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The Changing Role of the Financial Planner Part 1: From Financial Analytics to Coaching and Life Planning

by David Dubofsky, Ph.D., CFA, and Lyle Sussman, Ph.D.

David Dubofsky, Ph.D., CFA, is professor of and associate dean for research, University of Louisville. He Executive Summary has published more than 25 academic journal articles and is the author of two textbooks. • This report is the first in a two-part completed some portion of the survey. Lyle Sussman, Ph.D., is professor and chairman of the study of the emerging role of coaching • Approximately 25 percent of the department of management and entrepreneurship, in financial planning. This first paper respondents’ contact with clients is University of Louisville. He has written 65 scholarly articles reports the results of our survey, which devoted to non-financial issues. About and 9 management books translated into 17 languages that support the thesis that financial 74 percent of planners estimate that have sold a total of 1 million copies worldwide. acumen is necessary for - the amount of time they are spending ning, but not sufficient. Implications for on these issues has increased over the training and professional development last five years. are extensively discussed in Part 2. • Most respondents believe that their ur research into the emerging • An online survey was sent to 38,810 non-financial coaching and counseling role of the financial planner as members of the Financial Planning makes them better planners and helps O life coach is presented in two Association and CFP Board mailing list their clients, but are less certain that separate reports. This first report focuses participants, to determine the non- these activities increase business. on the descriptive results of a large scale financial coaching and life planning • Planners help clients with critical issues Web-based survey, and provides empirical activities of financial planners. that reflect human drama and frailties: data clarifying the scope, trends, and • The primary research question for this religion and spirituality, death, family dys - coaching-related practices of financial study concerns the changing role of the function, illness, divorce, and depression. planners. The second report, which will be financial planner and the major implica - • Most respondents have at least some published in the September issue of the tions of that change for the financial training to equip them to help clients Journal (Sussman and Dubofsky, 2009), is planner of today and tomorrow. with non-financial issues, but 40 per - an extension of the descriptive summary • A total of 1,374 planners completed cent have had no training or profes - and focuses on the implications of our the entire survey, though 2,006 sional development in this area. empirical results for financial planners. This first report thus sets the stage for the second report. As a set, the reports answer the following overarching question: How is It reveals a 2,000+ word description of the the role of the financial planner changing nature of the work, training, and qualifica - and what are the major implications of that tions for this occupation. The results of change for the financial planner of today the survey we conducted suggest that the Acknowledgement: We could not have conducted this and tomorrow? Department of Labor’s description survey without the assistance of Rebecca King of the Finan - A description of the profession known accounts for only 75 percent of the actual cial Planning Association and Asha Williams of Certified as “personal ,” can be work financial advisers perform for their Financial Planner Board of Standards. Rachel Candelora found by visiting the U.S. Department of clients. The other 25 percent of the work provided valuable research assistance. We also thank the Labor Occupational Outlook Handbook involves dealing with non-financial participants in our focus group. Web page (www.bls.gov/oco/ocos259.htm). issues—human drama and frailties.

