How an Advisor is like a Financial Coach.

The other day I watched a great video with Dave Butler, Co-CEO of Dimensional Funds and David Booth, Founder of Dimensional funds. In the video they talk about the client/advisor relationship and how that relationship should look. After watching, I had 6 take aways that I want to share.

  1. Advisor-Client Relationship: Advisors focus on understanding their clients deeply, beyond just financial transactions. They know their clients’ aspirations, family details, mortgages, and have a clear idea of their financial safety nets to ensure stability even if markets plummet.
  2. Strategic Dialogue: The interaction between advisors and clients involves thorough discussions about the client’s life, financial goals, and potential market scenarios, making these conversations a cornerstone of the advisory relationship.
  3. Market Fluctuations and Client Reactions: During significant market downturns, like the pandemic-induced drop, advisors play a crucial role in guiding clients through their emotional responses, preventing panic selling, and sometimes seizing opportunities to invest more when the client may feel too worried to invest.
  4. Emotional Discipline: Advisors help clients navigate the emotional aspects of investing, particularly fear and greed, to make rational, not emotion-driven, investment decisions.
  5. Coaching Against Common Mistakes: As financial coaches, advisors help clients avoid making “dumb mistakes” by providing perspective during fearful or overly optimistic times, ensuring clients stick to their investment plan.
  6. Planning and Resilience: Advisors emphasize the importance of having a solid financial plan that prepares clients for any market condition, ensuring they can stay on track towards their goals, leading to a more secure and fulfilling financial life.

Below is a link to the video if you’d like to watch. If you’re looking for a relationship like this, let’s talk.