The advisor as therapist

Who says that being a financial advisor isn’t a little like being a therapist? For instance, if you don’t know the difference between an emotional request and a rational (intellectual) one, you’ll be blindsided by the emotional ones.

Here’s an easy way to look at it so that you’re more successful handling client needs, especially during this emotional, stressful market. When a client gives you information about taxes, investment balances, profit and loss and so on, they are involved in an intellectual process. They want to know about addition and subtraction in their portfolio. It’s rational. It feels neat and tidy. But, later the conversation takes a turn. The client wants to know if they’ll be able to afford that big vacation they’d planned last year before everything spiraled downward. You show them why it isn’t a good financial choice. At first, it seems like a logical conversation. But this is when the wise advisor sees the red flags of emotion wave. Instead of giving the client only the intellectual information they are requesting, the advisor knows there is emotional content in this request. If you don’t recognize the emotional piece, you could see an impulsive decision made (sell assets to go on vacation) or resentment build.

“Yes” to the vacation means relief and joy and you can continue a good client relationship. “No” means disappointment and maybe some form of anger. While the market conditions aren’t your fault, you might get punished for your answer–no matter how logical and honest. Emotions don’t play by the rules of rational thought, and they are extraordinarily powerful.