John and Mary’s assets were broken down into the following categories:

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• A home • Property and equities • A profitable food distribution business • A charitable foundation that supported soup kitchens In approaching family transitions, five elements are typically addressed by Chris: • Family Relationships: While financial concerns had brought the family to Chris’s office, Chris was concerned that he could end up with a group of wealthy, but unhappy, family members. • Business Continuity: Customers really don’t care that the parents are handing over the reins of their business to the children; they just want to keep getting the prices and service to which they have become accustomed. A business transition is no excuse for shoddy service. • Family Continuity: The Williams family had built up a strong reputation and financial position. John and Mary believed the power of the family would be preserved if all of its business interests and community interests were kept as a single unit rather than the family members going their separate ways. • Financial Continuity: John and Mary had worked hard for a lot of years to build up their investments, property, and equities. They did not want to just sell them off.

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Financial DNA • Philanthropic Continuity: John and Mary were very involved with their community, and their charitable foundation was making a difference for families in need across the country. They did not want to see family bickering take away from all those they were trying to help. The issues involved were complicated—from a business standpoint as well as from an emotional standpoint— with very little agreement among family members as to how the assets and responsibilities should be divided. The different financial personalities involved, combined with different skills, educations, financial knowledge, personal wealth, and widely differing perceptions of their family life and each other, presented a huge challenge. Chris saw five risks staring this family down: • Lack of Trust: The family had lost their closeness over the years as the children found their own ways in the world. • Expectation Gaps: Though the future of the parents’ assets, business, and foundation had never been discussed, each of the children had expectations about what the future would hold with regard to those assets. • Poor Communication: The family members were wrapped up in their own lives and didn’t spend much time talking to each other. When they did talk, they talked around issues, avoiding any subjects that might be controversial or emotional.

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Unlocking Family Dynamics for Greater Family Wealth • Perceived Inequity: Different viewpoints could easily cause a perception of inequity, even where it didn’t exist. • Litigation: The members of the Williams family were all smart, educated, and used to standing up for themselves. They would not hesitate to use the legal system to achieve what they considered fair.

Chris Introducing Financial DNA to the Williams Family “The happiest moments of my life have been the few which I have passed at home in the bosom of my family.” —Thomas Jefferson

The first step involved each family member completing the Financial DNA Discovery Process. Then when they had completed the profiles, Chris met or called each one of them individually to discuss their reports. In particular, he did not want any trust lost in the overall family facilitation so he took care to find out the concerns of each person. The second and crucial step for Chris and the family was building understanding of their differences and from that, acceptance and respect. Financial DNA proved the perfect process. Chris organized a family meeting over a weekend to get everyone together in a relaxed environment whereby family bonding could take place while having some fun. The family actually had a good time discussing and comparing their profiles during this time (see Figure 12.1). When the family meeting process is facilitated the

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Figure 12.1

The Williams Family Path Profiles

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

right way, making each person feel equal, the participants have a greater propensity to be open. After all, we all like to talk about ourselves. As Chris taught them how the profiles worked and what they meant, the family became more comfortable and relaxed. Chris was easily able to introduce the ideas of strengths, struggles, and blind spots without family members becoming accusatory or defensive. Once the family could objectively see their differences, the lightbulbs went on. The reports became the platform upon which the family could rebuild relationships by objectively understanding their differences. This gave them a starting point to begin money discussions. Suddenly, the Williams family members were beginning to understand where each was 196

Unlocking Family Dynamics for Greater Family Wealth

Figure 12.2

Path 6 Group Report

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

coming from, where they were currently, and where they wanted to go with their lives. Luckily, each member of the Williams family was committed. Through family group reports such as the one in Figure 12.2, the family could begin to see the areas that they had in common and the areas in which they differed.

Chris Facilitating the Family Mission Statement Once a sufficient level of understanding and trust had been built, Chris moved the family on to a deeper level through family exercises. He walked the Williams family through the process of creating a family mission statement that each member could agree to. This established a necessary level of buy-in and reinforced the notion that each 197

Financial DNA

Figure 12.3

Path 4: Example of a Possible Source of Conflict

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

Figure 12.4

Path 6: Example of a Possible Source of Conflict

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

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member had a say in the process and thereby in the future of the family’s finances. Early on, Chris could see a potential for conflict between Sarah and Brian. Both had assertive and aggressive personalities, but where Brian was methodical and picky, Sarah was spontaneous and impulsive (see Figures 12.3 and 12.4).

Potential Division: Dividing the Family Assets “If you love your children equally, you will treat them uniquely.” —Ron Blue

By discussing the reports and what they meant about talents, passion and purpose, Chris was able to begin discussions about which children would be handling which assets. It became a matter of who would be best-suited for each job, rather than who Mom and Dad loved most or any other ridiculous emotional tags that the children might attach to any decision made by the parents. Chris used the Financial Directions appraisal to show each member of the family where their relative strengths and struggles overlapped and to provide them with a more in-depth analysis of their financial motivations and preferences (see Figures 12.5 to 12.7). Through these comparisons and the profiles, Chris was able to show Brian that with his temperament and financial interests, he was best-suited to manage the family’s property and equities, while Sarah, with her MBA and marketing interests, was better suited for running

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Figure 12.5

Financial Directions Strands

(© 2001–2005 Financial DNA Resources All rights reserved. Used with permission.)

Figure 12.6

Financial Directions Strands

(© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

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Figure 12.7

Financial Directions Strands

(© 2001–2005 Financial DNA Resources All rights reserved. Used with permission.)

the business. George knew he wanted to continue his involvement with the charity, where he’d been volunteering for years. By having the entire family evaluate their choices from the inside out, the family members agreed this allocation would be best in the long term. Each of the children would control one area of the family assets but all would share equally in the ownership of those assets (see Figure 12.8). John and Mary were very pleased that they were able to split their assets equitably and leave a strong financial legacy for their kids. They were thrilled to reach an arrangement that made everyone happy and ensured the continued

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Figure 12.8

The Succession Planning Resolution

(© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

strength of the legacy that they had spent a lifetime building. However, in the end, they said that the best part of the process was the new, closer relationship the family had achieved. Your Turn Understand Your Own Family Dynamics and Enhance Your Family Relationships • Do you know the similarities and differences of your family members? • Do you feel communication and trust could be better in your family?

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• What does the history of your family mean to you? How do your family members see it? • Does your family have a set of values and a mission that form the framework for making financial decisions? • Does your family have a major transition coming up or one that has taken place that will have a lasting impact (e.g., succession, retirement, inheritance, major financial gain or loss)? • Have you thought about holding a family get-together, meeting, or retreat?

Recommended Reading Planning a Family Business Legacy by Karl Bareither with Tom Reischl This book takes you step by step through a unique, time-tested approach to family business succession and estate planning. The process outlined in the book reaches beyond traditional planning techniques. You will learn why and how to include the whole family in the planning process. In addition, you may like to read: Navigating the Dark Side of Wealth by Thayer Willis In Navigating the Dark Side of Wealth, Ms. Willis details the pitfalls that great wealth can lead people into: the morally corrupting and emotionally stunting effects that having material riches can cause, and the pain and

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heartache that ensue. More importantly, within these pages she provides the needed guidance that, if taken to heart, can lead troubled inheritors to more balanced and fulfilling relationships. Wealth in Families by Charles Collier Charles Collier offers interviews and insights based on his experience as senior philanthropic advisor at Harvard University. He offers practical advice for basing personal philanthropy on deeper questions about the meaning of wealth, its long-range effect on your family, and how to wisely use philanthropy to fulfill your ultimate purpose in life. Focusing more on the “why” than the “how” of giving, Collier also offers advice on parenting, inheritance and managing money. He points out that in addition to financial wealth, families first should consider and focus on other forms of wealth, such as human, intellectual and social wealth. This book includes two family questionnaires and a list of additional thought-provoking resources for sorting through the life priorities, philanthropic opportunities and other timely questions confronting wealthy families.