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In dealing with these personal, non- plans. Retiring baby boomers are thus dis - Research Questions financial issues, financial planners forge covering that managing a bonds with their clients that we may charac - account is difficult at best and gut Because the study is exploratory in terize as special and endearing. There are wrenching at worst. nature we pose research questions rather precious few interpersonal bonds worthy of than test theoretically grounded this label. Examples include parent and Purpose hypotheses. Specifically, this study was child, minister and parishioner, teacher and designed to empirically answer the student, physician and patient. We posit Given the potential of the planner-client research question posed above: How is that the relationship between financial plan - engagement to be executed on an emotional the role of the financial planner chang - ner and client is also worthy of the label. minefield (Kahn, 2001), it is not surprising ing, and what are the major implications Discussing personal financial assets, that a body of literature focusing on the of that change for the financial planner personal life goals, and articulating plans planner as coach and counselor has of today and tomorrow? for achieving those goals relies on trust, emerged. This literature speaks to the need This major question suggested five corol - candor, and a client’s willingness to be and importance of the non-financial coach - lary questions: Executive Summary open and potentially vulnerable. These ing and counseling role of financial planners RQ1: Planners’ Perceptions of the characteristics are the essence of special (Kahler, 2005; Warner, 2006; Wagner, 2000; Coaching Role. To what extent do finan - and endearing relationships. “People who O’Neill, 1991; Matson, 2003), and the skills cial planners perceive their role as encom - • This report is the first in a two-part completed some portion of the survey. would not dream of seeking out a thera - required of this new role (Christiansen and passing coaching and counseling? Do plan - study of the emerging role of coaching • Approximately 25 percent of the pist, counselor, or clergyman for emo - DeVaney, 1998; Collier, 2004; Miller and ners see this role as increasing or in financial planning. This first paper respondents’ contact with clients is tional support may find themselves emo - Koesten, 2008). Two dominant themes decreasing in importance? reports the results of our survey, which devoted to non-financial issues. About tionally overcome or vulnerable when emerge from this literature. First, financial RQ2: The Issues. What are the most support the thesis that financial 74 percent of planners estimate that talking with a planner about a pending acumen is necessary for financial planning common personal, non-financial issues acumen is necessary for financial plan - the amount of time they are spending divorce, planning for death, or in the but may not be sufficient . “The most effective financial planners confront in their ning, but not sufficient. Implications for on these issues has increased over the aftermath of losing a loved one, caring financial planning will combine the cogni - engagements with clients? training and professional development last five years. for a special needs family member, or tive talents of the traditional financial plan - RQ3: Perceived Value of the Coaching are extensively discussed in Part 2. • Most respondents believe that their leaving a legacy” (Kinder and Galvan, ner with the emotional skills of a counselor” Role. Do planners perceive the coaching • An online survey was sent to 38,810 non-financial coaching and counseling 2006, p. 197). Thus, financial planners, (Kahler, 2005, p.62). Secondly, financial role as important for them, their clients, members of the Financial Planning makes them better planners and helps whether they planned for it or not, may planners must seek out professional develop - and their business? Association and CFP Board mailing list their clients, but are less certain that become personal coaches and counselors ment opportunities to increase their coach - RQ4: Coaching and Counseling Critical participants, to determine the non- these activities increase business. for their clients. ing and life planning skills. Incidents and Behaviors. What are the crit - financial coaching and life planning • Planners help clients with critical issues Moreover, given the demographic The literature supporting these two ical incidents reflecting the non-financial activities of financial planners. that reflect human drama and frailties: trends of retiring baby boomers, the themes, however, is primarily anecdotal coaching/counseling role of financial • The primary research question for this religion and spirituality, death, family dys - wealth they are likely to inherit from par - and prescriptive. Thus, we have case stud - planners? What behaviors do financial study concerns the changing role of the function, illness, divorce, and depression. ents or distribute to children, and deci - ies highlighting the financial planner and the major implica - • Most respondents have at least some sions regarding Social benefits emergence and impor - tions of that change for the financial training to equip them to help clients (Congressional Budget Office, 2003), tance of this new finan - financial planners are in a growth indus - cial planning role, per - planner of today and tomorrow. with non-financial issues, but 40 per - Financial planners, whether they • A total of 1,374 planners completed cent have had no training or profes - try. The Department of Labor forecasts sonal accounts of specific “ the entire survey, though 2,006 sional development in this area. that it will be the sixth-fastest growing issues raised in life plan - planned for it or not, may become occupation between 2006 and 2016, with ning sessions (for exam - personal coaches and counselors for the number of personal financial advisers ple, succession planning, rising from 176,000 to 248,000 during blended families, clients their clients. this period (see www.bls.gov/oco/ocos and/or family members ” 259.htm#projections_data and with Alzheimer’s), and www.bls.gov/oco/oco2003.htm). The advice on how planners demand for qualified financial planning should execute that role. But this literature planners engage in as part of their coach - also reflects the American worker’s fails to provide an empirically based, com - ing and counseling? increased exposure to financial uncer - prehensive view of the underlying dynam - RQ5: Training and Preparation. Of tainty, a result of the corporate world’s ics and scope of the role. The purpose of what type and how extensive is the train - transition from offering defined benefit this study is to provide that view and fill ing financial planners have received in life plans to defined contribution that void. planning and coaching?

