Blue Chip Issue 81

COACHING
We all face the continual tension between choices that
give us an immediate reward, versus choices that reward us in
the future. Our susceptibility to the present bias means that
eating chocolate cake today is easier than eating broccoli
– at least for most of us. Saving money is like broccoli.
Not much appeal for now, but lots of benefit in the future.
Having a conversation with your client about this is difficult.
As UK financial planner Andy Hart said at the recent HUM
SA Conference, “Financial advisors are paid to have difficult
conversations with their clients.”
David Kreuger suggests that, “The most important thing
we can do to achieve success is to manage our emotions and
regulate our states of mind.” When it comes to investing, Kreuger
draws on Benjamin Graham’s insight into successful investing:
“People don’t need extraordinary insight or intelligence.
What they need most is the character to adopt simple rules
and stick to them.” How can you help clients do this? Having a
documented financial plan is an important start. A financial plan
is a way of providing a client with rules for decision-making.
But because we are human, this is not enough to make good
decisions. We still have to manage that tension between present
pleasure and future fit.
Managing that tension means having difficult conversations
with your clients. Conversations in which you can challenge your
clients not to eat the chocolate cake, and help your clients to
behave themselves to better financial health. This is hard work.
These are hard skills to learn. The temptation is to stick to the
technical. It is easier. But clients need more than this. Operating on
a lung is useful, but only if a doctor can help the patient to stop
smoking. Developing a financial plan is useful, but only if you can
help a client, “manage their emotions and regulate their state of
mind”. The starting point? Recognise that developing the skills
for difficult conversations is as important, if not more important,
than knowing how to do the technical work.
References:
Andy Hart, “The Story behind
the Story,” Humans Under
Management SA 2021 Virtual
Conference, 15 September 2021
David Kreuger, “Your New
Money Story: The Beliefs,
Behaviours and Brain Science to
Rewire for Wealth,” Rowman and
Littlefield, 2019
Seth Godin, “Seth’s Blog: Gift
cards, serial numbers and hard
technology,” 19 September 2021
Rob Macdonald, Head of Strategic
Advisory Services, Fundhouse
www.bluechipdigital.co.za
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