Critical Analysis of Clients’ Financial Behaviour

This paper discusses the financial behaviour of clients with critical analysis considering the theoretical explanation of consumer choice and decision making before and after making an investment.

Running head: FINANCIAL BEHAVIOUR
Financial Behaviour
Name of the Student
Name of the University
Author note

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Part 1:
Interview of a financial advisor:
Attended by: Name of the financial advisor
Date: 03-Oct,2019 Time: 15:00
Questions Answers and notes
1. Client background/history
Can you provide the background
on the client's situation (back
story) and how it led to this
situation?
The client works in an IT company and is about to get a
retirement in the next month itself. He worked in an IT
company and has under 10 years two daughters and he
is about to retire in 15 years. He appointed me to assess
the current financial situation, the financial aspects
affecting the future of his children 9 their higher
education and weddings) and to understand the
intricacies of his retirement related investments. The
client, in the last few months is really worried about the
future of his daughters, after his retirement. Moreover,
he had previous losses at business investments and since
then he had not taken any investment decisions until
now, when he is planning his retirement life.

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2. Outline of the situation
Can you outline the client’s
problem, issue or complaint that
has arisen with yourself or your
firm?
Who was involved?
While I tried to help with the various retirement plans,
in which he can invest from now and then after
investing a certain premium for 15 years – he can have a
stable source of income from the retirement fund, on a
regular basis after 15 years when he retires from his
profession. The client’s main problem with me arose
when he focussed the financial planning just on the
children’s future while I stressed the retirement plan to
be more effective for his older life. The issue was a
communication gap that I faced with my client in this
case and it was difficult to make him understand that
retirement would actually him and his wife to receive
regular income from the retirement fund without any
extra pay. The amount of the premium was a bit high
and he said that I cannot pressurize him ( which I was
not doing) to subscribe for the aforementioned
retirement plan, as he thinks a low investment for an
average retirement plan would be better for him as with
that he can support his daughters predominantly, after
his retirement.
3. Client behaviour
Can you describe the client’s
behaviour throughout the
situation?
The client’s behaviour, initially when we began the
interaction was very polite and adherent to the situation.
As the consultation sessions progressed – instead of
having a trust worthy relationship with me (his financial
advisor), his behaviours started to become very
disruptive. On a couple of situations, instead of listening
patiently for a bit with me – he started to act very
impatient with me and at certain points – he was naïve,
reluctant and verbally very aggressive. He was
countering most of the retirement solutions, I gave him
and started with a challenging behaviour towards me.

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4. Your own and other employees’
behaviours
How did you feel during this
situation?
Can you describe your own and
other staff’s behaviour/reactions?
After receiving the complaint from my client I was
called for justification and I presented my point with
enough documents. It was very stressful situation in my
career. Numerous office colleges advice me to comply
with my client concerns and to make the financial plan
accordingly to avoid any further consequences.
5. Root cause
What do you believe is the root
cause of the problem?
He might have been involved with a severe loss due to
high volume direct capital investment, that is why he
might be panicking. I believe that, a sense of insecurity
regarding large volume capital investment is the main
reason behind his problem.
6. Impact
What was the impact on the client
from a perception, emotional and
financial perspective?
After facing a huge loss because of unplanned
investment on some other investment operations, a
permanent phobia might have developed in his mind
regarding a high capital direct investment.
7. Action
What would you have done
differently?
If I were in his place, I would rather invest my capital
with proper analytical understanding with rational
problem solving. In this case, while investing in
retirement plan – I would have thought of my own
future with my wife’s and used other funds to support
my children (if required).
8. Changes
What changes to staff training,
back office/business processes,
client service standards and/or
job roles have been undertaken to
reduce the chance of it re-
occurring?
More staff training must pertain to client
communication, skill development sessions in order to
interact and aid the client through a ‘financial’
counselling. In order to meet a high client servicing
standard – the more humanistic financial counselling
approach must be added.

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9. Current position
Based on the changes put in place,
what is different now?
The client is more secure and feels happy what is
problem is addressed. His dignity is lifted and he is
satisfied that we are addressing his problems in the most
apt way.
10. Client outcomes
How do the changes improve client
outcomes?
After developing the new retirement plans, he withdrew
his campaign. The changes reinforced communication
with the client, better decision making and choosing of
the right plan.
11. Staff outcomes
How do the changes improve the
employees’ work environment?
Reflection and evidence based practise received from
this life insurance case – would increase the morals of
the employee toards a more client cantered practise.
12. The adviser
How do you feel about the way
forward now?
I think in this case, company needs to increase the
mutual communication between employee and client
while having an unbiased standing. Like employee
trainings, client counselling will be also helpful in these
cases.

