Ilovepdf Merged 7

HUMAN
BEHAV. &
PRACTICE
MGT. FIN 5561
4 R'S OF
MARKETING
PROF. TY SOO
4 R’s of Marketing:
Focused on aspects of customer engagement and

satisfaction.
04/16/2024
1. Retention:
· Involves strategies to keep existing
customers and encourage repeat business.
· Businesses aim to provide excellent products
and services to ensure customer loyalty and
minimize customer churn.
2. Referral:
· Refers to the process of encouraging existing
customers to recommend a product or service to
others.
· Positive word-of-mouth and referrals from
satisfied customers can be powerful tools for04/16/2024
3. Relationships:
· Focuses on building strong and positive
relationships with customers.
· Businesses aim to understand their customers'
needs, communicate effectively, and create a sense of
trust and loyalty.
4. Recovery:
· Involves strategies to win back customers who
may have had a negative experience or stopped using
the product or service.
· Addressing customer issues, resolving complaints,
and improving the overall customer experience 04/16/2024
HUMAN BEHAV. & PRACTICE MGT
FIN 5561
BUSINESS START UP
Prof. Ty Soo
Copyright
© 2022 Canadian Institute of Financial Planning
All rights reserved. No part of this PowerPoint presentation

may be reproduced, stored in a retrieval system or
transmitted in any form or by any means without prior
written consent from the Canadian Institute of Financial
Planning.
Human Behaviour and Practice Management
(FIN5561)
Different types of Financial Planners
The different Types of

Financial Planners
•The Broker. Financial planner
charges an annual fee based on
the market value of your
portfolio. ...
•The Independent or Dually-
registered. ..
•The Fee-only
Sole Proprietorships and
Partnerships
Source:BDC
Source: Investopedia,Theresa Chiechi & Matthew Collins
Sole Proprietorships
• a sole proprietorship is an
unincorporated
businesses owned by only one person
• it is the simplest form of business
organization
• a sole proprietor must run a business
(i.e. carry out
business activities)—he or she cannot
just make
passive investments
• a sole proprietorship is created by the
simple act of
Sole Proprietorships: Business Name
& Unlimited Liability
• the sole proprietor must register any
business name
that does not contain his or her own
full name
• a sole proprietorship is not a separate
legal entity
from the owner
• the income or losses of the business
and its assets
and liabilities belong to the sole
proprietor
• the sole proprietor has unlimited
Who Should Establish a Sole
Proprietorship?
• due to the unlimited liability, sole
proprietorships
are generally suitable for business
activities that:
• can be financed by an individual
• do not require sophisticated management
• some provinces prohibit certain
professionals from
incorporating their practices, so many
individual
lawyers, accountants, doctors and
dentists practice
Sole Proprietorships: Income Tax
Considerations
• the net income of the business is the
personal
income of the sole proprietor
• similarly, property used by the
business is property
of the sole proprietor
• the sole proprietor can pay a
reasonable salary to
anyone other than themselves
(including a spouse
or children)
Sole Proprietorships: Income Tax
Considerations
• if net business income (i.e. basically
revenue less
expenses) is positive, it is added to the
personal
income of the sole proprietor
• if net business income is negative, it is
deducted
from the personal income of the
proprietor to the
extent it reduces his or her net income
to zero
• excess losses that cannot be deducted
Partnerships
• a partnership is a relationship
between two or more
individuals carrying on an
unincorporated business
in common with a view of profit
• as with a sole proprietorship, a
partnership must
carry on a business activities) and
cannot simply
consist of several individuals making
passive
investments
General Partnerships
• a general partnership is the simplest
form of
partnership
• it can come into existence without any
legal
formalities, simply by two or more
people carrying
out business activities together
• it consists only of general partners
• general partners are entitled to take
an active role in
General Partnerships: Unlimited
Personal Liability
• a general partner is personally
responsible for the
total debts and obligations of the
partnership
• liability includes debts incurred in the
ordinary
course of business; it also includes
liability for the
negligence and any wrongful act or
failure to act
committed by any of the partners in
the ordinary
Partnership Agreements
• a partnership agreement can be
drafted to develop
a business relationship that better
reflects the
individual needs and contributions of
the partners
(e.g. how profits and losses are to be
distributed,
the roles and responsibilities of
partners, etc.)
• in the absence of a partnership
agreement, a
Partnerships: Income Tax
Considerations
• a cash distribution or drawing is not
the partner's
share of partnership income for tax
purposes nor is
it employment income to the partner
• a partner is taxed on his or her share
of partnership
income, not on the cash distributions
that he or she
receives
• partnership income or losses are
reported and
Partnerships: Calculating the
Adjusted Cost Base (ACB)
• as capital property, the disposition of a
partnership
interest can result in a capital gain or
a capital loss
Additions to ACB Deductions
• the ACB of a partnership interest isfrom
ACB
calculated as:
• capital contributed • partner’s share of
drawings
• partner’s share of • partner’s share of
profits losses
• partner’s share of • partner’s share of
capital investment tax
dividends received credits
Partnerships: Section 97 Rollover
• when a partner contributes
depreciable or other
capital property to a partnership,
rather than cash,
the transfer will normally take place at
the FMV
and will trigger tax implications
• an election can be made under ITA
S97 to rollover
the property at its ACB or UCC
without realizing
a gain or loss
Partnerships: Disposition of a
Partnership Interest
• reorganizations, such as the admission
of a new
partner or the retirement of an
existing partner,
may result in the deemed disposition
of a
partnership interest for tax purposes
and tax
implications for the partners
• under ITA S98, continuing partners
may use
rollover provisions to avoid the
Limited Partnerships (LPs)
• a limited partnership must have at
least one
limited partner and one general
partner
• limited partners are passive investors
—they
contribute capital, but are otherwise
uninvolved in
the operation of the business
• limited partners have limited liability
for the debts
and liabilities of the partnership
Limited Partnerships (LPs): Extent of
Limited Liability
• limited partners are not liable for the
debts,
obligations or losses of the partnership
provided
they do not participate in the
management of the
partnership
• so, the most a limited partner can lose
in a
partnership is his or her investment,
just like a
shareholder in a corporation
Limited Partnerships (LPs): Income
Tax Considerations
• generally, the Income Tax Act views
limited
partnerships in the same way as
general
partnerships with two notable
exceptions:
• at-risk rules: generally, the investor may
only claim tax
deductions with respect to a particular
investment, to
the extent the deduction reduces his or
her ACB to
Limited Liability Partnerships (LLPs)
• an LLP is similar to a general
partnership, except
partners are not personally liable for
the negligence
of another partner
• partners remain personally liable for
the general
debts and obligations of the
partnership, as well as
their own negligence
• generally, the ITA does not
differentiate between a
Business Income: Statement of
Business Activities
• the self-employed report business
income on a
Statement of Business or Professional
Activities (T2125)
using the accrual method of
accounting:
• income is reported in the fiscal period
earned regardless
of when it is actually received
• expenses are deducted in the fiscal period
incurred
regardless of when they are actually paid
Tax Considerations for Home-based
Businesses
• a sole proprietor or partner who runs
a business
from home or maintains a qualifying
home office
in addition to their regular place of
business, may
be able to claim a business-use-of-
home expense to
offset his or her business income
provided:
• it is the taxpayer’s principal place of
business and he or
Calculating the Business-use-of-home
Expense
• for self-employed individuals, eligible
expenses include
a portion of all home-related expenses,
including
operation and maintenance costs such
as heating,
electricity, cleaning services,
landscaping and lawn
maintenance services
• it also includes a portion of property
taxes,
mortgage interest, home insurance
Business-use-of-home Deduction: Floor
Space vs. Number of Rooms
• to calculate the business-use-of-home
expense,
there are two methods:
• floor space method: total floor area
devoted to the
business ÷ total floor area of the house
• number of rooms method: number of
rooms devoted
to the business ÷ total number of rooms
in the house
• the taxpayer can consider only the
main areas of
Non-capital Losses
• if a business loss creates a negative
total income,
the excess loss becomes a non-capital
loss
• non-capital losses include:
• unused losses from an office, employment,
business or
property
• unused allowable business investment
losses (ABILs)
• the unused portion of partnership losses
• the unused portion of partnership ABILs
Corporations
Nature of a Corporation
• a corporation is a business form that is
a non-
human individual with its own rights
and duties,
defined by the following
characteristics:
• limited liability
• continuous existence
• separation of management and ownership
• ease of transfer of ownership
• no duty of loyalty from the owners
• also, unlike a partnership or sole
Types of Business Corporations:
Public Corporations
• a public corporation is one that:
• has one or more classes of its shares
listed on a
prescribed stock exchange in Canada
• has elected, or has been designated by
CRA, to be a
public corporation and, among other
conditions, its
shares are held by at least 150
shareholders, each of
whom holds at least $500 worth of shares
Private Corporations
• a private corporation is one that is
resident in
Canada, is not a public corporation,
and is not
controlled directly or indirectly by one
or more
public corporations
• special income tax rules apply to
private
corporations
• a Canadian-controlled private
corporation (CCPC) is a
Corporate Taxation: Canadian
Corporations
• a Canadian corporation is a
corporation resident in
Canada
• residence is important in determining
whether a
corporation is eligible for tax
deductions such as
the small business deduction
• a taxable Canadian corporation is a
Canadian
corporation that is not exempt from
tax
Investment Corporations
• investment corporations sell shares to
investors or
subscribers and use the proceeds to
purchase
financial securities
• gains result from capital appreciation
and dividends
• a closed-end investment corporation
has a fixed
number of shares that are bought and
sold in the
secondary market (i.e. a stock market
Types of Shares: Common vs.
Preferred
• common shares represent the true
equity
ownership of the corporation, with all
the benefits
and risks of such ownership
• preferred shares are a hybrid security:
they have
characteristics of common shares and
bonds
• preferred shares usually have a
specified dividend
rate; generally, preferred dividends
Types of Dividends: Regular Dividends and
Capital Dividends
• regular dividends are the portion of
after-tax
corporate profits paid periodically to
shareholders
• retained earnings are the profits kept
in the
business rather than paid out as
dividends
• capital dividends are paid from the
capital dividend
account (CDA) of a private corporation
• because the CDA represents income or
Types of Dividends: Capital Gains Dividends
and Stock Dividends
• a capital gains dividend is the money
distributed by
an investment corporation when it
realizes a capital
gain on an investment
• a stock dividend is paid in the form of
additional
stock in the payer corporation,
accompanied by an
increase in the paid-up capital of the
corporation
• stock dividends are often paid by
Corporate Taxation
• a corporation pays income tax on its
profits before
passing them on to its shareholders as
dividends
• dividends received by a shareholder
are taxed in the
hands of the recipient resulting in
double taxation
• double taxation is alleviated by
integrating the
corporate and individual tax systems:
the effective
Corporate Taxation: Calculating Tax
Payable
• the basic federal rate on corporate
income is 38%
• a general rate reduction is applied to
any portion of
full-rate taxable income (i.e. income
that does not
receive any preferential treatment
under the ITA)
• a federal abatement can be claimed to
make room
for the provinces to levy their own
corporate tax
Corporate Taxation: Taxation Year
• a corporation's taxation year or fiscal
year is a period
of no more than 53 weeks
• at the end of this period, the
corporation closes its
books and determines a profit or loss
for tax
purposes
• the company may arbitrarily select its
fiscal year or
taxation year when it is first
incorporated
Corporate Taxation: Other than
Eligible Dividends
• a dividend from a CCPC is grossed-up
by 125%
• the grossed-up amount is added to
taxable income
• a federal dividend tax credit of 13 1/3%
of the
grossed-up dividend can then be
claimed
• corresponding provincial dividend tax
credits can
also be claimed
Corporate Taxation: Eligible
Dividends
• an enhanced dividend tax credit
applies to eligible
dividends received after 2005 from:
• public corporations resident in Canada
• other corporations resident in Canada
that are not
CCPCs and are subject to the general
corporate tax rate
• CCPCs resident in Canada to the extent
that their
income is subject to tax at the general
corporate tax
• the gross-up rate is 144% of the
Corporate Taxation: Claiming the
Small Business Deduction
• the combined federal and provincial
corporate tax
rate can be reduced through SMABUD
• the ability to claim SMABUD depends
on the type
of corporation and the source of its
income:
• SMABUD can only be claimed by CCPCs
• SMABUD can only be applied to a certain
amount of
active business income earned
• associated corporations must share
Corporate Taxation: Claiming the
Small Business Deduction
• the SMABUD deduction is calculated
as 17% of
the lesser of:
• active business income
• taxable income
• the SMABUD limit
• active business income in excess of the
SMABUD
limit can be reduced by paying or
making:
• bonuses and salaries
• deferred profit sharing plan (DPSP)
Corporate Taxation: Part I Tax
• dividends received by a corporation
are included in
its income, but unlike with an
individual, there is no
gross-up or dividend tax credit
• however, dividends received from
other taxable
Canadian corporations can be
deducted from the
taxable income of the recipient
corporation
• in effect, the recipient corporation
Corporate Taxation: Part IV Tax
• Part IV tax discourages shareholders
of private
corporations from deferring or
postponing tax by
leaving dividend income from portfolio
investments in the corporation
• Part IV tax in the amount of 33 1/3% of
dividends
from portfolio investments is credited
to the
RDTOH account
Corporate Taxation: Refundable Part I
Tax
• a refundable Part I tax of 6 /3%
2
applies to
investment income, other than
deductible dividends,
earned by CCPCs
• the corporation still pays Part I tax of
about 45%
on all of this other investment income
• however, it can credit approximately
26 2/3% of
the investment income to its RDTOH
Corporate Taxation: Filing a
Corporate Tax Return
• the corporate income tax return is
called a T2
• all corporations other than registered
charities must
file a T2 for every taxation year, even if
there was
no tax payable for that year
• the filing deadline is 6 months of the
end of the
corporation’s taxation year
• as with an individual, penalties apply
for corporate
Holding Companies
• holding companies are corporations
that exist
primarily for the purpose of holding or
owning
property
• they may hold or own:
• shares of an operating company (meaning
a corporation
carrying on an active business)
• investment portfolios
• other property
Estate Freezes Involving Holding
Companies
• an estate freeze freezes the value of
an asset such
that future growth is passed to the
intended
beneficiary and is ultimately taxed in
their hands
• the intended beneficiary subscribes to
the
common shares of HOLDCO for a
nominal cost
• the shares of OPCO are rolled over to
HOLDCO
Estate Freezes: ITA Section 85 and
Section 86
• an estate freeze can also involve
rearranging
ownership so that the taxpayer
exchanges their
common shares for preferred shares of
the same
value
• the taxpayer's intended beneficiary
subscribe to
new common shares at a nominal cost
• provisions in the Income Tax Act
permit the
HUMAN BEHAVIOUR & PRACTICE
MANAGEMENT
FIN 5561
CONSUMER BEHAVIOUR
PROF. TY SOO
COPYRIGHT © 2024 TY SOO ALL RIGHTS
RESERVED
COPYRIGHT© 2023 McGRAWHILL ALL
RIGHTS RESERVED ALL RIGHTS RESERVED.
NO PART OFTHIS PUBLICATION MAY BE
REPRODUCED, STORED IN AN RETRIEVAL
SYSTEM, TRANSMITTED OR USED IN ANY
FORM WITHOUT WRITTEN PERMISSION
FROM THE AUTHOR/PUBLISHER
Consumer Behaviour
 Consumer should
drive marketing
strategies (needs)
 Firms must
understand
consumer’s needs
 Founding principle:
listen & learn from
your customers
 Feedback = improve
© 2023 McGraw Hill Limited 4-3

The Consumer
Decision Process

Step 1: Need
Recognition
Need
Recognitio
n
• Functional needs
• Psychological needs
Does a Dior Minaudière clutch, like this one, satisfy psychological or

functional needs?

