Dynamic Planner has announced a two-year partnership with Henley Business School that will endeavour to understand how investors behave during various points of the market cycle and help them to form better outcomes.
With the support of the government-backed Knowledge Transfer Partnership programme, the alliance has been formed to explore the behavioural science of investing using big data.
Ben Goss, CEO of Distribution Technology (pictured), the parent firm to Dynamic Planner, highlighted the firm was the first technology company to be used by the FCA to analyse financial advice, and last year the firm introduced emotional elements to clients’ attitudes to risk questionnaires as there were obvious gaps between what people were saying and how they were reacting.
He said: “We are currently living through the fourth industrial revolution as well as a revolution in behavioural science.
“The use of virtual assistants, such as Amazon’s Alexa and Apple’s Siri, are not only helping our lives but providing big data on our behaviour patterns.
“The financial planning industry is set to benefit from big data.”
Explaining the key aims of the study further Kevin Money, Professor at Henley Business School, said emotions influence decisions and although some investors indicate they have a high risk attitude, when markets fall they sell their positions indicating they are not high risk at all.
Additionally, when people are feeling angry they are more likely to take on more risk or “make crazy decisions” affecting their investment portfolio.
“This is a very negative experience for them but if we are able to go back and analyse, we can turn it into a positive experience,” Money added.
Chris Jones, proposition director for Dynamic Planner, commented: “We can use big data to identify behaviour gaps and investigate these more. Once we have identified that individuals tend to go down a particular route, we can engage with them and help them make better decisions.”
The study will involve the publication of at least two academic papers as well as mini projects, which all aim to improve investor outcomes by preventing detrimental actions.
Jones added: “In today’s society and regulatory environment every stakeholder benefits from the investor investing in a solution that is suitable, understood and remaining invested throughout their investment journey; most importantly the investor themselves, but also the adviser, the asset manager, the regulator, the economy and society as a whole.
“Both data and behavioural science have become buzz words in recent times, but rather than rely on interpretation or translation from other works we intend to go much further and focus on the scientific method.
“We are determined to help improve the ultimate outcome for investors through being thought leaders in solving the problems of today and tomorrow for advice firms and their clients.”