Robin Powell: Some people treat their financial adviser like an order taker. They go to them with set ideas about what they want. The adviser’s job, as they see it, is to carry out their instructions. But it shouldn’t be like that at all. You need an adviser who will challenge you, and ask you searching questions.
Chris Budd used to run a financial advice business. He now writes about personal finance.
Chris Budd: The general public will tend to invest in the stock market when they feel good. And that means, when the stock market is just about to peak. And they tend to get out when they panic, from emotional decisions, i.e. when it’s at the bottom. Everybody has seen this happen all the time. You only need to look at the inflows and outflows in the stock market to have that proven. "Self-limiting beliefs" is the phrase we use for this. It’s beliefs that we have that are not actually true or not necessarily true because beliefs are not the same as truths. And that’s a great phrase that I come back to all the time: “Beliefs are not truths.” So, you might have somebody that will come to see you that doesn’t like the stock market, is risk-averse, because they went in once at the top and it went down and therefore, they think it’s not for them. So, what we need to do as financial planners is we need to help those clients to overcome some of those self-limiting beliefs. In fact, to be aware of them, first of all.
RP: A helpful analogy for a good financial adviser is that of a sports coach. They’re absolutely on your side, and sometimes that might mean being tough with you.
CB: For that reason, I’m a big advocate of financial planners being experienced and preferably trained in coaching. So that we can challenge clients, but challenge them in a non-threatening way; challenge them in a way that will get them thinking about their lives, thinking about their self-limiting beliefs, thinking about things that that they might want to do that they didn’t know that they could do, things like permission. Permission is a fascinating subject, permission to be happy.
RP: Self-limiting beliefs can stop us living life to the full. One of the reasons we fail to recognise them is that we’ve usually held those beliefs for years — often since childhood.
CB: We have a client who we were trying to get to spend some money. Again, a lot of financial planners will have this experience. It’s hard to get people to spend money when they’ve got it. So this particular lady we were getting very excited about golf, she likes her golf, so we were trying to organise a trip to the Ryder Cup for them. And it was going to cost quite a lot of money - VIP, really fancy, you know? And she said: “No, I can’t do that. My Dad wouldn’t like it.” Well, her dad had been dead for 15 years but she was still beholden to him.
RP: So, don’t be offended when your financial adviser really challenges you. They’re probably doing you a big favour.
Don’t forget to subscribe to our YouTube channel where you'll find acres of digestible investor education - no matter what you're investing for.
By subscribing, you can dip in and out and tailor your own learning programme.
Or get back to our Video Library to find more digestible content.