Cannon Financial Institute

Psychological Profiling: More Important for You Than for Your Clients

A conversation with Cannon Executive Chairman Phil Buchanan: Part 9

To read the financial press is to come away with the notion that all clients have deep psychological problems which create insuperable barriers to rational investing. Perhaps. Then again, people have been investing successfully for a long time and if you’re an industry veteran then you know many investors lose money because of their own folly—not yours.

The answer to this problem seems to be the use of psychological profiling tools. This could be the case. “Said Phil Buchanan, “if you don’t have years of experience to guide you, then psychological profiling can be a useful tool. Yet I can’t say the following too strongly, it’s not a substitute for listening. One of the things I often mention to FAs is the ratio of you talking vs your clients should be one to six. That is, in a one hour period, your clients should talk for fifty minutes and you should talk for ten. Unfortunately, it’s often the other way around.”

Yet psychological profiling tools do have a place in an FA’s toolkit, Phil commented, but probably not the way you are thinking. During a multi-year consulting project with a large financial services firm, Phil worked with the company Financial DNA. According to Phil, they learned a lot of interesting things which helped employees to better serve clients.

However, Financial DNA administered their battery of tests to employees and not clients under the quite rational belief that before you start applying legitimate psychological profiling to your clients, you need to apply it to yourself. There is a saying which has been around since ancient times, which says “know thyself.” When a saying has been around that long there is usually some truth to it. Hence, you can hardly advise clients on the psychology of their investing style without knowing something of your own psychology.

They begin their work by having anyone who deals with clients or prospects take their test to identify his or her personality type. In their initial study, Financial DNA discovered that many professionals in the firm were “reflective thinkers.” As you might imagine, people like this need time to reflect on what they have heard or read. Changing how reflective people think isn’t possible. What you want to know is how to deal with people who are reflective thinkers and how those people deal with clients.

“As we went through this experience with a significant number of employees, who could opt-out if they wished,” Phil said, “we gained enormous insight into how different changes in the organization would change the client experience. Some were good. Others were less so. When you form your team, remember, the most important people you need to profile are the people on your team.”

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Contributing Writer: Subject Matter Expert Charles McCain


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