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tions. The e-mail directed recipients to an TableTable 1: Respondent,Respondent, CFP CCertificant,ertificant, and FPFPAA MMembershipembership online survey. DDemographicsemographics A total of 2,006 financial planners This SStudytudy CFP CertificantsCertificants FPAFPA MMembershipembership logged on to the survey, representing a 5.2 GGenderender percent response rate. The introduction to MMaleale 79.6% 76.5% 75.0% the survey explicitly assured anonymity FemaleFemale 20.4% 23.3% 25.0% and confidentiality and provided the fol - AgeAge lowing rationale: < 30 3.2% 3.0% 2.0% 31–40 17.9% 20.4% 12.0% We have partnered with Certified 41–50 27.3% 28.0% 26.0% Financial Planner Board of Standards 51–60 35.3% 30.2% 35.0% and the Financial Planning Associa - > 60 16.4% 17.3% 25.0% tion to conduct a survey of your per - EducationEducation ceptions of the changing role of finan - High schoolschool 0.8% cial planners. This questionnaire SomeSome collegecollege 8.6% probes the nature and frequency of CollegeCollege degreedegree 43.7% 60.3%* 70%*** personal, non-financial problems and AdvancedAdvanced degreedegree 46.9% 34.7%** 33%*** issues raised during planning sessions. ProfessionalProfessional DesignationsDesignations Both anecdotal data and published CFP 97.6% 100%1 67.0% reports highlight the importance of RIA 41.7% --- 64.6% 2 the coaching and counseling aspects CChFChFC 15.6% 10.8% 9.7% within a financial planning engage - CLUCLU 13.3% 10.1% 9.2% ment. We define coaching and coun - CPACPA 6.9% 12.9% 11.0% seling as using your non-financial PFS 3.1% 3.0% 3.7% skills, ability, and knowledge to help J.DJ.D.. 2.3% 4.2% 2.9% your clients achieve personal fulfill - CFCFAA 1.5% 2.4% 2.1% ment and their life goals. AssetsAssets UnderUnder ManagementManagement3 < $20 million 25.0% Of the 2,006 surveys started, 1,374 were < $25 million 38.0% completed, representing a 68.5 percent $20–50 million 28.0% completion rate. Because the survey $25–50 million 18.0% probed highly sensitive information, we $51–100 million 22.0% 13.0% correctly anticipated that some respon - $101–250 million 17.0% 9.0% dents might skip or disregard some ques - > $250 million 8.0% 4.0% tions. In order to obtain the highest Don’tDon’t manage assets 17.5% response rate possible, respondents were * Associate’sAssociate’s and bachelor’sbachelor’s degrdegreesees Continued on page 52 urged but not required to answer every ** Master’s,Master’s, PPh.D.,h.D., and JJurisuris DoctorDoctor degreesdegrees question. A question could be skipped *** FPAFPA membersmembers couldcould selectselect both;both; therefore,therefore, the sum eexceedsxceeds 100%. without automatically terminating the 1 100% areare CFP certificants.certificants. 70% areare CFP practitioners.practitioners. 2 Includes dually-registereddually-registered advisersadvisers questionnaire. We thus recorded responses 3 InformationInformation fromfrom CFP BoardBoard not availableavailable from complete and incomplete surveys. In general, the number of responses declined as respondents went deeper into the Method and Sample wanted to opt out of e-mail communica - survey. The number of responses to any tion. The Financial Planning Association one question ranged between 1,087 and Our survey was e-mailed to 38,810 finan - sent the survey to an additional 16,000 1,517. For dichotomous questions, within cial planners. CFP Board sent it to 22,810 members who accept e-mail and research- this range of responses, the sampling error registered CERTIFIED FINANCIAL related communications. CFP Board and ranges from ±2.52 to ±2.97 at the 95 per - PLANNER™ certificants who were self- FPA collaborated so that a respondent cent confidence level. identified practitioners and who previ - should not have received a request to par - Table 1 provides demographic characteris - ously never notified CFP Board that they ticipate in the survey from both organiza - tics of our respondents and compares them

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to the population demographics of CFP cer - Almost 98 percent of our respondents addition, 17 percent of respondents tificants and FPA members. 1 Comparison are CERTIFIED FINANCIAL PLANNER manage portfolios of $101–$250 million, data address the issue of nonresponse bias. (CFP) practitioners. Many of them hold and another 8 percent manage more than This comparison suggests reasonable com - other professional designations or titles as $250 million. parability of sample characteristics to popu - well, such as Registered Respondents are compensated in a vari - lation characteristics. Moreover, it is impor - Adviser (RIA, 41.7 percent), Chartered ety of ways; the two compensation meth - tant to note that 30 percent of CFP Financial Consultant (ChFC, 15.6 per - ods most frequently mentioned were certificants and many FPA members are not cent), and Char - CFP practitioners, so that some demo - tered Life Under - graphic differences between our respon - writer (CLU, 13.3 dents (all of whom stated that they supply percent). We have partnered with Certified financial planning services directly to indi - Almost 88 per - “ viduals and families) and the other two cent of our respon - Financial Planner Board of Standards groups are expected. dents have more and the Financial Planning Association to Eighty percent of our respondents are than 30 clients. The conduct a survey of your perceptions of male, and 20 percent female. In terms of value of assets race, 94 percent are white. The largest age under advisement the changing role of financial planners. group is 51–60 (35 percent), followed by was clustered in the ” 41–50 (27 percent). Ninety-one percent of categories of “less the respondents have either an undergradu - than $20 million,” ate or graduate degree. All but 11 percent of “$20–$50 million,” and “$51–$100 mil - “percent of assets” and “commission,” the respondents have more than five years of lion,” with 25 percent, 28 percent, and 22 cited by 69 percent and 64 percent of our experience working as a financial planner. percent representation, respectively. In respondents, respectively.

