As promised in the previous blog, let’s explore ten points of financial planning where human behaviour is critical to the success of our clients to enjoy financial prosperity now and in the future.
Today, we will touch on each of these to spark curiosity, questions, and conversation. In future newsletters, we will unpack these integration points in more depth.
Client concerns and communication style
Our customary greeting: “How are you?” is often met with a typical response: “Doing great, thank you and you?”. However, this greeting embodies our client’s unique stories, concerns, and possibilities.
I love the greeting in our African languages such as Sawbona, meaning ‘I see you’ and ‘Dumela, wena o kae?’, meaning ‘Good day, where are you?’. As financial coaches, we are curious to understand our clients as unique human beings, where they are. With the understanding that we and our clients is already somewhere.
This leads to the following questions, that come up for me, in no particular sequence of importance:
- What is my client’s concern?
- What are the unspoken challenges?
- What is my client’s preferred communication style?
- What environment will best support my client on their journey to prosperity?
Contracting
We can see this part as a conversation for a relationship. It is the understanding of the client’s concerns, the sharing of our value proposition, and the approach we have toward the client. It is essential to remember our business processes, and financial jargon is second nature for us. It could be helpful to share an infographic in layman’s terms of what the client can expect from the process and the outcomes. The coaching dance to prosperity can start if both parties are comfortable with each other, and understand the engagement process, expectations, and associated fees.
Money Narrative
Our client’s personalities and values contribute to their attitude towards money. Their values are a key driver of what is essential and create meaning for them. When we, as financial coaches, understand what creates meaning for our clients, we can be much better thinking partners for our clients on their journey to prosperity.
However, there is a second part that we are curious about: the successes and challenges our clients experienced regarding money and life during their lives. As these events will have shaped their money narrative and attitude towards life.
Thirdly, the household, community, and culture in which clients grew up and live will contribute to some of the assertions, assessments, and beliefs our clients have. It will also influence their money narrative. It is vital to understand this and how these beliefs serve them.
We must understand our client’s money narrative so that we can support them to design, plan and live a life of prosperity, now and in the future.
Wealth competencies
The Next Millionaire, Next Door, Enduring Strategies for Building Wealth identified key competencies to create and sustain Wealth (Stanley & Fallaw, 2019). If we compare these competencies with the research on the drivers and behaviours required for financial satisfaction, they overlap.
Some of these competencies are frugality, financial confidence, control, focus, planning, and monitoring.
If we understand our clients’ strengths and struggles, we can coach them to build financial muscles.
Goals and Possibilities
When they walk into our office or engage in a Zoom call, most clients have not applied their minds to how they would like to design their future life and what they are doing to move towards it. Research confirms that asking clients what their goals are is ineffective, and much better results can be achieved by facilitating a process with clients to think of their future life, and then engineering it backwards.
As financial coaches, we can support our clients to explore new possibilities for a quality life of prosperity beyond saving for children’s education and retirement. We help clients design and live their lives to the fullest now and in the future with their resources.
Research indicates that many clients battle to identify and plan for long-term goals and then stay committed to the declarations they made.
Managing flow of money
A good friend and mentor of mine always jokingly says, “Do you want to sleep well or live well.” The moral of the story is that money spent cannot be saved, enabling us to build wealth to ensure financial independence at a certain point and time in the future.
I would argue that part of our role as financial coaches is to help our clients develop a strategy that enables them to sleep and live well throughout their lives.
Life transitions
It is one thing to have goals and plans; however, what if life happens. Most clients plan for transitions like death, disability, retirement, and kids’ education. However, life is not linear; what happens if the client gets retrenched five years before planned retirement with two kids still at Varsity or an elderly parent’s health deteriorates, and the client needs to support them financially.
I see our role as Financial Coaches is to facilitate these conversations with our clients to proactively plan for possible transitions, be there when our clients need to navigate through the change, and help them build a new phase in life after the transition took place.
Modelling and managing life in flow
Life is dynamic, and as our clients live their lives, we, as financial coaches, help our clients navigate complex matters of financial planning and the emotions they experienced surrounding money and life, and the relationships they cherish. We can act as their thinking partner through these changes, planning, emotions and relàtionships.
As part of this process, it is sometimes challenging for a client, 30 years old, to envisage that today’s decisions can affect their dream of being financially independent at age 50. Suppose we can build and model these scenarios for our clients in a simplistic way. In that case, we can get them emotionally engaged in their plans and give them peace of mind that what will happen if certain unexpected life transitions occur.
How does the dashboard look that we monitor our client’s dreams? What vitals do our clients monitor to measure their financial health?
Implementation
Research indicates that only 20% of clients are change-ready for advice that planners over to clients. As we are taking a coaching approach to planning, we are working with the client’s agenda. We are taking into consideration what the client deems as important and implementing solutions that they initiate.
Cheerleading and Accountability
As financial coaches, we are cheerleaders. We support our clients on their journey to financial prosperity. However, we are also curious to understand with our clients what breakdowns they experience when they do not achieve the outcomes they set out to achieve.
Bredan Frazier says financial planning is 95% behaviour. Reading through the above, I leave you to be the judge of that.
I know I am biased. However, I will say as a crazy financial coaching artist, financial planning done right, is done in a financial coaching way.
In the next blog, we will explore the two different approaches to financial coaching.
