Traditional onboarding questionnaires: What your clients may not tell you?

Do you want to have an impact in your investments? What is your financial situation? What is your risk appetite?

If we are asked this kind of questions more or less directly in a traditional questionnaire, it is unlikely that our true preferences will be captured. Why?

1. Some of our preferences are not socially accepted.
We should be sensitive to ESG investments. A high risk appetite may not be well perceived. According to the culture, it would be better to have a modest or a wealthy financial situation.

2. We are not always aware of our preferences.
We may be convinced to be risk averse because our relatives have told us so or for any other external reasons. This does not mean it corresponds to our true preferences. Being aware of our own biases and personality is often tricky.

3. We are unable to put into words or evaluate our preferences precisely.
We know we are comfortable when the value of our portfolio slightly increases or decreases, but we do not know if this means we have a moderate or a very aggressive risk profile.

4. We answered randomly because we get bored by traditional questionnaires.

In the end, traditional onboarding questionnaires do not really help advisors to understand the expectations and psychology of their clients.

The use of psychometrics or behavioral finance questionnaire can help better understand clients’ true preferences thanks to a more scientific approach:

  • computation of inconsistencies and response errors
  • use of indirect questions to capture clients’ implicit biases
  • use of an interactive and user-friendly interface to make sure clients do not get bored
  • simulations and back-testing to check the predictability of the questionnaires
  • use of simple words and situations to make sure clients understand the question
  • use of role-play exercise to be sure clients answer in a realistic way rather than in a theoretical way

Hilke Plassman publications, INSEAD

1-Greenwald, A. G., Poehlman, T. A., Uhlmann, E., & Banaji, M. R. (2009). Understanding and using the Implicit Association Test: III. Meta-analysis of predictive validity. Journal of Personality and Social Psychology, 97, 17–41

2-Implicit assimilation and explicit contrast: A Set/Reset Model of response to celebrity voiceovers MARK R. FOREHAND, ANDREW PERKINS

3- Predictive Validity of the Implicit Association Test in Studies of Brand, Consumer Attitudes and Behavior Greenwald, A. G., Dominika Maison, Ralph H. Bruin, JOURNAL OF CONSUMER PSYCHOLOGY, 14(4), 405–415, 2004

4-Verlegh, P. W. J., & Steenkamp, J.-B. E. M. (1999). A review and meta-analysis of country-of-origin research. Journal of Economic Psychology, 20(5), 521-546

5-Implicit Consumer Ethnocentrism–an Example of Dissociation between Explicit and Implicit Preference, A. G., Dominika Maison, Ralph H. Bruin, 2004

6-Is the implicit association test a valid and valuable measure of implicit consumer social cognition? FF Brunel, BC Tietje, AG Greenwald – Marketing, 2004

7-A Meta-Analysis on the Correlation Between the Implicit Association Test and Explicit Self-Report Measures, Wilhelm Hofmann, Bertram Gawronski, Tobias Gschwendner, Manfred Schmitt

8-MEASURING IMPLICIT CONSUMER ATTITUDES AND PREDICTING BRAND CHOICE, Michaela Wanke, Henning Plessner, TatjanaGartner, Wade Malte Friese, 2002

9- Object and user levels of analyses in design: the impact of emotion on implicit and explicit preference for ‘green’ products,Vera Sacharina, Richard Gonzaleza and Jan-Henrik Andersen, 2008
10-Predictive Validity of the Implicit Association Test in Studies of Brand, Consumer attitudes,and Behavior, Maison, Greenwald, Bruin (2004)

11-Does One Bad Apple(Juice) Spoil the Bunch? Implicit Attitudes Toward One Product Transfer to Other Products by the Same Brand (2012) Kate A. Ratliff, Bregje A. P. Swinkels, and Kimberly KlerxBrian A. Nosek

12-Unhealthy food is not tastier for everybody: The “healthy = tasty” French intuition (2013) Carolina O.C. Werlea , Olivier Trendela, Gauthier Arditoa

13-The implicit measurement of destination image: The application of Implicit Association Tests (2012) JieYang, Jiaxun He c, Yingkang Guba

14-Using aversive images to enhance healthy food choices and implicit attitudes: An experimental test of evaluative conditioning (2011) Hollands, Gareth J.; Prestwich, Andrew; Marteau, Theresa M. Health Psychology, Vol