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Chapter THIRTEEN

Successfully Working in Business

M

any of you reading this book own a business or work on a team in a business. There is no doubt that in this setting you are exposed to many of the human behavioral issues that have been identified so far. Working in businesses and teams is largely impacted by your understanding of the people with whom you work and the quality of your relationships. As an advisor, Chris Coddington has found that while people often come to him for mentoring in individual and family finances, he often provides input about their roles at work. Sometimes this is even the area of most immediate need. After all, having your business and career aligned to who you are and your goals is key to your wealth creation and a quality life. In the case of advisors wanting to introduce Financial DNA to their clients, one of the starting points has been profiling their own teams and running team sessions. This was something that Chris did early on to gain confidence

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with the product and learn to see behavioral dynamics. You will see the behavioral analysis of his team below. In other cases with clients, Chris has seen how different financial attitudes within a team have emerged to impact the functionality of a business. Again, the Financial DNA Path 4, Path 6, and Financial Directions profiles have been used to uncover that part of the iceberg below the surface. Also, Chris uses the Path 4 and 6 profiles for the broader range of human capital solutions provided in business, such as leadership, hiring, and benchmarking. This chapter is only intended to give you a snapshot of the issues. I would suggest reading Lee Ellis’s Leading Talents, Leading Teams (referred to in Chapter 5) and Patrick Lencioni’s The Five Dysfunctions of a Team for an in-depth understanding of team and leadership issues.

Workplace Relationships The average fully employed person spends over 1,800 hours each year, more than one-third of her life, at work. What’s more, people tend to spend as much time, if not more, with their coworkers as they do with their families. For many, the workplace has become more than a home away from home. It has become home—and not always a happy one. Our relationships at work may impact our lives more than we think. So often we consider our work relationships as a given. We have to work with these people. We have to put up with whatever presents itself, or leave. In fact, based on research over 25 years by the Gallup Organization, how

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long a person stays in a role and how productive he is while there is determined by the relationship with his immediate supervisor (as mentioned in First, Break All the Rules by Marcus Buckingham and Curt Coffman). Furthermore, for over 80 percent of people, their happiness at work is related to the quality of communication with their colleagues. The truth is that there is a lot of room for improvement in many businesses—no matter what rung of the corporate ladder a person is currently clinging to. By understanding our own behavior and that of those around us, we can work toward the win–win in all our negotiations (whether business or personal). For example, if you know you are a Strategic Thinker and your boss is a Motivator, you know not to bring your ideas in the form of detailed reports laden with statistics. Motivators want to look good in every situation and be free from details.

Chris Leading His Team “Exceptional leaders are the ones who are able to analyze even the most daunting problems, optimize resources against impossible odds, inspire unwavering loyalty, and fearlessly execute strategy.” —Lance Kurke, The Wisdom of Alexander the Great

Starting your own business like Chris did automatically thrusts leadership upon you from the very first person you hire. Chris knows leadership can be learned. Our approach is to have you first learn about your natural behaviors and then learn to adapt your behaviors to others in your team and with all other stakeholders to

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communicate on their terms and operate with a greater level of empathy. In the final analysis, this is really emotional intelligence. Too often, managers in business come into their jobs with a set of tools—tricks figured out on the job, concepts learned in business school, skills picked up from mentors. However, not understanding the behaviors of others (let alone their own behaviors) is like trying to build a house without blueprints. Even if you have all the right tools, you won’t get very far without understanding how the pieces all go together. In the end, understanding behavior is the foundation of your leadership abilities. Of course, there are many other aspects of leadership to learn as well, but this basic understanding will take you far. Chris knows very well that ultimately a business runs on results. Most of us do. For this reason, many of us become obsessively results-oriented. We keep count, try to get ahead, look out for our own interests above all else. But the leadership formula is a matter of getting improved results on a sustainable basis through great relationships. This means truly understanding the behavioral style of your team members and learning to communicate with them. As part of Chris’s initial introduction to Financial DNA, every person on his team completed the Financial DNA Path 4 and Path 6 profiles (see Figures 13.1 and 13.2). The Financial DNA Path 4 and Path 6 team reports (the same as the family group reports) that were prepared for the team are shown in Figures 13.1 and 13.2.

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Figure 13.1

Financial DNA® Path 4 Group Matrix

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

Next Chris arranged for a team development session. The main goal of the session was to build a greater level of trust in the team. Transparency—sharing profiles, being honest about strengths and struggles, about behavior— builds trust. People are much more likely to be honest with you when they know you are being honest with them. With transparency comes the beginning of learning to communicate with people on their own terms. After all, the team members learned that they can’t communicate on those terms until they have first identified them. During the team session, everyone completed their My Unique Profile (see Chapter 6). A core value of the business is that each person uses this for difficult discussions

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Figure 13.2

Financial DNA® Path 6 Group Matrix

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

and generally to remind each other of their communication needs. One of the main points Chris learned in the team session was how his rational approach and desire to make quick decisions was difficult for most of his team. Sometimes Chris had difficulties communicating with Tom Smart, a Researcher who was not interactive. While Tom was a great analyst, he also took a long time to come up with solutions. In the case of Carol Benjamin, a Detailist responsible for preparing financial plans, and Alan Eckhardt, an Encourager responsible for client relationship management,

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there were always some clashes. Carol had learned to weigh her decisions by herself and check what was being sent out. Alan was enthusiastic and easily swayed, while Carol was cautious and analytical. They could all have a very fruitful working relationship as a client service team under Chris, but it would take understanding. The team session became a forum for them to air their frustrations. This was particularly beneficial for a group whose normal tendency was to avoid conflict instead of solving the problem. Financial DNA offers a nonjudgmental, nonthreatening way to get to those unique communication terms. It offers a way to identify individual struggles while at the same time emphasizing each person’s unique talents.

Recognizing Talents and Balancing the Team “Great managers would offer this advice: Focus on each person’s strengths and manage around his weaknesses. . . . Help each person become more of who he already is. This radical insight is fueled by one simple insight: Each person is different.” —Marcus Buckingham and Curt Coffman, First, Break All the Rules

By having each person complete a profile, Chris got a chance to look at the makeup of his team and determine whether it was appropriately balanced and functional. Any recurring patterns of behavior that can be productively applied are talents. Talent cannot be taught; it can only be recognized. Good leaders are able to recognize talent. They are able to identify productive behaviors and encourage them while working around nonproductive

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behaviors. In other words, good leaders encourage an individual’s strengths and minimize an individual’s struggles. By recognizing individuality, good leaders help others become more their truest selves. The recognition of productive behaviors matched to the jobs that will most emphasize and enhance those behaviors is the way to success. Leaders are effective matchmakers—taking the right person with the right talents and matching that person with the right tasks and positions. The perfect match builds a person’s selfconfidence and makes him want to work harder. It is not, then, the leader who inspires. Rather it is the leader’s responsibility to help others inspire themselves. You can see that Chris’s team was unbalanced, being heavily weighted with harmonious and methodical people. There was clearly a shortage of talents for making new sales (although Alan as an Encourager was good at maintaining existing clients). Chris could see that this would need to be rectified to develop the business further. Melanie Hilton, an Administrator, was recruited by Chris to help facilitate Financial DNA with families. This was a good use of her talents as she would have a high degree of natural empathy. John Smith, a Deep Thinker, was the chief operations officer responsible for overseeing all aspects of the business. His value is in his natural ability to take time to think through ideas resourcefully and also with his caution help Chris manage business risks. Again, Chris has to ensure he slows down enough to listen to John’s perspectives. The primary strength of the team was its operational capability and reliability. From this perspective, Chris now

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had the round pegs in round holes and the right team to expand his business (subject to hiring more new account salespeople—rainmakers).

Chris Coddington Advising Techscape Partners “Any business arrangement that is not profitable to the other person will in the end prove unprofitable for you. The bargain that yields mutual satisfaction is the only one that is apt to be repeated.” —B.C. Forbes

Alexander Burberry and Grahame Johnson own Techscape Partners. The two high school buddies started Techscape in college when Alexander discovered a revolutionary software application that could change the landscape of technology. Both Alexander and Grahame were finishing their MBAs at the time, and Grahame had a hot lead on an investor who could take the concept from idea to reality. The two young men joined forces, assuming working together would be as easy as sharing a dorm room. The lead paid off, and the product hit the market like a rocket. Alexander and Grahame struggled to keep up with the success of their company. Too many late nights, not enough time to make decisions—tempers grew short. Their original investor started to worry about the safety of his investment. He had seen great ideas die from internal business problems before. He had no intention of watching another company crash because of interpersonal conflicts and different financial attitudes getting in the way when the pressure was on. He sent Alexander and Grahame to Chris in the hope that Chris could use Financial

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DNA to bring the two back to working health and develop the right financial structure for the business and its stakeholders. Other advisors, such as Bruce Woodcock, have seen the benefits of using Financial DNA in team situations: I have started working with three different people involved in the same successful small business. They are interested in a business succession plan. They were thrilled to get their profiles, especially the comparison reports overlaying one profile on another. They told me it was so helpful to confirm what they already suspected, in terms of who should do what tasks in the business, and the business succession plan. The most outgoing of the three, a Motivator, said they had great fun going back and forth in the office discussing each other’s profiles. They now want several other employees to take Financial DNA.

