Lewis Schiff
Lewis Schiff
Do You Have the Magic Skill?

How financial advisors can better connect with clients and not only have enhanced relationships but more product practices.

May 20, 2010
by Lewis Schiff

Personal financial advisors and clients discuss serious emotional issues such as divorce, health, death, depression, children’s behavioral problems, career fears, religious/spiritual questions and even addictions. When a client asks you for marriage advice when he’s thinking about leaving his wife and kids for a much younger woman, you know the answer never appeared on a Series 7 exam or in any of the PFS course work.

According to Lyle Sussman, Ph.D., professor and chairman of the department of management and entrepreneurship at Kentucky-based University of Louisville, the depth of the emotional complexity increases as the assets increase. His research study also found that less than 40 percent of financial planners had any training to manage such matters. “You have to think up front how you are going to deal with these client problems, because you are going to face them,” notes co-researcher David Dubofsky, PhD, CFA, a professor of finance and associate dean for research at the same university.

Emotional Intelligence

Financial advisors have a distinct advantage if they display emotional intelligence, which includes self-awareness, self-discipline and empathy, among other factors. The effective application of emotional intelligence focuses on as much knowing when and how to express emotion as it does controlling it. Empathy, an especially important component of emotional intelligence, contributes to career success, for example. When discussing delicate family issues with a new client, empathetic advisors have a clear advantage for forging a strong relationship leading to planning solutions that align with the client’s goals.

Emotional Competencies

Basic emotional competency skills — which are linked to and based on Emotional Intelligence — can have a profound effect on client relations. An Ameriprise Financial study of advisors identified the emotional competencies that help them guide clients to make the right decisions about investments resulting in better returns.

According to Lennick Abermann Group, et. al.’s Morally and Emotionally Competent Financials Advisors Deliver Superior Client Service and Portfolio Performance, there are six proven emotional competencies that have the most impact on portfolio results. They also happened to be the center of high-performing advanced planning advisors:

1. Demonstrates Integrity. You provide direct, consistent and honest communication with clients, even when dealing with sensitive and/or difficult topics.

Example: A client insists on changing the asset allocation in his retirement portfolio, although you warn him about the long-term negative impact of such a change. Your client is unconvinced, so you suggest that he seek advice from another PFS expert. By willing to give up your client, you demonstrate integrity rather than proceed in a way that you know is too risky.

2. Client Service Orientation. You focus on the client’s point-of-view and are attentive to the tactical aspects of the efficient delivery of services.

Example: After an initial meeting, it’s clear that a couple needs to revise their current estate plan. You provide attorney referrals and participate in all meetings with the one selected, plus all discussion with other experts required to create and then implement the plan.

3. Concern for Quality and Order. You drive to reduce uncertainty in the information you present to clients and to clarify the planning processes, roles and plans.

Example: You use a regular process for monitoring portfolio performance and communicate with clients at regular intervals throughout the year. When your client calls with a question, you and your staff have easy access to all of the relevant data with efficient computer and paper files, which are updated regularly.

4. Teamwork and Collaboration. You work cooperatively and productively with others as a team member and not competitively or in isolation.

Example: By sharing insights and information with other personal financial specialists, you partner effectively to best serve the clients’ interests.

5. Self-Confidence. You believe in your abilities to accomplish tasks, including challenging circumstances and believe in the soundness of your decisions and opinions.

Example: Rather than go along with a client’s irrational and inconsistent ideas about investing, you constructively challenge them.

6. Achievement Orientation. You act in ways to meet or surpass goals of high personal performance, coupled with prudent risk taking.

Example: You continually streamline your discovery meetings to gather more complete client details in less time.

Productivity Increases

While personal financial specialists and other financial professionals with high-net-worth (HNW) clients manage their practices and relationships to model themselves as trusted advisors and not salespeople, it’s worthwhile to look at research on the sales process. In many ways, the simpler transactional relationship provides a purer setting to measure similar quantitative results than the more complex planning and analysis conversations that goes on with an advanced planning group.

During the 1990s, American Express Financial Advisors developed an Emotional Competence training program to enhance the emotional self-awareness, self-control, empathy, communication and conflict management. A version for managers focused on developing emotional competencies in others. The programs became standard training for both new advisors an managers.

The programs proved effective. In one evaluation, a group of 33 advisors received training and then took a standardized test that measured optimism and coping skills required for successful life insurance sales. The group that attended emotional competency classes improved their scores by 13.5 percent, while the control group only gained by 0.9 percent.

Personal Emotional Boost

In another test with a select group of American Express Advisors, gross dealer concessions increased an average of 18 percent for the difficult year September 2001 to August 2002, compared to 11 percent all advisors in its Market unit.

These advisors and those in two other groups showed significant improvement in life satisfaction measurements and reduction in stress:

  • 29 percent reduction in stress
  • 24 percent reported improvement in positive emotional states
  • 13 percent reduction in anger
  • 10 percent improvement in the quality of life
  • 9 percent improvement in physical vitality

A related combination of a boost in productivity and a jump in quality of life factors would have a profound impact on any single personal financial advisor, especially over many years.


The close personal engagement that personal financial advisors have with their clients has a direct impact on the advisor’s life and practice. As one advisor told researchers Dubofsky and Sussman, “We get closer to our clients and they open up to us with the good, the bad and the personal. It’s in large part a relationship business. I go to weddings, (was best man last December for a client), funerals, college graduations, make hospital visits and on occasion have shoveled snow, raked leaves, moved boxes to storage, etc. and simply cried with clients. Planning is all about life and being a small part of the fabric of all that happens to each of us. It's not all about money, that’s simply part of the tapestry of life and we can be a common thread by choice.”

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Lewis Schiff is a senior managing principal of Advanced Planning Group, a family office network for advisors.