Financial Advisers Should Be Coaching
Practice Management & Value Proposition

Financial Advisers Should Be Coaching

September 5, 2023

by Tony Vidler  CFP logo   CLU logo  ChFC logo

Coaching is about changing behaviour in order to change results. Advising is telling people what, and perhaps how, something should be done.  Advising is basically “having the answer” and telling someone what it is in its most simple form.  Coaching is a blend of telling and teaching, monitoring and managing, and, supporting and empowering.

Most experienced advisers do some coaching in order to get clients to follow good advice, but few grasp the extent of coaching or the influence it has.  Therein lies a problem with many financial advisers: they don’t necessarily understand their most important contribution to client’s lives.

Perhaps because advisers do not often understand the impact that coaching has they do not approach that element of their work with deliberate intent, and as a result they tend to not do one of the key elements that makes coaching effective in getting results.  That is, imposing disciplines and accountability.

The true skill of a great coach is in their ability to understand which blend of coaching skills is going to be most effective at any given time with any given person in order to bring about the desired change.  There are times when being the brutal martinet is absolutely required (though it is to be used sparingly), and times when one must adopt the mindset of a kindergarten teacher (without becoming patronising).  Any given client at any given time will need a martinet or a teacher, or something in between.  In order to know which approach, or skill set, might be required at any given time you need to understand the coach’s function to begin with, and how that interacts with advising.

The first function of coaching is to understand the objective of the game…what are we actually trying to achieve?  The ability to think strategically, and more importantly be able to draw clients into a space where they are able to consider strategic objectives rather than short term tactical questions or issues, and understand strategic significance is critical.  It naturally follows that one must be able to settle on tactics that will lead to the successful execution of the strategy, so operational planning focus must follow.  Great advisers are usually strong in these areas…though average advisers have a tendency to move straight into tactical mode without understanding the vision and defining the strategy required to achieve it.

Being able to achieve these primary objectives requires management and strategic thinking skills, but also requires an innate understanding of the person one is working with.  Being able to draw out their thinking, issues and potential barriers is necessary in order to begin the process of change.  So some grassroots understanding of applied psychology, personalities and human nature is needed too.  You have to “get” people…something that good advisers tend to be very strong in.

Bearing in mind that virtually all change is painful or uncomfortable to some degree for anyone you are working with, and that you are not going to be able to achieve the objectives without making some changes, you will then find yourself in a position of having to be an excellent salesperson.

That’s right: you have to sell well to coach well.

You have to sell the client on the idea that the price is worth paying.  You have to sell the client the belief that they can do this.  You have to sell the client that this will work if we work together to make it work.

It is about this point where you need great teaching skills.  Educating the client and giving them the knowledge base that is required for them to understand the mechanics of what we are doing is important, but the primary purpose of teaching anyone anything is not just to transfer knowledge, but to transfer the decision making ability.  So you need essential knowledge transfer, or telling, skills.  But you also need tutoring skills where you are able to help the client evolve their own decision-making skills with the newly acquired knowledge, and then help them hone those decision-making skills with guidance, opinion and recommendation.  That is tutoring, as opposed to just teaching.

So managing the clients development as a good decision maker with a good knowledge base is about as important as managing the process of executing the plan that was developed in the first place.  The core skill of management in any field is fundamentally about the tactical use of available resources to achieve an objective.  In the context of providing great advice by being a great coach then, “managing” becomes the art of helping clients use existing time, money and knowledge effectively.  Average professionals tend to be good at helping clients manage the money element, but not time and knowledge.

THIS is often where the need to be a martinet kicks in: holding clients accountable for actions or timeframes that they know need to be met in order for the ultimate vision to be attained.  It is an uncomfortable experience for clients at times, and an even more uncomfortable experience for the coach if truth be told, but it is necessary from time to time.  Plans and people get off track for a multitude of reasons, and the coach’s job is stay on top of the plan’s progress.

This is the area where advisers fail at coaching usually.  Sometimes you have to give clients a harsh reality check and a dose of unpleasant honesty.  After all, bad outcomes are often the result of bad behaviour, right?   Being able to say “no”, or “you screwed up here, and this is why…” and then making them work to correct it is a key part of coaching.

Creating accountability,and then enforcing the consequences of poor performance, are part of the role.

Teaching, tutoring, monitoring and managing are generally areas where professionals are usually ok, or very good.  It is the step from there to establishing accountability and then supporting clients through behavioural change which is most often the most valuable aspect of the work an adviser can do.

That is the time when clients truly know that you are there for them, in their corner, and chasing their vision or goals with them.  Being able to motivate and create self belief and confidence is a necessity thereafter…picking them up and pointing them in the right direction again, and giving them the confidence to move forward is probably one of the most valuable things advisers can do.

To become “a clients coach” there is a need to:

  • Master your craft technically. You need to have knowledge and answers at the ready – you won’t know what you’ll need at any given time.
  • Master the art of managing businesses and people: learn as much as you can about both. Especially people.
  • Begin by focussing strategically with clients, and define the vision (or end game for them). Always think “big picture” at the start.
  • Outline a tactical plan that will get them “there” (wherever “there” is).  Define the journey and map it out.
  • Sell them on the process, not the product. They need to believe that the journey will get them what they wanted.
  • Teach and empower them; and give confidence and self belief to clients.  They need to know that they can complete the journey themselves if it comes down to it at some point in the future.
  • Hold them accountable. Be prepared to say “no” and chastise if need be.
  • Be empathetic and help them get back on their feet when it is needed.
  • Motivate.  This is more “selling”….it is selling their vision back to them, and selling clients on their ability to achieve it.

That’s coaching.

And that is why even many of the the most successful people on the planet have coaches, despite the fact they are already amongst the most successful people on the planet.  They don’t just want or need “advice”. They want someone in their corner who can provide some objectivity and accountability, and who has the technical nous to transfer for sure. But mostly they want the reinforcement, motivation and encouragement, and emotional support to chase their own vision.

That is real value that an adviser can deliver.

You may also find this post useful:
How The Greatest Advisers Become Great
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