From the first meeting, Chris could see that the two just had naturally different behavioral styles. Alexander was exceedingly bright, but also abrupt, his conversation switching gears as fast as his mind did. He was obviously determined and excited about the potential of Techscape, eager to see his dream come to fruition. Grahame, on the other hand, was careful to be supportive, always thoughtful and tactful. Though he was friendly, he seemed to lack the confidence it would take to get on board with Alexander’s fast-paced plans. Chris had some perceptions of the behavioral styles with which he was dealing, but true to his own rules he was not going to make assumptions and kept his observations to himself. Instead he took the two partners through

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the Financial DNA Discovery Process just as he would a married couple—slowly, deliberately, and without judgment. He let the two businessmen discover what he could see from the beginning. Alexander and Grahame went to the same high school, the same college, the same business school. Both had MBAs; both graduated near the top of their class. The two had always figured that since their resumes were the same, so were they. Then they saw their Path 4 and Path 6 profile reports (see Figure 13.3). Alexander was a Director, and Grahame a Cautious Thinker. The two knew they were grating on each other’s nerves as they never had before. They also knew they normally

Figure 13.3

Grahame and Alexander Path Profiles

(Property of Financial DNA Resources. Licensed from RightPath Resources. All rights reserved.)

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worked very well together. Looking at the objectively determined Financial DNA Path 4 and Path 6 graphs, however, was the key for them to see exactly how they fit together. On one hand, the Path 4 graph showed the two as pretty much opposites in every category. On the other hand, it showed that between them they covered the entire spectrum of talents. As a team, there was little they couldn’t handle. When they looked at the Path 6 profile, the two saw that they came together in the areas of achieving (Factor 4: Conscientiousness), daring (Factor 5: Adventurousness), and supportive (Factor 3: Compassion). The places they came together are particularly helpful for an entrepreneurial business. Where they widely differ—Alexander is assertive and blunt, Grahame is not; Grahame is tolerant, Alexander not so much—are definitely areas that add to tensions. When the two had plenty of time, and there was not money at stake, Alexander could slow down and wait for Grahame to catch up, or Grahame could take the time to make his views known. However, when the pace picked up and the pressure increased, both reverted to their more natural behaviors. The problem was that neither Alexander nor Grahame had identified the problems as behavioral. Grahame just figured Alexander was becoming too short-tempered and forgetting about relationships, and Alexander thought Grahame was losing his nerve and not focused enough on results. In reality neither had changed. The realization that

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they were only seeing different levels of each other’s behaviors was liberating and recharged the confidence they had in each other. “When two men in business always agree, one of them is unnecessary.” —William Wrigley Jr.

Chris helped the two learn to work together again. The lesson they learned from the Financial DNA path profiles and Chris was that differences can divide, or they can be assets if understood. At the same time, he helped them restructure their debt and diversify their investments so that they were a little less dependent on their one big investor. “Liberating” was how Grahame described the process. Alexander said it was “intense, but good.” Now Alexander and Grahame have a framework to understand and then best utilize each other’s different natural talents. They have changed their expectations of each other in certain areas and improved their relationship in all areas. Your Turn How Functional Is Your Team? • Have you reflected on why you are in your position? • Do you know what the unique talents of your colleagues are? • Do you know how to capitalize on the differences in your team?

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• Is everyone on your team committed to the business? • Do you know how to adapt your communication style to address others on their terms? • Do your team members trust each other? • Does your business (or the business you work in) have the right financial alignment to meet the needs of the team and its business goals?

Recommended Reading The Five Dysfunctions of a Team by Patrick Lencioni This book is a great follow-up to Lee Ellis’s Leading Talents, Leading Teams. Written as a leadership fable, the book truly brings to life the issues that exist within teams and the barriers to reaching goals. The issues, explained as the five dysfunctions, are incredibly simple to understand. Of course, if they were easy to overcome in real life then working in teams would be easy. Interestingly, to overcome each of the five dysfunctions requires behavioral modification from each team member in some way.

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Chapter FOURTEEN

Linking Your Life to Your Financial DNA and Keeping on the Path

O

nce you have gone through the process of discovering so much about yourself, you might feel as if you are done, but don’t go off half-cocked. Knowledge, as valuable as it is, won’t take you far on its own. You need a way to keep going, to stay on the path. Don’t let yourself fall back into the old comfort zones.

Knowledge Is the First Step to Change: Understanding Your Financial DNA “Even if you’re on the right track, you’ll get run over if you just sit there.” —Will Rogers

By this point, you should have done the hard work of discovering your Financial DNA. Now you are ready to apply all you’ve learned to building your quality life and document it in your Financial DNA quality life financial plan. This is the plan that takes you from where you are now to where you want to be, which can be life-changing. 219

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One of my clients, Gordon Gilkes, was inspired to make a big change. I could see what he should be doing, but guiding him to see it and own the decision took time. Ultimately, his whole life journey had been building toward his decision to open a dance studio. Making the decision was in perfect alignment with his behavioral style. Here’s the letter I received from Gordon: I would just like to say thank you for the inspiration you gave me to go back into teaching dancing. It had been my consuming passion for 20 years, and because of your encouragement to follow my heart and the use of the Financial DNA process, I gained the courage to leave my job and start fresh. I have purchased a dance studio and am definitely the right man in the right place at the right time. I believe I have the opportunity to make a difference in people’s lives by assisting them with finding their creativity. Perhaps I will be fortunate enough to help others fulfill their dreams in the same way you have helped me. Gordon Gilkes Principal, North Shore Dance Studio

The goal is to get you to where you are living in the right place for you, being with the people you love, doing the right work, on purpose, so that you may live a more fulfilling life. This is the platform for you to maximize your wealth creation potential from implementing committed wealth creation decisions. The following summarizes the process that has helped people like Gordon to make life-transforming decisions and then remain committed to them.

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Making Committed Wealth Creation Decisions by Setting Your Direction “Intimate relationships cannot substitute for a life plan. But to have any meaning or viability at all, a life plan must include intimate relationships.” —Harriet Lerner

Something I have learned over the years from my own personal life journey and from being a wealth mentor to others is that it is difficult to make committed wealth creation decisions until you have identified your Financial DNA and your life purpose. The two must be integrated and in alignment. The tendency otherwise is to undo your financial decisions as soon as a negative life or financial event takes place. This could lead to selling an asset at the wrong time and undermining your financial health. The understanding necessary for synchronizing wealth creation with the rest of your life comes from understanding your (1) talents and aptitudes, (2) passions and life purpose, and (3) economic denominators—your current financial position and where you want to be in the future with a committed plan. They must all then converge. In Figure 14.1, you can see that the Financial DNA profiles fall in the life and wealth review area. Here is where you examine all areas of your life, starting with reconciling who you are with who you say you are. The gap can be narrowed with greater understanding. Finding your passions and life purpose (refer to Chapter 10) is best done with a wealth mentor or an experienced facilitator, but it can be done alone. The key is to find the connection between who you are and your passions

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Figure 14.1

Building the Platform to Last

(© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

and life purpose. Once you make that connection you are ready to work those passions into a vision and mission. After you have articulated your life purpose, you can connect that purpose to your economic denominators and plan how you can achieve those dreams. Again, this is where a wealth mentor (who is a sound financial advisor) is needed. You may well see a gap between where you are and where you want to be, but knowing the dimensions of that gap is the first step toward narrowing it. The last piece of advice is that the plan for you must also fit in with the plans of those around you. The plan cannot operate in a vacuum. There must be alignment with the needs and expectations of your personal and business relationships.

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Managing Expectations, Managing Reality “Fortunate indeed is the man who takes exactly the right measure of himself and holds a just balance between what he can acquire and what he can use.” —Peter Mere Latham

An important part of the process is to manage expectations of what can be achieved. Of course, the timeframes involved are important, as well. Both are vital as far as managing emotions and making rational decisions. The idea is to use Financial DNA as a process to help close the expectation gaps between: • What was said and what you heard • Who you are and who you say you are • Where you are and where you want to be • What service you want and what will be provided Very often, there is a large gap in one of these areas when a person starts the quality life financial planning process. Sometimes gaps occur because of blind spots or simply not understanding what is involved to move forward with a realistic plan.

