Emotional intelligence is a sought-after skill for advisors

Most Americans agree that it’s important for advisors to exhibit emotional intelligence, both with their clients and themselves. With three out of four Americans considering emotional intelligence together with more technical skills, advisors must ensure their clients feel that their needs are heard and supported, and that they are helping them to reach their financial goals. Those are among the results of a recent Million Dollar Round Table survey on key skills consumers look for when choosing an advisor.

What boosts consumers’ trust?

Although most Americans said they are likely to trust a financial advisor for professional advice, there are key skills that can help boost consumers’ trust in advisors overall, the survey said. More than two-thirds of those surveyed (68.6%) said they find qualified financial advisors trustworthy, with men (74.2%) more likely than women (63.3%) to consider qualified advisors trustworthy.

An advisor’s guidance on intricate financial tools is also appreciated, as 60.7% of Americans said that they are more likely to trust a financial advisor than their friends, family or colleagues. And women (56.2%) are less likely to take an advisor’s advice over that of friends, family or colleagues than men (65.6%).

Additional advisor qualities, together with emotional intelligence, increase advisor trustworthiness as well, the survey showed. More than 4 in 10 survey respondents (45.6%) said that an advisor who listens to and acknowledges their needs is likely to increase their trust, with respondents across demographic lines agreeing on the importance of this skill.

Additionally, 44.4% of Americans said that an advisor who follows through on their word increases their trust, and 44.4% said an advisor communicating in a way that’s easy to understand increases their trust. By guaranteeing that clients feel heard and able to process client conversations, advisors can increase their credibility and develop long-term client relationships.

What consumers without an advisor expect from an advisor

There are certain benefits that Americans who don’t have an advisor said they would expect advisors to provide – and Americans who do have an advisor confirm that those specific needs are being met, the survey said. More than 4 in 10 survey respondents (42.1%) who don’t have an advisor expect advisors to help their clients feel less stressed. And among Americans who do have an advisor, 54.8% say their advisor does help them feel less stressed, with women (58.9%) and Americans ages 50 and older (58.3%) more likely to say this than men (51.3%) and Americans ages 18-49 (50.8%).

Less than half (39.4%) of Americans who don’t have an advisor said that they expect advisors to help clients feel protected from tumultuous financial periods that are out of their control, compared with 51.3% of Americans with an advisor who said their advisor helps them feel protected during those times. Advisors can showcase to clients and prospects their dedication to providing safeguards for their financial plans, regardless of the current financial market, the survey said.

“With the value of emotional intelligence still sky high for clients and prospects, financial advisors must continuously improve their ability to connect with clients on a deeper level,” said MDRT President, Greg Gagne. “Demonstrating trustworthiness and emotional know-how as an advisor is necessary to guide clients toward a continuous path of financial security and growth.”

Areas for advisor improvement

Among Americans who have an advisor, many of them feel their advisor could improve certain emotional intelligence skills. Only 41.3% of Americans with an advisor think their advisor can resolve conflicts and communicate well.

Similarly, only 33.8% of Americans with an advisor think their advisor is disciplined in managing their own emotional reactions during discussions, and 44.6% said their advisor helps them to have no regrets about their finances. With only 27.5% of Americans with an advisor saying they think their advisor is aware of their own emotions and how they affect others, it’s pivotal for advisors to take the time to learn the ways they can unintentionally impact their clients emotionally and how to improve.

 

American consumers have made it clear that emotional intelligence is a necessary skill for any financial advisor, the survey said. Financial advisors must be prepared to forge stronger connections with clients and highlight their ability to be a trustworthy support system. By demonstrating the ability to manage their emotions, as well as their clients,’ during discussions, advisors can build more trusting, mutually beneficial client relationships.

Defining emotional intelligence

What is emotional intelligence? It is the ability to recognize, understand, manage, and effectively use emotions in oneself and others, explained MDRT member, Carla Brown, managing director at Oakmere Wealth Management, NED at The PFS. “It involves a range of skills, including self-awareness, empathy, self-regulation, motivation, and social skills. In the context of financial planning, EI allows advisors to connect with clients on a deeper level, enabling them to better understand clients’ needs, concerns, and goals beyond the numbers,” she added.

Why should advisors cultivate and use emotional intelligence?

“For financial advisors, emotional intelligence is crucial because our work is inherently about people,” Brown said. “Clients often come to us with hopes, fears and life goals that are deeply personal. By employing emotional intelligence, advisors can build stronger relationships based on trust and empathy.”

This approach fosters open communication, allowing clients to feel understood and valued, which, in turn, leads to more effective and personalized financial planning, Brown added. “Advisors with high emotional intelligence can navigate challenging conversations, such as discussing financial setbacks or adjusting plans due to unforeseen life changes with sensitivity and care,” she said.

Developing and applying emotional intelligence

Emotional intelligence is a continuous journey that involves both self-reflection and practice, Brown said, in explaining how advisors can develop EI and apply it with their clients.

Brown said advisors can begin to develop EI by:

1. Enhancing self-awareness: Regularly reflecting on their own emotions, triggers and responses can help advisors better manage their reactions in client interactions.
2. Practicing active listening: Truly listening to clients, without interrupting or thinking about the next response, allows advisors to understand the underlying emotions and concerns. “This can also involve asking open-ended questions that encourage clients to share more about their values and aspirations,” Brown added.
3. Cultivating empathy: Putting oneself in the client’s shoes to understand their feelings and perspectives is key. This can be developed by engaging in empathy-building exercises, such as imagining different scenarios that clients might be facing, she said.
4. Seeking feedback: Regularly asking for feedback from clients and colleagues on communication style and emotional responsiveness can provide valuable insights for improvement.
5. Training and development: Advisors can also benefit from formal training in emotional intelligence, whether through workshops, courses, or coaching. These programs can offer practical strategies for enhancing EI and integrating it into client relationships.

“By applying these skills,” Brown said, “we can create a more collaborative and supportive environment.”

The MDRT survey was conducted by Opinium on behalf of MDRT through a panel of individuals who have agreed to take part in surveys. Fieldwork was undertaken from March 14-18, 2024, with a sample of 2,000 U.S. consumers.

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