We work in a people-focused profession and we’re always thinking of ways we can get better. How can we keep improving the service we provide, be smarter, more effective and get closer to clients? One way of doing this is by gaining a better understanding of the people we help and guiding them through their decisions. By influencing positive money habits, we effect incremental improvements towards clients’ life goals and financial outcomes. I believe coaching has become a critical skill in financial planning which is why I’ve recently completed a qualification in coaching and mentoring.
Smart financial planners understand that effective financial advice is about more than just products and processes. The more we know about our clients and their ambitions and motivations, the better able we are to understand their spending and investing mind-set. It’s often our behavioural biases which have the greatest impact on our financial health. Whilst recommending products and delivering management process is important, great planning also offers coaching that will help clients to succeed.
After all, what is the point of building a brilliant financial plan if you don’t act on it?
Where Personality Meets Plan
So, what does financial coaching look like in practice? For us, it starts with the Life Goals exercise we ask our clients to do before our first meeting with them. This invites them to think carefully about what they want to achieve, what matters most to them and the sort of specific lifestyle they want to live – rather than focusing on financial targets or pensions or how much they have in their savings account. We also want to understand their money personality, which is understanding their emotions and predispositions when it comes to making financial decisions. They might be flamboyant with their money, or cautious and careful with their cash. These are hardwired attitudes which exist as a result of upbringing, education and a host of other factors.
When we have an idea of a client’s money personality, we compare it with their life goals to see how they tally up. How will their personality help them achieve their goals or what parts of their psychological make-up might threaten to derail their plans? If they’re a naturally spontaneous person but their financial plan requires a focus on saving how can we square the two and settle the potential conflict? Coaching supports clients to stay committed to their financial plan when their instincts might be trying to tell them otherwise.
Keeping Accountable is Key
Creating a sense of accountability is also key. We like to think of a financial plan as a contract between the adviser and the client. We share responsibilities which need buy-in from both sides. It’s teamwork. Sometimes people don’t achieve the goals they’ve set themselves because they are prone to procrastination, or fear and self-doubt. Reacting to market volatility or being tempted to invest on a tip goes against preparation and planning. Having a financial expert who is also skilled in coaching, will identify personal weaknesses which can be overcome. Often by simply nudging clients in the right direction, we can reinforce good behaviour which keeps their plan working for them long after their adviser meeting has ended.
It’s worth noting that good behaviour doesn’t just mean restricting and resisting. For example, an overly cautious and careful money personality who, let’s say, wants to spend quality time with their family, would be encouraged to enjoy their wealth more rather than wait for retirement. Each client is unique and an adviser with good coaching and mentoring skills will ask deeper questions and be more sensitive to personal well-being. They will allow the client to explore what’s best for them in a non-judgmental way. They won’t force solutions on to them but will remain objective, guiding and educating them to reach their own conclusions. Financial coaching is less about finding solutions and more about facilitating an environment where the adviser better understands the client and their underlying motivations. This will absolutely lead to better results.
Skills that Transfer to the Team
I studied to become a qualified coach and mentor with Quiver Management. The training programme is accredited by the European Mentoring and Coaching Council (EMCC), the leading professional body in Europe for coaching and mentoring. The course is designed specifically to be relevant and directly applicable to the work environment so, with my boss’s hat on, the qualification will have clear benefits in managing the team at First Wealth too.
Listening carefully, communicating well, understanding what drives people and supporting them in achieving their ambitions are all skills which are just as important to a business manager as they are an adviser. Mentoring our team is essential to our future success. As well as the technical and financial side of being an adviser, emotional intelligence is becoming an essential skill. Learning how to listen is the difference between financial coaching, which is seeking and applying a better understanding of the people involved, and financial planning, which is more focused on finding financial solutions. These are very different skill sets but really powerful when used together.
Future of Coaching Needs Full Commitment
As I mentioned above, I believe coaching is the future of financial planning but, like anything, to be successful it needs genuine commitment and hard work. There are too many examples of advisers picking up on the latest buzzwords and dropping them in to conversations with clients with no real intention of embedding them into their working methods. At First Wealth, we are committed to financial coaching for clients.
For me, the way forward is with some words of wisdom I received from one of my mentors on my coaching course. She said the best way for a financial coach to check they are empathetic and on track is to ask: ‘Am I in my own head or am I in the client’s head?’ At First Wealth, the answers and our future direction will always be decided by what achieves the best results for our clients.
If you’d like to find out more about how our financial coaching can help you achieve your life goals, please get in touch.