Contracting

Financial planners can learn a lot from business coaching (I do, anyway!). One of the most important principles of business coaching is contracting. It is essential that the coach has a clearly established contract with the coachee.

Take an example. A business owner or manager engages the business coach. “I want you to coach Bill,” she tells them. “He’s got a real attitude problem. You’ve got three sessions with him, I want you to coach him to get him working harder.”

This is unlikely to work. Bill has not contracted with the process of coaching. The sessions are likely to be awkward and pointless.

I’m a massive advocate of the coaching THEN planning THEN advice process of financial planning. Help the client to work out what the future might look like, then create a financial plan (probably involving a cashflow forecast) to plot a path to get there, then use technical knowledge to provide advice on the way.

But what if the client doesn’t want the coaching element of the process? Maybe they know where they are going and don’t want to be challenged and ask to go straight to the planning phase. What if they don’t want to think about the future at all and just want tax or product advice?

There are two responses to this situation. The first is contracting. The second is to decide not to deal with those sort of clients at all.

To deal with the second point first, it is important to get the right kind of client for your business. In my experience, people who say they don’t want any form of planning, who just have a specific requirement they want solving, don’t make good long term clients. They tend to be focussed on cost not benefit, on investment portfolio performance rather than investment portfolio relevance. At Ovation we choose to not deal with these sort of clients.

Some people don’t need coaching. Actually, I don’t believe that for a moment. I’ve never yet met a person who has their lives so perfectly in order that they wouldn’t benefit from some facilitated thinking and/or from being challenged. So let’s start that paragraph again.

Some people are wary of coaching. This could be for a variety of reasons. Perhaps they have sufficient clarity over their desired future. People don’t first approach a financial adviser to be challenged. Maybe they find the whole process uncomfortable.

Not everyone wants to confront their future. Carl Richards deals with this really well in his 4 part podcast series on goals, I’d recommend you check it out (the Behavior Gap Radio podcasts).

There are things that we can do to improve our contracting with the client. When I do business coaching I send an email to the new coachee in advance explaining how the process works. That I am there to help their thinking, that I am not there to provide answers. That they need to come with an open mind and a willingness to explore.

Why not take a similar approach with a new financial planning client? Send them an email or letter confirming time and date etc, perhaps ask them to bring their ID documents with them. Then include a paragraph explaining the process. Why should the process be a mystery? Tell them that in order to create a financial plan, to understand their attitude to risk, to make any sort of recommendations, we first need to get clarity over what they want their future to look like. We can then create a plan to help bring that future closer.

There are other ways. Blogs on the web site explaining your process, for example. Using challenging questions that aren’t confrontational. Carl talks about not setting goals but setting ‘guesses’, to highlight the fact that goals can change (I also like ‘motivations’).

It all builds up to contracting with the client to provide your kind of services, a pre-sale process so that the client comes in ready to properly engage with you in that first meeting.

Chris’s second novel, Manners From Heaven, is now available from Amazon. Click here for all his books, including The Financial Wellbeing Book.

If you’re interested in courses run by Quiver Management on coaching skills for financial advisers, click here.