As we’ve explored in several previous columns, the financial planning part of advising affluent families is often the easiest piece of a workable solution. More often, advisors find family dynamics and client psychology the most challenging facet of their jobs. Family issues can halt the implementation of the most logical financial plan on page one–if the advanced planning team hasn’t taken these immense factors into consideration. The team can’t be expected to resolve decades of dysfunction and miscommunication, for example, but they can create a plan that works with the important family factors in mind.
It takes a special breed of advisor to work effectively with wealthy clients–and the non-financial skills he or she brings to each meeting have a direct impact on the success of the practice. As we discussed in the November column, the key soft skills for successful advisors include Emotional Intelligence and the four areas of emotional competency: self-awareness, self-management, social awareness, and relationship management.
Emotional Intelligence is a key differentiator among advisors. Those who have more developed skills can help guide their clients toward making the right decisions for themselves, their families, their businesses, and their charitable interests. Such skills don’t make advisors better financial experts, but they do allow them to have greater influence with their clients to help those clients reach better outcomes.
The challenges in advising wealthy families and the importance of dealing with non-financial matters is the subject of a new study, From Wealth Counselors to Wise Counselors: A Dialogue with Leading Advisors to Wealthy Families,” from Wise Counsel Research, Inc. The study collects the experiences of 20 advisors with financial or legal backgrounds and 10 others highly experienced in counseling or therapy backgrounds. All work primarily with very wealthy families, which they define as those with more than $25 million in assets. In the study, many of the participants noted that an essential feature of their work is helping families with the personal challenges associated with their wealth. The financial advisors see many others in the field as too focused on just the money details and missing essential information that would lead to more appropriate solutions.
One of the respondents who thought her main value to wealthy clients was her experience in finance and knowledge of economic theory discovered otherwise. “I was very experienced in business, I had run family offices, and I had an academic expertise in economics. But as I got to know the people more and more, I realized that the issues central to them were about much more than the money. Money was not the sole issue. My business changed in short order to deal with issues around wealth, not the wealth itself.”
Advanced Listening Skills Required
Listening, client dynamics, and complex wealth planning issues are issues the study author, Keith Whitaker, PhD, president and founder of Wise Counsel Research, has had direct experience in addressing. He is a Certified Trust and Financial Advisor and headed Wells Fargo’s (and Wachovia’s) Family Dynamics practice. He is currently a Research Fellow at Boston College’s Center on Wealth and Philanthropy. (He also reviewed my book, The Middle-Class Millionaire, for The Wall Street Journal,which is how we met.) “What was very interesting was how much the issue of listening came up as an essential tool,” he notes. “The advisors emphasized listening as a skill [necessary] to be a good advisor.”
As one advisor in the study commented, and we’ve explored in previous columns, an essential skill for working with affluent families is the ability to listen carefully and think beyond the actual words spoken in order to reach a true understanding. “Often it is what they don’t tell you that is as, or more, important than what they have told you,” this advisor observed. This skill comes into play especially in the early stages of a client relationship. In fact, one of the major findings of the study is the significance placed on “listening empathically and with understanding amidst a host of various and often confusing legal, financial, and emotional concerns.” Many saw the degree of listening skills a wealth advisor brings to client interaction as important as technical knowledge in distinguishing a practice.
Whitaker views the ability to listen as deriving from being comfortable in difficult situations, which requires an advisor to be emotionally centered and strong. When he coaches or trains advisors, Whitaker tells them that they can’t expect clients to be able to listen if they as professionals aren’t able to do the same. Advisors have gotten frustrated and told him, “Of course I listen to my clients.”
“Are these professionals in the place to be able to hear and to encourage thorough communication? That’s where experienced advisors really excel,” Whitaker notes. “Clients want to be heard, but they want to know that their advisors are in the place to actually receive what they’re offering.”
One of the advisors connected the skill of listening to influence. “I don’t work for wealthy clients because I’m grateful that they use me,” he said. “I don’t work with wealthy clients for my own self-worth. I work with wealthy families because these families can influence the world, and I have a special knack at influencing them.”