Focus on Financial Planning

Keith Costello

Keith Costello is president and CEO of the Canadian Institute of Financial Planners (CIFPs) and the Canadian Institute of Financial Planning (CIFP). Over the past 15 years, Costello has led the creation of educational solutions, practitioner support services and advocacy support for financial planners.

Financial planners and financial advisors need to embrace soft skills to succeed in the future

By Keith Costello |

The rapid rise of technology in the financial services sector is having a significant impact on the technical service offerings of financial planners and financial advisors and creating a new client service paradigm. To survive in this new environment, financial planners and advisors need to improve their soft skills or risk being replaced by evolving artificial intelligence-based (AI) systems, such as robo-advisors.

Traditionally, financial planners and advisors have relied on their hard skills such as product knowledge, educational proficiencies and technical skills to serve their clients while employing basic soft skills. But now, AI-based systems are reducing the technical value of what the financial planner or advisor has to offer his or her client.

Thus, learning how to engage and add value through soft skills is a financial planner or advisor's top-line of defence against AI cannibalization of his or her value. So, what exactly are soft skills, and how can you utilize them successfully?

Soft skills are social skills that are intangible but nevertheless integral in dealing with family, friends, co-workers, business partners, strangers and, of course, clients effectively. Furthermore, they reflect your ability to empathize, listen and, ultimately, earn your clients' trust and respect.

Although being technically competent is a given, the soft skills you demonstrate will be crucial for building a trusting and enduring relationship with your clients. Moreover, soft skills are more intuitive as well as based on social norms and accepted social practices. We all posses some basic soft skills, but only by utilizing certain techniques can we improve and expand these skills.

Soft skills can be categorized as follows:

> Communication skills
• Listening
• Questioning
• Probing
• Clear presentation

> Client and co-worker interaction skills
• Attitude awareness
• Conflict handling
• Co-operation
• Diversity tolerance
• Teamwork
• Willingness to help
• Taking and understanding direction
• Supervision
• Problem-solving

> Self-management skills
• Decision-making
• Time management
• Self-discipline
• Stress management

Let's focus on the following communication skills to demonstrate how you can improve your client engagement process:

> The value of listening in a client conversation:
The client should do the majority of the talking while you listen, so that you could understand his or her situation and formulate the best strategy for the client. How can you maximize your listening skills? Try these techniques:

• Stop talking
• Face the speaker
• Maintain eye contact
• Listen attentively
• Show patience
• Pause before replying
• Question for clarification
• Paraphrase what was said back to your client

> Provide clients with summary and reflective statements:

• Summary statements are a by-product of effective listening. They should be injected periodically into the conversation to summarize what you heard your client say, such as, "So, what you're saying is that travel will rank as your highest priority during retirement."

• Reflective statements are similar to summary statements. They involve paraphrasing what you heard your client say and reflecting it back. They're important because they're a strong indicator that you're listening to your client, and he or she is the sole focus of your attention. A good example of this is saying something along the lines of: "When you managed your own finances, you were frustrated because of the volume of information that you had to juggle every time that you reviewed your portfolio?"

> Ask effective questions:
Asking the right type of question at the right time is a skill that you must master to elicit the vital information needed to construct a comprehensive plan for your client effectively. This process involves two types of questions:

• Open-ended questions are used to obtain information on how a client feels, or his or her opinion or knowledge on a given topic. This type of question encourages the client to provide a substantial answer vs a simple yes or no. Furthermore, it transfers control of the conversation to the client; is a less threatening way to gather information; and helps develop trust with your client. An example of this type of question is, "What do you see yourself doing during retirement?"

• Closed-ended questions are meant to obtain a quick, fixed response, such as a simple "yes" or "no," to confirm information that has been gathered from previously asked open-ended questions for certainty. An example of a closed-ended question is, "Is it important for you to leave an inheritance or a charitable bequest?"

 

Although the use of these soft skill techniques may seem to be common sense, many financial planners and advisors don't employ them when engaging with clients and rely on their technical skills instead. As the differentiation factors for client retention switches to soft skills from technical skills as a result of the AI revolution, you need to excel in soft skills to build trusting and emotional relationships with your clients over the long run.