How to Help Clients Make Better Decisions

Morningstar's Dan Kemp speaks to Catherine Morgan, a financial coach with The Money Panel, about how advisers can improve investors' spending and investing decisions

Dan Kemp 8 May, 2019 | 3:48PM
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Dan Kemp: Hi, I'm Dan Kemp and I'm here at the Morningstar Investment Conference with Catherine Morgan, who is a Financial Coach of The Money Panel. We've been talking about how we help investors reach their goals.

Catherine, welcome.

Catherine Morgan: Thank you.

Kemp: Now, I know that you are passionate about helping people make good investment decisions, particularly women. Where does that passion come from?

Morgan: Yeah, really good question. So, I've been in financial services for about 20 years and one of the areas I'm really passionate about is helping women to be in a place of confidence and control when they're dealing with their finances. I've very much been in their position where they can be financially resilient through all stages of their life.

Kemp: And one of the things that really stood out for me from your presentation was the importance of building an emotional connection with your clients, if you are an advisor rather than just dealing with the sort of day-to-day numbers. So, what sort of tips can you give advisors? How do you build an emotional connection with your clients?

Morgan: Yeah. So one of the things I think is really important is to recognize that money is emotional, and yes, we want to understand the practical aspects of dealing with money and that's typically why people would go and see an advisor, but also I think there is an importance to understand the journey that we've come along to get to the stage that we are at right now and how we deal with money. So, for example, one of the questions that I use very much with clients is around what was the earliest experience growing up around money and that can provide such valuable insight to the advisor but also for the client because I think it's really interesting to think about what kind of messages we heard growing up and how that impacts on actually how we behave with money.

I mean, there are some fantastic fintech companies in the market, at the moment the likes of Starling Bank, for example, Monzo where one of the areas that we are commonly not very good at with money is dealing with the day-to-day management of money. And I think fintech is a great opportunity to help people to get better prepared for their finances. But actually dealing with the emotional side of that too because if you are spontaneous with money and you kind of have that temptation to nip into the shop and buy a pint of milk and you end up with the basket of £30 worth at the end of it is because the emotion is driving that decision and some times that emotion can be more for others than it can for some. So, for example, if someone has a very emotional relationship with money and they are very spontaneous, then automate your day-to-day spending to make it easier for yourself when you are looking at the emotion how you actually manage money.

Kemp: So what you're describing there, seems to me to be very new in terms of how people think about money, how people coach others into sort of better money habits. So, I guess it's endemic of the fact that the world of financial service is changing very rapidly. How do you see that evolving as we look forward?

Morgan: That's a great question. I'd love to say evolve where we are as an industry and a profession providing more education to client, so that they can make their own decisions. And when they need the technical expertise or they need greater support because for example they may be going though divorce or they may be coming to retirement, for example, and they need to do expertise advise, that to me is where the value of a financial advisor or financial planner can really give to their clients.

But up until that point I think generally we need to be better educated as to how to deal with money and understand money because there is a lot of jargon, there is a lot of confusion with money but actually it's quite simple but it's thinking about how we feel about money, how we deal with money, what our habits and belief systems area and then just putting some really simple structures in place with things like spending plans, so that you feel that you can still spend money in a way that you want to be spending without having to restrict money but then you are at some point going to need a pension or an investment vehicle or something that's going to help you to get to where you want to be in the future.

And I believe – I would like to believe, I guess, as a profession that we can start to really embrace and communicate in a slightly different way than perhaps we've communicated before where we're using less jargon, more educational content, more ways of methods of communicating; so podcasting, video content, social media discussions, community feel around money because I think that money is still quite a tippy subject and it's important that as a profession that we recognize that and just make it easier for people to engage and make decisions.

Kemp: Fantastic. Catherine, thank you for joining us.

Morgan: Thank you.

Kemp: Thank you for watching.


This article is part of Morningstar's special report on What the Experts Say

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Dan Kemp

Dan Kemp  is Chief Investment Officer, Morningstar Investment Management EMEA

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