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was developed through two sources: (1) a Taableble 1 (continued)(ccontinued)ontinued): Respondent,Respondentt,, CFP CCertificant,ertificantt,, and FPFPAA MMembershipembership summary of the anecdotal literature dis - DDemographicsemographics cussed earlier, and (2) a summary of a focus group conducted with six financial CCompensationompensation MethodsMethods This StudyS tudy FPAFPA MMembershipemb ership planners, convened to help design the PPercentercent of assets 6 68.7%8.7% 6 66.2%6.2% questionnaire. CCommissionommission 63.9% 63% We probed these 17 issues in two ways: FFixedixed ffeeee 3 31.1%1.1% 2 24.8%4.8% assessing the percentage of clients who HHourlyourly 27.5% 17.5% raised each issue, and assessing which AAnnualnnual or retainerretainer 2 21.5%1.5% 1 14.7%4.7% three issues took up most of the planners’ SSalaryalary 14.2% 9% time. Figure 1 summarizes the answers to OOtherther 3.2% 0% the first question. Depending upon the NNumberumber of CClientslients ThisThis StudyStudy specific issue, the number of responses 1–10 3.8% ranges from 1,266 to 1,307. Figure 1 shows 11–20 3.9% that, given that a financial planner has 21–30 4.8% engaged in non-financial coaching and > 30 87.6% counseling, personal life goals were dis - NumberNumber of YearsYears AsAs a FinancialFinancial PlannerPlanner cussed with 64 percent of the planner’s TThishis SStudytudy FPAFPA MMembershipembership clients on average. Other prominent issues

<— 5 10.6% 0–4 27% deal with a client’s physical health (52 per - 6–10 24.8% 5–9 9% cent of clients) and a client’s job, career, or 11–20 32.8% 10–14 13% profession (50 percent of clients). All other > 20 31.8% > 15 49% issues involve less than 50 percent of a Note:Note: InformationInformation fromfrom CFP BBoardoard not available.available. financial planner’s clients. When asked which three non-financial Results planning (monetary) issues, and that 25 issues take up the most time, 81 percent of percent of their time is spent on non- the respondents cited a client’s personal Perceptions of the Non-financial Coach - financial issues. 2 life goals; 66 percent cited a client’s job, ing Role. Because some financial plan - We asked our respondents whether they career, or profession; and 44 percent ners do not have direct contact with are engaged in non-financial coaching included a client’s physical health, thus val - clients and because some planners may activities because their clients demanded idating responses to the first question. The view their role as “purely” financial plan - these services or because they supply these fourth most frequently stated issue, death ning, we posed an introductory question services as part of their business strategy. of someone close, was selected by 19 per - designed to clearly dichotomize the Sixty-six percent respond to their clients’ cent of the financial planners as one of the sample into those who coach and counsel requests, while 34 percent supply these three most time-consuming issues. and those who do not: “In your role as a services as part of their business strategy. Only two issues received distinctly dif - financial planner, do you ever engage in The Issues. At the end of our survey, ferent rankings in terms of the percentage non-financial coaching and counseling?” respondents had the opportunity to pro - of clients who raise the issue versus the Of the 1,726 planners who answered the vide any other information they thought time spent dealing with the issue. The question, 1,540 (89 percent) answered yes was relevant to our study. One comment first is a client’s legal problems, other and 186 (11 percent) answered no. All stood out: “… when someone trusts you than those dealing with estate, , and/or subsequent results that we report come enough to open up about , usually divorce. While it ranked eleventh in terms from those who answered yes. they will open up about other more per - of the number of clients who raise these Of those who answered yes, 74 percent sonal issues.” The following results expli - issues to their financial planners (21.3 believe that during the past five years, they cate this sentiment. percent of clients), it ranked fifth in have increased their coaching and counsel - We asked our respondents whether they terms of the number of financial planners ing involvement with their clients; and 26 had dealt with 17 personal and sensitive who said it was among the top three most percent believe that the frequency of deal - issues their clients might experience, time-consuming issues (17 percent of ing with non-financial issues has decreased. issues concerning a client’s work, family, financial planners). The second issue is a Respondents estimate that 75 percent of and a wide range of emotional, physical, client’s marital problems. When consider - their time is spent dealing with financial and mental problems. The list of 17 issues ing the number of clients who raise this

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issue to financial planners, it ranked sixth (23 percent of clients). But in terms of Figure 1: Non- nancial Issues that Clients Raise with Financial Planners time spent, it ranked thirteenth (only 4 percent of all financial planners said that Average Percentage of Clients Who Raise the Issue the issue was in their top three most 0 10 20 30 40 50 60 70 time-consuming issues). Even beyond the most prominently cited Personal life goals issues, we were struck by the numbers of Physical health respondents who have dealt with the issues at the bottom of Figure 1. The fact that Job/career/profession 10–20 percent of clients talk about addic - The death of someone very close to the client tions, divorce, mental health, depression, Conflict with children and spirituality underscores the reality that financial planners provide their services on Marital problem an emotional minefield. Children’s medical/emotional problems

