There are a lot of physicians who rush from patient to patient, and many patients aren’t pleased with those doctors in general. The same can be said about financial advisors. Sure, physicians deal with one’s personal health and the family physician oversees the health of the entire family. But a good financial advisor deals with one’s financial health and also oversees the financial health of the entire family.
A few years ago, our affluent research uncovered four psychographic motivators for decision-making: personal health, family health, financial health and spiritual health. Financial health is often connected to both personal and family health.
The following, uncovered in our research on investors and advisors, are the five most common ways advisors destroy empathy. And the reality is, most advisors don’t realize they’re doing it.
1. Insisting that you’re “right” and they’re “wrong”
If you’ve done this, most likely you were right in terms of the issue. However, you were wrong regarding your ability to display empathy.
Example: You’ve agreed upon the acceptable risk-tolerance, invested accordingly, and established clear performance expectations. But a raging bull market has your client complaining about returns.
Empathy: “I know these bull markets can make you feel as though you’re losing out, but for the long-term, we’re on track. Everything is working according to the plan we established.”
2. Defensiveness
We’ve all found ourselves in this mode once in a while, but the less the better. Nothing is more infuriating to a client than an advisor who gets defensive; it’s a tell-tale sign that they’re not listening. What happens is that you begin to disagree with their assessment (argue) and, in effect, you’re reluctant to admit to any form of imperfection.
Example: A client is questioning how your firm charges fees for a household account, as there appears to be a disparate fee range among the accounts for family members.
Empathy: “Your question regarding how the firm charges fees for household accounts is a fair question. It’s rather confusing and fees could be better aligned. Let me look into it and see where I can make the fees more unified.”
3. Martyrdom
You’re the innocent victim—it’s your firm’s fault—which puts you in a defensive posture, not on the client’s team.
Example: A client complains that your firm sends too much correspondence, much of which they don’t even open, and, at times, important documents get thrown away. And when they do open a statement, it’s too confusing. You listen, agree with your client, and then simply blame your firm.
Empathy: “It’s easy to feel overwhelmed with the amount of correspondence clients receive from financial institutions, and the statements can be very confusing. How about we schedule a meeting for the end of next month, which will give you time to collect every piece of correspondence and bring it to our meeting? Then I’ll go through it all, piece by piece, with you, show what to trash and save, and teach you a shortcut for reading the statements.”
4. Counter-Attack
This means responding to criticism with criticism. This is an easy trap to fall into, much like “I’m right” and “you’re wrong,” which typically occurs when you are in the right.
Example: A client complains about returns and but then is lectured for not listening to the advisor’s investment recommendations.
Empathy: “It’s quite natural to feel as though you lost out relative to the recent moves in the market, but can I make a suggestion? Let’s take a look at the investments I initially recommended, analyze how they’ve performed, and see if we can make any adjustments.”
5. Premature Problem Solving
This involves jumping to the solution without taking time to put yourself in their shoes. It could be retirement planning, college funding or an impending divorce, but the mistake is in providing the solution without fully understanding the emotional aspect of the situation.
Example: “I’ve seen this before when people have procrastinated on planning for retirement, let me tell you what you need to do ....”
Empathy: “It’s natural to feel as though you should have started planning for retirement earlier. That said, most people wish they started planning earlier, but it’s not too late. Can I ask you a few questions?”
By simply reframing, with a touch of paraphrasing, the tone of the conversation changes. Have some fun with this; go through the above with your assistant, or better yet, your significant other, and identify your typical response to each scenario. Of course, you’ve got to be totally honest. Your objective should be to prioritize correcting any empathy-destroying habits.