From advisor to therapist: how emotional intelligence gives women advisors the upper hand
November 16, 2016 By Signator Investors
It’s no secret that as the financial services industry continues to evolve financial advisors will be under increasing pressure to prove their value. Between regulatory changes, an increased demand for full transparency and the advent of robo-advisors, client expectations are reaching new highs, and advisors MUST be prepared to defend the value of their advice.
When it comes to robo-advisors, there is one clear advantage to being a human. Advisors can focus on more than just the investment advice portion of their role – the activities that can be replicated by a robot – and start advising clients on the emotional aspects of finance. Working through a divorce, calming nerves during market ups and downs, helping budget to meet certain life goals… these are situations that require more finesse, much like that of a financial therapist.
This is great news for women financial advisors!
Why? It’s in your DNA.
Women are naturally more empathetic and tend to play more caring roles; this fosters rapport and chemistry that makes clients feel comfortable sharing the more personal details of their lives. And these details make all the difference. In addition, the parts of our brains linked to emotions, calculation of risk and the ability to listen are more prominent (while not news to most, it’s actually been verified by a research team out of Cambridge University).
“Listening with the intention to understand, not the intent to reply (as Stephen Covey said) is key,” shares Alice Tang, Vice President, BPG Wealth Management LLC, in Portland, Oregon. “When I’m meeting with clients to discuss either financial or non-financial issues, they feel respected and safe, which leads to increased trust.”
Typically, women are good communicators. We see the planning process as more than just numbers and take into consideration family values and goals. And it shows in how we invest… we save more and we get better returns (about 1% better to be exact).
According to a 2013 study by the Insured Retirement Institute, 70% of women looking for a financial advisor would prefer to work with another woman. And, just as many women leave their financial advisor within a year of their husband’s death.
Lynn Curtin Lange, Financial Advisor and Branch Manager of North Shore Wealth Management just outside of Toronto, Ontario isn’t surprised by this. “I do feel a stronger bond with many of my female clients,” says Lynn. “They have become friends. Empathy may be the reason or the fact we are both female. Some have said I understand them better (referring to their previous male advisor) and explain things in a way that is helpful. As a result, they feel comfortable providing me with very personal information. The better I know them, the better I can advise them and the stronger the relationship becomes.”
Now consider this: according to BMO Wealth Institute, 51% of the country’s wealth is controlled by women in the US; that number is projected to reach 66% by 2020. That’s an estimated $22 trillion under the control of women.
I’ll give you a minute to let that sink in. Twenty-two trillion dollars.
<<insert Dr. Evil laugh here>>
But in all seriousness, that’s a lot of money in the hands of women just like you. Women who want nothing more than to be treated with respect, spoken to honestly and given a transparent view of their financial picture.
So ladies, pull out the proverbial couch and put on your therapist hat ’cause you’re going to be in great demand.
To read the Insurance Journal article that inspired this post, click here.
Shawna Dennis is AVP of Content Marketing at Manulife.