What Clients Want is Not What They Need

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Let’s start with a thought experiment.

Name a client who went through your entire process from beginning to end completing everything on time without ever needing a reminder or follow-up — someone who didn't need to be reminded to send in their documents, someone who didn't need an email reminder to schedule an estate planning meeting, or need a friendly nudge to follow-through on your advice to start saving an extra $500/month.

This client has nerves of steel and never flinches when their accounts are plummeting because the world around them is collapsing.

Finding this client is about as common as finding a fund manager who consistently outperforms the market.

This is the “behavior gap” (or the “knowing-doing” gap).

Information alone isn’t sufficient. Telling your client what to do doesn’t always yield results.

Your clients need you and your team to nudge them to execute the plan.

The perfect plan is useless in the absence of execution. The most valuable service you provide is getting someone to change their behavior to execute the plan or helping them stick to the plan without letting their emotions derail their future.

But can we quantify it?

Quantifying the value of behavioral coaching

The increased awareness and interest in behavioral finance has shined a light on the fact that behavioral coaching is valuable when working with clients.

In fact, there have been numerous studies conducted with the goal of quantifying the value of an advisor. We’ve had Morningstar’s “Mind The Gap,” Vanguard’s “Advisor Alpha,” and Russell Investment’s “Value Of An Advisor” studies.

In each of these studies, the top "value-add" derived from working with an advisor boils down to the behavioral coaching element. It's worded differently in each study, but the most valuable thing an advisor does is help clients behave the way they are supposed to.

Yet, the data shows that most advisors don't actively promote this value:

  • 83% don't include information about personal coaching or life planning in promotional or marketing materials; and
  • 72% don't discuss the role of coach or counselor during an initial contact.