Knowing your client isn’t something that was invented by the FCA.
The client/adviser relationship is a very special one: clients have always entrusted their adviser with huge amounts of personal and private information about themselves, their wealth and their aspirations. However, knowing the client isn’t the same as understanding what makes them tick…
Most advisers will have been in situations where they have asked themselves just why the client isn't reacting in a logical and seemingly sensible way to the advice being given. The answer is straightforward: clients are displaying deep-seated behaviours and patterns that impact on their behaviours around money.
As both a chartered financial planner and a money coach, trained by the Money Coaching Institute, it's my job to explore the behaviours and patterns behind clients’ attitudes to money. I use money coaching techniques to reveal the reasons behind the behaviour being displayed and help clients to understand how that is affecting their decision processes.
I've always been keen to understand why clients put barriers and roadblocks in the way of their financial well-being. For me, money coaching offers an essential part of the jigsaw in helping clients to reach their financial objectives.
Money coaching will never replace traditional financial planning, but it does enhance it, allowing us as advisers to create better financial plans for our clients, having resolved any behavioural aspects of their relationship with money.
The money coaching approach delves into the client’s past, exploring how childhood experiences and parents’ attitudes can influence decision-making in adulthood, and identifying where logic is being pushed aside by unconscious behaviours.
The basic tenet of money coaching is that unhelpful behaviours can be changed through a series of exploring conversations and exercises that acknowledge why a problem exists, then guiding the client to a new positive relationship with money.
Think of money coaching as a bit like sports training. Forming new habits and committing to specific exercises can help bring about real change.
Through the use of exercises and analysis skills, the money coaching process allows the client to acknowledge where a problem exists. By using some simple coaching techniques, financial planners can then help clients overcome any of those barriers.
It provides a great insight into client behaviours which can be a game-changer for advisers. At Almary Green, we've gone through the basic concepts training for money coaching and the advice team have completely embraced this new approach.