You’re Not a Life Coach (So Don’t Try To Be One)


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A decade ago, most advisors defined their value as putting together an appropriate investment portfolio for their clients. But the combination of the Internet and robo-advisors obliterated that model.

Today, anyone can easily assemble an index-based portfolio of low-management-fee index funds or exchange-traded funds. For some, one index fund (like one of Vanguard’s LifeStrategy Funds) may be the only investment they need.

As a consequence, some advisors have shifted their emphasis to financial planning and relegated investing to a subordinate role.

Recently, I’ve noted a new trend. Some advisors are extending their services to being “life coaches” to their clients. An article in Reuters noted this trend, “Some advisers are playing up an extra role as their clients’ ‘life coach,’ since investment skills alone may no longer be enough to stand out in a field now replete with computer-generated advice.”

Advisors who embrace this concept need to be acutely aware of their limitations.

A limited role

There’s a limited role advisors can play in acting as a life coach for their clients. Helping them to understand what they can spend in retirement is an obvious example where they can add value. Being empathetic in times of crisis and assisting them with referrals to competent professionals is another.

Where I get concerned is when advisors cross the line into motivational speakers and approach pop psychology.