Step 2: Information
Search
Informatio
n Search
• Internal Search for

Information
• External Search for

Information
Lauren liked the picture of Zendaya wearing a ruffled
turtleneck in a magazine so much that she searched
online to find and purchase it.

Factors affecting
consumers’ search
processes
Perceive
d
Benefit
vs.
Perceive
d Costs
Factors
Affecting
Consumer’s
Search
Processes
Actual
or Locus of
Perceive Control
d Risk

Factors affecting
consumers’ search
processes
• Is it worth the time and effort to search for

information about a product of service?

Factors affecting
consumers’ search
processes
• Internal Locus of Control:

some control over outcomes = engage in
more search activities
• External Locus of Control:

Fate, external factors control all
outcomes = why bother?

Factors affecting
consumers’ search
processes
Performance
risk
Actual versus Perceived Risk Financial risk
Social
risk
Physiological
risk
Psychological
risk
Test Your Knowledge
Which of the following is NOT one of the factors

affecting
consumers’ search processes?
A) the perceived benefits versus perceived costs of
search. B) the locus of control
C) the actual or perceived risk
D) the kind of search

Test Your Knowledge
Which of the following is NOT one of the factors

affecting
consumers’ search processes?
A) the perceived benefits versus perceived costs of
search. B) the locus of control
C) the actual or perceived risk
D) the kind of search

Step 3: Alternative
Evaluation
Alternativ • Evaluative Criteria
e
Evaluation • Determinant Attributes
Macy’s is part of the retrieval set of stores available to women for business apparel, but Banana Republic is in the evoked set for young
women looking for business apparel.

Alternative Evaluation:
Compensatory & Non-compensatory
Accessorie Overall
Mileage Style Price
s Score
Importan
ce 0.4 0.1 0.3 0.2
Weight
Toyota 10 8 6 8 8.2
Honda 8 9 8 3 7.1
Nissan 6 8 10 5 7.2
Evaluations are based on a 1 (very poor) to 10 (very good) scale.
Based on the non-compensatory decision rule (based on price), Nissan is the best
candidate for purchase.

Decision Rules
Compensatory
Consumer
Decision
Rules
Decision Noncompensat
Heuristics ory

Decision Rules
Examples of decision
heuristics:
• Price
• Brand
• Product
presentation
The distinctive style of these lululemon yoga pants is a determinant attribute
that distinguishes the product from other brands.

Test Your Knowledge
Decision heuristics are ________ that help a

consumer narrow down his or her choices.
A) mental shortcuts
B) breathing exercises
C) logical steps
D) compensatory decision rules

Test Your Knowledge
Decision heuristics are ________ that help a

consumer narrow down his or her choices.
A) mental shortcuts
B) breathing exercises
C) logical steps
D) compensatory decision rules

Step 4: Purchase
Decision
Purchase
Decision
• Customers are ready
to buy

Purchase &
Consumption
Increase
Conversion
rate
Reduce real
Reduce the
or virtual Merchandise
actual wait
abandoned in stock
time
carts
Make it easy Plenty on hand Open more check-outs

Step 5:
Postpurchase
Postpurchase
• Three potential
outcomes
Consumers often feel dissonance when purchasing products or services.

Postpurchase
outcomes

Test Your Knowledge
Which of the following is NOT a step to use to

ensure postpurchase
satisfaction?
A) Providing money-back guarantees and warranties.
B) Build unrealistic expectations.
C) Encourage customer feedback.
D) Demonstrate correct product use.

Test Your Knowledge
Which of the following is NOT a step to use to

ensure postpurchase
satisfaction?
A) Providing money-back guarantees and warranties.
B) Build unrealistic expectations.
C) Encourage customer feedback.
D) Demonstrate correct product use.

Customer Loyalty
• Customer loyalty develops over time with
multiple repeat purchases of the product or
brand from the same marketer.
• Loyal customers will buy only certain brands and
shop at certain stores, and they do not consider
other brands or firms in their decision.

Undesirable
Consumer Behaviour
• Negative word-of-mouth & rumours
can be very damaging
• The Internet is an effective way to
spread negativity
• Marketers must respond quickly!

Factors Influencing Consumer
Buying Decisions

Physiological Needs
In this ad, Subway satisfies the physiological need for food

while letting the consumer know that healthy eating can
also be delicious.

Psychological
Factors: Motives

Psychological Factors:
Attitude
• Your evaluation or
feeling towards an
object or idea
• Learned & long-
lasting but they
can change
abruptly
• Affective vs.
behavioural
components
Yoga satisfies self-esteem needs by helping people satisfy
their inner desires.

Psychological Factors:
Perception
• Culture, tradition, and our overall upbringing determine

our perceptual view of the world.

Psychological
Factors: Learning
• Affects both attitudes and perceptions
• Affected by social experiences

Entrepreneurial marketing 4.1:
Juiced for Success: Greenhouse
• Organic juices
packaged in
reusable glass
bottles.
• Demand forced
expansion –
leading to three Greenhouse uses intriguing product names such as Farma-C and a line of “greatest hits”
new shops.
to catch the attention of consumers.
• Organic
ingredients that
come from local
Social Factors:
Family
Decision makers
Influencers
Family members often influence buying decisions.

Social Factors: Reference
Groups
Groups: Provide:
• Family • Information
• Friends • Rewards
• Co-workers • Self-image
• Famous people

Social Factors: Reference
Groups
What reference group is evoked by these Birkenstock sandals?

Social Factors: Culture
• Shared meanings,
beliefs, morals &
customs
• Your culture group
can be your school,
country, religion
• Culture greatly
influences consumer
behaviour Marketers work to understand consumer culture and respond with products such as halal
• Marketers must
meats to meet specific needs.
understand
differences among
countries © 2023 McGraw Hill Limited 4-37
Situational
Factors
Purchase
Shopping
Temporal State
Situational factors may influence your purchase decisions. If you are buying jewellery for yourself,
you might browse the clearance counter at People’s Jewellers (top picture). But if you are buying
a gift for your best friend’s birthday, you may go to Tiffany & Co (bottom picture).

Test Your Knowledge
When retailers and service providers have developed

unique images that are based at least in part on their
internal environment, they are using?
A) Salespeople
B) Store atmospherics
C) Crowding
D) In-store demonstrations

Test Your Knowledge
When retailers and service providers have developed

unique images that are based at least in part on their
internal environment, they are using?
A) Salespeople
B) Store atmospherics
C) Crowding
D) In-store demonstrations

Involvement & Consumer
Buying Decisions

Types of Buying
Decisions
Extended Problem Solving
Limited Problem Solving
Impulse Buying
Habitual Decision Making
Typically, fashion apparel purchases (left) require extended problem solving, whereas grocery shopping normally requires limited problem
solving (right).

Test Your Knowledge
What type of buying decision requires the least

amount of time and effort?
A) extended
B) habitual decision making
C) limited problem solving
D) impulse buying

Test Your Knowledge
What type of buying decision requires the least

amount of time and effort?
A) extended
B) habitual decision making
C) limited problem solving
D) impulse buying

HUMAN BEHAV.
& PRACTICE
MGT. FIN 5561
CONTACT MGT
& MARKETING
PROF. TY SOO
Source:Investope
dia 04/16/2024
Contact management and marketing:
Important aspects of business operations that

involve organizing and utilizing information
about your contacts (customers, clients, leads)
to effectively market and promote your
products or services.
04/16/2024
Contact Management:
1.Customer Relationship Management
(CRM) Systems:
• Implement a CRM system to centralize contact
information, interactions, and history.
• Choose a CRM platform that suits your business
size and requirements.
2.Data Organization:
• Keep contact details up-to-date and organized.
• Categorize contacts based on criteria such as
lead status, customer type, or industry 04/16/2024
3.Communication Channels:
• Integrate various communication channels like
email, phone, and social media within your
CRM.
• Ensure seamless communication across
platforms.
4.Data Security:
• Implement security measures to protect
sensitive customer information.
• Comply with data protection regulations and
04/16/2024
5.Automation:
• Automate routine tasks like data entry, follow-ups,
and reminders.
• Use workflows to streamline processes and

improve efficiency.
04/16/2024 6
Marketing:
1.Target Audience Segmentation:
• Segment your contact list based on demographics,
behavior, or preferences.
• Tailor marketing messages to specific segments for
better engagement.
2.Personalized Marketing:
• Utilize data from your CRM to create personalized
marketing campaigns.
• Personalization enhances customer experience and
increases conversion rates.
04/16/2024
3)Email Marketing:
• Create targeted email campaigns to nurture
leads and retain customers.
• Use analytics to measure the effectiveness of
email campaigns.
4) Content Marketing:
• Develop high-quality, relevant content that
addresses your audience's needs.
• Share content through various channels,
including social media and blogs.
04/16/2024
5)Social Media Marketing:
• Engage with your audience on social media
platforms.
• Use social media analytics to track
performance and adjust strategies.
6)Analytics and Reporting:

• Monitor key performance indicators (KPIs) to
assess the success of your marketing efforts.
• Use analytics to make data-driven decisions
and refine your strategies. 04/16/2024
7)Marketing Automation:
• Implement marketing automation tools to
schedule and automate campaigns.
• Automate lead nurturing processes to guide
prospects through the sales funnel.
8)Customer Feedback:
• Encourage and collect customer feedback to
understand their needs.
• Use feedback to improve products, services,
and marketing strategies.
04/16/2024
By combining effective contact management with
targeted and personalized marketing strategies,
businesses can build stronger relationships with
their audience, improve customer satisfaction,
and drive growth.
04/16/2024
HUMAN BEHAV.
& PRACTICE
MGT. FIN 5561
DRIVERS OF
CUSTOMER
SATISFACTION
& KYC
PROF. TY SOO
1
COPYRIGHT
All rights reserved. No part of this PowerPoint

