Financial DNA for Suitability Compliance

www.financialdna.com

Financial DNA® Know Your Client for Suitability Compliance


What Happens When Money Negatively Triggers Emotions?

Litigation Risk

Client Retention


Active Client Participation

Active Behavioral

Management by Advisor

Enhanced Suitability

Compliance

The Next Gen Compliance Model Based on Behavioral Finance


Behavioral Matching Closes the Solution Suitability Gap

What Advisors and Clients Do Based on Instinctive Behavior

What Advisors and Clients Should Do

Based on Rationality

Suitable Communication

& Solutions

Emotions Managed


The Traditional Approach to Risk Discovery is Not Enough

Traditional Investment

Risk Profile

Holistic Financial

Personality Discovery


The Traditional Risk Profiling MethodologiesLeave you in the Dark in Key Areas

Your ideal clientHow to Communicate

Email, Phone, or Meeting?+ more

Risk Profile

Loss AversionPattern Bias

Newness BiasOver Confidence

+ more

HardWired

Behavior


Client online completion of the FDNA Natural Behavior Discovery Process

Advisor reviews client FDNA reports and prepares for discovery meeting knowing how to adapt his/her biases

Advisor discusses the FDNA Report in the discovery meeting in context of client needs, wants, goals, financial capacity and experiences

DNA data integrated to CRM and Financial Planning Software for monitoring all communications and processes, and to provide exception reporting for mis-aligned actions

Advisor prepares plan and IPS for further discussion and client sign-off

Compliance Phases of Advice Process

Recommended Suitability Compliance Process Using the Financial DNA Discovery Process

Annual Review: Client online completion of the FDNA Financial Personality Discovery Process to compare current situational learned behavior against natural behavior.


Suitability Monitoring Program

Suitability Monitoring Program

Advisor-Client Relationship

and Communications

Advisor Performance in

Following Processes

Real -Time Exception

Reporting: Plan and Portfolio

Alignment

Advisor Talent Alignment


Instinctive Automatic,

“Go To” Style

Situational Learned/ Modified Behavior

Situational Learned/ Modified Behavior

Behavior Gap

Behavior Gap

Natural DNABehavior

Skills KnowledgeExperiences

Environments

Skills KnowledgeExperiences

Environments

The Unique DNA Starting Point for

Enhanced Predictability

Document, Monitor, Communicate, Educate

Document, Monitor, Communicate, Educate

Dynamic Monitoring of Plan and Portfolio Recommendations to Financial DNA


Group 1 Group 2 Group 3 Group 4 Group 5 Group 6 Group 7

Pop. % in this category

<2% 2-18% 19-30% 31-69% 70-81% 82-98% >98%

Portfolio Structure

Capital Protection

Ultra-Conservative

Conservative Balanced Accumulation Growth Aggressive

Unacceptable Conservative Changes

Unacceptable Aggressive Changes

Acceptable Portfolio Changes

Policy: Report portfolio changes more than +/- 1 Grouping of the Natural Behavior Portfolio Risk Group as outside the long term “go to” default behavior. Advisor to document changes with client sign off on basis of material changes in the client’s: 1. Goals and financial capacity2. Circumstances or demonstrated learned behaviors

Automatic Exception Reporting of Portfolio Changes Outside Risk Group Levels

One Portfolio Risk Grouping


To access the Financial DNA Compliance Kit and for more information about Financial DNA:

Contact: DNA Behavior International5901-A Peachtree Dunwoody RdSuite 375Atlanta, GA 30328(770) 274-0311

inquiries@dnabehavior.comwww.financialdna.comwww.businessdna.comwww.dnabehavior.com

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Financial DNA for Suitability Compliance