Perceived Value of Coaching. Our Divorce (pending or final) respondents generally believe that their Conflicts with extended family members (other than non-financial coaching and counseling spouse and/or children) helps their clients, lets them be better Spending addiction financial planners, and, perhaps to a lesser Legal problems (excluding estate, tax, extent, helps their businesses. Table 2 (on and/or divorce issues) page 54) presents the responses to a set of Religious/spiritual issues four questions that deal with the possible Mental health benefits of non-financial coaching. Depression/general unhappiness The first two questions address client Children’s addictions (drugs, gambling, eating, outcomes. Less than 3 percent of financial spending, sex, etc.) planners disagreed or strongly disagreed Client’s addictions, other than spending (substance abuse, gambling, sex) with statements that their clients’ families Sexual problems communicated better with each other and that their clients seem to be living and enjoying a life closer to their core values. In contrast, almost 60 percent of financial they are less certain that it has a positive planner into the event, and was followed by planners agreed or strongly agreed with effect on the bottom line. a description of the incident. those statements. Critical Incidents and Planners’ Behav - We assessed the critical incidents by The last two questions in the set iors. This research question has two parts. posing a dichotomous question, asking solicited perceptions of personal perform - The first posed several critical incidents simply whether the planner had or had not ance and business potential. Almost 90 financial planners might experience in serv - experienced the incident. Table 3 (on page percent of respondents agreed or strongly icing a client’s needs. A critical incident pro - 55) ranks the incidents by the percentage agreed that their ability to be a good finan - totypically reflects significant events and of yes answers. Seventy-four percent of the cial planner is enhanced or improved processes, from the respondents’ perspec - planners have experienced a session in because they discuss non-financial issues tive. The second part presented a series of which a client became emotionally dis - with their clients. Perhaps surprising, how - specific coaching and counseling behaviors traught. The emotional between ever, are the respondents’ answers to the financial planners may engage in when deal - planner and client is illustrated by the fourth question. Almost 13 percent do not ing with a client’s personal problems. second most prevalent incident: 58 percent believe that their business has increased The critical incidents, drawn from the lit - of our respondents have been told a secret because of their non-financial counseling, erature discussed earlier and from our focus by a client, dealing with a non-financial while 39 percent believe business has group of financial planners, reflected signifi - issue, that no other person knows. increased because of their non-financial cant examples of coaching and counseling Religion and spirituality have been the counseling. Thus, while financial planners events, processes, and actions planners are focus of considerable discussion in the strongly believe they are doing a better job likely to experience. The incidents included financial planning world. Our data confirm because of their non-financial coaching, the pronoun “you,” putting the financial their importance: 49 percent of respondents

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Other stakeholders recognize this intense Tableable 2: HasHas NNon-financialon-financial CCoachingoaching BBeeneen of VValuealue fforor CClientslients and/or bond. Thirty-three percent of our respon - PPlanners?lanners? dents have been lobbied by an organiza - Stronglytrongly DisagreeDisagree NeutralNeutral AgreeAgree S Stronglytrongly Totalotal tion for philanthropic donations, and 26 DisagreeDisagree AgreeAgree ResponsesResponses percent were lobbied to include an organ - BecauseBecause of mymy discussion ization in a client’s will. Thirty-two per - of sensitive,sensitive, personalpersonal non- cent have been lobbied by a member of a financial issues with mymy client’s family to get special considera - clientsclients therethere is moremore 9 24 418 562 110 1,123 tion. These critical incidents expose the effectiveeffeffecective communicationcommunication (1%) (2%) (37%) (50%) (10%) financial planner to complex ethical betweenbetetwween husband and wife,wifwifeee,, issues and dilemmas, and to the risk that parentsparents and children,children, he or she might reveal confidential infor - or others who maymay bebe mation about the client. significantsignificant in mmyy clienclients’ts’ lives.livliveses. As noted above, we also asked several BecauseBecause of mymy discussion questions related to non-financial coaching of sensitive,sensitive, personalpersonal non- and counseling behaviors planners might financial issues with mymy engage in during the course of their client clientsclients theythey seem toto bebe 5 23 468 543 80 1,119 engagement. Figure 2 (on page 56) pres - living a lifelife closer toto their (0%) (2%) (42%) (49%) (7%) ents the results. corecore values,values, and enjoyingenjoying Ninety percent of our respondents explic - whatwhat is most importantimportant itly state that any information disclosed by toto them. the client will be held in strictest confidence. BecauseBecause of mymy discussion Twelve percent of financial planners always of sensitive,sensitive, personalpersonal non- try to establish rapport by sharing their own financial issues with mymy sensitive personal information, in order to clientsclients mymy abilityability toto do 5 8 104 694 300 1,111 make their clients more comfortable dis - a goodgood job atat financial (0%) (1%) (9%) (62%) (27%) cussing their own problems. Another 55 per - planning is enhancedenhanced cent sometimes engage in this practice. or improved.improved. Thirty-eight percent of our respondents BecauseBecause of mymy non- always help their clients understand how a financial counselingcounseling 29 113 549 344 84 1,119 financial plan may be affected by psycho - mymy business has (3%) (10%) (49%) (31%) (8%) logical issues, such as security, fear, status, increased.increased. or self esteem. Only 17 percent of respon - dents include information about life plan - have offered to pray for a client, and 36 per - ners have been asked whether or not their ning and/or personal coaching services in cent said that a client has asked the finan - client should have children. their promotional and marketing materials. cial planner to pray with them. Twenty-two We were astonished at the array of Twenty-eight percent make it a point to percent of our respondents have tried to human frailties emerging in the client- discuss their role as a coach or counselor bring a client closer to God or to the client’s planner relationship. Our respondents have in life planning during their initial contact spiritual core values. 3 faced client issues including suicide, 10 with prospective clients. We find these per - Clients’ marriage and other family prob - percent; therapy, 7 percent–9 percent; and centages reflective of the prominent role lems are issues for many financial planners. drugs, 3 percent–5 percent. Twenty-six that non-financial planning has assumed in Forty-eight percent of our respondents have percent of respondents have had to the financial planning profession. We also mediated marital discord. Another 44 per - reschedule a session because of a client’s found it interesting that even with this cent have mediated problems between a emotional distress. prominent role, only 1.8 percent of our client and his or her children. Client prob - The intensity of the bond between respondents report that their firm has lems with extended family members were financial planner and client is illustrated hired a therapist or family counselor in the experienced by 29 percent of respondents. by our finding that 21 percent of respon - past five years. Clients have asked 34 percent of planners dents have had a client who established a Because the issues and incidents pre - whether they should or should not get trust and listed the financial planner as sented in Figure 1 and Table 3 could divorced, and another 12 percent of plan - either the sole or co-executor of the trust. create personal and administrative costs