What Are Your Needs and Wants?: Aligning You to Them “In life, the first thing you must do is decide what you really want. Weigh the costs and the results. Are the results worthy of the costs? Then make up your mind completely and go after your goal with all your might.” —Alfred A. Montapert

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Financial strategies may bring disappointment if they are not aligned to an individual’s specific needs and wants. By articulating these, you are able to determine whether they are on track and what corrections may be needed to reach goals. The Financial DNA Future Wants and Needs appraisal (a CompleteINSIGHT appraisal) draws out these real needs and wants. It also helps formulate the vision that will deliver them. But what exactly are needs? What are wants? Need: (n) Necessity; obligation; prerequisite; claim; requirement Want: (n) Something desired; craving; wish; something coveted Needs can be identified as falling into different categories: • Physiological needs • Safety and security needs • Loving and belonging needs • Self-esteem needs • Self-actualizing needs Wants can be anything, including the following: • To be a millionaire within 5 years • To be able to send children and grandchildren to top schools/universities

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• To multiply your salary 10-fold • To pay for an exotic vacation to a faraway place • To purchase significant life protection The kinds of questions you should consider, and some of these are asked in the appraisal, include: • What are the rules or mottos by which you aspire to live your life? • What do you perceive your life path to be? • Upon reaching your goals, how do you respond? • Upon missing your goals, how do you respond? • Do you need to find the core of who you are? • Are you satisfied with your current belief system, or have you always felt this is an area you would like to develop? • Do you ever wonder why you are alive—for what purpose you were placed on earth? • Have you noticed a change in your belief system as you mature? • Do you ever stop and wonder why we have money? • What is your target level of wealth in terms of where you see yourself in 5 and then 10 years? • What are your 5 most important needs for the short, medium, and long term?

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• What are your 5 most important wants for the short, medium, and long term? The appraisal will help you get your mind straight on what you need and what you want. Once you have identified both, you can start putting together a plan for achieving them.

Setting Goals: Planning to Get Where You Want to Go “It is a paradoxical but profoundly true and important principle of life that the most likely way to reach a goal is to be aiming not at that goal itself but at some more ambitious goal beyond it.” —Arnold Toynbee

Financial DNA is not a touchy-feely, personality-profile, what-box-do-I-fit-in system. It is about making you more the person you want to be through a concrete system that enables real-world planning to take place. An integral part of getting from where you are to where you want to be is setting goals. Goal setting is more than lifestyle planning. It is about introducing the journey of life into the process and recognizing unique behavioral styles. The starting point: • Where am I? • Where do I want to be? • How do I get there?

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The general goals of Financial DNA are: • Achieving inherent potential in life and finances • Removing blockages and negatives • Synchronizing money, time, and relationships The specific goals that lead to this big picture will be unique. Take the time to write down specifically what is wanted out of life. Include timelines. Whenever possible, break goals down into smaller steps, so you can proceed in smaller increments. Start by figuring out what you want to look like and feel like at a given time in the future. Write it down. Now back up and figure out the last step you will need to take in order to reach that goal—the step right before reaching your goal. Write it down. Then back up a little further and write down the step before it and the step before and on and on until you are back to where you are now. Once you have all the goals written down, concentrate on one step at a time. Don’t worry too much about the whole picture. Just keep taking small step after small step until one day you look up and there you are—right where you wanted to be.

The Quality Life Financial-Planning Process: Where Is It Going? “Energy is the essence of life. Every day you decide how you’re going to use it by knowing what you want and what it takes to reach that goal and by maintaining focus.” —Oprah Winfrey

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The end result of the preparation of a Financial DNA quality life financial plan should be discovering where all the elements of a financial personality converge with a life purpose and economic denominators. Where the convergence takes place is the platform to last, because this is where one can give maximum commitment to investments, career, family, relationships, life, and philanthropy (see Figure 14.2). In the end, the quality life financial-planning process is all about alignment—the process of synchronizing the parts so they are in the proper relative position. For financial potential to be reached, this alignment needs to occur with yourself, with your family, with others with whom you have relationships, and then with your investments, your career, your own life balance, and philanthropy.

Figure 14.2 The Outcome: Completing Your Financial DNA® Quality Life Financial Plan (© 2001–2005 Financial DNA Resources. All rights reserved. Used with permission.)

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Documentation: Completing the Financial DNA Quality Life Financial Plan Workbook After you have completed all the Financial DNA appraisals, you will find yourself in possession of more information about self, finances, and life than you probably ever imagined. All that information can be overwhelming. Summarizing this information brings it all back into perspective and helps bring clarity. You complete the Financial DNA quality life financial plan workbook using everything learned throughout the discovery process. It enables you to document the outcomes so that you have a road map for moving forward. We can provide you with a template to use to keep a logical structure.

Living a Balanced Life: Your Own Definition of a Quality Life “The best and safest thing is to keep a balance in your life, acknowledge the great powers around us and in us. If you can do that, and live that way, you are really a wise man.” —Euripides

A quality life is different for all of us. It starts with how we are naturally hard-wired, what can get in the way, and how each of us can live with different stresses. Also, it needs to reflect that we have different relationships, boundaries, and philosophies in our lives. As stated in Chapter 1, I have defined a quality life as successfully integrating finances into a balanced life, and in

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so doing, having the courage to live according to your unique design, in harmony and without regret. Chris Coddington knows that with his propensity for high adventurousness and need for results, maintaining balance is different for him than it might be for someone else. Nevertheless, he knows this is an area that he needs to work on so that he does not miss out on the very important non-business areas of life. As Warren Buffett said: “If there is any difference between you and me, it may simply be that I get up and have a chance to do what I love to do, every day. If you want to learn anything from me, this is the best advice I can give you.” This can seem an easy statement to make from a billionaire. However, Buffett genuinely believes this. On the surface it sounds like the kind of glib throwaway line you tell people after you have already banked your first billion, but Buffett is sincere. He loves what he does and genuinely believes that his reputation as the world’s greatest investor is due to his ability to carve out a role that plays to his particular strengths (excerpted from Now, Discover Your Strengths by Marcus Buckingham and Donald O. Clifton). In the end, each of us should lay out how to measure whether we are living a quality life. What specific indicators can you use as a measuring stick to see how much progress you are making? It is important to measure your results against your life purpose statement in the areas where you want your life to change. Some of the measurement sticks can be numeric, and others are far more subjective. This will depend on the area being measured.

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For instance, Chris Coddington does both. He measures success based on the number of clients and nonclients he impacts through being a wealth mentor. However, he also looks at the quality of his interactions with his team, family, and friends. Also, his ability to play sports and stay healthy is measured.

Accountability to Stay on the Path: Your Sounding Board “To will is to select a goal, determine a course of action that will bring one to that goal, and then hold to that action until the goal is reached. The key is action.” —Michael Hanson

Many people do not succeed in life because they do not have enough accountability. For some, accountability is a necessary motivation to act and check back in, and for others it is needed to confirm ideas and the right course. Ultimately, it is difficult to succeed completely independently, even if one is hard-wired that way. I suggest that you put in place a sounding board to provide the accountability you need. A sounding board is a group of people who you meet with regularly to monitor your commitments and progress to goals in various areas of your life—personal, physical, spiritual, and business. You can have sounding board members who have a specific input and with whom you meet individually. Of course, it might be uncomfortable, but it will really help you to stay on the right course. In a way a sounding board can be fun because it promotes a forum to share successes, and it can also provide a support network for challenging moments.

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In order to develop your sounding board, you will need to: • Identify who you would like to be accountable to and for what goals/actions. • Find different people for the personal, spiritual, physical, and business sides of life. • Find people who are at your level and with whom you share mutual respect. • Meet with each board member on a regular basis (monthly, quarterly, yearly, etc). • Be sure your board has the same core values as you. • Be prepared for mutual disclosure. The work of your sounding board should include: • Identifying your goals—the ones you want to share. • Sharing the commitments you are prepared to make. • Identifying what can get in the way and sabotage your success. • Setting a time for when you and the board will meet and share progress. • Sharing the things that are important to each board member so that everything gets done. Part of your commitment should include a reward system: rewards for you and rewards for your board members for when you reach your goals.