presentation may be reproduced, stored in a
retrieval system or transmitted in any form or by
any means without prior written consent from the
Canadian Institute of Financial Planning.
2
WHAT IS THE KNOW YOUR CLIENT RULE?
The “Know Your Client” (KYC) rule is one of the most important rules that salespersons1 must keep in mind
when selling securities. It is designed to provide them and their firms2 with guidelines for making sure that
they collect important information necessary to enable them to assist in fulfilling a client’s investment needs.
3
HOW IS THE KYC INFORMATION COLLECTED?
Through initial face-to-face conversations with a client, the information gathered is recorded on an account application
form, typically referred to as a “New Account Application Form” or, NAAF, for short.
It sets out the minimum information an advisor or financial planner must collect from a prospective client, but a firm may
request additional information on its NAAF depending on the type of business and services it offers.
4
HOW IS THE KYC INFORMATION COLLECTED?
Client information that must be recorded on the NAAF can be grouped into four distinct sections, namely
• Personal Information
• Financial Information
• Investment Objectives
• Other Information, including Date and Signature
5
KYC REVIEWS AND SUITABILITY
In order to make certain that the client's records are up to date and that client’s investment goals continue to
be met, regulations require that the KYC information for an existing client must be reviewed and any changes
updated periodically.
6
HOW OFTEN AND WHEN SHOULD KYC
INFORMATION BE REVIEWED?
Some firms send annual letters to their clients reminding them to let the firm know if there have been any changes that
would require an update to their KYC information. It is good business practice, however, that salespersons touch base
with their clients on a more regular basis. This not only forges a good bond between the client and salesperson
relationship, but also it affords an opportunity to catch up with the client and alerts the salesperson to any changing
conditions that may affect the client’s existing financial situation and investment needs as he/she moves through life.
7
Did the client lose his/her job? Receive a promotion? Are they expecting an addition to the family? Are they
planning to move? The answers to these and other questions will no doubt prompt changes to the KYC
information and perhaps change the focus of some of the investment plans altogether. It can affect their income,
liquidity concerns or even their risk tolerance in any given account.
8
A client’s written authorization must be obtained for any material changes, including the client’s name, address or banking
information and supporting documents must likewise be provided for the file. Any notifications of changes required to a client’s KYC
information must be based on the written approval of the client.
The firm, moreover, “must restrict access of registered representatives and other persons to its electronic systems for maintaining
KYC information so that material information cannot be changed without the required approval”. 4 Evidence of annual KYC reviews
should also be recorded in the client’s files.
9
KYC information should also be reviewed whenever there is a change of advisor. The new advisor must verify
the account information to ensure it is current.
10
THE IMPORTANCE OF UPDATING KYC
Updating KYC is important as this information is used in compliance suitability reviews. What this means is
that any subsequent trading proposed for a client's account is closely reviewed against the information the
client provided.
If the proposed trade (purchase or sale, for example) is in keeping with the client's documented KYC
information and investment goals, then the trade will be deemed suitable. If, however, the proposed trading
activity contains elements which conflict with the information gathered from the client, then, at minimum,
more information is required from the salesperson and client before the trade is placed, if at all.
11
THE IMPORTANCE OF UPDATING KYC
For example, a compliance reviewer should question and make notes with respect to the suitability of a PAC
of $1,000 per month if the client's annual income is only $25,000. In this circumstance, the salesperson and
client should re-evaluate and reconsider the appropriateness of the trade. Can a more suitable solution be
considered?
12
THE IMPORTANCE OF RECORD KEEPING
All salespersons and their firms will be subjected to audits from time to time. These can be as informal as in-
house audits whereby compliance staff will perform daily or periodic reviews of client files and trading
activity to more formal audits whereby regulators or the firm’s auditors will review the firm’s books and
records and test for compliance with the rules and regulations governing their business.
13
THE IMPORTANCE OF RECORDKEEPING
Records must properly reflect the firm’s business transactions and financial affairs. Records that must be maintained and/or
produced include the following categories:
• accounting (for both the firm’s own operation as well as the client trust accounts)
• trading and sales compliance records (client files, including new account applications and subsequent trading instructions, for
example)
• data entry and output systems (back office systems which contain client data)
• communications to clients (including any marketing materials and client statements)
• client complaints (a client complaints file and log must be maintained even if no complaints are ever received)
14
WHAT RECORDS MUST BE KEPT?
The following are some (but not all) of the items of information required to be maintained by the applicable provincial securities
legislation as per IIROC’s Dealer Member Rule 200:
• Blotters (or other original entry records) containing an itemized daily record of
• all purchases and sales of securities
• all receipts and deliveries of securities (including certificate numbers)
• all trades in commodity futures contracts and commodity futures contract
• options
• all receipts and disbursements of cash, and
• all other debits and credits
15
BY WHAT MEANS ARE RECORDS KEPT
The information may be kept by means of mechanical, electronic or other devices where such method of
record keeping is not prohibited under applicable securities legislation and where appropriate internal
controls are in place to guard against the risk of falsification of information contained in the records and
where the information is available in an intelligible and accurate form within a reasonable period of time.
16
BY WHAT MEANS ARE RECORDS KEPT
Confidentiality
As per privacy regulations and IIROC’s Dealer Member Rule 2400, all KYC and client information and other
records must be kept confidential. Besides holding information about a client confidential, the firm must “not
disclose the information to representatives, employees or agents of another financial services entity located
in the same premises, except as expressly permitted or required by law or the Rules”.
17
HANDLING CLIENT COMPLAINTS: IDENTIFYING,
MONITORING AND RESOLUTION
Maintaining investor confidence in that the salesperson and firm they are dealing with abide by fair
standards of business conduct and ethics is important in fostering an honest, efficient and healthy
marketplace.
18
WHAT IS A COMPLAINT?
A “complaint” is defined by the regulators as any written statement of a client or any person acting on behalf
of a client alleging a grievance involving the conduct, business or affairs of the dealer or any representative
of the dealer.
19
IDENTIFYING A COMPLAINT?
Much can be learned even if the complaint is not a breach of rules but is rather administrative or service
oriented
Typical complaints that may fall in this category can include:
• complaints of errors that are administrative in nature (i.e. incorrect spelling of name on account)
• complaints of poor performance in an investment portfolio (caused by stock market downturn and
economic conditions)
• poor customer service (including little attention given to a client by his/her advisor or administrative staff)
20
Serious complaints, or those involving a breach of the rules or the law, can include:
• complaints of value losses in an investment portfolio (caused by other than market volatility). For example,
losses incurred as a result of theft or misconduct
• suitability issues: whereby an advisor or firm sells a product that is not suitable for an investor’s
investment objectives or risk tolerance
• unauthorized transactions: performing investment transactions without client approval
21
Serious complaints, or those involving a breach of the rules or the law, can include:
• encouraging excessive transactions (churning). For example, purchases, sales and transfers made with the
sole purpose of garnering additional sales commissions
• misrepresentation: making false representations about an investment
• Other allegations of misconduct, including confidentiality breaches, fraud, misappropriation or misuse of
funds or securities, forgery, other inappropriate financial dealings with clients and engaging in securities-
related activity outside of the firm
22
DOCUMENTING A COMPLAINT
While most firms will have a standardized form available for ensuring that all the necessary details are
gathered, the record for each complaint should include, at minimum, the following information:
• The date and time the complaint was received by the complainant
• The complainant’s name and account number (if applicable)
• The name of the person who is the subject of the complaint
• The security or services which are the subject of the complaint and a brief description of the nature of the
complaint
23
DOCUMENTING A COMPLAINT
While most firms will have a standardized form available for ensuring that all the necessary details are
gathered, the record for each complaint should include, at minimum, the following information:
• The person who dealt with the complaint

• A note as to whether the complaint was verbal or written
• The date and conclusions of the decision rendered in connection with the complaint
• The person(s) who resolved the complaint
• Copies of all supporting documentation, including correspondence to or from the client and any other
parties
24
HOW MUST A COMPLAINT BE HANDLED
Once a complaint has been identified and documented, it needs to be acknowledged, investigated, tracked,
responded to and resolved.
25
PROVIDING A FINAL RESPONSE AND COMPLAINT RESOLUTION
Once a complaint is resolved, the firm will send a letter to the client which
identifies the error and explains how it was resolved. According to IIROC rules, firms
are required to notify clients of the results of their investigation within a reasonable
period of time.
26
MANAGEMENT
FIN 5561
LIFE STAGES
PROF. TY SOO
RESERVED
Copyright

Various Life Stages
Stages of Life Planning: 20s, 30s and
40s
As an individual moves through the

different stages of his or her life, not
surprisingly, his orher priorities will
typically change. A comprehensive
financial plan in general, and a retirement
plan more specifically, must address the
changing circumstances and changing
needs of an individual at each stage of life.
While retirement planning generally comes
into sharper focus during the mid- to late
stages of an individual's life, the reality is
that it is never too early to begin planning
Twenties to early thirties
An individual in his or her twenties or early

thirties has typically just completed his or her
post-secondary education and is just embarking
on a chosen career path. This stage is
marked by a relatively high debt load
(stemming from student loans or a mortgage),
minimal savings and a modest but, increasing
income. For most people in this age range,
purchasing a car and a home, getting married
and starting a family, paying off debts and
pursuing interests, such as travel, tend to be
top of mind. If an individual in this age group
does have savings, an overweighting in equities
is appropriate (subject to the client's risk
tolerance) given his or her long-time
In the bigger picture then, planning for
retirement—an event that will take place 30
or 40years in the future—is unlikely to rank
highly among individuals in this life stage. As
a Planner, it is important to recognize not just
the future needs of a client but also, his or
her
current needs. Accordingly, a planner will do
well to educate a client in this stage about th
benefits of starting a retirement plan as early
as possible, implementing a savings program
(e.g. via an RRSP) and discussing the various
sources of possible retirement income (e.g. a
company sponsored pension plan and
government benefits). As important as
planning for
the future may be, at the same time, the
planner must acknowledge that discretionary
funds will be needed for the individual to live
Early thirties and forties
At some point during this life stage, an individual
typically becomes established in his or her
career. He or she has been able to accumulate
some savings and the individual's income
continues to increase as he or she approaches
their peak earning years. An overweighting in
equities is still appropriate for an individual in this
age bracket provided of course, he or she
is comfortable with the inherent volatility. There
will likely be many expenditures that will
compete for the income of the individual. In this
period, the focus of an individual tends to
be on moving into a first home or a larger home,
paying off the mortgage and other debts
and saving for his or her children's education.
Significant life events may also take
place that may create a financial
strain such as a
divorce followed by a second
marriage, support payments (e.g.
child support and alimony
payments), the death or the ill-
health of family members (e.g.
dependent parents and
siblings) and a change of career
(whether voluntarily or due to
layoffs or poor economic
conditions).
Individuals also begin to see
retirement as something palpable as
opposed to some
disconnected event in the distant
future so in this life stage, there tends
to be a marked
increase in the percentage of savings
allocated for retirement. This may be
magnified for an
individual in his or her forties who has
yet to begin saving for retirement.
There will likely be
a sense of urgency with the sudden
realization that retirement may only be
15 – 20 years
away.
Stages of Life Planning:
40s - Early 50s
The period during one's forties to approximately
age 54 is often described as the preretirement
period. During this time, the individual is generally
in his or her peak earning
years, has a reduced debt load and an increased
net worth. If his or her risk tolerance
permits, an individual in this age group may have
a high allocation of his or her savings in
equities to continue to emphasize growth over the
long-term. As the individual enters his or
her fifties, he or she will likely introduce more
fixed income investments into their portfolio
to gradually shift the focus to capital preservation.
Ideally, his or her mortgage has been
discharged and children are no longer financially
dependent on them. If not theoretically,
certainly practically, it is during this period that
retirement planning begins in earnest and
answers to planning questions become less general
in nature and more definitive.
This life stage provides the perfect
opportunity for a planner to assess a
client's situation for clients who have
been following a well-conceived savings
plan to this point, the findings will reveal
they have made significant strides
towards a comfortable retirement; for
other clients who have procrastinated, a
planner will have to deliver the news that
significant lifestyle changes will need to
be made for the client to reach his or her
retirement goals or alternatively,
expectations at retirement will need to be
reduced.
Life planning questions
At this stage, examples of questions a planner may ask of his or her client include:
􀁸 Have you given thought to what age you would like to retire? Tell me about it.
􀁸 At this stage, what are your financial goals and objectives? How would you prioritize
them?
􀁸 Are there circumstances in your life that could delay or jeopardize your retirement
plans?
􀁸 Describe your current financial situation. Have you completed a net worth statementto
determine your assets and liabilities and to get a snapshot of where you stand?
Have you begun saving for retirement? If so, how are you doing this? If not, what
obstacles are preventing you from doing so.
􀁸 Do you have credit card debt or personal lines of
credit that could be consolidated to
reduce your monthly debt payments? Do you have
a plan of action to eliminate any
non-constructive debt?
􀁸 Are you making regular contributions to your

RRSP? Do you have unused RRSP
contribution room? If so, have you explored
strategies to take advantage of this
room (e.g. RRSP loans)?
Stages of Life Planning: Mid 50s - Early 60s
The mid-fifties to early sixties is the period of early
retirement. In recent years, as much as 50% of
retirees have left the workforce by age 62. If he or
she elects to retire, the ndividual may be eligible for
government benefits such as CPP and upon
retirement, will begin receiving pension benefits from
his or her former employer.
For an individual that continues to work during this time, certainly, he or she is
keenlyaware of the prospect of retirement. The individual in this life stage has
ideally accumulateda significant net worth and has minimal debt. A common
asset allocation for someone in thisage bracket is a balance between equities and
fixed income investments. As the individual approaches retirement, his or her
investment goals will likely shift from long-term growth to capital preservation.
This life stage is a time when an individual must come to terms withthe reality
that he or she is about to enter the next phase of life and must be prepared for
this change psychologically as much as he or she must be ready for this change
financially.
• At what age would you like to retire?
• Do you plan to continue working part-time during
retirement?
• Have you planned a realistic budget of your cash
flow to determine what yourexpenses may be
when you stop working? Will you be debt-free
when you retire?
• What is the earliest age you can retire and still
receive a full pension?
• Do you feel you are on track to achieve your
retirement goals?
• How much of your after-tax income are you
presently saving for retirement? In what
form are these savings?
• How do you feel about the current asset mix of
your retirement savings?
Are you still comfortable with the potential
fluctuations that may take place?
Stages of Life Planning: 65 - 70
From age 65 to age 70 is when the vast majority of individuals will
actually retire. By this stage, the individual's retirement savings will
likely have an overweighting in fixed income
investments to emphasize income and capital preservation over growth.
That said, it is mportant to maintain an element of capital appreciation
—subject to the client's risk tolerance—given that his or her retirement
period could extend for 20 or 30 years or longer.
Hopefully, a comprehensive retirement plan has been a part of this
individual's life for several years so, this stage should mark the
culmination of that prudent planning. This said,this phase only marks
the beginning of the individual's retirement—by no means does the
planning stop just because he or she has stopped working
• Describe what your retirement will look like. Will it
include travel, hobbies, part-time
work, etc.?
• What medical benefits do you have?
• Will you remain in your current home or do you

have alternate living arrangements
in mind.
If so, what are they?

