Is Financial Planning Like Weight Loss Coaching?

Tuesday, May 10, 2011 06:54
Is Financial Planning Like Weight Loss Coaching?

Tags: financial planning | investor behavior

The head scientist for Weight Watchers says financial planning works a lot like getting someone to get in physical shape. Maybe, maybe not.

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The FPA brought in Karen Miller-Kovach, chief scientific officer of Weight Watchers, to address "obvious parallels" between what she does and what financial planners do. 


The problem is that her behavioral perspective is interesting when it comes to getting at-risk Americans to get out of debt and stop saving -- all the touchstones of mass market personal finance -- but doesn't have much in common with most modern financial planning.


Financial planners tend to work with mass affluent to high-net-worth people. These clients are already wealthy or, to use the health analogy, in pretty athletic shape.


The typical planning practice doesn't work through any of the stages of resistance and mourning that she talks about. And clients don't have to radically modify their behavior. They just need to modify their asset allocations.


Still, if you have a lot of at-risk clients who could benefit from this kind of "tough love approach" -- or if you do a lot of public relations work aimed at the mass market -- these motivational tips could help.


But I don't know if many advisors working today need them in their day-to-day practice.

Comments (2)

Thanks for the article. I have two challenges with your short write-up here. (1) We have to stop thinking about financial planning as something that only applies to the Mass Affluent or HNW client. Discounting the benefits of the behavioral perspective because it "doesn't apply" to this narrow focus is missing the point.

(2) No matter how successful a person has been at achieving wealth, they can always make better choices with their money and often the ones with the most wealth are the most wasteful (at least in pure dollar terms) and destructive.

The segmentation as described in the article is interesting and a useful tool that any trainer / planner would want to be better at their craft.
cfp4me , May 10, 2011
Thanks for the challenges, the thoughts, and for reading!

I agree with you that planning as a discipline is asset-blind and would add that if anything, it's more crucial as we move down into the mass market world of "personal finance." When addressing these people, any behavioral lever we can pull to get them motivated, the better. I also agree with you that every client can do better, and successful planners are the ones who can coach those clients to make the right choices.

But the sheer cognitive dissonance between this "personal finance" approach and the business model of planning as it's actually practiced -- as a close cousin of "wealth management" -- still left me a little disturbed.

Measured on the physical fitness analogy, I suspect most planning clients are somewhere around the "supermodel" end of the scale. Do most planners actively work with people who need help slimming down their budgets, or do these issues mostly come up when a client asks for a little remedial help with a grandchild or son-in-law?

I suspect the planner who finds a way to bring planning out of the mass-affluent-to-UHNW market will change the world. You're right, perspectives like this are a step in the right direction.
ScottMartin , May 10, 2011

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