February 2021
TD Wealth and Behavioural Economics in Action at Rotman (BEAR) renew collaboration, helping uncover key financial blind spots
Professor Dilip Soman with students
When Lavanya Madhyanam, MBA ’21, was offered the opportunity to lead a team for a summer internship with Behavioural Economics in Action at Rotman (BEAR) working on a project with TD Wealth, she knew the experience would be valuable.
She didn’t expect it would shape her career focus.
“By leading this project and managing a team of four, I got a competitive advantage by gaining meaningful leadership experience,” says Madhyanam. “I realized I could combine what I learned about behavioural economics in this summer internship with my prior experience in behaviour change back home in India, and put it all to future use at a tech company that uses these principles to build more human-centric products and services.”
Like Madhyanam, many professionals are finding immense practical value in behavioural economics. So too are big organizations. This past spring, TD Wealth recommitted their relationship with BEAR to help advance the field of behavioural economics and behavioural finance through a donation. By leveraging BEAR's expertise, TD Wealth will continue to examine the influence of personality and emotions on investing decisions, equipping advisors and financial planners with the know-how to identify their clients' blind spots—individual and natural personality traits—which influence their decision making.
“TD Wealth has been able to harness BEAR's expertise to provide our advisors and financial planners with the tools and resources they need to uncover how and why clients make certain financial and investing decisions," says Dave Kelly, SVP & Head of TD Wealth Private Wealth Management and TD Wealth Financial Planning.
A deeper understanding of clients has become all the more important during the COVID-19 pandemic, adds Kelly.
“Using behavioural economics has helped our advisors and financial planners understand their clients better and deliver personalized advice during their conversations. It has also helped our clients increase their awareness of their financial blinds spots, how these blind spots can unknowingly influence their investment decisions, and how their TD Wealth advisor is uniquely positioned to help.”
"This longstanding relationship has allowed BEAR to create agenda-setting research and help TD Wealth fine-tune their initiatives, which allows us all to become more enlightened investors and advisors.”
— Professor Dilip Soman, director of BEAR.
At their core, the problems tackled by behavioural economics stem from an intention-action gap. Like the deskbound worker who wishes to exercise more, but doesn’t, many clients and consumers fail to act in a manner that’s consistent with their best intentions.
Through a behavioural economics lens, together TD Wealth and BEAR can identify the gaps between intention and action, then design interventions to alleviate the friction. For example, TD's Wealth Personality™ assessment, which was developed by harnessing the research from BEAR, empowers advisors and financial planners with knowledge about their clients' personalities to help direct conversations, provide personalized advice and help them ensure clients stay on track with their financial goals and make better decisions.
Professor Dilip Soman, director of BEAR, is thrilled with the ongoing support from TD Wealth and the leading-edge behavioural economics research they’ve pursued together.
"This longstanding relationship has allowed BEAR to create agenda-setting research and help TD Wealth fine-tune their initiatives which allow us all to become more enlightened investors and advisors,” adds Soman, who is the Canada Research Chair in Behavioural Science and Economics and a professor of marketing at Rotman.
Also, thanks to this relationship, BEAR research fellows and postdoc researchers have participated in a video series called "Wealth Psychology" that explores the behaviours behind financial decision making to inform consumers, investors, and the broader community.
Yet the impact of this research extends far beyond the TD or Rotman walls.
“The field of behavioural economics itself is very interesting, but it’s the broad application at BEAR that I find fascinating,” says Bing Feng, MBA ’19, a research associate and program coordinator at BEAR (at left).
“Behavioural economics empowers us to solve important real-world problems. We do this when we work with organizations that want to increase their employees’ motivation or better serve their clients, or when we worked with the Province of Ontario’s Behaviour Insights Unit to explore ways to raise organ donation rates,” says Feng.
By helping students and all kinds of organizations better understand how people act, BEAR is helping uncover blind spots that the traditional economics-based decision-making model does not address, harnessing insights to design better products, services, and programs.
Learn more about BEAR and the transformative impact of its research. »
For more information on behavioural finance or the TD Wealth Discovery Tool, please visit https://www.td.com/ca/en/investing/wealth/behavioural-finance.
By Alain Latour