The Future is Uncertain- Coaching to Manage Life’s Risks

By Jon M. Duncan, CFP®

Managing Member

The future is uncertain. As financial advisors, we believe that our most important job is to prepare our clients in advance to deal with life’s uncertainties in the moment they happen.

The best time to proactively coach clients and to help them mentally prepare for the financial challenges they are likely to face in life is when building their financial plan. A financial plan is the ultimate tool for managing uncertainty.

When building financial plans, we try to mentally prepare clients to view risk as unavoidable and manageable. We let them know, for example, that asset allocation and diversification are two effective ways to reduce and manage risk. They do not, however, eliminate the risk of loss. They key objective of planning is to optimize the trade-off between risk and reward.

We also try to prepare our clients to face doubt. Whether it is a bear market or an unexpected health scare, bad things happen and, when they do, it is human nature to question one’s decisions. Through planning we try to inform clients, in advance, and prepare them with the self-confidence needed to stay the course and keep to their long-term plan. We encourage clients to view their financial plans as evolving, changing, and adapting to changes in life not changes in markets.

Coaching is most effective when it is done proactively. In the middle of the game, when life happens, is when effective coaching pays off. It allows our clients to say to themselves, “Oh, yes. We anticipated that.” More importantly, by being prepared, our clients make better decisions and are not as easily swayed by the distractions and noise around them.

All of this sounds very simple, and it is. Dealing effectively with life’s financial challenges when they happen, however, is not easy. Most people need a coach to understand and work with them to identify life’s financial uncertainties in advance and mentally prepare them to make the decisions they will need to make before they need to make them. This is our most important role as financial advisors.


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