Expert: Louis Williams Dynamic Planner Facilitator: Brod Whiting
Headlines:
- Gamification brings in elements of games design into a non-game environment which can be used to motivate or to help with engagement
- A games-based approach is using a game to try and produce a result
- Gamification could be helpful in engaging clients in the adoption process, educating the clients and possibly appealing more to younger clients
- A particular element of fintech that might lend itself to more gamification was with regard to cashflow modelling
Context:
All delegates are using some form of risk profiling, and many are already customers of Distribution Technologies.
Everybody seemed to agree that risk profiling needs to have a psychometric basis.
There is a difference between gamification and a games-based approach. Gamification brings in elements of games design into a non-game environment. Examples of gamification would be the use of progress bars towards goals; badges to signify targets being reached; performance charts; and leader boards. These elements can be used to motivate or to help with engagement.
A games-based approach is actually using a game to try and produce a result. The main danger with a games-based approach is people behave differently when playing a game. People play action/war games which involve shooting people or driving games where points are gained for smashing other drivers off the road, which does not reflect real life. Indeed, with a games-based approach there is no way to draw any meaningful conclusions.
When it comes to a client’s attitude to risk it was viewed very seriously by the presenter and the audience. A psychometric approach with questions that were continually being validated seemed to be the accepted route by all.
Psychometric means a combination of psychology and statistics. A good psychometric approach takes into consideration the drivers behind the clients’ attitude to risk, their thoughts and beliefs, their emotions, and their experiences.
There was some discussion as to whether a client’s attitude to risk changes over time. It was generally felt that it did not, certainly for 70-80% of people. Life events, however, may result in changes to attitude to risk, for instance receiving a larger inheritance, winning the lottery or the client or their partner suffering from ill health. As people get older, they may also consider matters differently.
Adviser bias was a concern, whether conscious or unconscious. As was the consensus that while the use of psychometric risk-proofing was important, it is essential that individual clients fill in the questionnaires on their own and away from the adviser.
Once completed it should be used as a discussion document between the adviser and the client. However, there might be reasons for the score to be altered either up or down, due to perhaps the client’s lack of understanding of a particular question.
Care should be taken that adviser bias does not occur at this stage. It was pointed out that both FinaMetrica and Dynamic Planner had the ability to illustrate the results of individual advisers, measured over a number of client tests. Examples were given where the majority of one particular adviser’s clients had above the norm in terms of risk, and another where all his clients adopted a more cautious approach. In one instance, an adviser’s business had clients investing 100% in ESG funds, but after questioning, it was more about the attitude of the adviser rather than the individual clients.
It was felt that gamification could be helpful in engaging clients in the adoption process, educating the clients, possibly appealing more to younger clients. There were concerns however that it might be seen as trivialising what is an important matter to the client.
Key takeaways:
- A particular element of fintech that might lend itself to more gamification was with regard to cashflow modelling. There was a lot of discussion about whether the client should be given the tool to do their own modelling or whether it should be left to the firm
- There were concerns that the client may not enter all of the data required, or at least not accurately, which could lead to wildly inaccurate results, thus misleading the client
- There was a feeling that the software would need to be dumbed down for end clients, which again could lead to the wrong results. It seemed to be agreed that whist the firm completed the cashflow modelling internally, the client could be given access to a gamified version to do “What If” scenarios
- There was also concern that because of regulation, the only clients that could afford real financial advice/planning had to have portfolios in excess of £250,000 in order for them to be profitable for advisers. This is contrary to the FCA’s desire to make financial advice available to all
