Marie Swift asked for my comments on this article, and I posted them on her blog this morning. Here's what I posted, and a link to the article. If you're interested in keeping up with best practices in financial management, Marie's blog is helpful. You can find it here.
It's an interesting discussion. Clearly, more knowledge about clients can be an aid to helping them. But it might be a hindrance as well. Knowing that a client is neurotic about money doesn't really change the best financial solution for them. You might devise some strategies that keep them more comfortable, but it probably won't grow them more money for retirement. Understanding their fears and concerns might help communicate or educate them (good!), but it's far from certain that that yields tangible results.
I'm just unclear about the benefits of this. Nick Murray says that 80% of financial success is behavioral, and I think that's likely true. But I'm not sure how all this fits together to benefit the client. I'd say it has as much to do with the advisor's personality as the client's.
Here's the article from Smart Money:
Financial Planning Gets Personal
More financial advisers are moving beyond money matters and playing counselor with their clients. Not everyone thinks that's a good idea.
http://www.smartmoney.com/investing/stocks/financial-planning-gets-personal
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