• If there is a need, how would you feel about using
your home as a means of generating more income
(e.g. reverse mortgage)?
• Do you plan to leave a legacy for your children and

grandchildren
MANAGEMENT
FIN 5561
MAKING FINANCIAL DECISIONS &
LEARNING STYLES
PROF. TY SOO
RESERVED
Copyright

Financial decisions can be
complex and can greatly impact
one's financial well-being. When
it comes to making these
decisions, understanding your
learning style can play a crucial
role in how you absorb and
process information related to
finances. There are several
learning styles, and each
individual may have a preference
for one or a combination of these
1.Visual Learners: Visual
learners prefer to see
information presented in
charts, graphs, diagrams, or
through visual aids. When
making financial decisions,
they may benefit from using
tools like spreadsheets,
financial software with visual
representations of data, or
diagrams illustrating
different financial scenarios.
2.Auditory Learners: Auditory
learners learn best through
listening and verbal
communication. They may find it
helpful to discuss financial
matters with others, listen to
podcasts, or attend seminars
and workshops where they can
hear explanations and
discussions about financial topics.
3.Kinesthetic Learners:
Kinesthetic learners learn best
through hands-on experiences
and by doing. They may benefit
from actively engaging in
financial activities such as
budgeting, investing in mock
portfolios, or participating in
simulations that mimic real-life
financial situations.
4.Reading/Writing Learners:
Reading/writing learners prefer to absorb
information through written text and
often benefit from taking notes and
reading materials. They may find it
helpful to read financial books, articles,
or blogs, and to write down key points or
create summaries to reinforce their
understanding
5. Logical/Mathematical
Learners: Logical/mathematical
learners excel at reasoning,
logic, and problem-solving. They
may prefer to analyze financial
data, calculate risks and returns,
and develop strategies based on
quantitative analysis. They may
enjoy using financial modeling
tools, spreadsheets, and
mathematical formulas to make
informed financial decisions.
6.Social Learners: Social learners
thrive in group settings and learn best
through interaction with others. They
may benefit from joining financial
discussion groups, attending
networking events with other investors,
or participating in financial forums
where they can share ideas, ask
questions, and learn from others'
experiences
7.Solitary Learners: Solitary learners
prefer to work independently and may
excel at self-directed learning. They may
prefer to research financial topics on
their own, work through financial
problems privately, or engage in self-
paced online courses or tutorials to
deepen their understanding of financial
concepts.
HUMAN BEHAV.
& PRACTICE
MGT. FIN 5561
PORTFOLIO
MODELS &
DASHBOARDS
PROF. TY SOO
1
Portfolio Models and Dashboards
Portfolio Models
• Approach to organizing, analyzing assets,
investments or projects.
• Assist in making informed decisions about

resource allocation, risk management and
performance optimization
2
Types:
• Financial Portfolio Model-Finance
Diversifying investments across different asset
classes(stocks, bonds, real estate etc) to
achieve balance between risk and return.
• Project Portfolio Model-Project Management

Categorizing and prioritizing projects based on
strategic goals, resource availability and risk
factors.
3
4
5
Dashboards:
• Visual representation of key
performance
of indicators(KPIs),metrics and data
points
• Provide a quick and concise overview

of current status and performance of
business or project. 6
Types:
• Financial Dashboard
• Project Management Dashboard
• Marketing Dashboard
• Sales Dashboard
7
Integration of Portfolio Models and
Dashboard
• Organizations often integrate the portfolio

models into dashboard to provide comprehensive
view of their Financial, projects, or investment
portfolios.
E.g. a financial dashboard may include

visualizations of the performance of different assets
based on predefined portfolio model . 8
• Closing ratio : KPI measures the number of deals
closed out of total number of sales prospects.
• Number of engaged leads : KPI counts how many

potential leads have been contacted or met with.
• Total dollar value for new assets : KPI measures total

value of new assets per period of time.
• Average conversion time: KPI measures the amount of

time from first contacting a prospective client to
securing a signed account to bring in assets.
9
Benefits:
Informed decision making-Portfolio models and
dashboards provide a consolidated view, aiding
decision maker in making informed and data-
driven decisions.
Efficient Resource Allocation: They help

optimize resource allocation by identifying areas
of strength and weakness within a portfolio.
10
Risk Management: Portfolio models assist in
assessing and managing risks associated with
investments or projects, while dashboards
highlight risk metrics for ongoing monitoring.
Tools and Technologies:

Various tools
11
Tools and Technologies:
Various toolsand technologies are available for
creating portfolio models and dashboards
including Microsoft Excel, Tableau, PowerBI, and
other specialized software based on the specific
needs of the user.
Portfolio Models and dashboards are crucial tools

for individuals and organizations to manage
assets, investments, and projects effectively by
providing a clear and visual representation of 12
HUMAN BEHAVIOUR PRACTICE
MGT FIN 5561
Marketing & Sales Plan
Professor Ty Soo
• Creating an Effective Marketing
Plan
• Marketing plan: Road map for the marketing

activities of an organization for a specified
future period of time(1-5 years)
• 1)Executive Summary:
• Highlights and objectives
• Connecting marketing efforts to strategies and
goals
2)Description of Company:
Describes what the company does
3)Strategic Focus, Plan &

Objectives:
Strategic direction
Core values
Mission Statement
4)Situational Analysis :
• Internal
• External
• Competition
• Swot analysis
• Porter’s 5 forces
• Market share
5)Target market, customer analysis
And positioning
6)Marketing strategy:
Creating, communicating & delivering
Value to target market
7)Marketing program
• Product
• Pricing
• Place(Channels and distribution)
• Promotion
• Services
8)Financial plans:
• Expected sales revenues and profits
• Projected budgets
• Projected costs
• 5yr term
9)Implementation:
• How implemented
• Plan of activities
10) Evaluation
• Metrics for performance measurement
• Show how and when to make adjustments to
Keep plan on track
MANAGEMENT
FIN 5561
SEGMENTATION, VALUE ADDED &
CUSTOMER CENTRIC
PROF. TY SOO
RESERVED
COPYRIGHT © 2023 McGRAWHILL ALL
RIGHTS RESERVED
ALL RIGHTS RESERVED . NO PART OF THIS
PUBLICATION MAY BE REPRODUCED,
STORED IN AN RETRIEVAL SYSTEM,
TRANSMITTED OR USED IN ANY FORM
WITHOUT WRITTEN PERMISSION FROM THE
AUTHOR/PUBLISHER.
Segmentation, Targeting, & Positioning
 Who is the target market for SoCIAL LITE

Vodka?
 Product location strategy
 Multiple segmentation strategies were
employed
Copyright 2023 McGraw Hill Limited

The segmentation-targeting-
position process

Step 1: Establish Overall
Strategy or Objectives
Consistent with
mission
statement
Derived from
mission &
current state

Step 2: Segmentation
Bases
Segmentatio
Sample Segments
n Base
Geographic Continent (North America, Asia, Europe, Africa), country, region
(West Coast, Prairies, Central, Maritimes), province, city, urban,
suburban, rural, climate
Demographic Age, gender, income, education, occupation, race, marital
status, family size, family life cycle, religion, ethnic background
(white, black, Asian, Indian, German, Irish, Arab), generational
cohort (baby boomer, Generation X, Generation Y), home
ownership
Psychographi Lifestyle (Innovators, Thinkers, Achievers, Experiencers,
c Believers, Strivers, Makers, Survivors), personality/self-concept
(conservative, liberal, adventuresome, outgoing, health- and
fitness-conscious), social class (upper class, middle class,
working class)
Behavioural Benefits sought (convenience, economy, prestige, quality,
speed, service, environmental impact), usage (heavy,
moderate, light, non-user, ex-user, potential user, first-time
Copyright 2023user), loyalty
McGraw Hill Limited (not loyal, somewhat loyal, completely loyal)
Geographic Segmentation
 Divide market into separate

geographic units
 Countries, regions provinces, cities,
neighbourhoods, climate, etc.
 Develop appropriate marketing
programs

Test Your Knowledge
Geographic segmentation is most useful for

companies whose products satisfy needs that vary by
__________.
A) gender
B) region
C) age
D) nationality

Test Your Knowledge
Geographic segmentation is most useful for

companies whose products satisfy needs that vary by
__________.
A) gender
B) region
C) age
D) nationality

Demographic Segmentation
 Most common method

 Divide market into groups based on:
– gender
– age
– ethnic group
– family lifecycle stage
– household type
– income
– Other, e.g. occupation, education, religion
 Census excellent source of segmentation data
Psychographic
Segmentation
How consumers describe themselves:
 Self-values
 Self-concept
 Lifestyles
Marketers such as MEC want their ads to appeal to one’s self-concept.

“I’m like them, so I should buy their products.”

DESCRIPTION OF VALS
Innovators
• Successful,
Thinkers
• Old guard, respect
Believers
• Hold conservative
Achievers
• Goal-oriented
sophisticated, take- authority belief systems, professionals
CATEGORIES
charge people
• High-esteem
• Well-educated
• Mature, satisfied,
deep-rooted moral
codes
• View money as
source of authority
• Change leaders, comfortable • Value family, • Deep commitment
open to new ideas • Carefully research religion, to career, family
and technology and plan before community • Respect authority
• Actively seek new taking action • Value stability and the status quo
Description information
• Experiment with
• Appreciate
historical
• Dislike ambiguity
• Not looking to
• Active consumers
• Favour prestige
confidence, future perspective change society products, conscious
of Vals oriented
• Problem-solvers
• Act in accordance
with what’s right
• Predictable, loyal
consumers
of peers
• Embrace
• Active consumers, • Not influenced by • Choose familiar technology with
cultivated tastes latest trends products, productivity
established brands benefits
Strivers Experiencers Makers Survivors

• Live in the moment • Seek variety, • Practical people • Oldest consumers
• Trendy, fun-loving excitement with constructive • Cautious, risk
• Money defines • Enthusiastic, skills averse, feel world
success impulsive • Strong mechanical is changing too fast
• Favour stylish consumers and automotive • Concern for safety,
products • Want it all interests security
• Revolving rates of mentality • Traditional views of • Comfortable with
temporary • Active in sports and family, work, routine and the
unemployment social activities gender roles familiar
• Looking for a better • Heightened sense • Protect what they • Loyal to favourite
life, not easily of visual see as theirs brands
achieved stimulation • Value self- • Laggards in
• Active yet • Keep up with latest sufficiency technology
impulsive fashions • Suspicious of new • Focus on needs vs.
consumers
• Want to look good, ideas wants
have cool stuff • Unimpressed with
material
possessions
VALS TYPES
It is just as easy to identify Thinkers (left) as it is Makers (right). A person is given the VALS™ questionnaire, and the
VALS™ program at SRIC-BI runs the answers through the computer for scoring to determine the VALS™ type.

Behavioural
Segmentation
Benefits
Behavioural
Occasio Usage
Segmentati
n Rate
on
Loyalty

Geodemographic
Segmentation
 How consumers describe themselves

using a combination of geographic,
demographic, and lifestyle
characteristics to segment a market.
 “Birds of a feather flock together.”

Geodemographic
Segmentation PSYTE clusters
Cluster Urban Lower Middle Suburban Affluent Suburban Affluent
Name (U4): (S1): (S1):
Urban Bohemia Suburban Affluence Asian Heights
Descript From body piercing to This cluster with a flair for Asian ancestries
ion tattoos, Urban Bohemia fine combined with
includes a diverse living represents both old hard work and growing
population and wealth
by design. A new wealth. Because create and mould these
neighbourhood wealth upscale
with a youthful skew, this accumulates throughout neighbourhoods. Asian
cluster occupies itself in life Heights
a variety of artistic, retail, stages, this cluster represents the affirmation
and generally creative exhibits an of
employment. Men and older skew with many dreams cultivated
women employed in empty through
cultural, nests. Suburban Affluence generations of
artistic, and indexes high on immigrants and
entertainment related managerial often through hardship.
jobs abound. and technical These
Household maintainers employment families boost local
under and are married with economies
age 25, many with children. as well as family
college prospects.
degrees, are also Asian Heights indexes
high
Test Your Knowledge
Which of the following tools is widely used for

geodemographic segmentation?
A) PSYTE
B) LSAT
C) GNP
D) LIMRA

Test Your Knowledge
Which of the following tools is widely used for

geodemographic segmentation?
A) PSYTE
B) LSAT
C) GNP
D) LIMRA

Step 3: Evaluate Segment
Attractiveness

Identifiable
 Who is in their The Gap has identified

several distinct segments
market? to pursue. Two of its

brands: Gap (left) and Gap
Kids (below) appeal to
 Are the segments

different target markets.
unique?
 Does each
segment require
a unique
marketing mix?

Responsive
Customers must:
 React positively to firm’s offering
 Move toward the firm’s
products/services
 Accept the firm’s value proposition

Substantial &
Profitable
 Size matters
 Too small & the segment is insignificant, & will not
be profitable
 Growth potential equally important
Which segment will be more profitable to Mark’s: its

traditional market for industrial workwear (above), or
the top-line casual apparel segment (right)?

Segment Profitability – How
to Determine?
• Segment size (# of people in segment) = 60
million (<15 yrs)
• Segmentation Adoption Percentage = 35%
• Purchase Behavior = $500 x 1 time purchase
• Profit margin % = 10%
• Fixed Cost = $50M
Test Your Knowledge
Which of the following factors is NOT a key factor

when considering
profitability of a market segment?
A) market growth
B) market competitiveness
C) purchase behaviour
D) market access

Test Your Knowledge
Which of the following factors is NOT a key factor

when considering
profitability of a market segment?
A) market growth
B) market competitiveness
C) purchase behaviour
D) market access

Step 4: Select Target
Market
How do you choose your

target market?
 Based on competing a SWOT analysis

 Assess the attractiveness of the
opportunity
 Considers the organization’s
competencies

Targeting Strategies

Types of Targeting Strategies
 Undifferentiated Targeting Strategy, or Mass Marketing

 Differentiated Targeting Strategy
 Concentrated (Niche) Targeting Strategy
 Micromarketing

Undifferentiated Targeting Strategy, or Mass
Marketing
Undifferentiated/
Mass the product or service
is perceived to provide the
same benefits to everyone,
there simply is no need to
develop separate strategies for
different groups.

Differentiated Targeting Strategy
Differentiated
Targeting target
several market
segments with a different
offering for each
Condé Nast has 26 niche magazines focused on different aspects of life—

from The New Yorker for literature lovers to GQ for fashion-conscious
men to Vogue for fashionistas to Wired for techies.

