Other Voices

Financial advice industry must give 'soft skills' the credit they deserve

Leaders need to shift the culture and start reinforcing the idea that communication skills are valuable and highly desired

Nov 13, 2017 @ 6:00 pm

By Kathleen Burns Kingsbury

Almost halfof Americans say the most difficult topic to discuss with others is personal finance; they would rather discuss death, politics or religion. This social taboo against talking openly and honestly with loved ones contributes to 50% of first marriages ending in divorce, 70% of families failing to successfully pass down wealth to future generations and 69% of parents feeling more comfortable talking with their teens about sex than investing. While advisers are uniquely positioned to bust open this money-talk taboo with their clients, many in the industry believe discussing the emotional side of money is nice but not necessary. The result is an industry plagued with money silence and woefully unprepared to assist clients and their families with this type of dialogue.

Advisers, like their clients, pay a high price for staying silent. When the next generation gains control of their parents' assets, between 90% and 95% of these accounts are transferred to a different professional. In addition, 67% of women don't feel understood by their financial advisers, citing lack of good listening skills as a primary reason. A high percentage of these women leave the adviser when they gain control of the assets through death or divorce. It is certainly easier to fire an adviser you have never met, or one who has not made an emotional connection with you, than one who has helped you and your loved ones facilitate financial differences or work through difficult money conversations.

The industry has given lip service over the past several years to the idea that advisers should be more equipped to engage clients in multigenerational wealth conversations. However, one or two keynotes on this topic are insufficient to put a dent in the issue. For real change to occur, industry leaders need to shift the culture and start reinforcing the idea that communication skills are valuable and highly desired.

Commonly referring to this field of study as "soft skills" sends the wrong message. The implication is that talking to clients is the light and fluffy side of the job. But the truth is, being emotionally intelligent, understanding how to manage couples and family dynamics in the context of an advisory meeting, and empowering others to do the same, is really hard. And it is just this aspect of the job that cannot be replaced by technology. Robots are not capable of having meaningful conversations!

It is time for a revolution, where advisers empower clients and families to talk about finances before, during and after life transitions, such as going off to college, getting married, having a baby, getting divorced, becoming widowed, remarrying and getting older. By doing so, they are showing clients that talking about money and its emotional impact during life transitions is paramount to good financial self-care.​

(More: Breaking Money Silence: Helping clients understand money taboos and talk more openly about finances)

Here are three steps the industry needs to take to stop colluding with money silence and instead embrace a more client-centric human approach to wealth management.

1. Adjust the financial industry's mindset. The first step is to examine the industry's mindset about financial communication and end practices that reinforce the idea that only the technical aspects of personal finance are worthy of time and attention. Industry conferences, trade publications and consumer magazines are chock-full of content about the technical side of money. But technical skills are only useful when combined with a keen understanding of human behavior. Ironically, these "soft" skills are what separate "the men from the boys" when it comes to attracting and retaining advisory clients.

Research shows that individuals want to work with advisers who possess high emotional intelligence and can help them communicate with their loved ones. Despite this information, the industry remains focused on teaching advisers how to maximize returns and create fancy charts and graphs over helping couples and families communicate about the human, and sometimes emotional, side of finance. It is time for this mindset to change to include a more holistic definition of wealth management.

2. Mandate communication skills training. The next step is for universities and certification programs to require communication skills training and an overview of wealth psychology as part of their curricula. The undergraduate and graduate financial planning program at Texas Tech University is one of the only ones that requires students to take and pass a communication course to graduate. Other CFP programs, such as the one at Bentley University in Waltham, Mass., where I teach the psychology of financial planning, offer similar coursework, but as an elective, not a requirement. The Certified Financial Planner Board of Standards Inc. does mention "interpersonal communication" as an education requirement; however, the CFP-required coursework, exam and continuing education requirements fail to provide the in-depth training necessary to increase adviser self-awareness and build skills to effectively communicate and manage the human aspects of the profession.

A study by Texas Tech University and Charles Schwab found that "95% of advisers felt that they could teach the technical material to new entrants, but needed the soft skills to be taught before they graduated." Now it is time for the industry to provide the training advisers know they need.

3. Change compensation models to reflect the importance of these services. Most advisers make money when they sell a product to a client or as a percentage of assets under management. Few are compensated for their time and expertise engaging clients in meaningful conversations. It is no wonder so many are unmotivated to incorporate these services into their practices. They are not paid for the trouble. Yes, the investment of time and energy into understanding your client improves your relationship, fosters trust and in the long run makes this client more loyal to you. But trust me, this is a hard sell when advisers are measured solely on production levels.

Cetera Financial Group CEO Robert Moore and President Adam Antoniades raised this issue in their op-ed "Advisers Should Be Rewarded For Their Expertise, Not Sales Skills," in the Jan. 30 issue of InvestmentNews. "It's time to reimagine the fundamentals of financial adviser compensation so advisers can be rewarded for their expertise and the value they bring to their clients' life goals," they wrote.

(More: Can Robert Moore save Cetera?)

I could not agree more. Let's change how advisers are paid so clients can enlist an adviser to help them break money silence in their families and the adviser can be compensated for doing so. Putting a price tag on this service legitimizes it and helps clients more clearly understand the value they are receiving from advisers.

Changing how the industry thinks, how advisers are trained and how services are paid for are not easy to implement. But meaningful change is never easy. I believe that if the industry continues to collude with money silence it is not fulfilling its fiduciary responsibility. It is in our clients' and society's best interest to teach money-talk skills, to help couples resolve financial conflicts and to empower the next generation to live more financially savvy lives.

Kathleen Burns Kingsbury is a wealth psychology expert, keynote speaker, author and founder of KBK Wealth Connection. Her fifth book is "Breaking Money Silence: How to Shatter Money Taboos, Talk More Openly about Finances and Live a Richer Life" (Praegar, 2017).


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