The entire science behind change fascinates me. It’s also one of the critical variables in
financial planning – without implementing a sustainable change the entire
planning process fails to deliver the outcomes we’re after.
That’s easier to say than do. We get busy, distracted and we
procrastinate. Procrastination is a real problem for a lot of people, and it’s
a sneaky one. Quite often we don’t even realise it’s sitting on our shoulders
making itself very comfy. Its level of comfort will depend on how we respond to
change and how ‘change hungry’ we actually are.
Different people have different levels of readiness to change and it needs to be
measured and respected. It allows a good coach to use the right approach and
develop a framework that maximises the client’s potential. After all, it’s all about the actual process
of planning – taking clients from self-discovery to actioning digestible steps
of a workable plan, fundamentally connected to personal values and goals.
It doesn’t just happen automatically though. The whole process is
underpinned by changes in thought, attitudes and behaviour. And that’s where
the rubber hits the road.
Studies after studies show us that if we address our behaviour, the results we're after are inevitable.
Coached investor behaviour can
literally stop you from booting away your fortune. Up to two thirds of investor
returns are lost annually, due to expensive mistakes because ‘human nature is
simply a failed investor’ (annual Dalbar/Lipper analysis).
People’s improved behaviour can increase their savings by $90,000
after working with a financial planner (Saving Study by KPMG Econtech for the
FSC).
Our behaviour and our decision mechanism is the
dominant determinant of our financial outcomes. And managing the process of
change forms a big part of what a behavioural coach does.
New Year’s Day is the single most popular trigger in our calendars, when
we tend to think of change and how we can improve our lives. Without successful
implementation, however, change won’t be sustainable.
So what can you do differently this time? The secret to getting ahead is
getting started. These three, simple and practical life hacks might be the way
to go:
- Don’t think (too much)– we tend to overthink things. Our minds love
making excuses about the ‘right time’ and ‘perfect conditions’. These never
happen. The best time to start was probably years ago. The second-best time is
now. Often, it’s just a matter of starting and working out details later.
- Create external tension – if we tell other people and make our plans
‘official’, we subconsciously create a guilt trip if we stop. Sharing our goals
and plans with friends fools our mind and holds it accountable.
- Start for 10 – break down the change into small bites you can introduce
daily. Then, every day, practice the new habit for just ten minutes. Once the
time is over we tend to continue as we already created a momentum.
Financial coaching can also reduce the anxiety about the irreducible
uncertainty we all face. It provides a holding hand and objective point of view,
that helps build our confidence when dealing with change.
Michal Bodi
Senior Financial Planner & Financial Coach
mbodi@sydneyfinancialplanning.com.au
