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Being a financial advisor has grown in complexity over the past few years. It requires extensive training in a diverse array of fields – everything from economics to psychology to regulatory compliance – not to mention the ability to constantly adapt to clients’ ever-shifting needs and preferences and stay up to date with technology.
Being an advisor today is akin to being a life coach or even a counselor. Although resources abound for the financial and regulatory aspects of delivering advice, a gap exists in addressing clients’ dynamic emotional needs and creating engaging experiences that inspire action. Training for financial planning is heavy on the “how,” but delves less into the “why.”
Traditionally, advisors have built up their coaching skills over time, with many firms relying on experienced advisors to tap into clients’ wants, needs, and behaviors. These advisors are hailed as heroes in their organizations due to their high emotional intelligence (EQ) and ability to stage experiences that unlock clients’ aspirations.
It takes time and experience to build the requisite EQ to connect with clients on a deeper level and learn how to balance listening and advising. But there are tools to help you level up in client behavior, experience, and engagement. Let’s take a look.
Understanding client behavior
How many times has a client assured you they will adopt certain financial behaviors, only for their finances to show they’ve been acting completely differently?
It is frustrating when client behavior is misaligned with their financial plan. But it’s not always the client’s fault. The rise of behavioral economics has shown that we’re not homo economicus but, in fact, irrational humans that make choices contradictory to our stated preferences.
Advisors who want to advance professionally should be studying the field of behavioral finance, a discipline that explores how psychology and behavior affect market outcomes and investor decisions. By studying this arena in depth, advisors will better understand the emotional and human side of their client’s experience and learn how to appropriately marry investment advice with meaningful life advice.
There are numerous resources available on the topic of behavioral finance: free online advisor academies, podcasts, webinars, etc. Start with Richard Thaler’s book Misbehaving: The Making of Behavioral Economics, Daniel Kahneman’s book Thinking Fast and Slow, and even our own Lumiant Academy.
Get coached to coach
As client value propositions evolve from transactional advice to ongoing coaching, advisors can transform their client experience into one that’s holistic and considers every dimension of a client’s wellbeing.
This is no easy leap as it requires switching from having a high IQ to high EQ, particularly as things like artificial intelligence (AI) make complex financial analysis possible in seconds.
Advisors who wish to take the reins of their own training should identify a worthy mentor and/or advisor coaching program. This may involve tapping a professional organization, for example, regional chapters of the Financial Planning Association. In some instances, the advisor may even look outside of the profession for a mentor they trust – perhaps someone with a background in psychology who can help the advisor further elevate their EQ.
Advisors can pursue self-paced coaching initiatives, such as the Serious Shift program from experience-economy specialist Dennis Moseley-Williams. For advisors that are not quite ready to tap a consultant, Moseley-Williams’ accompanying book Serious Shift: How Experience Staging Can Save Your Practice is a thought-provoking introduction to processes that can transform practices into experience-driven enterprises built on trust and advocacy.
Use technology to engage
Much of the technology used in the financial planning process has been designed for the advisor and, generally, to improve the efficiency in the production of advice.
But increased efficiency can often lead to less engagement. It quickly tries to ascertain a client’s financial position and goals, with little thought to the impact it will have on their lives.
There are a host of new tools for advisors to engage their clients more effectively.
They let advisors better engage with clients and navigate emotional waters, offering curated experiences and carefully constructed questions that enable clients to clearly articulate what is important to them.
Essentially, such tools are hardwired to build emotional intelligence – meaning the advisor can just follow along, listen to their client’s input and further their learning in the process.
Embedded, proven processes also ensure the right cadence for exploration with the client and that the next best steps are taken in the right sequence. Advice-engagement tools reveal the right information at the right time in the process, all without causing overwhelm. These solutions also incorporate repeatable processes and exercises that can be used to train advisors in forging meaningful connections and better serving clients.
Lastly, these tools translate qualitative information into quantifiable outcomes, which is one of the hardest parts of an advisor’s job. By implementing this technology and incorporating visuals that showcase their impact, advisors can better track and measure progress while demonstrating value to clients.
Cultivating emotional intelligence is a must for advisors
Developing these skills requires a multi-faceted approach to developing several soft skills and a dedication to seeking out mentors, resources and technology that will support them in improving their empathy, active listening, and emotional regulation.
By pursuing this path, we can ensure the profession retains the human touch that makes us so valuable to the clients we serve, all while preserving the institutional wisdom of our most esteemed and veteran advisors.
Blake Wood is US CEO at Lumiant, an advice and client engagement platform that empowers advisors to connect with clients and families around their lives, values and finances.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.