Concentrated (Niche)
Targeting Strategy
Concentrated
(Niche) Targeting
Strategy when an
organization selects a
single, primary target
market and focuses all
its energies on
providing a product to
fit that market’s needs
Newton Running uses a
concentrated segmentation
Copyright 2023 McGraw Hill Limited strategy—not all runners, but
those who want to improve their
running form.
Micromarketing
Micromarketin
g (one-to-
one)a form of
segmentation that
tailors a product or
service to suit an
individual
customer’s wants
or needs.
Build-A-Bear lets customers design their own stuffed furry friend
with unique clothes, accessories, sounds, and the name printed
on its birth certificate.

Test Your Knowledge
Which of the following products is most likely to

use an undifferentiated segmentation strategy?
A) shoes
B) jewellery
C) cereal
D) sugar

Test Your Knowledge
Which of the following products is most likely to

use an undifferentiated segmentation strategy?
A) shoes
B) jewellery
C) cereal
D) sugar

Step 5: Identify & Develop
Positioning Strategy
Positioning Methods
 Value
 Product attributes
 Benefits & symbolism
 Competition
 Market leadership

Value
 The relationship of price to

quality…..
 Different consumers = different
value
KIND and PowerBar both offer their respective target markets a good value. KIND bars (left)
are made with natural ingredients, all of which are pronounceable, thus supporting a healthy
lifestyle. PowerBars (right) are protein bars designed to improve the performance of athletes.
Product Attributes
Focus on the attributes that are most important

and varies by target market.
Audi features the all-wheel-drive Quattro, which is positioned to appeal to those

wanting great performance and handling, particularly on snowy and icy roads.
Benefits & Symbolism
 Emphasizes the
benefits of the
brand as well as
the psychological
meaning of the
brand to
consumers.
SoCIAL LITE Vodka targets Gen Z men and women and is positioned on
functional benefits: great taste, all natural, 80 calories, and no sugar.
Competition
Has two options:
 Position against a specific competitor
 Position against an entire product classification

Test Your Knowledge
When positioning a product based on the

relationship of price to
quality the positioning method being used is
_______________.
A) product attributes
B) benefits and symbolism
C) value
D) competition

Test Your Knowledge
When positioning a product based on the

relationship of price to
quality the positioning method being used is
_______________.
A) product attributes
B) benefits and symbolism
C) value
D) competition

Positioning By Using
Perceptual Mapping
1. Determine consumers’
perceptions &
evaluations in relation to
competitors
2. Identify the market’s ideal points
& size
3. Identify competitors’ positions
4. Determine consumer preferences
5. Select the position
6. Monitor the positioning strategy

Perceptual Maps

Repositioning
 Refersto a strategy in which marketers
change a brand’s focus to target new
markets or realign the brand’s core
emphasis with changing market
preferences
Powerade (left) and Gatorade (right) are positioned similarly and compete with
each other for customers who seek healthy, sweet drinks.
Value –Added
 Value –added is the difference between the
price of a product or service and the cost of
producing it.
Example:BMW car sells for a much higher

premium over the cost of production because of
its reputation for superior performance, German
engineering and quality parts.
Source: Adam Hayes, Investopedia
CLIENT CENTRIC
Client-centric, is a strategy and a culture of doing business
that focuses on creating the best experience for the client,
and by doing so builds brand loyalty.The client is the
centre of a business’s philosophy, operations, or ideas.
E.g. In a Wealth management company or financial
planning company, it could add an estate planner or a
Investment/retirement specialist for the benefit of their
clients.
Source:Investopedia
MANAGEMENT
FIN 5561
STAGES OF CHANGE
PROF. TY SOO
RESERVED. NO PART OF THIS PUBLICATION
MAY BE REPRODUCED, STORED IN AN
RETRIEVAL SYSTEM, TRANSMITTED OR
USED IN ANY FORM WITHOUT WRITTEN
PERMISSION FROM THE
AUTHOR/PUBLISHER.
Statement of change model
In psychology and behavioral science,

the "Stages of Change" model, also
known as the Transtheoretical Model
(TTM), describes the process
individuals go through as they change
their behaviors. Developed by
Prochaska and DiClemente in the late
1970s and early 1980s, this model
has been widely used to understand
and facilitate behavior change in
various contexts including health,
financial and family.
1.Precontemplation: In this
stage, individuals are not yet
considering changing their
behavior. They may be
unaware of the need for
change or resistant to the idea.
2. Contemplation:
Individuals in this stage are
aware that there is a
problem and are considering
making a change within the
next six months. They may
weigh the pros and cons of
changing but have not yet
committed to taking action
3. Preparation (or
Determination): In this
stage, individuals have made
the decision to change their
behavior and are planning to
take action within the near
future, usually within the next
month. They may begin to
take small steps toward
change, such as gathering
information or setting goals.
4. Action: This stage involves
actively modifying behavior,
thoughts, or environment in
order to make a desired
change. It typically lasts about
six months. Individuals in this
stage are implementing their
action plans and making
tangible efforts to change.
5. Maintenance: Once
relationships are established
or strengthened, individuals
must work to maintain them.
This stage involves ongoing
effort to nurture connections,
resolve conflicts, and adapt
to changes in the relationship
dynamics.
6. Termination or Relapse:
In some cases, relationships
may naturally come to an end
due to circumstances or
changes in individuals' lives.
Alternatively, individuals
might experience setbacks or
relapses in their efforts to
build and maintain
relationships. In either case,
it's important to reflect on the
It's important to note that
people may move back and
forth between stages, and
progress through the stages
is not always linear. Relapse
is also common and is often
viewed as part of the
process rather than a
failure. The Stages of
Change model emphasizes
the importance of tailoring
HUMAN BEHAV.
& PRACTICE
MGT. FIN 5561
SWOT ANALYSIS &

PORTER’S 5 FORCES
PROF. TY SOO
COPYRIGHT©2024 TY SOO ALL RIGHTS
RESERVED
An example of a SWOT analysis for a financial
planning /wealth management company :
Strengths:
1)Expertise and Credibility:

 The company may have a team of certified
financial planners with extensive expertise,
enhancing its credibility.
 A strong track record of successful financial
planning for clients.
2)Client Relationships:
 Established and trusting relationships with clients
can lead to repeat business and positive referrals.
 Personalized services tailored to meet individual
client needs.
3)Comprehensive Service Offerings:
 Offering a wide range of financial
planning/ wealth management services,
including retirement planning, investment
management, risk management
(Insurance) and estate planning.
 Diversification of services can attract a
broader client base.
4)Technology Integration:
 Utilization of advanced financial planning
software and technology for accurate
projections and efficient client
communication.
 Ability to stay competitive by embracing
digital tools.
Weaknesses:
1. Client Acquisition Costs:

 High costs associated with acquiring
new clients, especially in a competitive
market.
 Proportionately high start up
costs:client acquisition, advertising and
business development.
2. Selection of products and services:
 As a new entrant, there may be a
limited selection of products and
services being offered.
3) Experience : Limited
experience in dealing with client
care and operations.
4) Difficult Highly
Competitive/Low Cost
Environment: The financial
planning/wealth management
company will be competing with
low cost robo advisor companies,
low cost discount brokerages.
Opportunities:
1) Digital Transformation: The
introduction of new technology into
the financial industry allow more
convenient ways to reach the
clients . E.g.online webinars and
zoom meetings with clients.
2) Economic conditions: If
economic conditions improve,
investors will be more inclined to
invest more, hence requiring more
services from wealth management
and financial planning companies.
3) Government intervention:
Utilising monetary policy, central
banks can decrease interest rates
which in turn will dercrease the cost
of borrowing. More money will now
be going to the companies’ bottom
line e.g. profits. Investors will now
be motivated to invest
4) Educational Initiatives: Increase

in public interest on financial
planning, financial literacy and
wealth management.
Threats:
1) Economic Downturns: Economic
recessions or downturns can lead to
decreased asset values, reduced
investment returns, and increased
client concerns.
2) Cybersecurity Risks: Wealth
management/Financial planning
firms are prime targets for cyber
threats, and a data breach could
damage the firm's reputation and
client trust.
3) Regulatory Changes: Changes in
financial regulations can create
compliance challenges and may
require continuous training and
updates by financial industry
participants thereby adding to the
cost structure.
4) Changing Client Preferences:

Evolving client preferences, such as
a shift towards robo-advisors or
alternative investment options, can
impact traditional wealth
management and financial planning
Here's an application of the Porter's Five Forces analysis for a
financial planning/wealth management industry:
1) Threat of New Entrants:

 Barriers to Entry: The financial industry often has high
barriers, including regulatory requirements, substantial
capital requirements, and the need for established trust
and reputation.
 Economies of Scale: Existing financial institutions may
benefit from economies of scale, making it challenging
for new entrants to compete on cost.
2) Bargaining Power of Buyers (Clients):
 Switching Costs: Customers may face high switching
costs, particularly if they have complex financial
relationships or numerous products with the financial
company.
 Information Availability: In today's digital age,
customers have access to more information, potentially
increasing their bargaining power.
3) Bargaining Power of Suppliers (Investment
Instruments, Technology Providers):
 Supplier Concentration: If a financial
planning/wealth management firm relies on a few
specific investment products or technology
providers, those suppliers may have higher
bargaining power.
 Integration of Technology:If technology can be
integrated seamlessly, it may reduce dependence
on external technology suppliers
4) Threat of Substitute Products or Services:
 Alternative Investment Options: The availability of
alternative investment options, including robo-
advisors or self-directed platforms, and fintech
companies can pose a threat to traditional
financial planning/wealth management services.
5) Intensity of Competitive Rivalry:
 Number of Competitors: The wealth
management industry can be highly
competitive, with both traditional
financial institutions and fintech
disruptors vying for clients.
 Differentiation: Firms that differentiate
themselves through personalized
services, expertise, and technology
may have a competitive advantage.
 Industry Growth: Slow industry growth
can intensify competition as firms
compete for a limited pool of clients.
MANAGEMENT
FIN 5561
UNDERSTANDING HUMAN BEHAVIOUR
PROF. TY SOO
Copyright

2 presentation may be reproduced, stored in a
Introduction to Behavioural Finance
Behavioural finance is a sub-field of behavioural economics that uses insights from the fields of psychology, sociology and
neuroscience to understand how people make investment decisions.
Introduction to Behavioural Finance
The exact origin of behavioural economics is unknown, but to the surprise of many, elements of behavioural economic thinking
date back to the 1700s. Adam Smith, best known for The Wealth of Nations in 1776 which laid the groundwork for classical
economics, also wrote a lesser known book called The Theory of Moral Sentiments in 1759. It is in the lesser known book that
researchers now believe Smith’s ideas presage the emerging field of behavioural economics
Behavioural Finance
Leading Behavioural Economic Thinkers
Name Current role Popular writings**
Professor of Public Policy, Georgetown Animal Spirits

George Akerlof*
University Identity Economics The Market for Lemons
Professor of Psychology and Behavioural Predictably Irrational

Dan Ariely
Economics, Duke University The Upside of Irrationality
Robert H. Frank Professor of Economics, Cornell University The Darwin Economy
Professor Emeritus of Psychology and Public

Daniel Kahneman* Thinking Fast and Slow
Affairs, Princeton University
Hersh Shefrin Professor of Finance, Santa Clara University Beyond Greed and Fear
Robert Shiller* Professor of Economics, Yale University Animal Spirits Irrational Exuberance
Professor of Behavioural Science and Misbehaving Nudge

Richard Thaler
Economics, University of Chicago The Winner’s Curse
*Awarded Nobel Prize in Economics

** See Appendix for full details on these books
Conventional Finance vs. Behavioural Finance
Conventional economics assumes that people make rational choices to maximize self- interest. In many traditional economics
textbooks, the term homo economicus (a.k.a. economic man)is used to portray humans as rational people that seek to
maximize utility as a consumer and profit as a producer. It assumes that "we can calculate the value of different choices we
face, and that we are cognitively unhindered in weighing the ramifications of each potential choice."
Ariely, Dan. Predictably Irrational: The Hidden Forces That Shape Our Decisions. HarperCollinsPublishers, 2008. Page
239.
In contrast, behavioural economics argues that humans often act irrationally. Behavioural economists argue that traditional
economic models are flawed because they don’t recognize the limited brainpower of humans, the limited time humans have to
make decisions, the fact that humans sometimes lack self- control and the reality that self-interest is not always the primary
motive.
Thaler, Richard H. and Sendhil Mullainathan. "Behavioral Economics". The Concise Encyclopedia of Economics, 2nd
Ed. http://www.econlib.org/library/Enc/BehavioralEconomics.html (accessed April 17, 2016)
As Duke University professor Dan Ariely aptly states in his best-selling book, Predictably Irrational, "wouldn’t economics make
a lot more sense if it were based on how people actually behave, instead of how they should behave?”
Ariely, Dan. Predictably Irrational: The Hidden Forces That Shape Our Decisions. HarperCollinsPublishers, 2008. Pages
238-244.
How We Think
While many errors in human judgement are due to emotion, leading researchers today like Kahneman, Thaler and Ariely, have
discovered that many of them are actually due to the basic wiring of our brains. "Our irrational behaviours are neither random
nor senseless – they are systematic and predictable."10
Ariely, Dan. Predictably Irrational: The Hidden Forces That Shape Our Decisions. HarperCollinsPublishers, 2008. Page
239.
How We Think
Kahneman and Thaler refer to the workings of the human brain and the way we think by describing the two cognitive systems
we all have.11 12
The terms they use are artificial, meaning they are not the biological terms a neuroscientist would use, but they are associated
with the central limbic system and the prefrontal cortex regions of the brain.
Kahneman, Daniel. Thinking, Fast and Slow. Random House of Canada Limited, 2011. Pages 20-21. 12 Thaler, R. and C.
Sunstein. Nudge: Improving Decisions about Health, Wealth & Happiness. Yale University Press, 2008. Pages 20-21.
How We Think
Cognitive Systems of the Human Brain
System 1: Automatic System System 2: Reflective System

