While planning a fly-fishing trip to Montana for later this year, I did some homework on the rivers and streams to try to make the most of our time and money. I noticed a pair of phrases in my guidebook were repeated often: “a beautiful stream with lots of fish” and “grizzlies frequent the area.” My first reaction was, are they serious? And my second was more relevant to you: That’s a perfect analogy with the behavioral challenges of investing.

Nothing appeals to a fisherman’s greed more than a stream full of fish, but the threat of ending up as a grizzly’s chew toy should not be taken lightly. Reward and risk. Investing is often punctuated by unexpected events—some good, others bad—whose probability of occurring is high and easy to anticipate, even if timing and impact are not. It’s a matter of realizing that the future is uncertain and that a degree of mental preparation is necessary.

We believe that advisors can play a critical role in their clients’ investment success and that their role as a behavioral coach can be an important contribution to that endgame. But behavioral coaching is most effective in the moment if the clients have been mentally prepared in advance.


So how can you proactively coach clients?

The best time to proactively coach investors and to help them mentally prepare for the investment challenges to come is when you are building the client’s initial financial plan. In many ways, it is the tool for proactive behavioral coaching.

When building the plan, mentally prepare your clients for:

Losses as well as gains

Let clients know that while asset allocation and diversification are two effective risk management tools at our disposal, they do not immunize the portfolio from all volatility or losses.


Let clients also know that something—at some point in the future—is going to make them question the investment strategy. While it may be a bear market and not a grizzly bear, scary times will certainly occur during the typical client’s investment journey. These emotional periods are often fueled by pundits promoting something “different.” Let clients know—in advance—that the pundits don’t know them, you do. You built the financial plan specifically for them, considering their needs.

When the best thing to do is to do nothing

Let them know that their financial plan is adaptive to changes that would warrant a revision, such as changes in the headlines of the client’s life, not changes in the market’s headlines.


Coach for tomorrow today

As beneficial as behavioral coaching can be, it is most effective when it is applied proactively. When events occur, it allows you to say, “Remember, we anticipated that something would happen, and we agreed not to let market headlines affect our strategy.” Sounds simple, and it is, but it’s also effective.

As with any coaching, it’s important your clients know you’re a team, shoulder to shoulder and prepared, no matter what. It may be the most important form of mental preparation you do for your clients. Whether it’s a bear market or fishing in streams under the threat of bears, there’s more peace of mind when you’re not alone. I’ll take that same approach when fishing in Montana with a buddy. After all, those waters are supposedly full of fish.