Good decision-making drives investor success more than any other aspect of financial planning. For financial advisors, dealing appropriately with clients’ emotions can make the difference between a poorly thought-out, irrational decision and a logical, rational one.
That’s the basis of a new three-day behavioral management training program put together by Ladenburg Thalmann Financial Services, whose the Ladenburg Practice Management team works with advisors across the company’s five independent advisory and brokerage firms.
“If advisors can recognize and effectively manage emotions, they can help clients manage those emotions and mitigate their impact on decision-making,” says Kirk Hulett, senior vice president of organizational and practice development at Ladenburg.
On day one of the program, advisors practice using the tools necessary to recognize their emotional state, take a step back and deal with stressful situations mindfully. For example, dealing with an emotional client often means that, in practice, advisors need to curb their own emotions around the situation before they can offer appropriate assistance to their client.
Once advisors can recognize and deal with their own emotional stresses, they’re ready to learn how to apply that knowledge to helping others, says Hulett. On day two, advisors discover how to help clients learn the situations that make them agitated, and how to control their emotions under those circumstances. After a month during which advisors implement these new skills in their practices, they reconvene for day three to share their experiences.
The training offers an opportunity for advisors to earn the Behavioral Financial Advisor (BFA) designation, which Hulett sees as a key differentiator given industry trends. He points out that while technology has changed traditional investment management and financial planning, computers and robo advisors only offer so much help when human beings make the final decisions.
Financial advisors who can help clients manage their emotions have a better chance of translating complex, technology-driven information into logical decisions that connect with investors’ values, he says.