(associated with the brain’s central limbic system) (associated with the brain’s prefrontal cortex)
Fast Instinctive Unconscious Effortless Associative Slow Reflective Conscious Effortful Deductive
Impressions, right or wrong, lead to judgements

Reasoning leads to judgements "Executive Functioning"
"Senses and Emotions"
The Brain and How we Think
http://discovermagazine.com/~../../../../../../../Media/Version21/C10V21/Images/Issues/
2015/nov/brain-chart.jpg (accessed April 27, 2016)
How We Think
The activities of the Automatic System (System 1) are associated with the oldest parts of our brain. Think of it as the part of
your brain that leads to gut reactions. "Americans have an Automatic System reaction to a temperature given in Fahrenheit but
have to use their Reflective System (System 2) to process a temperature given in Celsius.”
Thaler, R. and C. Sunstein. Nudge: Improving Decisions about Health, Wealth & Happiness. Yale University Press,
2008. Pages 20-21.
How We Think
For Canadians, the opposite is true. Likewise, a person whose first language is English will struggle to speak French using their
Reflective System, and vice-versa. The vast majority of our thought processes are System 1 responses and they have been
refined by learning and practice.
How We Think
The field of psychology has come to understand that errors in judgement occur due to the interplay between the Automatic
System and Reflective System in our brains. So despite the fact that humankind can be smart enough to put a man on the
moon, we can sometimes be fooled by seemingly simple problems.
In the popular book, Nudge, Thaler and Sunstein use the following test as an example. Go ahead answer the three questions in
the next three slides, give it a try!
2008. Pages 20-21.
How We Think
For each of the 3 questions, write down the first answer that comes to your mind.
1. A bat and ball cost $1.10 in total. The bat costs $1.00 more than the ball.
How much does the ball cost? _____ cents.
2008. Pages 20-21.
How We Think
1. A bat and ball cost $1.10 in total. The bat costs $1.00 more than the ball.
How much does the ball cost?
Most answer 10 cents. The correct answer is 5 cents
2008. Pages 20-21.
How We Think
2. If it takes 5 machines 5 minutes to make 5 widgets, how long would it take 100 machines to make 100 widgets?
Most answer 100 minutes. The correct answer is 5 minutes.
2008. Pages 20-21.
How We Think
3. In a lake, there is a patch of lily pads. Every day, the patch doubles in size. If it takes 48 days for the patch to cover the
entire lake, how long would it take for the patch to cover half the lake? _____ days.
2008. Pages 20-21.
How We Think
3. In a lake, there is a patch of lily pads. Every day, the patch doubles in size. If it takes 48 days for the patch to cover the
entire lake, how long would it take for the patch to cover half the lake?
Most answer 24 days. The correct answer is 47 days.
2008. Pages 20-21.
Heuristics and Biases
As humans, we use rules of thumb, or mental shortcuts, to help us. However, these mental shortcuts, known as heuristics, can
fail to produce a correct judgement and lead to cognitive and emotional biases. A cognitive bias is a systematic error in thinking
due to inferences or predisposed beliefs that affects the decisions we make. An emotional bias is a decision-making error due
to emotional factors. Unfortunately, biases cannot always be avoided if our Reflective System has no clue to the error.
Heuristics Summary Heuristics
Heuristics Summary
Heuristic Description Problem for Investors
A mental shortcut that helps us make a If investors base their trading decision upon a
Anchoring decision by using an initial value that readily purchase price or a high price then they could
comes to mind. continue holding a falling investment.
It is a subjective estimate of probability based
A mental shortcut that helps us make a
on how "top of mind" an event is. Can lead to
Availability (Recency) decision based on how easy it is to bring
serious risk assessment errors as a result of
something to mind.
fear.
The problem arises when applying long-term
A mental shortcut that helps us make a
theory over a very short-term time horizon.
decision by comparing information to our pre-
This could make investors optimistic about past
Representativeness (Similarity) conceived ideas or stereotypes. For example,
winners even though they are overvalued and
"a recent winner must continue to be a
pessimistic about past losers even though they
winner."
are undervalued.
Investors can let their likes and dislikes
A mental shortcut in which people rely on "gut determine their beliefs about investments.
Affect (Attitudes) feelings" instead of considering risks and However, your emotional attitude can change
benefits independently (relying on facts). over time and this changes perceptions of risks
and benefits.
Common Anchors in Financial Planning
Anchor Consideration(s)
Set aside 3 months’ pay in an Emergency Fund Instead of anchoring to this, consideration should be given to income
characteristics (salary vs. commission, seasonality), job stability, health
issues, marital status, dependents, homeowner status etc.
This does not inform how much someone would need to save in order to
Save 3% of every paycheque
reach a financial goal in retirement.
Leaves clients vulnerable to insufficient savings in retirement. The
Plan for 70% of preretirement gross earnings expense-based approach of pricing desired retirement lifestyle should
be used instead.
These are the bank’s ratios to approve loans. However, clients should
GDS and TDS ratios of 32% and 40% respectively avoid anchoring to them, especially if they do not belong to a pension
plan or have dependents.
This rule of thumb is dangerous and could lead to inadequate coverage

because it does not take into account age, debt obligations, dependent
Life insurance coverage of 10 times income needs or existing coverage/available resources. A proper individual
needs analysis should be done to determine the appropriate amount of
coverage.
Heuristics and Biases
Behavioural Biases
Cognitive Biases Emotional Biases
Caused by blind spots (the inability to analyze available information)
Information-processing errors Belief perseverance errors Caused by psychological predispositions. They

-individual fails to manage and organize -individual attempts to avoid mental conflict are not deliberate but spontaneous.
information properly due in part to the mental arising from information that contradicts with
effort required. their existing beliefs.
Anchoring and adjustment Availability bias Conservatism bias Confirmation bias Affinity bias Disposition effect
Endowment bias Loss aversion bias

Bandwagon effect bias Framing effect
Hindsight bias Representativeness bias Overconfidence bias Self-control bias Status-
Mental accounting Self-attribution bias
quo bias
Summary of Biases and Potential Remedies
Cognitive Biases Description Potential Remedy

Highlight to the investor that successful
investors recognize that the market does not
Investor is fixated on a particular price to sell
care what an individual investor purchased
at, such as a recent high price, or purchase
their investment at. Instead, they base their
Anchoring and adjustment price. Investor could also be fixated on a
trading decisions on the future prospects of the
particular price to buy at, such as a recent low
investment. Dollar-cost averaging is a solution
price.
for investors that are fixated on a particular
price to buy at.
Investors are likely to miss out on returns over
It is a subjective estimate of probability based the long run. Attempt to give the investor a
on how "top of mind" an event is. Can lead to sense of perspective as they are only seeing a
serious risk assessment errors as a result of fraction of the economic picture because of the
Availability bias fear. ‘noise of the media’. For this, I would suggest
Fact: Investors are sitting on record cash right the interactive "Big Picture" chart from the
now because of lingering fear from the global University of Chicago or the popular Andex
financial crisis. 34 chart by Morningstar. See web links to both
charts in footnotes.35
Kahneman attributes herding to a System 1
tendency that results from a loss of
The tendency to align beliefs and behaviours
Bandwagon effect bias (herding) confidence.36 It can be overcome through
with those of others.
education and thinking critically, like a
contrarian, about trends.
Sources: Refer to p. 17 of Retirement Planning textbook for sources and references noted above.
Summary of Cognitive Biases and Potential Remedies
Cognitive Biases Description Potential Remedy

Advisors and portfolio managers can be guilty
This is when people tend to seek out
of this bias. The solution is to encourage
information to support their opinion or the
Confirmation bias contrary viewpoints from others. The lack
opinions of others (like a hot stock tip from a
thereof was one of the reasons for the downfall
friend).
of Long-Term Capital Management.37
When investors fail to incorporate new Investors that suffer from conservatism likely
information by continuing to hold their prior don’t process complex information well and
Conservatism bias views. This can lead to underreaction or a slow should look to work with professional advisors
update to a new forecast. (original info. is over that can sort it out. Note the difference
weighted) between this bias and status-quo bias.
Mental accounting need not be a bad thing but
When people treat money differently
it can be dangerous for those that
Mental accounting bias depending on where it came from and where it
simultaneously borrow and lend (i.e. invest) at
is going.
different rates.
As described in the description of the A potential remedy to highlight that patterns in
representativeness heuristic. This problem returns are variable is to show the investor a
Representativeness bias
arises when investors apply long-term theory Periodic Table of Returns. See footnote for
over a very short time horizon. sample.38
Leads investors to underreact to information
The tendency for investors to claim that their
received from public sources and overreact to
successes were due to skill but that their
their own analysis. Difficult to correct.
Self-attribution bias failures were due to bad luck. Investors that
Emotions play a role as some psychologists
cannot perceive their mistakes are subject to
suggest it is a defense mechanism for low self-
overconfidence.
esteem.
Summary of Emotional Biases and Potential Remedies
Emotional Biases Description Potential Remedy

The tendency for investors to concentrate a While it makes sense to hold a majority of your
significant portion of their portfolio in their assets in your home currency, there are clear
Affinity bias home country or in a company they like benefits to diversifying your investment
because of the products they sell or their social portfolio by region, industry and company as
values. modern portfolio theory proves.
Many investors just cannot come to terms with
Because of loss aversion, investors have
their losses. Investors should be motivated to
trouble coming to terms with their losses and
sell losers to exploit tax reductions.
Disposition effect tend to hold losers too long and sell winners
This effect shows that loss aversion leads to
too early. Hersh Shefrin uses the term "get-
risk aversion – which is the preference to
evenitis" to describe it.39
reduce risk in the face of uncertainty.
This bias is difficult to overcome. Education on
This is the tendency to value what we own
the merits of the investment is useful but the
more than what we do not. This leads investors
strong emotional attachment is hard to break.
to hold investments that might not be ideal,
Endowment bias Question them on what they would pay for the
especially assets that were inherited or gifted
asset if they didn’t own it to start the
to them.
conversation on value.
Summary of Emotional Biases and Potential Remedies
Emotional Biases Description Potential Remedy
This involves a value-based discussion with the

investor. Visuals on the benefits of long- term
People try to prevent losses more than they try
investing can assist. The client should
Loss aversion bias to make gains. See description of Prospect
understand how volatility fits into their long-
Theory.
term financial plan. Stop- losses could be
considered.
The tendency for investors to believe they are A discussion on diversification and historical
right and that they are above-average. investment performance is warranted. Also, it
Typically, this investor seeks self-directed is appropriate to highlight the reality of long-
Overconfidence bias
investing and resists believing that investing term performance vs. benchmark. Kahneman
success depends partially on luck. This bias is a suggests you should ask them about the
genuine feeling as opposed to self- attribution. probability that intuition leads to skill.
The best possible solution for this bias is to
People are committed to keeping things the ensure adequate time is spent upfront to
way they are. One of the causes of this bias is implement a suitable investment plan because
a lack of attention but generally the investor the investor is unlikely to change. After
feels safe with the status-quo. They may examining the long-term investment choices of
consider changes to their portfolio but often pension plan members he discovered that the
Status-quo bias end up doing nothing. This can be problematic default cash allocation option was quite costly
when investors are content holding cash for to plan members.
long periods of time in their retirement Try sharing this quote by Sir John Templeton
accounts. too, "the only way to avoid mistakes is not to
Thaler jokingly says this bias is driven by the invest – which is the biggest mistake of all."41
‘yeah-whatever’ heuristic.40 Note the difference between this and
conservatism bias.
Prospect Theory and Loss Aversion Bias
Loss aversion bias, where people try to prevent losses more than they try to make gains deserves special mention. One of the
key concepts of behavioural finance is what Kahenman and Tversky called Prospect Theory in 1979. The theory examines how
people maximize value (utility) in choosing among alternatives that carry risk. They studied how people respond to the prospect
of loss, an issue explored by Harry Markowitz in the 1950s and Daniel Bernoulli in the 1700s, by surveying responses to the
series of problems below.
Source: Kahneman, D. and A. Tversky. "Prospect Theory: An Analysis of Decision under Risk," Econometrica 47-2.
Mar. 1979. Page 279.
Prospect Theory and Loss Aversion Bias
Source: Kahneman, D. and A. Tversky. "Prospect Theory: An Analysis of Decision

under Risk," Econometrica 47-2. Mar. 1979. Page 279.
Implications for Financial Markets
At this point, it is appropriate to recognize, as Hersh Shefrin points out in his book Beyond Greed and Fear, that "one investor’s
mistakes can become another investor’s profits. But one investor’s mistakes can also become another investor’s risk." he is
referring to here is that the collective actions of individual investors can lead to Shefrin, H. Beyond Greed and
Fear: Understanding Behavioral Finance and the Psychology of Investing. Oxford, 2002. Page 4.
What Shefrin is referring to here is that the collective actions of individual investors can lead to market irrationality.
Robert Shiller, another Nobel-prize winning behavioural economist, emphasizes the factor of overconfidence at a macro-level.
His work is nicely summarized in his book called Animal Spirits.
Akerlof, G. and Shiller, R. Animal Spirits: How Human Psychology Drives the Economy. Princeton University Press,
2009.
s that the collective actions of individual investors can
Unlike Kahneman, Robert Shiller’s work largely focuses on the macro-side of behavioural finance. He was one of very few
economists that predicted significant problems with real estate prices in the lead up to the 2006-2007 U.S. credit crisis and
global financial crisis that followed.
Akerlof, G. and Shiller, R. Animal Spirits: How Human Psychology Drives the Economy. Princeton University Press,
2009.
s that the collective actions of individual investors can
Herding
Humans are pack animals by nature and this makes it hard to be a contrarian. Herd behaviour (the bandwagon effect) is all
about relying on the simple observation of others to acquire information. I recall someone warning me long ago that "when your
cab driver asks you about a specific stock to take it as a sign that the market as a whole is becoming irrational." This was
particularly evident during the dot-com bubble in the 1990s and the credit crisis of 2007. In Canada, at an individual stock level,
names like Bre-X and Nortel are often associated with herd behaviour.
Personality Types and Investing Success
Warren Buffett Benjamin Graham John Templeton
Professor, Columbia University

Chairman, Berkshire Hathaway
Father of security analysis and Founder, Templeton Funds
(student of Benjamin Graham)
value investing
1930 to present 1894 to 1976 1912 to 2008
- Thinks long-term but does not

overthink
- Patient
- Prolific writer - Less emotional
- Cool head
- Exact reasoning
- Steady hand - Opportunistic (uses cash to
- Deep memory
- Defers gratification - Cheerfully capitalize)
- Mental training ability
Reported Traits greedy - Doesn’t panic
- Multi-lingual
- Independent thinker - Modest - Learns from mistakes and the
- Many interests (including plane
- Sympathetic conscience mistakes of others
geometry and music) - Very warm - Seeks answers to new
- Emotional discipline
- Generous
questions
- Regular prayer
Source(s): Refer to p. 25 of Retirement Planning textbook for sources.

