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(From Left:) Lisa Salvi, Vice President, Business Consulting & Education, Schwab Advisor Services; Ryan Caldwell, Partner and CEO, Wacker Wealth Partners; Heather Fortner, Partner, Chief Compliance Officer and COO, Signature FD; Stacy Haubenschild, Partner, COO, Hennssler Financial

Emotional Intelligence a Must in Navigating Client Relationships

Alumni of Schwab's Executive Leadership Program talked about the need to encourage advisors to raise their 'emotional quotient' during a panel discussion at Schwab's IMPACT Conference.

As investment management is increasingly commoditized, an advisor’s emotional intelligence or emotional quotient (EQ) is all the more essential, according to advisors from Schwab’s Executive Leadership Program during a panel discussion at the company’s annual IMPACT conference in San Diego. 

According to Lisa Salvi, a vice president for business consulting and education with Schwab Advisor Services, the value placed on emotional intelligence was apparent even in the scheduling of conferences like IMPACT.

“When I think back five years ago, or when I first started coming 10 years ago, if we had put sessions on the agenda that were on the softer side of things ...” she began.

“Nobody went,” cut in Heather Fortner, a partner, chief compliance officer and COO at Signature FD.

“No, it needed to be very technical,” Salvi continued. “And now those are some of our top sessions.”

The discussion was conducted in tandem with the release of a report by Schwab Advisor Services, asking registered investment advisory firm leaders who were alumni of the Executive Leadership Program about the future of the independent space. To date, more than 200 individuals with more than $400 billion in managed assets have participated in the program, which lasts a year and includes executive coaching, instruction by faculty members from graduate schools and access to Schwab’s knowledge of the industry’s history.

Schwab got the perspectives of 11 alumni on a variety of topics, including talent development, tech integration and the need for more emotional understanding as a foundational component to advisor/client relations. Fortner, an alumna from 2015, said while advisors in the industry had historically focused on “IQ” concerns like planning and asset management, she believed that many advisors had actually been fulfilling EQ needs for their clients for a long time.

“What we haven’t done is a great job of showing value for that, because it’s very difficult for people to quantify,” she said. “So I think that the firms that are able to actually do that and are able to do it well, and are able to train their advisors to be more comfortable with those conversations, and they’re able to actually deliver that over time and deliver over the entire journey, those are going to be the firms that are successful moving forward.”

The panelists’ acknowledgment on the importance of these softer skills and services mirrored similar comments by Schwab CEO Walt Bettinger during a Q&A session held on Tuesday morning, who argued that particularly in light of the industrywide race toward zero-commission trades, the most valuable (and marketable) skills an advisor could wield would be those that could not be commoditized, including life planning, further customization and “playing psychiatrist” during volatile periods in the market.

Wacker Wealth Partners CEO Ryan Caldwell echoed how advisors need to be able to assuage investors’ fears, recalling his first year on the advisor side of the industry in the height of the financial crisis. He remembered strongly reconsidering his career choice and recalled the difficulty of walking through the fears and regrets investors might have about their decisions during such a tumultuous period.

“Investment management is becoming more and more commoditized, and people can go online and click a button if they don’t want to talk to someone, but the people that come into our firms are the people who want to put their trust in someone, and want to have a conversation, and you just can’t do that effectively if you don’t have those skills,” he said. “I think we have to make a concerted effort to dig into this skillset, to do the fulfilling work we’re talking about doing, which is guiding people through scary moments in the markets and making scary decisions.”

Salvi agreed, noting that wealth management’s role in financial planning has shifted as clients demand more and different services from advisors.

“That continuum of wealth management is really important and has to be done well, but it’s not the differentiator as much as it used to be,” she said. “Now it’s the value-added services and relationship management you’re adding on top of that, and I think that’s absolutely where some of those EQ elements really come to play.”

Earlier this week, Schwab released a separate survey of nearly 1,000 independent advisors about their perspective on what will happen in the coming year; paradoxically, while more than half of advisors predicted a recession in the coming year, 94% of surveyed RIAs expect they will grow net new assets in 2020 by an average of 20%.

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