Part 4 – The major benefit of ‘behavioural coaching’

 
One important part of a planner’s job, and what adds real value, is being able to keep their clients focused when times are bad.

       

 

Part 4 in the value of financial advice series. The benefits from ‘behavioural coaching*’ by a financial planner is best demonstrated when managing market volatility.

However, this task is often made harder by the media’s apparent need to report things in their worst light.

Negative, rather than positive, commentary always seems to be the norm and the finance industry has copped quite a lot in the past years. But do other professions receive similar treatment where a few bad apples are used to represent all involved? A quick look would indicate the answer is yes.

Take for example shearers, a mainstay of Australia’s culture and history. One online author feels that shearers are getting such a bad deal from commentators that she’s trying to show what the profession is really like. Too often commentators focus only on very negative fringe issues such as how dangerous shearing is to sheep and that there are too many shearers using drugs. It seems that respect is hard to earn but all too easy to lose.

Like shearers, and the rest of us for that matter, planners aren’t all angels but ‘the proof is in the pudding’. Shearers have proven time and again that they are invaluable to the Australian economy. Similarly, and as shown by a ‘Vanguard Investments Pty Ltd 16-year study’, planners, a profession constantly being questioned and undermined, add around 3% to a portfolio’s value over time. This is a very worthwhile benefit.

Some very good examples of the benefits of remaining focused come from the GFC itself. While tough at the time it proved that staying the course, even when common sense and commentators said otherwise, still led to good outcomes for many.

One example of is where investors in the US equity market with a broadly diversified portfolio of 50% stocks and 50% bonds who didn't hit the panic button, saw an average annual return of 7% from the pre-crisis market peak in 2007 through to June of this year.

Another example from the same period shows that those who remained solely with shares did over 35% better.

These figures are based on Vanguard calculations using data provided by FactSet, as at 29 June 2018.

Your financial future is too important to simply react and it’s your planner’s job to see this doesn’t happen in an unmanaged way. The point here is that a financial adviser is often the only person who is in the position to provide the guidance needed when times are volatile.

*The topic covered by Part 3 of this series of articles was ‘behavioural coaching’.

 

Peter Graham
BEc, MBA
PlannerWeb / AcctWeb

More Articles

TRANSITIONING INTO RETIREMENT: WHAT YOU SHOULD KNOW

Deciding on your retirement funding options comes down to personal choice. . If you’re close to...

Read full article

The Deadliest pandemics in History

Check out the Deadliest pandemics in...

Read full article

Middle-to-higher incomes boosting SMSF growth

The SMSF sector experienced healthy growth over the March quarter, with men and women on middle-to-higher...

Read full article

The superannuation changes from 1 July

The super changes on the way from the start of the 2024-25 financial year. . A number of...

Read full article

Investment and economic outlook, May 2024

Region-by-region economic outlook and latest forecasts for investment returns. . For the last...

Read full article

Downsizer contributions can be time critical

With the expansion of the downsizer contribution, the timing of when it is used can affect how to use...

Read full article

Deeming freeze a win for Age Pensioners

Why the decision to keep deeming rates on hold may be a window for interest rates.   . In...

Read full article

Plan now to take advantage of stage 3 tax cuts

With the stage three tax cuts set to be implemented in around six weeks, opportunities for tax-saving...

Read full article

Sofie Korac is an Authorised Representative (No. 400164) of Prudentia Financial Planning Pty Ltd, AFSL 544118 and a member of the Association of Financial Advisers.

Financial Advice Sydney and the North Shore Office based in Gordon NSW

Financial Services Guide - Disclaimer & Privacy Policy

^