Financial advisors excel at guiding clients towards sound financial decisions. However, when it comes to their own finances, they often struggle to apply the same pragmatic advice they offer to clients. I include myself in this observation. The cognitive biases, behavioural patterns and challenges that advisors help clients navigate affect their own decision-making processes. Making objective financial decisions can be even more challenging for advisors, as personal preconceptions may cloud their judgement. This reality underscores the adage, “A lawyer who represents himself has a fool for a client”. The same principle applies to financial advisors.
Avoiding uncomfortable topics is a common human tendency, particularly when dealing with subjects that provoke discomfort or anxiety. Retirement planning, estate planning, drafting a will, budgeting, health issues and succession planning are all complex and emotionally charged discussions that are frequently postponed and avoided by both clients and financial advisors.
As financial experts, advisors routinely encourage clients to confront these difficult issues directly and guide them through complex financial situations. They construct comprehensive financial plans that address every aspect of a client’s financial portfolio, providing guidance and accountability to ensure adherence to strategic plans. Advisors educate clients about the challenges and discipline required to follow through on these plans, emphasising that regular reviews and objective assessments are necessary for long-term success.
Financial advisors are adept at prompting clients to discuss sensitive issues, including confronting mortality, recognising detrimental spending habits, addressing retirement concerns and engaging in succession planning. These conversations require empathy, persistence and the ability to guide clients through emotionally difficult territory. An unbiased viewpoint significantly enhances the decision-making process.
Tom Stoppard aptly remarked, “We give advice by the bucket but take it by the grain.” Despite dedicating their careers to advising others, many financial advisors do not apply the same principles to manage their own financial affairs. They often overlook the importance of seeking professional help for their personal financial plans, either due to overconfidence or reluctance to admit the need for assistance. Cognitive blind spots impede sound financial decision-making, leading to procrastination and incomplete planning. A trusted financial advisor provides an objective perspective on difficult topics such as succession and retirement planning, educational funding for children and budgeting within a commission-based environment. This ensures that advisors receive candid, unbiased advice that serves their best interests, even if it challenges their initial perspectives.
John Steinbeck’s observation, “You know how advice is, you only want it if it agrees with what you wanted to do anyway,” underscores the importance of having an advisor who provides objective guidance rather than merely validating preconceived ideas.
It is important to acknowledge that financial professionals, like all individuals, may encounter challenges in organising their own finances. Seeking assistance is not a sign of weakness but rather an acknowledgement of the complexity of personal financial planning. Just as financial advisors advocate for their clients to seek expert guidance, they should apply the same principle to their own financial matters. By appointing a trusted financial advisor to manage your financial situation, you benefit from the same clarity, objectivity and strategic insight that your clients do – why would you deserve anything less?
