BLUECHIPCLIENT
BLUECHIPCLIENT ENGAGEMENT | Behavioural financeA Coaching Way of BeingBlue Chip explores the role of coaching in unlocking financial potential. Behaviouralcoaching expert, Rob Macdonald, unpacks what it is and why it is important to thework of a financial planner.22www.bluechipdigital.co.za
CLIENT ENGAGEMENT | Behavioural financeBLUECHIPWhat is coaching?Most people are probably familiar with the idea of a coach. Ourexperience is usually from the sports field, where we may havehad a coach at school or observed coaching in the professionalsports era. Yet more recently interpersonal coaching has grownglobally as a way of supporting individuals in their life or work.Various labels are given to this, the most common probablybeing “Life” or “Executive” coaching. The essence of this formof interpersonal coaching, I believe, is for a coach to help anindividual find answers for themselves to questions that theythemselves have, about any aspect of their life or work. It mayhelp someone who is dealing with a challenge, wanting to makea change or trying to achieve a goal.How is that distinct from mentoring?Mentoring usually involves someone with greater experienceor expertise, passing on guidance and knowledge to someoneless experienced. Coaching is about helping someone find theirown answers to questions, rather than providing the answers.An example would be, in response to the question, “How shouldI do this?” a mentor may say, “I suggest you do it this way… inmy experience that worked best.” Whereas a coach is likely torespond with a question like: “What ways have you thought ofdoing this?” So, a mentor plays a role in offering solutions oradvice; in coaching the responsibility for finding solutions anda way forward falls onto the client, rather than the coach.Coaching is about helpingsomeone find their ownanswers to questions.How then does coaching apply to financial planning,given that clients go to a financial planner to get advice?Yes, on the face of it, financial planners play more the role ofmentor rather than coach. They have the financial technicalexpertise and experience which a client usually lacks. Butthere are two key challenges that financial planners face whengiving advice to clients. The first is that sometimes they willgive the wrong advice because the client hasn’t given them allthe information needed to give the right advice. Second, thefinancial planner gives the right advice, but the client doesn’ttake it.Isn’t that a problem that just comes with the territory ofbeing in a professional advisory occupation?Yes. Doctors, laywers and other advisory professions face thesame challenge. Unfortunately, there is another problem withgiving advice! Ironically, giving advice can be disempowering.If you tell me what to do, then I can blame (or praise) you for theoutcome of the advice.A financial planner I worked with had a client who had aspending problem. The financial planner advised the client thatthey needed a budget and offered to draw up the budget forthe client. Six months later, the financial planner was fired bythe client because they still had a spending problem. The clienthad taken no responsibility for sticking to the budget because itwas all the financial planner’s idea. In a way, it was the financialplanner’s budget not the client’s budget!So how do financial planners address these problems?The key is to find a way for clients to take greater responsibilityfor their own financial outcomes. Research by Morningstarshows that clients are more likely to achieve financial health ifthey feel in control of their financial future.In other words, getting clients to feel more empowered withthe decisions they make is key to effective financial planning.Helping clients take responsibility for their own decisions is whata coaching approach enables.Does this mean that financial planners should be coaches?No. You might be surprised by my answer. Clients are still comingto financial planners for financial advice, so I don’t believefinancial planners can be just a coach. They still must draw ontheir expertise and experience to help clients, just like mentors.In some ways I think we are doing the financial planningprofession a disservice with the many new services we seeemerging, and financial planners taking on labels such asa financial counsellor, therapist or coach to differentiatethemselves. Often there are people who operate with theselabels who are not even licensed to give financial advice. Butin the same way that I want to see a doctor about my physicalhealth, I want to see a financial planner about my financial health.Yet, you are advocating for a coaching approach tofinancial advice.I definitely am. Much research shows that the greatest value thata financial planner adds is through behavioural coaching. ButI’m suggesting that this approach doesn’t changethe fundamental nature of the work of afinancial planner, which I believe is to helpclients make and implement life and moneyA financialplanner’s workis not just aboutthe money.Rob Macdonald,Independent Consultant
