Part 4 - The major benefit of ‘behavioural coaching'
Part 4 in the value of financial advice series. The benefits from ‘behavioural coaching*’ by a financial planner is best demonstrated when managing market volatility.
However, this task is often made harder by the media’s apparent need to report things in their worst light.
Negative, rather than positive, commentary always seems to be the norm and the finance industry has copped quite a lot in the past years. But do other professions receive similar treatment where a few bad apples are used to represent all involved? A quick look would indicate the answer is yes.
Take for example shearers, a mainstay of Australia’s culture and history. One online author feels that shearers are getting such a bad deal from commentators that she’s trying to show what the profession is really like. Too often commentators focus only on very negative fringe issues such as how dangerous shearing is to sheep and that there are too many shearers using drugs. It seems that respect is hard to earn but all too easy to lose.
Like shearers, and the rest of us for that matter, planners aren’t all angels but ‘the proof is in the pudding’. Shearers have proven time and again that they are invaluable to the Australian economy. Similarly, and as shown by a ‘Vanguard Investments Pty Ltd 16-year study’, planners, a profession constantly being questioned and undermined, add around 3% to a portfolio’s value over time. This is a very worthwhile benefit.
Some very good examples of the benefits of remaining focused come from the GFC itself. While tough at the time it proved that staying the course, even when common sense and commentators said otherwise, still led to good outcomes for many.
One example of is where investors in the US equity market with a broadly diversified portfolio of 50% stocks and 50% bonds who didn't hit the panic button, saw an average annual return of 7% from the pre-crisis market peak in 2007 through to June of this year.
Another example from the same period shows that those who remained solely with shares did over 35% better.
These figures are based on Vanguard calculations using data provided by FactSet, as at 29 June 2018.
Your financial future is too important to simply react and it’s your planner’s job to see this doesn’t happen in an unmanaged way. The point here is that a financial adviser is often the only person who is in the position to provide the guidance needed when times are volatile.
*The topic covered by Part 3 of this series of articles was ‘behavioural coaching’.
Peter Graham
BEc, MBA
PlannerWeb / AcctWeb
Hot Issues
- ATO encourages trustees to use voluntary disclosure service
- Beware of terminal illness payout time frame
- Capital losses can help reduce NALI
- Investment and economic outlook, August 2024
- What the Reserve Bank’s rates stance means for property borrowers
- How investing regularly can propel your returns
- Super sector in ASIC’s sights
- Most Popular Operating Systems 1999 - 2022
- Our investment and economic outlook, July 2024
- Striking a balance in the new financial year
- The five reasons why the $A is likely to rise further - if recession is avoided
- What super fund members should know when comparing returns
- Insurance inside super has tax advantages
- It’s never too early to start talking about aged care with clients
- Capacity doubts now more common
- Most Gold Medals in Summer Olympic Games (1896-2024)
- SMSF assets reach record levels amid share market rally
- Many Australians have a fear of running out
- How to get into the retirement comfort zone
- NALE bill passed by parliament
- Compliance focus impacts wind-ups
- LRBA interest rates increase for 2025
- Income-free areas set to increase from 1 July
- Most Spoken Languages in the World
- Middle-to-higher incomes boosting SMSF growth
- Investment and economic outlook, May 2024
- Transitioning into retirement: What you should know
- Plan now to take advantage of stage 3 tax cuts
- Deeming freeze a win for Age Pensioners
Article archive
- April - June 2024
- January - March 2024
- October - December 2023
- July - September 2023
- April - June 2023
- January - March 2023
- October - December 2022
- July - September 2022
- April - June 2022
- January - March 2022
- October - December 2021
- July - September 2021
- April - June 2021
- January - March 2021
- October - December 2020
- July - September 2020
- April - June 2020
- January - March 2020
- October - December 2019
- July - September 2019
- April - June 2019
- January - March 2019
- October - December 2018
- July - September 2018
- April - June 2018
- January - March 2018
- October - December 2017
- July - September 2017
- April - June 2017
- January - March 2017
- October - December 2016
- July - September 2016
- April - June 2016
- January - March 2016
- October - December 2015
- July - September 2015
- April - June 2015
- January - March 2015
- October - December 2014
January - March 2019 archive
- When super isn't compulsory
- Investors brace for Brexit - deal or no deal
- ATO identifies SMSF contravention red flags
- Extra website resources and tools is one way we offer you and your family more.
- Tax and estate planning traps flagged with pension restructures
- A checklist for a healthy financial year
- High-risk LRBAs, TBAR on the ATO’s radar this year
- All you need to know about how Australia is going.
- Royal Commission report makes super fee recommendations
- Four tips for boosting your super balance
- New Year resolutions, New Year strategies
- Part 4 - The major benefit of ‘behavioural coaching'
- 3 tips for weathering the market's bumpy ride
- Common BDBN ‘pitfalls’ flagged in wake of ASIC action
- Case law points to ‘growing importance’ of SMSF document chain
- How Australia is performing.
- Global outlook summary: Down but not out
- Australia - a comprehensive run-down of our vital statistics.
- Your guide to smarter holiday reading
- Verifying asset values in a SMSF.
- Admin, BDBN errors flagged for SMSFs this year
- ATO targets non-arm's length income - NALI
- Retiring in their 30s or 40s?