This is the one skill your financial planner should have
In times of market volatility, active listening offers a rare opportunity to earn sincere and lasting trust.
Investor anxiety is running historically high. Dubbed the 'coronacoaster', dizzying uncertainty has upended almost every aspect of our daily lives. So, it's not surprising, then, that clients are looking to their financial planners for new levels of assurance.
But financial insight and expertise, however specialised, is not enough to calm the nerves of apprehensive clients. That's according to Sharon Moller, Financial Planning Coach at Old Mutual Wealth, who believes that financial planners can help by saying far less and listening better than ever before. “In times of crisis, it’s important to remember that most of our decisions are based on fear and scarcity.”
“I recognised this very response in myself as I experienced feeling fear of losing connection, not being able to provide properly for my family and the fear of losing people I love like my 83-year-old mother who might be too frail to survive the pandemic,” says Moller.
“I must admit, the last thing that crossed my mind was the effect that the current craziness in the markets might have on my investment. Not because it isn’t a valid concern, but because at this moment my family and their health are my priority.”
Using active listening, Moller explains that offering financial expertise is secondary to picking up emotional attitudes and behavioural patterns of the client. “When financial planners use active listening, they show empathy, which helps to build a connection. And because the conversation is fundamentally respectful, in turn you earn their trust,” says Moller.
“When financial planners tease out these patterns in non-threatening, exploratory ways, often clients arrive at their own insights, leaving them feeling more in control.”
Make the shift from specialist to coach
Rather than passively hearing (while waiting for your gap to speak), active listening is about being fully present in the moment and being consciously open to what your client has to say.
According to Moller, many planners find this difficult because it means completely reimagining the role they play in their clients' lives. "We have to unlearn the ingrained impulse to explain, instruct, solve or even dictate, and learn instead to empower," says Moller. "Your job is inform and support – not to tell them what to do."
In order to make this shift, you have to let go of the need to be the most knowledgeable person in the room and of what you think you know about your client's needs.
It calls for real awareness of your own triggers and assumptions but, explains Moller, it's only once we change the way we see ourselves as planners that the possibility of active listening really opens up.
Create a non-judgemental space
Your aim in active listening is to create a safe space in which your client is free to speak openly about all their concerns and anxieties. This might feel counterproductive or even overwhelming at first, warns Moller.
"If you achieve an atmosphere of complete acceptance, your client will share seemingly irrelevant details of their lives." But none of it is actually irrelevant, both because the act of listening builds trust in and of itself and because these details offer vital clues as to what motivates clients' choices and informs their values.
Moller implores financial planners to remember that "it's about seeing the human being in front of you, with all their complex contradictions, and resisting the urge to push an agenda or product".
Listen to the story below the surface
"Listen for the general mood they live in," advises Moller. How much responsibility do they take for what happens in their lives? How many perspectives are they able to hold at any one time? What are their unquestioned assumptions?
'Active listening', she explains, is the number-one skill financial planners need to sharpen to really support their clients in times of doubt. "If you can truly master this, stressful circumstances will offer an opportunity to supercharge your credibility and deepen trust with your clients," says Moller.
"When their money isn't doing what they want it to, that's uncomfortable. But underneath the current discomfort, what has really changed? They still want to do something they love every day, to support their families, to retire in a certain way. Active listening holds up a mirror for your client. In it, they'll be able to see the kind of long-term perspective that sets investors up for success."