Personality Types and Investing Success
Warren Buffett Benjamin Graham John Templeton
Professor, Columbia University

Chairman, Berkshire Hathaway
Father of security analysis and Founder, Templeton Funds
(student of Benjamin Graham)
value investing
- Looks for bargains among quality - Looks for bargains among quality - Looks for bargains among quality
Investment focus
stocks stocks stocks
- Preferred holding period is - No investment is forever
forever - Invest with a margin of safety - Don’t be fearful or negative too
Investing views - Be greedy when others are - Profit from volatility - Invest often
fearful and fearful when others are intelligently - The only way to avoid mistakes
greedy is to not invest
- When it comes to investing "If - "Do something foolish, - "The four most expensive words
An Interesting Quote you have an IQ of 150, sell 30 something creative and something in the English language are "this
points to someone else." generous every day."65 time it’s different."66

The Market and Risk
Direct Source: Mackenzie Investments. Understanding Markets and Long-term

Investing Report. December 31, 2015
Myths about Risk Tolerance
Myth: People’s risk tolerance is variable and changes when markets rise and fall.
Reality: Risk tolerance is typically set by early childhood and it decreases only slightly with age, though major life events can
change it.
Myth: A person’s appetite for risk is the same across all aspects of their life.
Reality: Just because a person likes to take physical risks does not mean they like financial risks or other sorts of risk.

Myth: Risk tolerance will determine asset allocation within an investor’s portfolio.
Reality: A risk tolerance assessment should tell the adviser the risk an individual is prepared to take in their financial affairs. But
it is the risk profiling process that provides a proven methodology to ensure the suitability of investment advice.
Myth: Financial advisers can accurately estimate their client’s risk tolerance
Reality: Strong evidence of gender stereotyping exists. Advisers also assign too much weight to demographic variables like
income, wealth and marital status.

Myth: Risk tolerance will determine asset allocation within an investor’s portfolio.
Reality: A risk tolerance assessment should tell the adviser the risk an individual is prepared to take in their financial affairs. But
it is the risk profiling process that provides a proven methodology to ensure the suitability of investment advice.
Myth: Financial advisers can accurately estimate their client’s risk tolerance
Reality: Strong evidence of gender stereotyping exists. Advisers also assign too much weight to demographic variables like
income, wealth and marital status.

Myth: Questions on time horizon of the investment, investor’s age and when the investor will retire are relevant to
determine an investor’s risk tolerance.
Reality: While these are important aspects of knowing your client, they are separate factors to a person’s risk tolerance.
Although, time horizon, for example, might be relevant to the measurement of risk capacity or risk required, it is not relevant to
risk tolerance, which is an enduring psychological trait.

Educating Clients on Irrational Behaviour
When educating clients on the biases covered in this report, and when attempting to remedy them, be sure that you criticize the
behaviour and not the person. Also, be realistic in the success of the behaviour modification strategy as emotional biases are
very difficult to correct.
Risk Tolerance Investor primarily affected by: Behaviour modification is typically:
High Emotional biases Difficult to correct
Medium Cognitive biases Easier to correct
Low Emotional biases Difficult to correct

Client Engagement Skills
Client engagement skills are all about connecting and communicating with your clients at the human level.
This is the person to person connection that drives trust, confidence and belief. Engagement skills are arguably the most
difficult but the most important skills to learn in becoming a trusted advisor and building a practice.
Because human beings are endlessly complex, no one approach, or skill will work in all instances. Humans are not only
complex, but, they can change their ideas, and motivations from meeting to meeting and even within the same conversation.
Client engagement skills are about mastering a set of behaviours and relationship building skills that put your customers first
and identifies you as a trusted business partner, not just as another supplier.
It means consciously thinking about your client’s experience at every touch point. Most people who have direct client contact
are often too eager to tell clients about their products, services or solution.
In taking this approach, they position themselves on the opposite side of the table; your clients sense it, understand it, know it,
and reject it.
As a Registered Retirement Consultant (RRC/CR), the importance of engagement skills in attracting and perhaps, more
importantly, retaining clients is often understated particularly when compared to the more tangible requirements for hard skills
such as product knowledge, educational proficiencies and technical skills.
Without minimizing the importance of hard skills - clearly, you must be technically competent - the reality is that it is the
engagement skills demonstrated by you that builds a trusting, enduring relationship with your clients. An RRC/CR who has
strong engagement skills will have the ability to look for clues in a client’s body language, voice, word choice and demeanor so
that appropriate questions can be asked, and a relationship built.
By comparison, hard skills are usually related to professional knowledge, tools or techniques that allow us to work within our
profession.
Personal Style
Each person is a very special and unique individual. We have our habits, our culture, our education, our ethics and manners.
And, we have a personal style, or personality or temperament. We bring our entire self to each interaction and environment we
encounter each day.
This includes work and the interactions with our clients. To be optimally effective and professional it is imperative that we
understand how we act, react and interact with the world. What makes us tick? What are our hot buttons or frustrations? How
do we prefer to communicate and listen?
Personal Style and Colours
Hippocrates was perhaps the first to reference colour with his four humours. Over the years there have been numerous
systems that have carried on with this approach and attached a colour label to a particular personality. The table below (next
slide) reviews a sampling of those systems and how they relate to Personality Lingo
Personal Style and Colours
Personality Lingo® Connector Thinker Planner Mover
Hippocrates Phlegm Yellow Bile Black Bile Red Blood
Don Lowry’s True Colours BLUE GREEN GOLD ORANGE
Colour Lingo BLUE GREEN GOLD ORANGE
Personality Dimensions BLUE GREEN GOLD ORANGE
Insight Learning BLUE GREEN GOLD ORANGE

Four Lenses BLUE GREEN GOLD ORANGE
Four Windows BLUE GREEN GOLD ORANGE
Real Colours BLUE GREEN GOLD ORANGE
Spectrum Temperaments BLUE GREEN GOLD ORANGE
Personality Resources BLUE GREEN GOLD ORANGE
Colour Code BLUE/WHITE RED Blue – N/A YELLOW

Herrmann Brain RED BLUE GREEN YELLOW
Ritberger ORANGE GREEN RED YELLOW
Birkman GREEN BLUE RED YELLOW
Personal Style and Letters Descriptors
The most popular letter systems for Temperament identification are the Myers-Briggs Type Indicator and the Keirsey systems.
The chart below shows how Myers-Briggs ad Keirsey relate to Personality Lingo:
Personality
Connector Thinker Planner Mover
Lingo®
ENFJ, INFJ ENFP, ENTJ, INTJ ENTP, ESTJ, ISTJ ESFJ, ESFP, ISFP ESTP,
Myers – Briggs
INFP INTP ISFJ ISTP
Keirsey
NF NT SJ SP
Temperament
Personal Style and Word Descriptor Systems
Personality Lingo &reg Connector Thinker Planner Mover
Ancient Greeks Fire Water Earth Air
Galen Phlegmatic Choleric Melancholic Sanguine
Carl Jung Intuition/Feeling Intuition/Thin king Sensing (/Judging*) Sensing (/Perceiving* )
Seasons Summer Winter Autumn Spring
Keirsey Idealist Rational Guardian Artisan
Keirsey/Bates Apollonian Promethean Epimethean Dionysian
Diet Styles Diet Feeler Diet Thinker Diet Planner Diet Player
Inner Hero Helper Thinker Planner Doer
Helen Fisher Estrogen/Oxytocin Testosterone Serotonin Dopamine
Helen Scully Facilitator Innovator Organizer Liberator
Character Champions Blue Dolphin Green Owl Gold Ant Orange Wolf
Who are you?
So where do you fit? What is your personal style? This is important as who we are on the personality level greatly impacts
everything we do. Engagement skills, communication, sales, leadership, learning, stress management, conflict resolution and
more are all influenced by who we are. This is how we act, react and interact with the world around us.
Let’s start with Introvert or Extrovert. Many people erroneously believe that introversion means you are shy whereas
extroversion means you are not. Both Introverts and Extroverts can be shy. Shyness is the fear of social judgement and can be
experienced by either introverts or extroverts.
Who are you? Introvert or Extrovert?
A basic definition for Introverts is that they gather or restore their energy from their internal world of thoughts, ideas and
reflections and Extroverts rejuvenate or gather their energy from the outside world of people activities and their environment.
People with a preference for Extroversion tend to express their most dominant personality traits outward. Determining the
personality style of someone who is extroverted is usually quite straightforward – what you see, is what you get!
Introverts on the other hand tend to use their primary personality style to process internally. They may communicate outwardly
and behave in manners that are associated with their secondary style. Therefore, extra attention needs to be paid when
identifying the personality style of Introverts.
People with a preference for Extroversion tend to express their most dominant personality traits outward. Determining the
personality style of someone who is extroverted is usually quite straightforward – what you see, is what you get!
Introverts on the other hand tend to use their primary personality style to process internally. They may communicate outwardly
and behave in manners that are associated with their secondary style. Therefore, extra attention needs to be paid when
identifying the personality style of Introverts.
Extroverts (E) Introverts (I)
• Social Interaction v • Inner concentration

External world of thoughts e
r Inner world of feelings Depth
Breadth s
u Intensive interests
Extensive interests s
Few relationships
Many relationships Gregarious and
Reflective and thoughtful Fore-thinkers
social After-thinkers
About 45% of the population
About 55% of the population
The Importance of Personality Style
Our personalities are a very important and critical component of who we are, how we respond, how we communicate, how we
relate and how we process information.
This is foundational to learning and using excellent engagement skills to build both personal and professional relationships.
As you will learn later in this unit, your personality greatly influences how and what you verbalize and hear.
The Importance of Personality Style
You could be clearly communicating your message and be completely misunderstood! How? Easily – you speak your own
language and use words based on your personality.
You hear what other people say through your ears which filter messages through your own language based on your
personality.
Confusing? Not really it is just thinking of Personality -speaking as another language.

