The other day I watched a great video with Dave Butler, Co-CEO of Dimensional Funds and David Booth, Founder of Dimensional funds. In the video they talk about the client/advisor relationship and how that relationship should look. After watching, I had 6 take aways that I want to share.
- Advisor-Client Relationship: Advisors focus on understanding their clients deeply, beyond just financial transactions. They know their clients’ aspirations, family details, mortgages, and have a clear idea of their financial safety nets to ensure stability even if markets plummet.
- Strategic Dialogue: The interaction between advisors and clients involves thorough discussions about the client’s life, financial goals, and potential market scenarios, making these conversations a cornerstone of the advisory relationship.
- Market Fluctuations and Client Reactions: During significant market downturns, like the pandemic-induced drop, advisors play a crucial role in guiding clients through their emotional responses, preventing panic selling, and sometimes seizing opportunities to invest more when the client may feel too worried to invest.
- Emotional Discipline: Advisors help clients navigate the emotional aspects of investing, particularly fear and greed, to make rational, not emotion-driven, investment decisions.
- Coaching Against Common Mistakes: As financial coaches, advisors help clients avoid making “dumb mistakes” by providing perspective during fearful or overly optimistic times, ensuring clients stick to their investment plan.
- Planning and Resilience: Advisors emphasize the importance of having a solid financial plan that prepares clients for any market condition, ensuring they can stay on track towards their goals, leading to a more secure and fulfilling financial life.
Below is a link to the video if you’d like to watch. If you’re looking for a relationship like this, let’s talk.
https://www.dimensional.com/us-en/insights/having-a-financial-coach-in-your-corner