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Keep working with board members until the relationships get sluggish. Trust your gut on when it’s time to get new board members or an entirely new board. Your Turn Document and Implement Your Own Quality Life Financial Plan • What are your top 30 goals and their order of priority? • What does a quality life mean for you? • What is the gap between who you are and who you want to be? • What is the gap between where you are and where you want to be? • What is an area of your life that you could improve, and what is the first step you will take to change it in the next 7 days? • How will you measure your success? • Start looking around for a sounding board.

Recommended Reading From Success to Significance: When the Pursuit of Success Isn’t Enough by Lloyd Reeb Many of you will reach halftime in your life and question what to do next. This book is about defining what you’re really about and pursuing it with focus, common sense, and passion. Lloyd Reeb makes it clear that you do not have to be wealthy to make the transition toward what

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you were created to do in life and reach significance. Further, he shows how you can make the transition to significance while maintaining a viable career. The methodology outlined in this book (i.e., to build your action plan, which includes understanding your financial position) fits in very well with the Financial DNA approach. While the book is based on Biblical principles (and that may not be suitable for every person), there is a lot of wisdom in it that is applicable regardless of your religion or belief systems. Half Time: Changing Your Game Plan from Success to Significance by Bob Buford If you really want to go further and explore your “halftime” more with another perspective then also read Half Time. Bob Buford is the founder of Halftime and has written the foreword to Lloyd Reeb’s book. Halftime is an organization designed to inspire business and professional leaders to embrace God’s calling and move from success to significance (www.halftime.org). Halftime.org is an interactive coaching tool that will help participants on their halftime journey by providing helpful hints, personal stories, outstanding resources, and specific next steps.

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Acknowledgments

“Consult your friend on all things, especially on those with respect to yourself. His counsel may then be useful where your self-love might impair your judgment.” —Seneca

Connecting to Key People: You Need a Team There is no doubt that this book and the topic of Financial DNA is much bigger than me. While I do have the privilege of being the person to envision this understanding people before numbers approach to wealth creation and be the first steward to take it forward, I do not own it. The Financial DNA Discovery Process, as it is now known and being experienced by many worldwide today, was the product of not only my experiences and knowledge but also my family, personal, and business relationships, whether good or bad. It is to all of you with whom I have crossed paths and interacted that I wish to first pay tribute for enabling Financial DNA to come to life. 235

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Equally, there are many of you early adopters out there who have embraced Financial DNA in the past few years, and to you I am eternally grateful for your belief in what the process can do and in me. This is only the start of the journey for all of us, and I know the future of Financial DNA is with those who use it in the future. For everyone, family life is a key influence on your Financial DNA and ultimately how you go out into the world. To this end, I must thank my mother, Pamela, who has always kept me focused on using my talents and for her inspirational courage in the way in which she has lived her own life and provided her sons with the greatest opportunities any children could have. To my brother, John, his never-ending encouragement, humble manner of accepting success, and tolerance of his brother’s at times singleminded way. There is no doubt there have been some key people in my life whom I can identify as suddenly coming across my path to help birth Financial DNA as we see it today. I do not believe it was any accident that I met these people. The lesson I have learned is that when you know who you are and where you are going, these types of providential connections are more frequent and more valuable because you know what to do when they take place. I also know there are people (clients, colleagues, friends, and acquaintances) that I have impacted for their betterment. In the end, either way, these exchanges are an important part of building a quality life. In May 2001, when I was at a crucial development stage, I met Carol Pocklington. Carol is an English-born migrant to Australia who had over 30 years’ distinguished

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Acknowledgments

experience working in human behavior and people development in many high-level areas of the British government and multinational corporations around the world. Right off, Carol confirmed my way of thinking and, in her way, guided me to live the dream. Then, when I knew we needed a validated behavioral profiling system Carol quickly directed me. She had already researched all of the major programs in the market worldwide and could, with her credentials, show me what we needed. She understood that I was looking for a validated system that addressed people’s naturally motivated behavior and that also would serve as a developmental program for making decisions and building relationships. This is how I was connected to RightPath Resources in Atlanta, Georgia. Based on her research, Carol had already been using the RightPath profiling system in Australia, and introduced me to Leigh Brown, a Sydney business leader and facilitator. The RightPath business had at that time been recently established by Leigh in Australia. Once Leigh understood my vision for the use of behavioral analysis in the financial services arena he played a crucial role in orchestrating for me to meet the founders of RightPath and helping me build what has become a significant relationship with them. RightPath was founded by two revolutionary thinkers in the area of human behavior—Jerry Mabe and Lee Ellis. Both had significant experience (over 15 years each) with behavioral profiling instruments in very different careers. Jerry has been able to take the strategic helicopter view and show people how business performance is improved by understanding the difference between naturally motivated

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behaviors, which tend to stay constant, and learned behaviors, which change. Lee has been the instigator and developer of the instruments, understanding the intricacies of behavior and how to convert that knowledge to a businessfocused, validated assessment process. Lee led the validation process with a team of psychologists associated with the University of Georgia. In that process, he found 22 areas of behavior—way beyond the four factors identified by others. Today, Jerry and Lee are on my Advisory Board and act as mentors in the commercialization of Financial DNA. I cannot thank them enough for opening up RightPath and yourselves to enable me to go forward. As the journey has progressed, I have continued to find outstanding people to work within the Financial DNA Resources business. In particular, I must mention Gary Tyzack who has very loyally stuck it out with me for the past five years. The team has expanded in recent times, and everyone is playing very valuable roles in turning Financial DNA into a commercial operation for many people to access worldwide. The support and patience of my team has been incredible. I know that understanding each other’s behavioral style in the team has helped all of us mitigate the impacts of many of the normal human pressures that typically destroy such endeavors. Since March 2004, I have worked closely with the team at Wells University, the education division of Wells Real Estate Funds, and since January 2005 have a formalized strategic alliance with them. Again, this connection came through a providential meeting with Joe Colavito who already had a close relationship with RightPath before I entered the scene. The team at Wells University led by

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Acknowledgments

Steve Franklin, Doug Buce, Joe Colavito, and Danny Moore, along with the whole Wells business, have been magnificent in the way that they have embraced Financial DNA and shared my vision of promoting a relationship culture in the financial services industry. Our shared vision has resulted in Wells engaging in a licensing agreement to provide Financial DNA to financial professionals and receive a financial incentive for profile sales. Their ability to bring Financial DNA to life has been inspirational. I must also show great appreciation to my editor, Cindie Geddes, who has helped me write this book and show us all in the course of writing it that you do not need to be a behavioral specialist or a financial advisor to appreciate what Financial DNA is all about. I am very appreciative to my friends and colleagues who spent their valuable time to read the drafts of the book and provide me with constructive feedback, in no order of importance: Lee Ellis, Susan Bradley, James Gottfurcht, Pam Williams, Erica and Larry Breslau, Neville Cox, David Rochester, Gary Tyzack, and Michael Frazer. Finally, to my friends who have encouraged me all the way with my entrepreneurial pursuits since 1996 when I left the employed corporate world of Arthur Andersen. For some who have thought I was missing in action during the past few years, the Financial DNA journey is why. Thank you HUGH MASSIE

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Appendix

A

Chris Coddington’s Financial Behavior Analysis

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Financial Behavior Analysis Chris Coddington

Client:

LEARNED FINANCIAL BEHAVIOR (Stage 2)

NATURAL BEHAVIOR (Stage 1)

Financial DNA Path 4 Profile: 1. 2. 3. 4.

