Coaching key part of holding on to clients

“Real” financial advisers will have to embrace behavioural coaching for their clients if they want to sustain their businesses into the future, an investor behaviour expert now working with New Zealanders says.

Friday, November 4th 2016, 6:00AM 2 Comments

by Susan Edmunds

Carl Richards

Carl Richards has been hired by Consilium as its marketing specialist.

Consilium offers support services to more than 60 independent financial advice firms throughout New Zealand.

Richards is the author of multiple books on the subject of investor behaviour and runs a website and blog. Carl also writes a weekly article for the New York Times.

He said while there were local variants, human behaviour – and investor behaviour within that – seemed constant across the world.

Financial advisers were starting to realise how important managing that behaviour was when they were helping their clients reach their goals, he said.

“There’s been a tendency for a long time for our industry to throw prescriptions at things without taking the time to diagnose,” he said. “Real financial advisers are starting to understand diagnosis is a huge part of what they do.”

Advisers who had given clients the appropriate diagnosis and solution would be well placed to help their clients when markets became scarier, he said.

“That’s the biggest job of real advisers, to prevent the big mistakes we all make as humans. When I first discovered for myself the role that investor behaviour plays I thought ‘this is easy, I’ll run around the world educating people on it’ but I was naive. It’s not that easy. It’s hard to see your own blind spots.”

Consilium would help advisers with things that went beyond back-office solutions, he said, and included training and support on how to communicate more effectively with clients.

“As it’s becoming more and more clear that investment solutions are a commodity, advisers are running around trying to work out ‘what’s’ my real value now’. It comes down to their ability to communicate on the client’s level with empathy and trust. Advisers who are looking for guidance on that, we can help.

“If they don’t understand how important it is already they will be forced to quickly because the industry is changing so fast and if they are not providing behavioural coaching to their clients they’ll find what they do is cheaper somewhere else. It’s the key value of a real financial adviser.”

He recommended advisers do “life boat drills” with clients, to talk about how they would respond to market turbulence and plan strategies to deal with it.

“The appointment of Carl in such a specialist capacity further strengthens our ability to meet the needs of our clients”, saidScott Alman, managing director of Consilium.

“We champion professional advice and those who deliver it. Carl’s comprehensive understanding of investor behaviour and proven ability to use media and technology to deliver messages that stick will greatly benefit financial advisory firms that work with Consilium, increasing their impact and extending their marketing reach.”

Tags: Consilium

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Comments from our readers

On 4 November 2016 at 8:23 am smitty said:

Being familiar with Carl Richards, who does great work by the way, I would venture to suggest that Consilium needs to embrace their soft warm side, rather than relying on clients wanting to invest because they have the best "technical" solution. After all, all markets are efficient aren't they?

On 4 November 2016 at 11:34 am Brent Sheather said:

One of the chief reasons “real” financial advisors have to embrace behavioural coaching is that because most advisors have unsustainably high annual fees, both monitoring and funds, they invariably misspecify clients risk profile. In other words relative to the average pension fund’s asset allocation the average retail client has too much money in equities and not enough bonds. The FCA found the same problem in the UK and SEC has mentioned it in the US as well. We saw a new client the other day, retired and with a low to medium risk profile with just 25% in bonds and much of that was not investment grade. Surprise, surprise a high fee structure was also involved. High fees is the biggest threat to good advice.

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