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for the planner, we probed another behav - TableTable 3: RankRank OrOrderder of CCoaching/Counselingoaching/Counseling CCriticalritical IncidenIncidentsts FFacedaced bbyy ior: the decision to no longer serve a FFinancialinancial PPlannerslanners client and terminate the relationship. IIncidenncidentt YesYes No ResponsesResponses Seventy-one percent of respondents report that they have essentially “fired” a 1 DuringDuring a planning session a clientclient becamebecame 973 334 1,307 client. Demanding too much time and emotionally distraughtdistraught (e.g.,(e.g., starstartedted crcrying,ying, (74.4%) attention was most frequently cited (by 65 trembling,trembling, sobbing,sobbing, or becamebecame violent).violent). percent of respondents) for a financial 2 YouYou wwereere ttoldold a secrsecretet byby youryour clienclientt (other than 732 539 1,271 planner terminating the relationship. But, relevantrelevant financial facts),facts), who said thatthat yyouou araree the (57.6%) only personperson who kknowsnows thisthis.. in support of the idea that non-financial 3 YouYou offofferedered toto praypray forfor yyourour client.client. 630 645 1,275 issues and incidents create dissonance in (49.4%) the planner-client relationship, 40 per - 4 YouYou servedserved as a mediatormediator betweenbetween a husband and 620 686 1,306 cent of respondents said they fired a wifewife becausebecause of their maritalmarital discord.discord. (47.5%) client because the client’s values or 5 YouYou servedserved as a mediatormediator betweenbetween a clienclientt and his/ 574 731 1,305 lifestyle made the financial planner her children.children. (44.0%) uncomfortable. This finding underscores 6 YourYour clientclient askedasked youyou toto praypray with him/her.him/her. 461 807 1,268 the personal and administrative costs (36.4%) incurred when financial planners engage 7 YourYour clientclient designateddesignated youyou as the personperson ttoo ccontactontact 446 859 1,305 in non-financial coaching and counseling. in the eventevent of an emergency.emergency. (34.2%) Training and Preparation. This 8 YourYour clientclient askedasked youyou whether he/she should or 430 842 1,272 research question deals with the training should not get divorced.divorced. (33.8%) that financial planners may have received 9 YouYou werewere askaskeded byby an organizationorganization toto lobbylobby youryour 421 853 1,274 to properly deal with non-financial issues. clientclient fforor philanthropicphilanthropic donations.donations. (33.0%) We have documented that financial plan - 10 YouYou werewere askaskeded byby a client’sclient’s family membermember ttoo 406 864 1,270 lobbylobby the clientclient on behalfbehalf of thatthat family membmemberer (32.0%) ners face a wide array of human problems (e.g.,(e.g., a child askedasked youyou toto approachapproach his/her parentparent that are usually handled by psychologists, [your[your client]client] fforor specialspecial consideration).consideration). psychiatrists, family therapists, and/or 11 YouYou servedserved as a mediatormediator betweenbetween a clienclientt and 374 928 1,302 members of the clergy. A priori, we extendedextended family member(s)member(s) (other than spspouseouse (28.7%) hypothesized that courses and training in and/or children).children). therapy, social work, psychology, or coun - 12 YouYou werewere askaskeded byby an organizationorganization toto lobblobbyy yyourour 335 932 1,267 seling should help a financial planner deal clientclient ttoo include thatthat organizationorganization as a beneficiarybeneficiary (26.4%) with these issues. However 40 percent of in a will. our respondents have had no coursework 13 EitherEither youyou or a clientclient rrequestedequested thatthat a planning 334 972 1,306 or training related to any kind of non- session bebe rescheduledrescheduled bbecauseecause the client’sclient’s (25.6%) financial coaching or counseling. Thirty- emotional distressdistress preventedprevented continuationcontinuation of thatthat nine percent have had one or more col - session. lege courses in therapy, social work, 14 YouYou triedtried bringingbringing a clienclientt closer toto GodGod (or toto his/ 273 996 1,269 psychology, or counseling; 6 percent have her spiritualspiritual “core“core values”).values”). (21.5%) an undergraduate degree in one of these 15 YourYour clientclient established a trusttrust and listlisteded yyouou as 268 998 1,266 either the sole or co-executorco-executor of the trust.trust. (21.2%) areas; and 3 percent have a related gradu - 16 YourYour clientclient askedasked youyou whether he/she should or 150 1,118 1,268 ate degree. Thirty-two percent have taken should not havehave children.children. (11.8%) professional development seminars or 17 YouYou learnedlearned thatthat a clienclientt waswas thinkingthinking of suicidesuicide.. 129 1,143 1,272 workshops. (10.1%) Finally, perhaps one’s own personal 18 YouYou werewere ininvolvedvolved in an interventionintervention toto get a clientclient 110 1,191 1,301 experiences with a professional counselor intointo therapy.therapy. (8.5%) or life planning coach may help a financial 19 YouYou werewere ininvolvedvolved in an interventionintervention toto get a 90 1,212 1,302 planner do a better job handling his/her client’sclient’s family membmemberer intointo therapy.therapy. (6.9%) clients’ non-financial problems. Thirty-nine 20 YouYou wwereere ininvolvedvolved in an interventionintervention toto get a 58 1,243 1,301 percent of our respondents have them - client’sclient’s family membmemberer intointo drugdrug treatment.treatment. (4.5%) selves received psychological counseling 21 YouYou wwereere ininvolvedvolved in an interventionintervention toto get a 41 1,261 1,302 from a professional counselor; 35 percent clientclient inintoto drugdrug treatment.treatment. (3.1%)

