Originally published on Advisor Perspectives, November 1, 2017

A decade ago, most advisors defined their value as putting together an appropriate investment portfolio for their clients. But the combination of the Internet and robo-advisors obliterated that model.

Today, anyone can easily assemble an index-based portfolio of low-management-fee index funds or exchange-traded funds. For some, one index fund (like one of Vanguard’s LifeStrategy Funds) may be the only investment they need.

As a consequence, some advisors have shifted their emphasis to financial planning and relegated investing to a subordinate role.

Recently, I’ve noted a new trend. Some advisors are extending their services to being “life coaches” to their clients. An article in Reuters noted this trend, “Some advisers are playing up an extra role as their clients’ ‘life coach,’ since investment skills alone may no longer be enough to stand out in a field now replete with computer-generated advice.”

Advisors who embrace this concept need to be acutely aware of their limitations.

A limited role

There’s a limited role advisors can play in acting as a life coach for their clients. Helping them to understand what they can spend in retirement is an obvious example where they can add value. Being empathetic in times of crisis and assisting them with referrals to competent professionals is another.

Where I get concerned is when advisors cross the line into motivational speakers and approach pop psychology.

Common myths

I have found no evidence that advisors are happier or lead more fulfilled lives than the general population. Much of the life coaching advice I see on LinkedIn and elsewhere from advisors consists of simplistic “solutions” to complex problems, similar to what is routinely peddled by self-help “gurus.”

Steven Novella, M.D., an academic clinical neurologist at Yale University School of Medicine does an excellent job demonstrating the lack of merit in much of what these “gurus” advocate. He notes that most life coaching and self-help programs are not evidence-based and are largely wrong. He says real solutions, based on “decades of psychological studies” are often “counter-intuitive.”

One example of potentially harmful advice relates to overcoming fear and being “the best you can be.” This counseling – while very common – is highly suspect.

According to an article in the Washington Post, famed guru Tony Robbins is an advocate of overcoming fear that he believes is “holding you back.” In June 2016 he encouraged his followers to “storm across a bed of hot coals” with the goal of conquering “the other fires of your life with ease.”

This experience went badly for 30-40 participants who suffered burn injuries to their feet and lower extremities.

There may be valid reasons why clients shouldn’t overcome their fears and engage in activities that scare them. Few advisors have the training to make these judgments.

Repeating quick-fix mantras may have surface appeal, but it can easily backfire.

Advisors are not life coaches and shouldn’t try to become one.