Overview of your Personality Style
Playful, high energy, easily bored, loves freedom and new ideas. Creative, great negotiators, always up for an adventure.
Loves novelty and being on the leading edge, lives in the moment.
•Strengths: embrace change, think outside of the box, love a challenge, high energy, playful and fun, very gregarious.
Mover Visual communicator.
•Challenges: easily bored, short attention span, frustrated by status quo, don’t always think before speaking.
•Communication Tips
•If you are a Mover: don’t interrupt, focus on the speaker, tone down the volume, limit wordiness and conversation
•Speaking to a Mover: Tell "people" stories, give colourful details, give attention, don’t tune out.
Logical, analytical, naturally curious, love knowledge and learning, perpetual learner. Able to easy conceptualize, reserved,
appreciate being given the time to think and process. Live in the future.
• Strengths: very knowledgeable, independent and able to work alone, reserved and proper, analytical and innovative.
Frequently ask, "Why?"
•Challenges: may come across as a "know-it-all" or arrogant, fact based rather than emotionally sensitive, very demanding
Thinker of themselves and others.
•Communication Tips
•If you are a Thinker: practise saying "please" and "thank-you". Focus on the person not the project. Practise active
listening, read to the end of the letter.
•Speaking to a Thinker: Use bullet points, not small details or stories. Give the bottom line first, give additional details only
if asked, ask questions, expect the "why" statement.
Supportive, kind, positive, crave connection to others. Great imagination with love of the arts, a real people person, very collaborative and a natural mediator. Lead with their
heart and easily identify and relate to the emotional state of others. Seek personal growth and meaning
•Strengths: open and accepting, love to communicate, very cooperative, natural mediators, caring and compassionate, creative and empathetic. Soft spoken.
•Challenges: extremely sensitive, lead with their heart, often supress their own needs and wants, tentative in communicating their needs.
Connector
•Communication tips:
•If you are a Connector: express your opinion, share ideas, practise making and expressing choices, speak more quickly and boldly.
•Speaking to a Connector: show respect and look for the positive, freely give praise, give focused attention, wait to speak until they are completely finished, give a few choices.
Conscientious and dependable, reliable, organized, makers of lists. Know and follow the rules, guidelines and legislation. Steadfast, goal driven, believe in right
and wrong. Strong sense of duty and commitment to the job at hand.
• Strengths: organized, productive, prepared, value citizenship, community service. Follow directions, follow through on tasks, hard working, loyal and
responsible.
Challenges: need to have a plan and clear instructions or directions, resist imposed change, puts others on an agenda, not tolerant of casual time management
Planner or being surprised. Communication tips:
•If you are a Planner: don’t overwhelm others with details, give praise when due, celebrate incremental improvements, adjust your expectations, appreciate
contributions of others.
•Speaking to a Planner: first ask if it is a good time to talk, respect their time/space/silence. Give factual and orderly details. Be prepared – think through what
you will say. Wait for their response.
The Mover
Clothing: often bright and/or intense colours, trendy threads, beads and sparkles, colourful ties often with graphics, fun
socks, novelty sweaters that tell a story.
Activity: high energy, constant movement, big gestures and movements, often touches others – clap on the back, fist
bump, tap on the shoulder. Can forget to respect the personal space of others.
What you see
Focus: very impetuous, easily distracted "squirrel!", tends to what is right in front of them, irreverent humour!
Emotions: highly charged and changeable. Emotions are not hidden, happy is elation, sad is devastating and responses are
based on the current state of emotion. May have several changes from high to low in a short span of time.
Volume: usually quite loud and easily heard across the room. Often have a very loud and distinctive laugh. Even whispers
carry quite far.
Language: not afraid to make up their own words or use slang. May use edgy and just barely appropriate language, jokes,
What you hear metaphors and fun terminology.
General: love to tell stories to make a point or just entertain. Very visual and graphic with a wide eyed "who me?"
innocence of expression. Speak very quickly with great excitement and can quickly change the subject as they can be
easily distracted.
• Personal work space can be quite chaotic. May appear to be disorganized but they will know where everything is.
Environmental Engage in high energy activities and possibly extreme sports. Love to challenge themselves and then tell a great story
Clues about their adventures.
Always open to new ideas, adventures or products. Rely on the research and opinions of others.
The Thinker
Clothing: often wears the strong power colours – black, red, navy blue, royal blue. Power clothing such as jacket and
slacks, logoed clothing, not usually seen wearing ultra casual such as baggy jogging pants and sweatshirts. Conservative
jewellery.
Activity: quick and active with purposeful movements. Each action has a reason. Able to be completely still, alert and
What you see watchful.
Focus: very decisive and direct. Always alert and watchful, easily takes charge of a conversation or situation. Focussed eye
contact.
Emotions: not readily apparent. Operates from logic rather than emotion. Emotional layer is very deep and when they rise
to the surface are expressed very strongly. Intolerant of sloppy work and mistakes and easily angered.
Volume: not necessarily loud but strong and direct. Will speak over others without raising their voice. Genuine laughter is
of moderate volume.
Language: use technical language and correct terminology. Knows how to spell and pronounce the big words and may use
What you hear
their vocabulary as a weapon rather than a tool. Enjoy utilizing a robust lexicon.
General: Want to know what you know. Asks many questions and will listen appreciatively to the answer. May challenge
your knowledge or assumptions, respects intellectual discourse.
Personal workspace will likely have evidence of several projects on the go at once. Also, research books, models,
prototypes or equipment. Love technology and the access to learning and knowledge that it represents.
Environmental Enjoy doing difficult things. Love the challenge of hard work, technically precise activities and pushing themselves to the
Clues limit while controlling their environment.
Naturally curious and thirsty for knowledge they enjoy solving problems and inventing better ways of doing things.
Prefer to keep their emotions to themselves and are slow to trust.
The Connector
Clothing: prefer comfortable and soft textured clothing. Soft knits, elastic waist, unstructured suits and sweaters. Soft
colours, pastels, browns, blues, greens, earth tones.
Activity: very relaxed and laid back, low energy. Peaceful and calm, even in chaos
What you see
Focus: will focus exclusively on those they are in conversation with. Pay close attention to feelings, language and
environment around them.
Emotions: lead with their heart. Very peaceful and calm, seldom have extremes of emotion. Balanced and rational.
Volume: most often quiet spoken with much feeling in their tone and expressions.
Language: use emotional words such as "I feel ..." very descriptive language, use lots of adjectives
What you hear
General: usually good listeners with strong focus on your words and how you are saying them. Very emotionally
intuitive, can easily pick up your current emotional state.
Have many friends and prefer to be in a group or working as a team. Would rather work with people than things or tools.
Casual about their surroundings unless it comes to comfort items. Work area will have pictures of family and friends and
some fun conversational objects. May have rocks or bottles of sand that have emotional meaning to them
Environmental clues
Wear their hearts on their sleeves and are ready to be glad or sad as the situation requires. Very openly emotional.
Always put the needs of others ahead of themselves. Very cause oriented, people, animals, environment etc.
The Planner
Clothing: the correct clothing for each activity. Tucked in, buttoned up, correct and proper, not necessarily stuffy or stiff.
Activity: very persistent and thorough, need to finish what they start. Likes to organize things and data – uses charts
and graphs.
What you see
Focus: prefer to focus on tasks rather than people. Very artistic and deeply sensitive. Can shut out the world to focus on
a task.
Emotions: very deeply emotional, quiet tears at a beautiful sunset or picture. Keep feelings to themselves but are the
most emotionally sensitive. You just don’t see it.
Volume: quiet-spoken, low tone, unemotional or intense. Very quiet laugh or chuckle. Do not draw attention to
themselves.
What you hear Language: Uses correct and precise language and terminology. Clear expectations and terminology, very articulate.
General: a very clear communicator that may start a conversation in their head and begin orally half way through. Very
organized thoughts and may speak in a "list".
Very tidy, everything in its place. Difficult to replace items when they are still useful. May have "hoarder" tendencies as it
is hard to part with familiar objects.
Works space will be very organized and likely minimalistic – one file or sheet of paper at a time on the desk. Cannot
think or work in clutter
Environment al clues
Work very well alone without supervision. Prefer to be given the job, the expectations, and the deadline and then be left
alone to work.
Like to follow the rules and procedures, most comfortable in a formal environment where everyone knows and follows
the rules.
Communication
Communication is a gift to both the speaker and the receiver. Therefore, is stands to reason that being a solid communicator
will stand a professional in very good stead. Let’s look at what good communication is and isn’t.
Communication
First, communication is not talking. You may have heard the age-old question, "If someone talks in the woods and no-one is
there to hear them, are they communicating?" Talking, is just that, talking.
Communication is the giving and taking of information, ideas, concepts or messages. Without a receiver, communication has
not occurred.
Without a message being sent in a way that the receiver can comprehend and respond to, communication has not happened
well.
How do we ensure that we communicate in the most effective way we can? The following ideas, techniques and instructions
will assist with that.
Communication
Communication consists of good speaking skills and solid listening skills, coupled with respecting and understanding how best
to communicate with the person’s individual style.
In other words, communicating from your voice to their ears.

Attending Skills
Attending skills are primarily physical behaviours that let other people know that you are focusing on them.
A well-recognized model for basic attending skills is the SOLAR model.

Attending Skills – The SOLAR Model
The SOLAR model stands for Square position, Open posture, Leaning in, Asking open questions, and Reflecting back what you
have believed you have heard.
This is an easy to remember and apply – once learned – process that will allow you to maximize your time in the client meeting.
S - Square position
Squarely face your client, whether across a desk or table, or in facing chairs. This gives the opportunity for direct eye contact
and the most room for expressive movement. It is easy to speak directly and to listen actively when sitting face to face.
O - Open posture
An open posture is where your hands and arms are relaxed and resting on the table, or desk or on the arms of chairs.
Arms and legs are not crossed, the opposing elbows are not firmly clenched in your hands and your shoulders and neck are relaxed.
For some people the habit of crossing their legs is firmly entrenched. If possible practise crossing legs at the ankles, not the knees as
this can still present an "open" attitude to your client.
Being physically open in your posture allows you to hear what is in the conversation, a closed posture – with crossed arms or legs
indicates defensiveness. Be open, engaging and vulnerable to facilitate relationship building. Open shows listening, closed indicates
decision is made, no longer listening.
L - Lean in to the conversation

Rather than leaning back into your chair lean in toward your client at a comfortable level. Leaning slightly towards your client
conveys interest and focus.
Think about a social environment you may have been in – you lean in when you are engaged, listening, or engrossed in what
you are hearing.
Leaning back gives the appearance of avoidance or superiority. Leaning in shows interest, engagement and openness to the
ideas being expressed.
A - Ask open questions
Open questions do not have a predefined answer. They allow for the engagement and exploration of ideas and thoughts and
provide a lot of information. A guideline would be questions that begin with how, what, where, why, or when.
For example: "What are some of the elements you consider when making plans for your future?"
An open question gives the respondent full breadth of thought and opinion in their response.
As you listen you may hear information or ideas that will help you in your further exploring for suggestions, solutions or
pathways
R - Reflect what you believe you have heard
Always double check to ensure that your perception of what you thought you have heard, is indeed what the person believes
they have said.
WHAT? Think about a mirror for words. In some ways we are a mirror to our client’s world. Remember that there are always 2
sides to a conversation.
What the speaker believes they have said, and what the listener believes they have heard.
There are two elements at work here, personality and perception. How we speak and how we perceive the message is
influenced by our personality, in other words our perception of the message.
Soliciting Skills
Soliciting is the art of eliciting information. To solicit is to "obtain by persuasion, entreaty or formal application". We will explore
4 specific communication soliciting skills: closed-ended questions, open-ended questions, declarative probes and prompts .
Soliciting Skills
Closed-ended Questions – or closed questions can be answered with Yes or No or a one or two-word answer.
Example: "Is it raining?" – Yes. "Are you cold?" - No "What is your name?" – Tom Jones. "Where do you live?" – 123
Somewhere Street.
Soliciting Skills
Open-ended Questions – or open questions require a fuller, more informative and robust response. Open questions have
sentences, lists and stories as answers and allow respondents to include more information, including feelings, attitudes and
understanding of the subject. They often start with "How, why, what". Open questions lead to conversation and the sharing of
thoughts, ideas and information.
Example: "What do you imagine your first day of retirement will be like?" – I am going to get up early, make coffee, read the
paper and wave to everyone going by on their way to work. Then I will take my dog for a walk. For lunch …
As you can see, an open question elicits so much more.

Soliciting Skills
Declarative Probes – are functionally like open-ended questions but are less interrogative. It is suggested that a declarative
probe is a "polite command". Their use is to get more information, to have the respondent open up and tell more. A declarative
probe is "Tell me more about that please.", "Elaborate a bit for me".
Soliciting Skills
Prompts – are used to gently assist or encourage a hesitating speaker to say something or to continue with what they were
saying. A prompt is used to move the conversation along. Prompts are short one or two-word phrases or non-verbal vocal
noises. Hmmmm, What else? Go on, And then … ?
Example: "My spouse thought I should come to see you" - UmHmmmm" Our brother in law is one of your clients and he seems
to be quite happy with the results of his portfolio" - Go on…"
Effective Reflections
Reflecting meaning is similar to a reflection of verbal content, with the added component of inference.
Sometimes it is necessary to infer what the other person meant or seemed to say but didn’t actually say it directly.
You are intending to infer the meaning of the statement. These inferences which are common in "normal" conversations (where
most people assume but do not verbalize their inferred meaning) need to be reflected back to the client to ensure that our
interpretations of the implied meaning are the correct ones.
Reflecting Affect (Feeling)
Reflecting affect (feeling) is a reflection of the feelings behind a client statement. As with reflections of meaning, reflection of
affect must be done tentatively.
This is one of the most powerful tools that can be used. It helps to defuse negative emotions that may be getting in the way of a
client’s capacity to deal with problem situations.
Acknowledgement of feelings such as anger, fear or frustration is often a first step in resolving a negative situation.
Effective Reflections
There are two major problems in learning how to do effective reflections: recognizing a meaning or emotion and identifying or
labeling it.
We often deal in shades of meaning, and the subtle differences in meaning between two words may be key.
Mini Glossary of Effective Reflections
Ideas for empathetic response leads:
Kind of feeling …
Sort of saying …
I am picking up that you …
If I am hearing you correctly …
Kind of makes (made) you feel …
What I guess I am hearing is …
Mini Glossary of Effective Reflections
Ideas for empathetic response leads:

I wonder if you are expressing a concern that …
You place a high value on …
I read you as …
Your message seems to be, "I …
So, your world is a place where you …
Structuring Skills
Without structure, conversations and client meetings can become meaningless drifting from topic to topic with little sense of
direction, accomplishment or purpose.
There is a need to manage interviews in a manner that allows clients full opportunity for expressions, and yet still provide a
context for learning, growth and decisions.
Structure provides meaning and maximized opportunity. In this section we will look at three structuring skills: Summaries,
Overviews and Transitions.
Overview Structuring Skills
An overview should contain at least four major components.
1. A brief description of how you intend to approach the meeting, interview or issue.
2. Your clients and your expectations should be clarified. Here you explain what is expected from your client and in turn what
your client can expect from you.
Overview Structuring Skills
An overview should contain at least four major components.
3. Your client should be given some indication about how much time is likely to be needed and the general structure of how the
meeting will proceed. This includes the length of each meeting and how many meetings will be needed.
4. An agreement to proceed is reached based on the previously mentioned conditions and expectations.
Your Client’s Vision for the Future
Creating a Self Portrait
Helping clients create their own self-portrait involves several steps.
1.Prepare the client for a self-portrait by doing some preliminary work that includes developing rapport and, as appropriate,
visioning.
2.Identifying specific roles/jobs/activities that the client has engaged in that were particularly satisfying.
3.Identifying the skills, knowledge and attitudes the client used to successfully engage in those satisfying activities.
4.Exploring meaningfulness issues related to the satisfying activities previously explored.
5. Identifying additional roles/jobs/activities that the client has engaged in both work and non-work-related.
6.Repeating Steps iii and iv for each activity identified.
7. Following the same process and referring to the client’s vision; identifying activities the client hopes to engage in and needs
to engage in, identifying related skills, knowledge and attitudes, exploring related meaningfulness issues.
8.Facilitating client research to flesh out information regarding needed activities.

9. Cleaning up and reviewing the mini self-portrait to ensure it appears in a form suitable to the client.
The Client Self Portraint
Activities Skills Knowledge Attitudes Meaningfulness

Identify: 1. For each activity (left column), identify Identify meaningfulness related to activities
*Satisfying roles/jobs and related activities the related skills, knowledge and and to related skills, knowledge and attitudes.
*Preferred activities (given the choice, you attitudes required to undertake that
Values
would prefer to engage in these activities) activity effectively.
*Needed activities (activities you will need to
undertake to move towards your vision)
Beliefs
Interests
Building Horizons: Outcomes vs. Times Frames

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Focused on aspects of customer engagement and

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