Financial advisers who have higher levels of interpersonal skills often have better-performing businesses and greater client satisfaction, even during difficult economic periods, according to the Association of Financial Advisers (AFA).
AFA chief executive Brad Fox, speaking at the release of the association’s newest white paper 'The Trusted Adviser’, said there had been an assumption about the role 'soft skills’ plays, but the research behind the paper had quantified the benefits to financial advisers.
The research behind the paper was conducted by the Beddoes Institute, which profiled 13 financial advisers who were the highest-ranked candidates in the AFA’s Adviser of Year Award in 2011 and 2012. From those about 500 client surveys were conducted, with a further 500 conducted with clients of advisers not involved in the award process.
Beddoes Institute leading practices program director Rebecca Shiels said the surveys found that interpersonal skills were the quality most sought-after in an adviser at 82 per cent, while technical skills rated very low at four per cent.
The paper states that while many clients expect an adviser to have technical skills, they were a basic expectation and the attributes which differentiated leading advisers in the minds of clients were interpersonal skills and emotional intelligence.
“Clients do not come to advisers for trusted transactions, they come for a trusted relationship. They may come for technical expertise but they stay for the relationship the adviser builds with them,” Fox said.
“We also found that trusted advisers outperformed other advisers, demonstrating that interpersonal skills and emotional intelligence have quantifiable benefits to a client and a practice.”
This outperformance was measured across areas such as client advocacy, prospect conversion, level of involvement in a client’s financial affairs, client satisfaction, willingness to pay and practice profit levels, with 'trusted advisers’ rating higher across all categories.
In particular, 'trusted adviser’ practices had average revenue per active client figures of $5686 and average profit per active client of $2418, with a practice total earnings before income tax of 43 per cent for a 12-month period.
Shiels said that while many believed interpersonal skills were inherent in some people, they can be taught to others – and given the findings of the white-paper the AFA would begin to look at how it could develop interpersonal skills among its members. It would also encourage advisory groups to consider this in their training and recruitment.
“There are implications in this paper for recruitment and training, and as an association we will be examining what we can do to help build emotional intelligence among our adviser members,” Fox said.