1. CONTROL - level of control you require …

Strategic Thinker 2. INFORMATION requirement to perform or review …

61 53 29 57

Control & Agenda Interaction Conflict & Pace Order & Detail

3. DECISION-MAKING based on …

Financial DNA Path 6 1. Dominance Assertive Independent Blunt 2. Extroversion Enthusiastic Social Verbal 3. Compassion Sympathetic Supportive Tolerant 4. Conscientiousness Precise Organised Achieving 5. Adventurousness Daring Ambitious 6. Innovation Imaginative Resourceful

PATH 6 Analysis Natural Trust: Relationships: Results: Risk Propensity: Risk Tolerance: S e t t i ng G oa l s : P u r s u i ng G oa l s : Resistance to Change New Idea Driven: Financial Managemen Need for Information: Spender: Need for Control:

4. ADVICE - your requirement for advice th a t is …

63 60 65 52

5. CONFIDENCE 6. KNOWLEDGE

45

7 EDUCATION

45 39 52

8. RESULTS - what you expect from investments

26 28 27 33

9. GOAL ORIENTATION

53

10. ADVISOR RELATIONSHIP

51 51 58 76

11. VALUES - with respect to finance

73 70 53 52 53

12. COMMUNICATION S T YL E O F A D VIS O R preference for …

LOW LOW HIGH HIGH HIGH HIGH HIGH LOW HIGH HIGH LOW MEDIUM HIGH

13. MANAGEMENT your focus on …

14. RISK - your ability to … 15. MOTIVATION - your motivation is to … 16. LOSS - your reaction to losses

17. ASSET - your preferences to the following asset allocations …

18. INVESTMENT PROPENSITY - your preferences to the following investment strategies …

242

1a 1b 1c 2a 2b 2c 3a 3b 3c 3d 4a 4b 4c 4d 5 6 7a 7b 8a 8b 8c 8d 9a 9b 10a 10b 10c 11a 11b 11c 11d 11e 12a 12b 12c 12d 13a 13b 13c 13d 14 a 1 4b 14c 15a 15b 15c 16a 16b 16c 17a 17b 17c 17d 17e 17f 17g 17h 18a 18b 18c 18d 18e 18f

with your advisor with your associates with investment products detailed research factual information statistical information logic optimism intuition emotion analytical structured complex creative investment confidence knowledge of investments need for investment education need for financial education need to see results quickly ability to make quick decisions accept factors beyond your control requirement for regular reporting long term strategic advisor close to your own profile high degree of advice being offered v sold product realism new opportunities investigative confront problems privacy direct friendly agreeable precise budgeting administration order saving understand risk & return accept consequences of high risks take chances have enough for the basics of life be recognised as successful make a significant social contribution avoid become emotional focus on the upside interest equities property cash/bonds alternative asset classes socially responsible adventure international lifestyle growth aggressive value security income diversification

Financial DNA Path 4 and Path 6 Reports

per Stage 1 Actual % Score 79% 67% 55% 65% 62% 54% 77% 42% 49% 32% 68% 62% 52% 76% 80% 82% 72% 34% 54% 86% 73% 22% 42% 77% 64% 35% 69% 74% 61% 58% 41% 84% 66% 36% 22% 47% 67% 29% 72% 53% 67% 6 5% 56% 30% 79% 72% 54% 24% 75% 56% 73 % 52% 55% 51% 70% 68% 32% 74% 79% 56% 51% 30% 46%

Actual L / M /H HIGH HIGH MEDIUM HIGH HIGH MEDIUM HIGH MEDIUM MEDIUM LOW HIGH HIGH MEDIUM HIGH HIGH HIGH HIGH LOW MEDIUM HIGH HIGH LOW MEDIUM HIGH HIGH LOW HIGH HIGH HIGH MEDIUM MEDIUM HIGH HIGH LOW LOW MEDIUM HIGH LOW HIGH MEDIUM HIGH HIGH MEDIUM LOW HIGH HIGH MEDIUM LOW HIGH MEDIUM HIGH MEDIUM MEDIUM MEDIUM HIGH HIGH LOW HIGH HIGH MEDIUM MEDIUM LOW MEDIUM

1a 1b 1c 2a 2b 2c 3a 3b 3c 3d 4a 4b 4c 4d 5 6 7a 7b 8a 8b 8c 8d 9a 9b 10a 10b 10c 11a 11b 11c 11d 11e 12a 12b 12c 12d 13a 13b 13c 13d 14a 14b 14c 15a 15b 15c 16a 16b 16c 17a 17b 17c 17d 17e 17f 17g 17h 18a 18 b 18c 18d 18e 18f

Predicted: H/M/L HIGH HIGH HIGH LOW LOW LOW HIGH HIGH MEDIUM LOW LOW MEDIUM LOW MEDIUM n /a n /a n/a n/a HIGH HIGH LO W LOW HIGH HIGH LOW LOW LOW HIGH MEDIUM LOW HIGH HIGH HIGH MEDIUM HIGH MEDIUM HIGH HIGH MEDIUM MEDIUM n/a HIGH HIGH MEDIUM MEDIUM LOW LOW LOW HIGH n/a n/a n/a n/a n/a HIGH n /a MEDIUM HIGH HIGH HIGH LOW LOW LOW

Significant Difference? (Y/N) No No No Yes Yes No No No No No Y es No No No n/ a n/ a n/a n/a No No Yes No No No Yes No Yes No No No No No No No Yes No No Yes No No n/ a No No No No Yes No No No n/a n /a n/a n/a n/a No n/a No No No No No No No

243

Reason for Difference Environment / Experiences F a m ily / Personal

Career/ Education

F i n a n ce

Yes Yes

Yes Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Appendix

B

Financial DNA Disclaimer

T

he Financial DNA Discovery Process is designed to uncover the behavioral, environmental, experiential, and financial factors that influence or have influenced a person’s financial decisions to date. The information discovered can then be used as a platform to enhance and improve financial and life decision making. The results of the Financial DNA Discovery Process, in conjunction with professional financial advice from a financial advisor, can provide a platform for creating effective strategies to maximize wealth in a manner that is consistent with a person’s unique Financial DNA. The Financial DNA Discovery Process has been developed with the express purpose of extracting information that may provide assistance to a person and his/her advisors, and others with whom he/she has financial dealings. The Financial DNA reports and all ancillary information provided as a result of completing the Financial DNA Discovery Process are to be regarded as feedback only.

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As a result of any person participating in the Financial DNA Discovery Process: • Financial DNA Resources and its related entities in any jurisdiction in the world have not provided any investment or securities advice on any matter that may impact a person’s financial decisions or any other decisions that the person may make at any time in the future. • Financial DNA Resources and its related entities in any jurisdiction in the world do not take responsibility for any advice, recommendations, or representations provided by a third party to another person in respect of any aspect of the Financial DNA Discovery Process and its potential or actual outcomes.

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Appendix

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Financial DNA Privacy Statement

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inancial DNA Resources and its related entities will treat all information provided by clients as strictly confidential. Financial DNA Resources will use the information only for the purpose of facilitating the Financial DNA Discovery Process. Financial DNA Resources has strict internal policies and procedures for maintaining the confidentiality of client information.

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Appendix

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About Financial DNA Resources

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inancial DNA Resources is a leading international wealth mentoring firm providing proprietary behavioral finance solutions and specializing in human capital development. Hugh Massie and his team have developed a systemized and transferable financial discovery process known as the Financial DNA Discovery Process.Financial DNA Resources currently licenses the Financial DNA program to a network of wealth mentors and large financial services firms, fund managers, boutique wealth management firms, and family offices primarily in the United States,Australia, and Canada. In that capacity, Financial DNA Resources operates as a resource partner to those wealth mentors and firms to assist them in going to the next level with their clients. Some of the services that Financial DNA Resources and its licensed wealth mentors provide are: • Enhanced Discovery • Client Relationship Management 249

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• Financial and Life Transition Planning • Individual Mentoring and Coaching • Family Facilitations and Retreats • Family Business Leadership • Financial Education for Investors, Families, and Children • Financial DNA Education Programs, Workshops, and Seminars • Organizational and Strategic Business Development • Practice Management Solutions, including Hiring, Team Development, Leadership Development, and Succession Planning For more information about Financial DNA and the services provided, refer to www.financialdna.biz.