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Interview of a Client service person:
Attended by: Name of the Client facing person
Date: 05-Oct,2019 Time: 15:00
Questions Answers and notes
1. Client background/history
Can you provide the background
on the client's situation (back
story) and how it led to this
situation?
My client was an employee in a telecommunications
company. Before two months – he had an accident and
broke his car. As he had a general insurance, the damage
and financial loss was mitigated. However, he had really
bad experiences with the other insurance investments
before and has suffered a substantial loss. He is worried
he might be injured the same way like his car is and has
decided to go a life insurance. But he is afraid due to
the prior insurance related losses as well.
2. Outline of the situation
Can you outline the client’s
problem, issue or complaint that
has arisen with yourself or your
firm?
Who was involved?
Initially – he told me about the properties which are
already insured and he kept on taking about his
properties rather than himself. He was failing to
understand the various financial intricacies between a
life insurance and a general insurance. The indemnity
clauses are different and style of insurance cover is
different. This knowledge gap led to the situation.
3. Client behaviour
Can you describe the client’s
behaviour throughout the
situation?
The client’s behaviour, initially when we began the
interaction was very generous and adherent to the
situation. Unable to address the new information
pertaining to the differences between life and auto
insurance – he became rude and rigid with his ideas. On
a couple of situations, instead of listening patiently for a
bit with me – he started to act very impatient with me
and at certain points – he was reluctant to answer me
and in turn, was verbally very aggressive and sceptic.

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4. Your own and other employees’
behaviours
How did you feel during this
situation?
Can you describe your own and
other staff’s behaviour/reactions?
I felt sad, affected and disappointed for not being to able
to help my client as well my own action – towards a
more person centred service.
Some of my other colleague talked to my client but the
situation was very complicated and my colleagues told
me to be more compassionate, behaviourally.
5. Root cause
What do you believe is the root
cause of the problem?
I think he did not have idea about a life insurance and
compared it all the time, to general insurance.
The client has a communication and knowledge gap
with the life insurance process.
6. Impact
What was the impact on the client
from a perception, emotional and
financial perspective?
The client was irresponsible, naïve and had delusionary
beliefs about LI. When I counselled him, I would his
ideas regarding life insurance is very negative and
limited. The client did not have emotionally charged.
7. Action
What would you have done
differently?
I would have taken a more compassionate, problem
solving and client centred approach.
8. Changes
What changes to staff training,
back office/business processes,
client service standards and/or
job roles have been undertaken to
reduce the chance of it re-
occurring?
The consumer management comity did not do anything
to make their consumer aware of the payment contracts
operations and purchasing considerations.
9. Current position
Based on the changes put in place,
what is different now?
The client is more secure and feels happy what is
problem is addressed. His dignity is lifted and he is
satisfied that we are addressing his problems in the most
apt way.

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10. Client outcomes
How do the changes improve client
outcomes?
He opted for a high premium policy with more
confidence.
11. Staff outcomes
How do the changes improve the
employees’ work environment?
Reflection and evidence based practise received from
this life insurance case – would increase the morals of
the employees toards a more client cantered practise.
12. The adviser
How do you feel about the way
forward now?
I think in this case, company needs to increase the
mutual communication between employee and client
while having an unbiased standing. Like employee
trainings, client counselling will be also helpful in these
cases.