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Figure 2: Financial Planners’ Behaviors Associated with Non-financial have received some other form of counsel - Coaching/Counseling ing or therapy from a professional coun - selor; and 22 percent have received coach - 1. Do you explicitly state that any information the client chooses to disclose will be held in the strictest confidence? ing from a life planning coach. Of those who have been trained in life planning and

Answer Responses % coaching, 65 percent said it was important Yes 1,057 90% or very important, 27 percent said it was No 120 10% somewhat important, and only 8 percent said it was not important. Total 1,177 100% Discussion 2. Do you try to establish rapport by sharing sensitive, personal information about your health, family, or history to make the client more comfortable discussing his or her All survey research is based on samples, problems? and all conclusions based on those sam - Answer Responses % ples are subject to questions related to Always 138 12% validity and reliability. Our results are also subject to those questions. Nevertheless, Sometimes 639 55% the relatively large sample (1,374), com - Rarely 318 27% parability of sample characteristics to Never 72 6% population characteristics, and our exploratory purpose lead us not to a defin - Total 1,167 100% itive conclusion, but to valuable and provocative conclusions. 3. Do you try to help your clients understand how their financial plans may be affected by psychological issues related to the role money plays in their lives (e.g., security, fear, Spreadsheets, optimization algorithms, status, self esteem)? Monte Carlo simulations, economic fore - casts, and actuarial tables have been and Answer Responses % will continue to be necessary tools for Always 443 38% financial planners. But our study under - Sometimes 600 52% scores and empirically supports the thesis Rarely 101 9% highlighted in our introduction: financial acumen is necessary for financial planning

