Win or endure? Choose advisor based on goal

A good investment advisor will begin by learning your goals, develop a plan, and manage behaviour to ensure you don't get excessively affected by highs and lows

Would you hire a coach who tells you upfront that he will not help you win? If your answer is “No”, I would not be 

surprised. But this question is not as stupid as it appears. Let us take a couple of examples from the world of athletics and wellness.

If it is your dream to complete a 42-kilometre marathon, would you consider hiring Patrick Sang? He coaches the legendary Kenyan marathoner Eliud Kipchoge, the first man to run the marathon in under two hours. When your dream is to just complete a marathon, you don’t need such a coach. Rather, you would need an endurance coach who can help you complete the marathon.

The endurance coach would take into account your aims, physical attributes, time and money resources, and motivation level. He would work with you to modify, even abandon, some goals, and then create a plan.  

The real work begins once the plan is ready. Monitoring progress and modifying the plan according to changing circumstances is critical. An important part of the coach’s job is to ensure you don’t get distracted by peripheral concerns, or dejected by inevitable setbacks.  

When I signed up for an online health and wellness coaching programme, they first enquired what my primary aims and priorities were: Was I looking to lose weight, develop endurance for sports, develop a well-toned body, or achieve overall wellness and healthy ageing? I had already uploaded my blood test results and details of my physical condition. The wellness coach recommended a diet, several supplements, and an exercise regimen. He also prescribed a wearable device that would measure many physical attributes on an ongoing basis.

As I implemented the programme, I was elated at the weight loss I achieved within a relatively short time. My coach, however, reminded me that my main aim was overall wellness and healthy aging, not weight loss. “But what’s wrong in being happy about the weight loss?” I said.

He responded: “Your elation at losing weight (something that is easily measurable) could lead to complacency and take the focus away from the considerable progress that needs to be made on your key goals, for which testing can happen only after a considerable interval.”

A good plan is only the start. Managing the client’s behaviour is the key to achieving aims.

These lessons apply to investing and choice of advisors as well. A good investment advisor will also start by knowing what you hope to achieve, then work with you to develop a set of aims. He will then develop a plan to achieve them with the available resources. 

He will ensure that the client waits for a reasonable period before assessing progress. He will also manage the client’s behaviour to ensure the latter does not get excessively elated or dejected by temporary highs and lows.

As for clients like me who asked my wellness coach: “Is there no way to judge progress in the interim till the test results are out?” He asked me if I felt more energetic and productive. In response to my affirmative answer, he said, “Just because feeling energetic or being productive is not measurable, it does not make it any less of an interim measure of progress.”

His response is something I hope investors don’t forget. Good investors know when they are progressing in their investment journey, despite inevitable setbacks. If you have any doubts, read what Kipchoge says on how the failure to achieve the two-hour barrier in 2017 was a necessary stepping stone to finally breaking it in 2019.

The writer heads Fee-Only Investment Advisors LLP, a Sebi-registered investment advisor; Twitter: @harshroongta