The versatile advisor

(June 2006) There seems to be a widening gap between what an advisor does and what a client wants. While many advisors prefer creating strategies and crunching numbers — clients are increasingly looking for an advisor who is also a partner, coach, and educator.

Clients are looking for interpersonal skills to complement market insight and strategic intellect. You could say that the new partnership is based on the advisor possessing equal parts emotional intelligence (EQ) and intellect (IQ) — a merging of insight and information. Today’s clients are placing a premium on the advisor’s ability to relate to them on a very human level.

Much of what clients are seeking in an advisor falls directly into the emotional intelligence arena. They desire good communication and social skills, intuition and empathy, sufficient patience for teaching and coaching, and genuine concern and support. All these skill sets can be viewed as emotional competencies, in that it takes an emotional investment on the part of the advisor on behalf of the client to succeed. Teaching, coaching, communicating, and demonstrating concern are expressions of this skill set.

You might say that today’s client is tacitly saying, "I’ll invest more assets with you when you demonstrate that you’re willing to invest more energy and concern with me."

How high is your EQ

Daniel Goleman’s breakthrough book, Emotional Intelligence, revealed that the basic assumptions about what makes a person successful are changing. It was once believed that a high IQ was the most important precursor to career success. However, recent studies seem to contradict this assumption. Studies indicate that a high IQ is somewhere between a 5-20% indicator of success, and that a high EQ is an 80% or more indicator of success.

These conclusions caused quite a stir in the academic community in the mid-90s when they were published, as many in that community held fast to the idea that IQ was the most reliable success indicator. Many were troubled to think that a "soft indicator" such as emotional competence could replace the statistical indicator of an IQ of 124. However, when we stop and analyze IQ for what it is, we realize that it basically measures ones mental agility with numbers and language. EQ, on the other hand, measures the following:

1. Awareness – Awareness of one’s own emotional state and the impact of those emotions on our behavior. 2. Restraint – The ability to restrain negative emotions from affecting our behavior. 3. Resilience – The ability to rebound and grow from failure, disappointments, and injustice. 4. Empathy – The ability to discern others feelings and motives. 5. Social skills – The ability to communicate, resolve conflicts, relate to and lead others.

What are the practical implications of developing emotional intelligence in the business of advising clients on how to invest wisely? It is easy to draw a correlation between these basic principles of EQ and the conversations that take place daily in the life of the advisor;

• Awareness is necessary for advisors to realize the impact and perceptions of their personality on the psyche of their clients. Are you increasing or diminishing the distance between yourself and your clients? What sort of emotional response do you evoke in your clients?

• Restraint is necessary for keeping the emotional part of the brain from "hijacking" the rational part of the brain when we are agitated or perplexed with a client’s behaviour. Are some clients causing you to "lose it" or to sour your attitude

• Resilience is necessary for the advisor to fight through career obstacles, negative surroundings, disappointments, and inevitable failures. Are you able to learn and grow from negative experiences?

• Empathy is necessary because it is the "emotional radar" that helps advisors read their clients’ motivations, concerns, and feelings that will ultimately determine their level of satisfaction with them as advisor. Are you able to read between the lines and respond in a manner that assures and calms?

• Social skills are necessary to communicate, resolve differences, relate to a broad variety of personalities, and to develop a dynamic of persuasiveness in our own personality. Are you able to lead people where you know they need to go without pushing?

From the client’s point of view

While we view all of the above emotional competencies as being critical to an advisor’s success, we want to spotlight empathy. We do this for the simple reason that if we don’t begin to see the world through the eyes of our clients, then they will move to someone else who is willing and able.

Empathy is perhaps the most critical cornerstone in the process of building client trust. If we are not connecting with our clients’ frustrations and hopes, how will they ever feel comfortable turning over their psychologically-laden assets to us? Those assets, in many respects, are representative of who they are, where they’ve been and where they hope to go. "Get a handle on who I am before you try to get a handle on my money" is the ultimatum playing out in the psyche of today’s client.

©2006 Mitch Anthony. All Rights Reserved. Mitch is the President of the Financial Life Planning Institute and Advisor Insights Inc. He is an industry leader in training advisors on building life-centered relationships. His numerous books include The New Retirementality and Your Clients for Life. His books have been translated into ten languages. He can be reached at mitch@mitchanthony.com.

(06/12/06)