Why Your Firm Needs an Emotional Money Coach

You might be wondering why your financial firm needs an emotional money coach (or what that even means.) As an advisor, you’re passionate about growing your clients’ wealth so they’re comfortable in retirement. They’re not worried about running out of money and able to enjoy their golden years. Some of your clients get it. They max out their contributions and even invest after tax money on top of that. You probably wish all of your clients were like this! But they’re not.

Why Your Firm Needs an Emotional Money Coach  

To Help Clients Who Self-Sabotage

Some of your clients earn an impressive income, but because of lifestyle creep or excessive debt, they’re not able to invest enough to meet their goals. Your sound advice to them is not the problem. The problem is that it seems to fall on deaf ears. Is there a way to reform this “high-income/ hot mess” client? Yes!

This is the reason why I see immense value in financial firms adding an emotional money coach to their team. Emotional money coaches have a deep understanding of the emotional and relational drivers behind self-destructive money behaviors, such as…

·       Emotional spending

·       Parents enabling their grown children to be financially irresponsible

·       Couples with high levels of conflict around money

·       Anxiety and stress over excessive debt

This type of coach will work with a client to uncover and correct self-sabotaging patterns. Of course, your client must be open to receiving this type of coaching and willing to implement the strategies. But if their finances are causing constant stress, the client is usually receptive to it.

To Assist Clients Going Through Emotional Life Changes

When your client is experiencing divorce or the death of their spouse, this person is ripe for making dangerous money decisions in the heat of emotion. Using money as a weapon, spending excessive amounts of money to self-soothe, or even freezing like a deer in the headlights can cause financial disasters that haunt your clients years later.

An emotional money coach will help your client make financial decisions now that they will be happy with in the long term. A coach can sort out exactly what needs to be handled now, and what decisions can be deferred until after the client has processed their overwhelming emotions. A widowed or divorcing client might not have handled the daily finances before this life change. A money coach can assist clients with granular money tasks like setting up online bill pay or a budget app.  

To Turn Mediocre Clients into Superstars

Most financial planners I talk to admit their firm has a segment of clients with great potential to be investing superstars. These folks want to be better savers and investors but they need some fine-tuning in their personal finances. It’s usually not the best use of an advisor’s time or experience to help these clients comb through their expenses and examine their daily money habits.

An emotional money coach will help these clients determine exactly what’s important to them, figure out how and where to redirect spending, and set up a system of money management that’s easy for the client to maintain. These minor adjustments can produce major results in a relatively short period of time, turning those mediocre investors into superstars!

I know you’re already thinking of clients who can benefit from this type of coaching. You see their potential and you want to help them progress. Assisting clients with these behavioral finance issues is going to be the next wave in the financial planning industry. With the proliferation of robo-advisors and low-cost funds, clients are demanding value-added services from their financial planning firms.

By assisting clients with the emotional side of money, you’re helping them minimize their debt, maximize their savings and investments, and direct spending to what’s really important to them. Your role as the financial advisor is to invest your clients’ money wisely and encourage them down the path to financial success. You might not want to do emotional money coaching with your clients yourself. So, what are some ways you can incorporate emotional money coaching in your practice? Stay tuned, because I’ll cover this in a future post.

P.S. Did you hear? My CFP Board approved on-demand course, Understanding Your Clients’ Emotional Money Behaviors, is now available!

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