“I Need Behavioral Coaching”…Said No One, Ever

According to a recent Morningstar study, investors do not perceive behavioral coaching from their advisor as a compelling value add.

On a list of fourteen other attributes, “helps me stay in control of my emotions” was ranked dead last by the 693 investors surveyed about an advisor’s value.

This sentiment is directly opposed to how most advisors feel about behavioral coaching. As the advisory space continues to evolve, more focus is being placed upon an advisor’s “soft skills”, like behavioral coaching. Anybody can put together an asset allocation or recommend the appropriate amount of life insurance. I believe advisors provide real value by understanding their clients and helping them make the best possible financial decisions over time. Said differently, getting clients to stick with a plan has more value than merely creating one.

So why do advisors and investors not value behavioral coaching equally?

My friend, Ashby Daniels, shared some great thoughts on this topic over on his blog Retirement Field Guide: https://retirementfieldguide.com/the-problems-with-behavioral-investment-advice/

I think behavioral coaching’s perception issue stems from the ego.

Behavioral coaching has the opposite impact on advisor and client egos. As the purveyor of behavioral coaching, the advisor’s ego is boosted. We get to be the “responsible adult” in the relationship, which feels gratifying. Conversely, the client’s ego must seemingly be checked to admit that behavioral coaching is necessary.

But I want to dispel an implicit myth about behavioral coaching: it is not predicated upon its recipient being crazy, stupid, or reckless. Nor is it predicated upon its purveyor being a genius, stoic, or super-human. It is predicated upon both parties being human. 

This is something we could do a better job advertising about behavioral coaching.

It’s not as if we pre-identify which clients will be susceptible to behavioral biases and provide this coaching just to them. This is something that everybody needs help with in some way, shape, or form over their lifetime.

Conversely, there aren’t tests to become an advisor that require us to display nerves of steel. As discussed in a prior post, even financial professionals are not perfect. We all suffer from behavioral biases too. It is simply easier to identify flaws in others than it is to recognize them in ourselves.

This is why behavioral coaching has value. Not because advisors are some mythical species who have somehow eradicated emotion, but because having a trusted resource watch your blind-spots is one of the best ways out there to make better decisions over time. Let’s leave the egos out of this.