Never 15 1% but not sufficient . Our study also under - Total 1,159 100% scores the need for a new set of tools. In the words of two of our respondents: 4. Do your promotion and marketing materials include information about life planning and/or personal coaching services you provide? When people pour out their life’s Answer Responses % financial history to you, their goals, their aspirations, it is very difficult for Yes 198 17% them not to pour out non-financial No 954 83% information ... and when they provide you the non-financial information they Total 1,152 100% expect non-financial advice. To most

people it is hard to separate the two. I 5. During your initial contact with a prospective client do you make it a point to discuss your role as a coach and/or counselor in life planning? am often asked, ‘How can you know my goals, if you do not know me?’ Answer Responses % Yes 323 28% Money is really the last taboo. More people will speak to their friends (and No 820 72% pastors) about their sex life than their Total 1,143 100% money. Who can admit to friends that they’ve racked up $103,000 in

56 Journal of Financial Planning | A UGUST 2009 www.FPAjournal.org D UBOFSKY | S USSMAN Contributions

card bills? Or who can stand up in training of any kind related to non-finan - under-management-528415-1.html. church (or at the water cooler at work) cial coaching or counseling. Spreadsheets August. and ask for help in how to allocate their and forecasting, yes, therapy intervention Congressional Budget Office. 2003. Baby $4 million estate among their children? strategies and counseling, no. Our results Boomers Retirement Prospects: An indicate that financial Overview. Retrieved from www.cbo.gov/ planners need to listen ftpdoc.cfm?index=4863&type=0. to what their clients are Kahler, Richard S. 2005. “Financial Inte - While the need for coaching is saying, accurately infer gration: Connecting the Client’s Past, “ what clients want to say Present, and Future.” Journal of Financial increasing and while the bond between but are afraid to articu - Planning 18, 5 (May): 62–71. planner and client creates the foundation late, and be able to Kahn, Ronnie. 2001. “Money Conscious - respond appropriately. ness: A Psychospiritual View of Finan - for discussing those issues, the ability of The second article in this cial Planning.” Journal of Financial Plan - planners to provide that coaching is two-part series (to be ning 14, 2: 128–139. problematic at best. published in the Septem - Kinder, George. 1999. Seven Stages of ” ber Journal ) elaborates Money Maturity. New York: Bantam and expands on the spe - Doubleday Dell Publications. cific strategies for Kinder, George and Susan Galvan. 2006. acquiring the coaching Lighting the Torch . Denver: FPA Press. It would have to be a very wealthy skills implicitly and explicitly required by Matson, Mark. 2003. “Shifting From Advi - parish/employee group to embrace that today’s and tomorrow’s clients. sor to Coach.” Advisor Today 98, 2: 50. kind of discussion. As a result, a finan - Miller, Katherine and Joy Koesten. 2008. JFP cial planner is one of the few people “An Investigation of Emotion and Com - that clients can speak to about such Endnotes munication in the Workplace.” Journal of sensitive topics. They often seem eager Applied Communication Research 36, 1. to share tough decisions and issues. 1. Data for CFP certificants are from O’Neill, Barbara. 1991. “Baby-Boom Eco - www.cfp.net/media/profile.asp. Data for nomics: Financial Planning for the ‘Big Divorce, family strife, suicide, drugs, FPA members were provided by FPA. Chill’ Generation.” Journal of Financial mental health, religion and spirituality, ill - 2. We recognize and stress that ambiguity Planning 4, 3 (July): 142–146. ness, and death—this reads like a list of exists between the meaning of “finan - Sussman, Lyle and David Dubofsky. 2009. issues that would and should be managed cial” and “non-financial” issues. Cer - “The Changing Role of the Financial by a member of the clergy, social worker, tainly, many non-financial coaching and Planner Part 2: Prescriptions for Coach - psychologist, or physician. Our research counseling activities have important ing and Life Planning.” Journal of Finan - reveals that financial planners often face financial ramifications. cial Planning 22, 9 (September). these issues. Knowledge about 3. All of the percentages we are presenting Wagner, R. 2000. “The Soul of Money.” and will not solve these prob - imply that the incident happened at Journal of Financial Planning 13, 8 lems. Possessing advanced degrees in least once for the respondent. (August): 50–54. , taxation, finance, or invest - Warner, Joan. 2006. “Life Planning Goes ments will serve planners well, but will not References Mainstream.” Financial Planning 36, 9 be sufficient. To the extent that financial (September): 1–2. planning is designed to help a client meet Christiansen, Tim and Sharon DeVaney. personal life goals, coaching and life plan - 1998. “Antecedents of Trust and Com - ning skills will become requisite skills for mitment in the Financial Planner-Client financial planners. Relationship.” Financial Counseling and Herein lies the rub. While the need for Planning 9, 2: 1–10. coaching is increasing and while the bond Collier, Charles. 2004. “A True Counselor.” between planner and client creates the Trust and Estates 143, 5: 164. foundation for discussing those issues, the Compere, Luliane. 2007 “Explosive Growth ability of planners to provide that coaching for Assets Under Management.” is problematic at best. Almost half of our Retrieved from www.financial-plan - sample, 40 percent, had no coursework or ning.com/news/explosive-growth-assets-

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