Emotional intelligence is a must-have trait for financial professionals who want to become indispensable to their clients and gain a competitive advantage in the market. Along with technical competency, intelligence and financial expertise, having the ability to feel and assess your own emotions, as well as understand others’ emotions, can go a long way toward improving relationships and building client retention.
In fact, one study examining emotional intelligence found that it is a strong predictor of performance; those who have a high level of emotional intelligence are more likely to stay calm in stressful situations, resolve conflict and respond with empathy to their co-workers and clients.
Without the ability to understand and manage your emotions, it becomes harder to communicate with your team and your clients who have complex emotional needs of their own. Fortunately, there are simple ways to cultivate emotional intelligence and become more self-aware.
What is emotional intelligence?
The term emotional intelligence, which can be defined as the merger of emotion and cognitive thinking, has been around for almost three decades. It was first coined by researchers who decided to classify emotional intelligence as an ability to embrace four core competencies:
1. Self-awareness — Someone who is self-aware is someone who understands their own emotions; they know what they are feeling and why. They also have a good idea of their strengths and limitations. Above all, they know what they value and have a sense of purpose that gets them out of bed every morning.
2. Self-management — Someone who has the quality of self-management can adjust and modify their behavior to coincide with their feelings so that their emotions don’t control them. Effective self-management also includes the ability to manage your impulses.
3. Social awareness — Someone who is socially aware is tuned in to what is happening around them. They can focus on other people – not themselves – and can read nonverbal clues to pick up what someone else is feeling.
4. Relationship management — Someone who can effectively manage relationships is likely emotionally intelligent. This means being able to connect with others so that they feel supported and understood. For a financial professional, it’s vital to negotiating, resolving conflict and working toward a common goal, such as your client’s retirement.
Growing your business with emotional intelligence
Wealth managers need to be emotionally intelligent if they want to retain clients, gain new business and help their clients achieve their goals. Financial professionals who demonstrate emotional intelligence have skills that are essential to building a successful business, such as staying calm under pressure, making thoughtful business decisions, taking criticism and resolving conflict. Having a basic understanding of what’s happening inside your client’s head (and inside your own head, too) can also lead to better decision-making.
Above all, wealth management requires trust. If your clients don’t trust you, then you can’t advise them. Studies show that trust is the most important factor clients consider when hiring a financial professional.
How to test and improve your emotional intelligence
Wondering if you have emotional intelligence? Here are some things to think about and a few ways to put emotional intelligence to work. Through practice, you can increase your ability to be self-reflective and become more socially aware.
- Practice your listening skills — Listening will help you better understand the needs and emotions of others. By repeating back to your client what they’ve said in your own words, they will know that you’ve heard them.
- Pay attention to body language — So much of communication is nonverbal. If your client is sitting with their arms crossed, for example, this might suggest that they’re not feeling receptive.
- Apologize — When a client is unhappy, an apology can go a long way toward repairing hurt feelings. Apologizing is a kind acknowledgement of unintentional wrongdoing, and builds trust and respect.
- Put yourself in your clients’ shoes — Always consider your clients’ needs and emotions, and ask questions to try and understand what they’re thinking and feeling. You might be surprised at what you learn.
Successful advising requires financial knowledge, but it also requires emotional intelligence. If you want to build a strong practice where your clients feel seen and heard, consider investing in emotional intelligence. It will help you more effectively engage with your clients and build your own communication skills.
Learn more about how to build trust with your clients.
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