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Contact Information for Financial DNA Resources

USA Financial DNA Resources is based in Atlanta, Georgia. Contact persons: Hugh Massie Connie Collins 3340 Peachtree Road NE Suite 1800 Atlanta, GA 30326 Phone: (404) 812-5318 E-mail: [email protected]

Australia Financial DNA Resources is managed by the Coddington Group in Australia. Contact persons: Hugh Massie 251

Financial DNA

Neville Cox Gary Tyzack Level 2 16 Spring Street Sydney, NSW 2000 Phone: (61 2) 9252 4488 E-mail: [email protected]

Canada Financial DNA Resources is managed by Harrington Lane in Canada. Harrington Lane Inc. WaterPark Place, 10 Bay Street, Suite 400 Toronto, ON M5J 2R8 Phone: (416) 943-1517 Contact persons: James P. McClocklin Daniel W. Brintnell Farhan Hamidani E-mail: [email protected]

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Index

A Accountability, 10, 231–232 Adapter (financial profile), 64 Administrator (financial profile), 64 Advisor-client relationships. See also Example clients communication in, 83–85, 99–102, 115 engagement letter for, 92 establishing, 94–96 expectation gaps in, 81–83 Financial DNA in, 77–79 knowing me, knowing you process in, 98–99, 151 risk tolerance as factor in, 125 trust in, 83–85, 87, 94, 104 Against the Gods: The Remarkable Story of Risk (Bernstein), 41, 142

Amygdala hijack: in family issues, 189 in risk taking, 126–127 Analyzer (financial profile), 65 Asset allocation: Financial DNA Path Profiles and, 63 in portfolio creation, 133–138 in succession planning, 193–194, 199–202 B Behavior. See also Learned behavior; Natural behavior as advisor-client relationship factor, 94, 103 assessing, 155 in business setting, 205–206, 211–217 changing, 89, 156

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Behavior (Continued) definition of, 33 financial decisions and, 7–8, 32 irrational, 127 leadership and, 207–208 money and, 119 path profiles and, 67–68 under pressure, 10, 11, 38, 72–73 Black, Jerry, 161 Blind spots: decision making and, 126 in family units, 196 identifying, 54, 62, 72 objectivity and, 41–42 Bradley, Susan, 84, 172, 173 Buffett, Warren, 73, 74, 230 Buford, Bob, 234 Business: Financial DNA in, 205–206, 208–211 leadership in, 207–208 succession planning for, 189, 192–195, 203, 214 C Cautious Thinker (financial profile), 65 Clients. See also Advisor-client relationships; Example clients couples as, 81 Financial DNA of, 87–93 in Financial DNA Discovery Process, 83–85 life purpose of, 161 self-revelations by, 99, 151

Coddington, Chris (fictional financial advisor): behavioral style of, 37, 38, 47, 148–150 communication style of, 99–102 early career of, 23–24 early life of, 20–23, 146–148 as entrepreneur, 24–26 Financial DNA Discovery Process used by, 35, 190–191, 206, 208–211, 241–243 financial personality of, 40–41 introduction to, 14 lifeline exercise done by, 144–146 life purpose of, 161, 170 mission statement of, 169–170 passion of, 169 path profiles of, 74–77, 149 personal brand of, 170–171 quality life for, 230 risk profile of, 122 as Strategic Thinker, 66, 128, 148 talents of, 168 unique gift of, 25–26, 169 values of, 153, 170 vision statement of, 169 as wealth mentor, 27–29, 77–79, 85–96, 163, 167, 205, 231 (see also Example clients) Coddington, Jane (fictional): as Adapter, 64 as entrepreneur, 38 first marriage of, 20 introduction to, 15 remarriage of, 23 as widow, 21–22

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Coddington, John (fictional), 20, 147 Coddington, Richard (fictional): behavioral style of, 37, 38, 148–150 career of, 24 early life of, 20–22, 146–148 introduction to, 15 path profiles of, 149 as Supporter, 67, 148 Communication style: between advisor and client, 27, 83–85, 99–102, 115 in couples, 176, 182 in families, 189, 194 misunderstandings from, 127 in workplace, 207, 208, 209, 211 CompleteINSIGHT (Stage 3), 49, 54–56 Couples: as clients, 81 financial decisions by, 5, 174–184 Current Financial Position Appraisal, 56 D Decision making: amygdala role in, 126–127 compatibility in, 51, 105–106 components of, 33 by couples, 174–184 emotional/rational balance in, 89, 127 in families, 5, 91, 185–187, 189 Financial DNA Discovery Process and, 49 financial personality and, 37

for life, 16 method of, 5 objectives of, 154 patterns of, 6 risk profile and, 122–123 under stress, 12 values for, 166 in wealth creation, 2, 221–222 by women, 91, 178 Deep Thinker (financial profile), 65 Detailist (financial profile), 65 Director (financial profile), 65 Driver (financial profile), 65 E Economic denominators, 221, 222, 228 Education, financial astuteness and, 154–156 Ellis, Lee, 51, 62, 80 Emotional intelligence (EQ), 36, 208 Employment, duration of, 206 Encourager (financial profile), 66 Environment: behavioral role of, 33–34 in financial decision making, 55 in financial personality, 36, 143–144 Example clients (fictional): Alan Eckhardt (Encourager), 66, 210–211, 212 Alexander Burberry (Director), 65, 213–217 Brian Williams (Strategic Thinker), 66, 192, 195–202 Carol Benjamin (Detailist), 65, 210–211

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Example clients (fictional) (Continued) George Williams (Harmonizer), 66, 192, 195–202 Grahame Johnson (Cautious Thinker), 65, 213–217 Helen Jones (Networker), 15, 85–87, 95–96, 98–116, 177–183 John Smith (Deep Thinker), 65, 212 John Williams (Motivator), 66, 192, 195–202 Mark Peters, 150–151 Mary Williams (Stylish Innovator), 66, 192, 195–202 Melanie Hilton (Administrator), 64, 212 Paul Wilson (Networker), 15, 66, 128–139 Sarah Williams (Driver), 65, 192, 195–202 Tom Smart (Researcher), 66, 210 Tony Jones (Analyzer), 15, 65, 98, 177–183 F Families: asset division in, 199–202, 203–204 financial decisions and, 5, 28, 91, 185–187, 189 Financial DNA Discovery Process in, 187–188, 190–191, 195–197

investing with, 58 Quality Life Financial Plan and, 228 trust within, 186, 194 Family businesses, succession in, 189, 192–195, 203 Financial advisors. See also Advisor-client relationships; Coddington, Chris degree of involvement of, 155 emotional baggage of, 46–47 engagement letter from, 92–93 in Financial DNA Discovery Process, 83–85 self-knowledge of, 61 Financial Astuteness Appraisal, 56, 154–156 Financial Behavior analysis, 53–54 Financial Behavior Appraisal, 56 Financial Directions Appraisal (Stage 2): in Discovery Process, 49 for families, 199–201 financial aptitudes in, 125–126 function of, 51–54, 131–133, 139 risk preferences in, 123–125 Financial DNA: application of, 219 business role of, 27–28, 78, 213–217 client use of, 87–93 of couples, 175, 177 development of, 9 elements in, 36 in goal setting, 226–227 to manage expectations, 223

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purpose of, 3, 163, 226 team sessions for, 205–206 in wealth creation, 221 Financial DNA comparison report, 51 Financial DNA Discovery Process: behavior uncovered by, 46, 47 benefits of, 89 for businesses, 208–211, 215–217 confidentiality of, 247 for couples, 177, 179–182, 184 definition of, 32 documentation of, 229 for families, 187–188, 190–191, 195–197 function of, 10, 12–14, 45, 59, 245–246 as objective analysis, 11, 42 participation in, 47–49, 83–84, 92, 95 passion discovered through, 162–163 portfolio design model in, 133–139 risk profile from, 120–123 role of, 4–5, 35 stages of, 49–58 in wealth creation, 221, 222 Financial DNA Passion and Vision Appraisal, 55, 164–165, 172 Financial DNA Path Profiles (Stage 1) accuracy of, 63 advisor-client participation in, 95 (see also Example clients) analysis of, 106–113

blended, 104–106 categories in, 63–67 comparison of, 103, 106 in Discovery Process, 49 financial personality and, 59 function of, 50–51, 62–63 interpreting, 68–73 online, 17–18 results of, 114, 115 risk assessment in, 121–123 Financial DNA Personal Environment Appraisal, 55, 144 Financial DNA Resources, 249–250 contact information for, 251–252 Financial DNA Values Appraisal, 55, 151–154, 166 Financial Mind-set Appraisal, 56 Financial personality: behavioral style and, 6 decision-making role of, 37 development of, 37–39 discovering, 47, 49 early life in, 20–23 factors in, 34, 71, 143 family role of, 187, 194 money and, 119 nature versus nurture in, 35–36 portfolio tailored to, 138 in Quality Life Financial Plan, 228 First, Break All the Rules (Buckingham and Coffman), 207, 211 The Five Dysfunctions of a Team (Lencioni), 206, 218

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Frankl, Victor E., 43–44 From Success to Significance: When the Pursuit of Success Isn’t Enough (Reeb), 233–234 Future Needs and Wants Appraisal, 55, 224–226 Futurity Appraisal, 56, 188 G Gates, Bill, 72 Gilkes, Gordon, 220 Gilliam, John, 120 Goals: ambition and, 122 career alignment with, 205 clarifying, 84, 89 for couples, 183 financial strategies aligned with, 55 formulating, 226–227 prioritizing, 233 sounding board for, 231, 232 wealth creation and, 54, 220 The Golden Ghetto: The Psychology of Affluence (O’Neill), 158 Gottfurcht, James, 34, 44 H Half Time: Changing Your Game Plan from Success to Significance (Buford), 234 Harmonizer (financial profile), 66 Hillman, John, 100 I Insights Dashboard, 114 Intergenerational planning, 56