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Part 2
Critical Analysis of Clients’ Financial Behaviour
Introduction:
Financial behaviour has even more impact on the business procedure marketing campaign of
banks and developing the Government policies. Consumer financial behaviour is one of the
most major concerns in any organisation and their marketing and promotion related activities.
The protective actions of these organisational operations depend on assumptions about
consumer needs, their emotional needs, psychological stimulus and other factors that works
under the decision making process (Kaminski et al. 2017)..
The purpose of this paper is to discuss the financial behaviour of the clients with critical
analysis considering the theoretical explanation of consumer choice and decision making
before and after making an investment. In this particular study two interviews are included
for critical analysis. One interview was taken from a financial advisor and another interview
was taken from a client service person. To understand the Consumer Financial Behaviour an
organisation needs a systemic economic and behavioural approach (Topa, Lunceford and
Boyatzis 2018). It can also help to compare different types of financial behaviours of the
consumers along with the psychological explanations for their behaviour and decision
making. Hence analysis of the financial behaviour of client and the partial influence of their
environment is necessary to understand the consumer expectation and business opportunity.
Through the interviews, two cases of client financial investment behaviour have been
acquired. In the following section Situational comparison between financial advisor’s and
client service person’s clients have been discussed followed by the behavioural analysis and
comparison between two clients. After that the strength and weakness in interviewees’
behaviour regarding consumer handling have been discussed with theoretical explanation.

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Finally the aim of this paper to present set of recommendations for the financial advisor and
the client service person regarding their consumer handling.
Situational comparison between financial advisor’s and client service person’s clients
In first case. The client works in an IT company and is about to get a retirement in the next
month itself. He worked in an IT company and has under 10 years two daughters and he is
about to retire in 15 years. He appointed me to assess the current financial situation, the
financial aspects affecting the future of his children 9 their higher education and weddings)
and to understand the intricacies of his retirement related investments. The client, in the last
few months is really worried about the future of his daughters, after his retirement. Moreover,
he had previous losses at business investments and since then he had not taken any
investment decisions until now. On the other hand, in second case - client was an employee
in a telecommunications company. Before two months – he had an accident and broke his
car. As he had a general insurance, the damage and financial loss was mitigated. However, he
had really bad experiences with the other insurance investments before and has suffered a
substantial loss. He is worried he might be injured the same way like his car is and has
decided to go a life insurance. But he is afraid of the prior insurance related losses as well.
In first case the client had suffered losses to direct investment and could not decide between
the execution or intention for taking up the retirement plans. Precisely, he had a goal setting
problem. In the second case, he was a genuine fear in repetition of a similar mistake while
choosing for the insurance policy.
Behavioural analysis and comparison between two clients
For both clients they avoided choosing the guided decision because it was their way to avoid
any potential regret of having made a high investment for a wrong product or service. It also
allows them to avoid embarrassment of reporting a loss. The client hated to be faulty

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investor. Human mind has a tendency to store the experience of particular events in the
memory where different memories generate from different experiences have great impact on
resultant behaviour, which is even stronger than the event itself. In behavioural science this
phenomenon is called Mental Accounting Behaviours (Anderson, Baker and Robinson 2017).
At the same time, all consumers who are going to invest prefer a sure investment return to an
uncertain one. In both of these cases clients has their rigid and bias through process regarding
investment. The first client ( who came for retirement plans) had a rigid sense of insecurity
regarding direct capital investment in terms of retirement plans. As the client himself
mentioned, that he faced a huge loss due to direct investment. However, he was failed to
distinguish the past and present situation. In past, he was not guided by a financial advisor
and therefore perhaps the loss he had experienced was caused by wrong planning and
execution rather than wrong direct investment plan.
Prospect theory also explains why investors hold onto losing stocks. The prospect theory is
also applicable for the second client. For second client, he had lack of knowledge regarding
general and life insurances. Influences from his peers, close relatives, family members and
the opinion of his trusted person might be the cause of his rigid stand on his perception of
payment contracts. Prospect theory clearly states that in practical investment situation lack of
knowledge in clients is very common. This case is not an exception. Most of the investors
make a common mistake of investing in a product or service or chasing for a stock which
already has a great attention in market. On the other hand, most of the individuals tend to
organize their market ideas, suppositions and investment opinions whereas making a choice
(Fulda and Lersch 2018). Before investing – the client take into consideration – the more
verifiable, long-term midpoints and probabilities. In this case, the client was unable to
difference between the general insurance and life insurance policies and he had previous
losses when it came to choosing insurances. He was irrational, rigid and had delusionary

