As the financial services industry evolves, clients are seeking more than just portfolio performance and pie charts. They desire a deeper connection—a values-based approach that prioritizes their unique goals and personal well-being. During a recent webinar on behavioral financial coaching, we explored how advisors can elevate their practice by incorporating strategies that reinforce their value and deepen client relationships.
Here, we delve into the three key takeaways from that discussion and explore how they can transform your advisory practice.
1. Techniques for Values-Driven Decisions
Advisors often focus on goal-setting, but values-driven decisions provide a more profound framework for guiding clients. Unlike goals, which can shift over time, values are enduring and form the foundation of meaningful financial choices.
Putting Values First
Imagine a client whose top value is “family.” By identifying and integrating this value into financial discussions, an advisor can align decisions—such as estate planning or investments—with what truly matters to the client. For instance, emphasizing how an estate plan protects their family’s future can motivate action, creating a stronger alignment between their decisions and values.
Actionable Steps
- Use the Values Exercise: Implement tools like a values assessment to uncover what matters most to clients.
- Ask Reflective Questions: Regularly revisit client values and ask, “Have these shifted, or do they remain consistent?”
- Tie Decisions to Values: Frame recommendations as supporting clients’ core values rather than solely focusing on monetary outcomes.
When advisors prioritize values-driven discussions, they position themselves not just as financial experts but as holistic guides helping clients achieve a life aligned with their core beliefs.
2. Proven Strategies for Positive Habits
Behavior change is central to effective financial planning. Advisors have the unique opportunity to guide clients in adopting habits that foster long-term success.
Understanding the Freeze Exercise
One standout strategy is the “freeze exercise.” When clients face financial stress or decision fatigue, this self-awareness tool encourages them to pause and reflect on three questions:
- What am I thinking?
- What am I feeling?
- What am I doing?
This approach slows reactive, emotion-driven responses and facilitates thoughtful decision-making. For example, if a client feels compelled to sell investments during a downturn, the freeze exercise can help them acknowledge their emotions, consult their long-term strategy, and make rational choices.
Building Consistency
Advisors can also model positive habits by creating structured check-ins to reinforce good behavior. Whether through regular meetings or behavioral coaching sessions, consistency helps clients stay on track and builds trust in the advisory relationship.
3. Tools to Strengthen Relationships
The final key takeaway emphasized the importance of relational tools that deepen connections with clients, their families, and even colleagues.
The Alignment Model
The alignment model serves as a Swiss Army knife for fostering strong relationships. It aligns clients’ values, goals, and behaviors to create harmony between who they are and who they aspire to be. For instance, if a client’s ideal self values “health” and “community,” but their financial habits focus solely on wealth accumulation, the advisor can highlight behaviors—like philanthropic giving or health-related investments—that better align with these values.
Why It Matters
Studies have shown that clients are more likely to stay with advisors who demonstrate an understanding of their unique needs and values. By focusing on the client’s whole life, advisors can distinguish themselves from competitors who emphasize only technical expertise.
Reinforcing the Certainty of Uncertainty
A recurring theme throughout the webinar was preparing clients for the “certainty of uncertainty.” Life events—like illness, market downturns, or unexpected expenses—are inevitable, but advisors can help clients feel confident and prepared.
Smart Money Philosophy
Introducing the concept of “smart money” equips clients with a framework to navigate uncertainty. By ensuring they have accessible funds regardless of market conditions or life events, advisors can reduce financial stress and enhance client confidence.
The Emotional Brain vs. Logical Thinking
The neuroscience behind financial behavior revealed an essential truth: emotions dominate decision-making, often within milliseconds. By recognizing this, advisors can encourage clients to pause, reflect, and engage their logical brain before acting. The advisor’s role as a steadying influence becomes invaluable, particularly during turbulent times.
The Business Impact of Behavioral Financial Coaching
Behavioral coaching is more than a value-add; it’s a growth driver. According to recent Vanguard studies, behavioral coaching can account for up to 150 basis points of an advisor’s total value. Additionally, 97.4% of advisors incorporating these techniques report increased revenue, and 73% report enhanced client acquisition.
Why It Works
- Client Retention: Clients feel heard and understood.
- Referrals: Differentiated service creates word-of-mouth opportunities.
- Deeper Engagement: Holistic conversations foster stronger bonds.
How to Get Started
Advisors interested in integrating behavioral financial coaching into their practice should consider pursuing the Behavioral Financial Advisor (BFA) designation. This program offers tools and strategies to enhance client relationships and provides resources like the alignment model and values-based planning exercises.
What You Gain
- Practical Tools: From values exercises to client-centric scripts.
- Peer Community: A network of like-minded professionals sharing best practices.
- Revenue Growth: Proven strategies to attract and retain clients.
Conclusion
The benefits of behavioral financial coaching go far beyond portfolio management. By focusing on values-driven decisions, fostering positive habits, and leveraging relationship-strengthening tools, advisors can elevate their practice and create lasting client impact. Whether you’re just starting to explore this approach or are ready to deepen your expertise, now is the time to embrace behavioral financial advice as a transformative element of your business.
Ready to take the next step? Explore the BFA designation and start redefining the way you deliver value today.
