The Institute for Innovation Development interview series invites innovation experts, innovative business leaders and emerging fintech companies to talk to our readers about their latest innovation activities. The series seeks to learn from innovative business creators, uncover innovation best practices and apply these insights into a financial services business model.
We recently talked with Jeremy Floyd, president and CEO of Finworx: a turnkey, persona-based communication platform that combines behavioral analysis and automated digital marketing to help improve the lives of financial advisors and their clients. Highlighting the kind of business alchemy that may be needed in today’s financial services industry, Finworx is one part fintech company, one part digital marketing agency and one part investment research firm.
Hortz: Your value proposition to advisors of offering them the ability to deeply get to know and most effectively communicate with their customers—the way that firms such as Amazon, Netflix and Facebook do—is very intriguing. Can you tell us more about the specific technology and processes you use to uncover the behavioral knowledge about each client?
Floyd: So I think there are really two parts to developing our behavioral understanding of the advisors’ clients. First of all, our technology accumulates client data from a number of sources, including client survey data, the advisors’ insight into their clients, the client’s digital footprint and publically available information. This data allows us to assign each client to one of our proprietary investor personas.
The second part of developing that behavioral understanding involves leveraging the power of big data analytics and machine learning to truly understand users’ behavior, then translating that into insights and action for advisors. What that means is that we take the additional data that surfaces from the client’s interaction with our software to improve our understanding of the client over time. As we get more information from e-mail opens and clicks, website traffic, etc., we get a better sense of what they’re reading, what topics resonate with them and their general communication preferences. It’s a really powerful tool when placed in the hands of a financial advisor, who’s now empowered to truly improve communication with and outcomes for their clients.
Hortz: How many “personas” did you develop and how did you determine them?
Floyd: To develop the personas, we used a combination of traditional risk typing from conservative to aggressive; personality typing, particularly the DISC personality traits; and our analysis of various emotional and cognitive behavioral biases.
This research resulted in four proprietary personas, as well as a fifth general audience setting in the event that a client has minimal data available—for example, a brand new client, someone who has an extremely common name such that scraping data is difficult, or an older client who has next to zero digital footprint. These personas represent an investor’s willingness to take risk, emotional and cognitive biases, and their likely behavior as determined by data analytics and an investor questionnaire.
Hortz: To what degree are they reliable and consistent? What research do you have that supports this?
Floyd: There is a well-established body of research around investor biases and personality typing, coming from psychologists, economists and behavioral finance researchers. Our approach is grounded in this research, though the legitimacy of this approach is also established by our ongoing measurement of communication—in other words, “How effective is our communication?” In addition, we have developed and tested our own investor questionnaire, first using internal data, then validated using a growing population of external, representative clients. We continue to monitor and validate the results on an ongoing basis to ensure reliability.