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ideas about the product. He lacked attention and focus in his behaviour and he lacked the skill
of active listening as well.
Strength and weakness in interviewees’ behaviour regarding consumer handling
There was professionalism and enough competency regarding the whole client handling and
consumer guiding process, although in some areas – the communication was missing between
the specialist and the consumer. Both of the interviewers tried to communicate with their
client to guide them in a proper investment direction. The first interviewer showed lack of
client counselling and the second interviewer should lack of instant problem solving
(Jiménez, Chiesa and Topa 2019).
Similarly in the case of retirement plan, the client (because of his direct losses at business
investments previously) is focussing to take up a retirement plan that as minimum as possible
but that way – she is losing the utility of taking an retirement plan. The client of second case
had lack of knowledge between the policies pertaining to General insurance and life
insurance. He perceives taking life insurance as a financial risk because of bad experience
with LI before.
Recommendations
It has been also found from the above case study that previous experience and
knowledge are two major factors of consumer decision making. In this case both interviewees
have to make their consumer preference modulating skill very strong. Improving their
emotional intelligence will be very helpful in this case (Agarwal et al. 2015). The financial
advisor and the client person have to undergo through specific training that can improve their
interpersonal communication skill and emotional intelligence.
It has been often found that the decision of the investor is highly influence by a Group
such as the primary influential group includes family members, relatives and the secondary
influential group including neighbours. Hence, both advisors need to take care of the origin of

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the consumer interest. Along with that the interviewees have to communicate with the close
influencers of the clients as well.

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References:
Anderson, A., Baker, F. and Robinson, D.T., 2017. Precautionary savings, retirement
planning and misperceptions of financial literacy. Journal of Financial Economics, 126(2),
pp.383-398.
Topa, G., Lunceford, G. and Boyatzis, R.E., 2018. Financial planning for retirement: a
psychosocial perspective. Frontiers in psychology, 8, p.2338.
Billingsley, R., Gitman, L.J. and Joehnk, M.D., 2016. Personal financial planning. Cengage
Learning.
Agarwal, S., Amromin, G., Ben-David, I., Chomsisengphet, S. and Evanoff, D.D., 2015.
Financial literacy and financial planning: Evidence from India. Journal of Housing
Economics, 27, pp.4-21.
Poynton, T.A., Lapan, R.T. and Marcotte, A.M., 2015. Financial planning strategies of high
school seniors: Removing barriers to career success. The Career Development
Quarterly, 63(1), pp.57-73.
Jiménez, I., Chiesa, R. and Topa, G., 2019. Financial Planning for retirement: Age-related
Differences among Spanish workers. Journal of Career Development, 46(5), pp.550-566.
Kaminski, R. J., Hurley, W. W., Bunnell, A. E., & Cardona, D. C. (2017). U.S. Patent
Application No. 15/224,194.
Fulda, B.E. and Lersch, P.M., 2018. Planning until death do us part: Partnership status and
financial planning horizon. Journal of Marriage and Family, 80(2), pp.409-425.

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Appendix: Reflective Questions
Your reflection
Record your notes and thoughts below. You are not required to submit the below reflection. This is a
tool to assist you analyse and prepare for your assignment. You must however submit the completed
questionnaire above for your two interviews.
What are your thoughts in relation to the problem?
I think in both of these case clients has a predetermined biased perspectives about their expected
outcomes from their investment process. The subjects are biased in relation to their bad
experiences. Only difference is the contextual differences between the two cases.
What would you have done differently?
I would analyse the cause of the biased mentality of the client and I should take up a more
problem solving approach. More compassionate and interpersonally interactive communication
approach should have been taken up.
Analyse the client’s behaviour in the situation and relate this to the concepts/theory.
Both the client’s behaviour was erratic, verbally aggressive and non-cooperative. In second case
the client, there was a significant lack of knowledge. Both these factors are good examples of
prospect theory based financial behaviour of the customer
Analyse the adviser’s behaviour in the situation and relate this to the concepts/theory.
There was an increased lack of emotional balance and logical thinking from the client’s side. Both
the clients were irrational and their behaviour was projected out of fear and anziety. Both the
financial advisor and the sales person have lack of emotional intelligence as per the Genos Model
of Emotional Intelligence.
Do you believe that the business has gone far enough to improve the situation?
In both cases there is no initiative taken from the organisation to improve the situation. Yes, there
are an initiative taken from my side to take the business through.

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What else do they need to do to ensure that the adviser meets their client’s expectations?
The businesses need to ensure that their financial advisors and client personnel have well
understanding of handling client’s emotions, behaviours and biases through utilising their
intrapersonal and interpersonal skills of communication with the help of emotional intelligences.