logo
spacer
spacer

 eWombat Search 
>
spacer spacer spacer
Latest Accounting News
Hot Issues
Federal Budget 2019 - Overview
How the 2019 Federal Budget affects you
FBT Reminder – Odometer Reading
‘Big awareness push’ underway as STP deadline approaches
GST collection on overseas goods at 300% of forecasts
The problem with getting to 53 years of age.
Lost Beneficiaries
New quarterly STP reporting method for closely held payees revealed
Some Australian figures to help on Budget night.
Employers hit with rolling SG audits as ATO toughens stance
Resources to help understand and implement Single Touch Payroll (STP)
Big fines, prison on the cards as new SG penalties introduced
Extra website resources and tools is one way we offer you and your family more.
FBT Exemption for Various Work Vehicles
Tax payable on expenditure recoupments
ATO identifies SMSF contravention red flags
Who wins dispute about taxable income?
Australia - facts & figures March 2019
Strategies to handle scam phone calls and problem e-mails.
Instant asset write-off threshold upped to $25k
Jail time for GST fraud
Correcting GST Errors
Fuel tax credit rates raised
ATO set to contact clients for overdue TPAR
Reminder on Victoria Property Duties
How Australia is performing.
Global outlook summary: Down but not out
Bookkeepers remind on incoming TPRS obligations
Golden Rules for Deductions
Articles archive
Quarter 1 January - March 2019
Quarter 4 October - December 2018
Quarter 3 July - September 2018
Quarter 2 April - June 2018
Quarter 1 January - March 2018
Quarter 4 October - December 2017
Quarter 3 July - September 2017
Quarter 2 April - June 2017
Quarter 1 January - March 2017
Quarter 4 October - December 2016
Quarter 3 July - September 2016
Quarter 2 April - June 2016
Quarter 1 January - March 2016
Quarter 4 October - December 2015
Quarter 3 July - September 2015
Quarter 2 April - June 2015
Quarter 1 January - March 2015
Quarter 4 October - December 2014
Behavioural Coaching and your financial plans

Behavioural coaching is a major component in how a financial planner adds value to your portfolio.


 



     


 


Last month’s topic was “How a Financial Planner adds value to a Portfolio?”, a major component being Behavioural coaching. The month before the topic was “The Value a Planner Adds to a Portfolio”.


This month the focus is on “What is Behavioural Coaching?”.


There are many long-term investment charts that show how portfolio values increase over time but even with this proof many investors react to short term market volatility which can often undermine attainment of long-term objectives.


Managing this reactionary behaviour is the definition of behavioural coaching.


Behavioural coaching is how a financial planner manages investor 'emotion' and 'reaction’ to market ‘noise' to ensure long term goals are achieved. A good example of this was the GFC. Planners often talked of the stress of having to explain the correct path under such extreme circumstances. In the end, though, those who played the long game have recovered well.


This form of control is hard to achieve when acting alone, it often requires teamwork and professional help.


Behavioural coaching centres on four issues:


  1. A financial plan is the anchor to all actions.
  2. Set clear expectations at the beginning.
  3. Managing the emotions that accompany periods of market volatility.
  4. Work together to ensure an effective planner / client relationship rather than simply reacting to markets.

Behavioural coaching may also involve assisting in areas such as budgeting to save money now to help attain goals later.


A planner, though, will struggle to help you achieve your goals if they aren't continually kept up to date with any changes in your life.


There are four components that you and your planner need to work on together. These are:


Goals


Without goals there can be no planning. However, goals must be realistic and for many investors this is itself difficult because of their starting age. The earlier a person has a financial plan then in most cases the better the outcomes.


Discipline


Market noise and emotion means decision making is difficult. It may even mean cuts now to help win in the end. Discipline is very hard to do on your own so help in this area is a major contributor to attaining long term goals.


Balance


This simply means not to put all your eggs in the one basket. Spreading the risk may mean the full extent of up swings aren't gained but it means that the full extent of down swings aren’t either. Balance means 'slow and steady' and we all know how that works out.


Cost


A planner needs to be able to show that they manage the costs in your portfolio, so they can be as low as possible. History shows that on average, lower costs means better performance.


This series of articles is based on a 16-year study by Vanguard Investments Pty Ltd.


 


Peter Graham
BEc, MBA
AcctWeb / PlannerWeb


 




13th-December-2018