Coaching is not teaching, or telling. Anyone who has watched professional golfers or tennis players will realise how wonderfully
skilled these sports persons are. They can all play the game to the highest level usually because they have an inherent skill
which the ordinary mortal does not have. Indeed other than in exceptional circumstances those born without such skills cannot
hope to compete with naturally gifted professionals no matter how much the know about technique or how hard they practice.
And yet these professional sports persons, almost without exception, have coaches and almost without exception they are better
at their sport than their coaches have ever been.
A sports coach will however have something valuable his/her more technically
gifted clients don't have and that is experience. Invariably the coach has been there, and done that - the fact that the coach
may never have achieved the same level of success as the client is irrelevant.
The experience the coach has means that
he/she understands the mental and physical barriers the client has to surmount.
Despite the fact that sport is largely
about physical ability the professional sports coach probably spends more time on the mental side of things. Often that means
helping the client either see his task from a new perspective or react in a different way to the challenges of the sport,
particularly when things aren't going well.
Successful management of financial assets doesn't require any special physical
skills but it certainly does require mental skills which have to be learned because they often are counter intuitive.
The economist and accomplished investor John Maynard Keynes once wrote...
"there
is nothing so disastrous as a rational investment policy in an irrational world"
Those who need further proof of the assertion that in order to succeed one must think and act differently from the apparently
obvious (which is the route the crowd will naturally adopt) need do no more than read a few chapters of Extraordinary
Popular Delusions and the Madness of Crowds by Charles Mackay. Here's a line or two from that book describing why
everyone in France at that time wanted to buy shares.The events later known as "Mississipi Madness" took place in Paris in
the early 18th century.
"the price of shares sometimes rose 10 or 20% in the
course of a few hours and many persons in the humbler walks of life, who had risen poor in the morning, went to bed in affluence."
Everyone was caught up in the share buying hysteria and as a result France became for a time the richest
and most powerful nation in Europe. It's quite likely that someone who for one reason or another could not have participated
would have been able to think more clearly and advise those who could only see untold riches that there could only be one
end to what was unfolding.
A financial coach is such a disinterested party in that he should have no vested financial interest
in whether his client buys or sells or whether the underlying asset is a bond a share or an investment in property.
In contrast
those who make a living, in one form or another from marketing or managing financial assets whether they be bonds,shares or
property are less likely to recognise a bubble for what it is and recommend acting accordingly. Why should that be ? Because
no matter what anyone says it's almost impossible to be completley impartial when one has a vested interest in seeing values
increase - hope and expectations often affect one's ability to act even if early warning signals have been detected.
The
Scotsman behind the share buying hysteria was one called John Law. Of course it all ended in tears and for his own safety
Law left France in secret "almost a beggar".
So coaching isn't about teaching it's much more about having a supportive
relationship. A good coach should listen, sometimes question and often challenge.
An experienced financial coach will know that no two investors are ever the same so a "one size fits all" approach
to investing isn't the way forward. A coach's job is to ascertain your goals, your aspirations, your level of risk tolerance,
what your priorities in life are.
The final step is to point you in the right direction and if necessary thereafter provide support and assistance ie lubricate
the system when called upon to do so.
