“Finances are emotional for clients especially as they discuss topics like hopes and fears for their future financial well-being,” said Ron Kruszewski, chairman and CEO of Stifel. “To prepare a financial plan that fits a client’s needs, a financial advisor first needs to evaluate the client’s emotional quotient (EQ). This requires empathy, understanding, an ability to read people and to react to nonverbal clues. A truly successful financial advisor needs to integrate intelligence, technology and EQ to effectively uncover a client’s issues, concerns and goals.”
Jeff Magson, client experience officer at 1st Global, agrees with Kruszewski’s perspective.
“Beyond the pure financial data, there is also an emotional element to financial planning that should not be overlooked called behavioral financial advice,” Magson said. “Emotions play a large role in client decisions. Advisors need to understand how those emotions may have influenced the client’s past decision-making, so that they can match those tendencies with the client’s values and goals to be able to appropriately guide and support the client.”
Coaching Lesson #3: Keep Clients On Track
Running coaches rarely leave clients to their own devices for extended periods of time. Instead, they check in, gauge progress, modify fitness regimens and set new time-bound goals, Dabu explains. Financial coaches need to do the same.
An ongoing review process with regular check-ins provides financial coaches an opportunity to monitor a client’s progress and provide feedback and encouragement as they work toward their goals. It also enables advisors to stay ‘in the know’ should a financial setback occur that requires swift adjustments. Lastly, it allows advisors to check in on prior time-bound goals and set new ones if need be.
“Advisors also need to track a client’s financial holdings and make recommendations as those holdings change, which can happen unexpectedly due to macroeconomic or personal changes,” says Bonneau. “That is why financial plans need to be a living document that are continually revised, ideally, by both the financial advisor and the client.”
Coaching Lesson #4: Keep Clients Motivated
“Like a coach, a financial advisor needs to work alongside the client to provide financial solutions as well as support and encouragement,” says Dabu. “And, like the best coaches, the best financial advisors keep a client’s focus on the plan, even when the going gets tough.”
While lofty financial goals are nice to have, a truly effective financial plan—one that endures the test of time—needs to be delivered to investors in bite-size chunks that are easy to understand and adopt, pointed out TD Ameritrade’s Lulu Demmssie, managing director of investment products and guidance, and Marco De Freitas, managing director and head of retail products and strategy. Small victories along the way can help keep clients feeling successful and motivated to attain the next goal.