Should Financial Advisors Be More Empathetic?

Written on the 29 April 2021 by Parkside InvestorPlus

Should Financial Advisors Be More Empathetic?

In my article Do you know your Money "Why"?, I wrote about the importance of having an inspiring WHY in all aspects of your life; your goals, aspirations, wants & needs and of course, money.

Having an inspiring WHY behind your motivations adds a degree of emotion that will positively fuel your intentions and actions.

As a professional financial planner, I spend a great deal of time with new clients in helping them uncover their money WHY if we can get clarity on this, then any strategies and actions we take will make much more sense for the client.

Yet, while we as financial planners are good at being strategic and technical, most of us, most likely, lack a critical soft skill empathy.

Should financial advisors be more empathetic YES.

Our job is to make sure we put in place the right strategies, make the right investment calls based on data and evidence and keep the client on track through periodic reviews and update sessions.

And we do all of this in a very clinical and methodical way because we don't have a crystal ball that predicts the future.

We may even rush the initial process by jumping straight to solutions and ideas (at times I am at fault of this as well!).

But here's the thing from the client's perspective, any money discussions are highly emotional.

And as financial planners we need to adjust our discussions by acknowledging the money emotion with our clients (while still having our technical hats on).

By doing this, we're giving our clients the sense and comfort that we truly do understand them, and we may even uncover some very important issues that the client may not have shared with us had we have gone straight into solution mode.

How can financial advisors show more empathy?

We don't need to take a crash course in life coaching or psychology to empathise better with our clients.

Here's what I've found that works.

  • Ask questions lots of questions especially about their families and extended families (without crossing personal boundaries).
  • Listen intently and look for non-verbal ques the frown, the head that drops, avoiding eye contact then gently probe by simply asking; 'is there anything else?'
  • When the emotion flows from the client, simply let it be let it flow and resist the urge to give advice or your take just listen intently (and have the box of tissues handy!).
  • I've found rarely do clients list their most important concerns up front in a list of 10 things, the most critical and relevant concern could be number 8 or 9 on the list.

Having an empathetic trait can be challenging for most of us, let alone financial planners.

However, when you can exhibit genuine empathy with your client, I have learned so much more than I would have if I simply projected my own thoughts on to them and when we do get to solution mode, it's the right one for the client and the client has truly bought into it.

If you're interested in finding out more about dealing with human psychology, check out this article.


Author: Parkside InvestorPlus
About: As advisers, we act as a fiduciary sitting on the same side of the table as our clients, providing peace of mind, greater control and visibility.

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