The Emotionally Intelligent Adviser

There are certain characteristics in a financial adviser that set them apart from their peers, according to an Association of Financial Advisers (AFA) white paper titled 'Pathways to Excellence'. 

The mapping of the customer journey throughout the various stages of the advice process and adviser relationship was informed by deep insights into the areas consumers' value most in the relationship with their adviser. At the heart of the blueprint to becoming a leading advice practice, as articulated by that paper, is the building of capabilities in the key areas that matter most to clients (see right). 

As an extension of the 'Pathways to Excellence' research, another AFA paper 'The Trusted Adviser', takes a deeper dive into the area that clients find most important, the qualities of their individual adviser. 

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A central premise is that trust between an adviser and a client is vital. In the words of one quoted client; "Trust is about caring, understanding, listening and explaining what is required". Importantly, trusted relationships grow rather than just appear, they involve both cognitive and emotional aspects and are two- way and personal. 

The research found that trusted advisers perform significantly better across key business metrics and in particular, the delivery of improved financial outcomes and real value to their clients.   

So what are the key ingredients of a trusted adviser? 

a. Technical skills; and 

b. Strong interpersonal skills and emotional intelligence.  

Advisers need to build capabilities in both these areas to become a "Trusted Adviser". Fostering empathy for clients promotes better dialogue and builds more trusting client relationships. This in turn leads to clients who are advocates for your practice, ensuring longevity of relationships and better quality referrals 

The following chart highlights responses to the question "What are the qualities of your adviser that are most important to you?"  

The importance of these skills has been further bolstered by a 2006 US study, which showed 25 per cent of an adviser's job is devoted to non-financial coaching. The survey said that they are often called to provide counsel regarding personal and life-changing issues (Sussman & Dubofsky, 2009). Also, 74 per cent of the planners surveyed had dealt with clients in distressed emotional states. However, financial planners receive very little in the way of training in how to deal with emotionally charged situations, let alone formal coaching in emotional competencies.  

What the advent of personal financial programs (PFMs) mean for advisers 

In addition to emotional intelligence, there are various threats and opportunities that face advisers, one of which is the emergence of roboadvice.  

Robo Advisors are a class of financial adviser that provides portfolio management online with minimal human intervention. With their complex algorithms bordering on artificial intelligence out there in cyberspace, they are growing at an annual take up rate by consumers of 250 per cent per annum. They offer very low admin costs of 15 - 35 BPS to perform passive investment portfolio construction.  Just ask the 1.2 million US Defense personnel who are actively using such a Personal Financial Management (PFM) Robo Advisor service. 

Of course, human advisers can differentiate their service offering from Robo Advisors with an array of personnel collaborative face-to-face in person, via Skype or "go to" meeting software that goes beyond just portfolio construction.    

To survive the automated threat to your business there are three things advisers must do according to the blog called "3 Ways Financial Advisers Must Change to Survive The Commoditisation of Robo-Advisors" on 

1. Go Beyond Just Passive Portfolio Construction  

There is more to the client than their money. The writing has been on the wall for a long time. If your only value proposition is investment advice and portfolio construction and that is all you are offering, then your days are numbered. Evolve your value proposition by offering more to your clients. How do you do that? You need to develop a strong relationship beyond "the money". Do you really know your client and what matters most in their life?   

2. Augment your relationship with Technology  

Don't be complacent in taking up ALL the new technologies on offer today. Your clients and their children aren't. Sometimes the best and most effective way to communicate may not be face-to-face. Technology provides better opportunities to collaborate, for example, using shared files in a cloud service like Google Drive, Apple Cloud and the new Microsoft Cloud Service. You can add audio visual messages to these clouds and information that is either specific to a client or general and offered to all clients. The main reason why a client leaves you is that they no longer feel "loved". You stopped caring which means you stopped communicating. Use the technology snap out of last century and get into this one. 

3. Compete with the Robo Advisors  

To avoid the your future business being undermined there are some things you need to do.  

  • Systematise your investment process. Implementing model portfolio's regularly and keeping them updated requires you to leverage technology. 
  • Break the mold, muster your courage and get on board. Use rebalancing technology. The new compliance regime (thank you FOFA) means that the very customized portfolios for every client will be impossible to manage continuously and effectively. It could also indicate that you are not really able to look after the clients' investment. 
  • Use the technology to boost client relationships. Don't be afraid. Technology is not a competitor but a way to drive down costs and become extremely efficient. This will leave you time to truly develop meaningful relationships where you can truly add value by giving your client real insight.    

Human Capabilities in the Workspace 

What is the human capability that you use to do your job?  Gary Hamel author of "Future of Management" presents his Maslow pyramid describing the hierarchy of human capabilities within a work environment.  There are six levels of engagement and human capabilities in the workspace. You can sort the various components of the Australian Financial Services industry into these categories. The question is where do you put yourself? 

1. Obedience:  show up, do the job. This could be a paraplanner. The boring grunt work of our job. 

2. Diligence: work hard, stay focussed, work long hours and keep doing what you have always done.  

3. Intellect: taking responsibility for their own skills, bring best practices to the work place. 

4. Initiative: taking ownership for a problem, an opportunity before you ask them rather than be bound by a definition of their job. 

5. Human creativity: brought by people who would ask how to do this in a fundamentally different way? What is there to learn from other industries? Where are the chances for radical innovation in this product/service? 

6. Passion and zeal: where the job is not only intellectually meaningful it is indeed spiritually meaningful. Enormous meaning comes out of work. 

Layers one to three are becoming global commodities and are starting to be performed by Robo Advisors as described above.  

Layers four and six are where you need to be in order to adapt and grow a flourishing advisory business.  

Insight Selling  

Today, an empowered buyer has done research, through use of the internet and social media. This type of client does not want a financial planner to talk about features and deliver a series of open-ended questions that delivers no value. What this client wants is insight. So, how does a planner deliver insight so that it challenges the customer's thinking without challenging the customer? Insight selling sells value and differentiates you to empowered clients. 


In order to survive and thrive in an environment increasingly pervaded by new digital players, emotional intelligence is a vital skill. Advisers who learn how to offer an holistic experience for their clients, based on the principles described above. will be able to set themselves apart.  

Wayne Lear is a certified financial planner with Shield Wealth and a client of Australian Moneymarket Pty Ltd.  

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