Interior finance, 27 Intuition, role of, 11, 39–40 Investment: aptitudes for, 125–126 asset allocation in, 133–138 by couples, 174–184 knowledge about, 56 options for, 155 Quality Life Financial Plan and, 228 risk and, 122, 124, 129–131 strategy for, 138, 140–141 style of, 115 Investment Products and Strategies Appraisal, 56 K Klaben, Gary, 53 Knowing me, knowing you process, 98–99 L Leadership: behavioral approach to, 207–208 talent and, 211–212 Leading Talents, Leading Teams (Ellis), 80, 206, 218 Learned behavior: natural behavior alignment with, 43, 54 as observable, 39–40 risk taking and, 121, 124 source of, 32–33, 38 stress and, 38–39 Learning style, 127–128 Life experience: advisor knowledge of, 151

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evaluating, 55 in financial personality, 36, 143–144, 181 mind-set adjustment and, 156–157 Life issues: financial advice and, 85 financial decisions and, 6, 16 Lifeline exercise, 144–146 Life planning, 27, 89 Life purpose: of family unit, 188 financial plan and, 91, 228 finding, 9, 26, 89, 159–160, 221–222 fulfilling, 31, 163 wealth creation and, 54, 221 Life purpose statement, 166, 167, 170, 230 Logotherapy, 44

as emotional issue, 91, 118 as stress source, 126 Motivator (financial profile), 66 My Unique Profile (MUP): for business teams, 209–210 function of, 99–102, 116

M Man’s Search for Meaning (Frankl), 43–44 The Millionaire Next Door (Stanley and Danko), 116–117 Mind Gym: An Athlete’s Guide to Inner Excellence (Mack and Casstevens), 30 Mission statement: example, 169–170 for families, 197–199 function of, 166 Modern Portfolio Theory, 138 Money: attitudes toward, 5 behavior style and, 119 couples’ handling of, 175–176

N Natural behavior: discovering, 40 in families, 189 in Financial DNA, 37 versus learned behavior, 32–33 learned behavior alignment with, 43, 54 money and, 119 path profiles on, 51, 72–73 personality and, 36 risk taking and, 124 stress and, 38–39 Navigating the Dark Side of Wealth (Willis), 203 Networker (financial profile), 66, 105 Now, Discover Your Strengths (Buckingham and Clifton), 230 O Objective analysis, 11, 39–40, 41–42 O’Neill, Jessie, 158 Opportunities, identifying, 164 P Passion: of family unit, 188 in financial personality, 36

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Passion (Continued) finding, 13, 25–26, 221–222 identifying, 55, 162–163, 164–165, 169 Personal brand, 168 Personality. See also Financial personality components of, 33–34 definition of, 33 discovering, 39–40 Personal Life Inventory, 164 Philanthropy: objectives for, 56 Quality Life Financial Plan and, 228 succession planning and, 194, 204 Planning a Family Business Legacy (Bareither and Reischl), 203 Portfolio design model: application of, 138–139 asset allocation in, 133–138 investment strategy in, 138, 140–141 The Power of Impossible Thinking: Transform the Business of Your Life and the Life of Your Business (Wind, Crook, and Gunther), 17 Psychology, role of, 34 Psychology of Money Consultants, 34, 35, 44 Psychology of Money Process, 35 Q Quality life: definition of, 229–230

finding, 1–2, 233 measuring, 16–17, 230–231 Quality Life Financial Plan: assembling, 56–58 behavior connection to, 88 as client service, 92 expectations of, 223 results of, 228 Quality Life Financial Plan Workbook, 56, 57, 229 R Relationships. See also Advisorclient relationships in business setting, 205, 206–207, 208 development of, 81–83 financial personality and, 36 money role in, 91 Quality Life Financial Plan and, 228 self-knowledge and, 61 with sounding board, 232–233 as stress sources, 126 in wealth creation plan, 222 Researcher (financial profile), 66 Respect: importance of, 182 for sounding board, 232 RightPath profiles, 80 Risk: advisor-client compatibility in, 105–106 brain processing of, 126–127 comfort level with, 56, 120–121, 124, 125 couples’ approach to, 179–180

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perception of, 127–128 profile measurement, 121–123 understanding, 142 The Road Less Traveled: A New Psychology of Love, Traditional Values, and Spiritual Growth (Peck), 157–158

in Futurity Appraisal, 56, 188 objectives for, 56 Sudden Money: Managing a Financial Windfall (Bradley and Martin), 172–173 Supporter (financial profile), 67 SWOT analysis, 164

S Self-knowledge, relationships and, 61, 81 Skills versus talents, 71–72 Smart Couples Finish Rich: 9 Steps to Creating a Rich Future for You and Your Partner (Bach), 184 Sounding board, role of, 231–232 Strategic Thinker (financial profile), 66, 105 Strengths: in family units, 196 identifying, 164 maximizing, 71–72, 74 in path profiles, 79 Struggles: in family units, 196 overcoming, 72 in path profiles, 79 Stylish Innovator (financial profile), 66 Success: accountability and, 231 identifying, 152 requirements for, 3 Succession planning: for businesses, 214 for families, 189, 192–204

T Talents: identifying, 13, 164, 168 versus skills, 71–72 as unique gifts, 10, 165 in workplace, 211–212 Teams: Financial DNA Discovery Process for, 208–211 functionality of, 217–218 individual talents on, 211–213 working in, 205–206 Techscape Partners, 15, 213–217 Threats, identifying, 164 Transitions—Making Sense of Life’s Changes (Bridges), 59–60 Trust: in advisor-client relationships, 83–85, 87, 94, 104 in business relationships, 209 decision-making role of, 126 in family relationships, 186, 194 in financial relationships, 27, 81–83 U Unique Ability: Creating the Life You Want (Nomura, Waller, and Waller), 29–30

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Unique gift: identifying, 13, 29–30, 165, 169 using, 10 University of Georgia, 51 V Values. See also Financial DNA Values Appraisal business focus on, 26 clarifying, 152 commitment to, 10 of family unit, 188 financial personality and, 36 identifying, 55, 170 importance of, 153–154 of sounding board, 232 statement of, 166 Vision: discovering, 13 of family unit, 188 role of, 163, 222, 224 Vision statement, 165–166, 169 W Weaknesses, identifying, 164 Wealth creation: decision making in, 2, 221–222 Financial DNA in, 221

goal setting in, 220 life purpose and, 54 Wealth creation review, 58–59, 86 Wealth in Families (Collier), 204 Wealth mentor. See also Coddington, Chris compassion/detachment of, 78 Financial Directions Appraisal and, 52 function of, 28, 56, 221, 222 path profiles and, 58 role of, 9, 25–26, 48–49 Wells University, 83 What Clients Love: A Field Guide to Growing Your Business (Beckwith), 96–97 Williams, Pam, 89, 90 Women, as financial decision makers, 91, 178 Women, Meaning, & Money programs, 173 Woodcock, Bruce, 87–88, 214 Woods, Tiger, 72 Workplace: communication in, 207 time spent at, 206 Workshops on Financial DNA, 93

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About the Author

Hugh Massie BComm (UNSW), ACA Hugh is an international wealth mentor who practices the philosophy that the greatest source of personal wealth creation and having a quality life is understanding and developing one’s own human capital. In his work as a wealth mentor, Hugh specializes in human behavioral discovery to liberate and empower people, families, and organizations internationally to implement committed wealth creation decisions aligned to the core of who they are. He educates and guides people to understand and develop their human capital through a greater awareness of their talents and aptitudes. Hugh is also an international speaker and trainer on behavior and wealth creation, having presented at leading industry events around the world. Hugh is the president of Financial DNA Resources and the Coddington Group, which he founded in 1996 in Sydney, Australia, and he is also a nonexecutive director of RightPath Resources. Prior to this, Hugh worked with Arthur Andersen for 10 years in the Sydney, Singapore, and Bangkok offices. Hugh’s Financial DNA® Path Profile is Strategic Thinker, a profile that has a strong focus on achieving goals with precision and quality. Hugh is a testament that a person who started out as a highly rational accountant can successfully adopt a behavioral approach to wealth creation, business, and everyday life. Hugh’s personal interests are golf, tennis, skiing, bridge, and travel.

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