2018 Industry Awards Winner 2018 Industry Awards Winner >

Good Investment Coaches are Indispensable to Their Clients

4 Steps Advisors Should Take To Strengthen Compliance

Share This Post

4 Steps Advisors Should Take To Strengthen Compliance

When clients hire financial advisors, there’s an expectation that their advisor will work with them to develop an investment strategy that reflects their investment profile. That’s what advisors do. And, for that, advisors are evaluated based on how those strategies perform over time. Advisors can make the case that their investment approach will deliver the desired outcome. But, the real risk with any investment strategy is not with the investment portfolio, but with investor behavior because, as legendary investor Benjamin Graham observed (paraphrasing), “an investor’s worst enemy is likely to be himself.”

Everyone Needs a Coach

For any number of endeavors in which people seek to achieve a level of performance beyond their current capacity – such as sports, weight loss, running a business – they have a better chance of getting over the top by working with a coach. Even successful business executives and sports figures recognize the major gap that separates a plan from action, theory from practice, and activity from results. For most people, it often takes an external force to push them beyond their comfort level. That’s what a coach does. The top athletes in the world hire a team of coaches because they know they can’t get to the next level without them.  In difficult and important endeavours, we could all use a coach to keep us detached from our emotions and accountable to our goals when our discipline fails.

The Real Value of a Financial Advisor

That’s where financial advisors begin to earn their fees. While putting together financial plans and developing investment strategies does require extensive knowledge and competencies, it’s not exactly rocket science. It is an intricate process that requires strict adherence to principles and practices that need to be customized based on each client’s unique profile and circumstances. But it’s still easier than dealing with a client who goes rogue and breaks from the strategy because he’s spooked by the market.

As with athletic trainers, investment coaches take the time to educate their clients on certain laws and fundamental truths grounded in established research and principles. For the athletic trainer, the laws of kinetics are predetermined and indisputable and, when their clients truly understand them, they are more likely to follow the recommended program. For financial advisors, there are time-tested principles of investing that are also indisputable. It’s the advisor’s job to educate their clients on how those principles form the foundation of a sound investment strategy.

Why Good Investment Coaches are Indispensable

Your real value as a financial advisor is in your ability and wiliness to be your client’s investment coach – to educate them on the principles of investing; to keep them laser-focused on their investment objectives; to hold them accountable for their decisions, and to help them avoid the costly behavioral mistakes many investors make. Essentially, that is why your clients pay you. Yes, they get a plan and an investment strategy, but, truth be told, that is only incidental to what your clients really need – a coach who keeps them focused on the target and instills the confidence to stick with the strategy.

 It’s the distinction that makes you indispensable as their financial advisor.

Akhil Lodha Author
Co-founder & CEO StratiFi Technologies

Building the industry standard for understanding portfolio risk through cutting- edge technology at Stratifi.

follow me

Simple, Robust, and Cost-effective.

How can you differentiate yourself, have a positive impact on your clients' financial lives, and build a valuable practice at the same time?

See How StratiFi Can Help