Financial planners who attain the exalted status of “trusted adviser” to their clients exhibit very high levels of emotional intelligence, in addition to exemplary technical skills, according to new research released by the Association of Financial Advisers (AFA).

Trusted advisers enjoy higher client advocacy than other advisers, have greater pricing power, convert prospects to clients at a higher rate, have more satisfied clients and run substantially more profitable practices, the research has found.

And the good news is that unlike intelligence quotient (IQ), emotional intelligence, or EQ, can be developed and increased through training.

The research, The Trusted Adviser – what matters most to consumers?, is based on 512 interviews with clients of the 12 finalists in the past two AFA Adviser of the Year awards, and was conducted by the Beddoes Institute – the same organisation that produced last year’s Pathways to Excellence research for the AFA.

It discovered that Adviser of the Year (AoY) finalists’ clients nominated their adviser’s interpersonal skills as the quality they considered most important. It was nominated without prompting, in 82 per cent of interviews.

The next most important quality, professional reputation, was nominated in 19 per cent of interviews (see graph below).

Quantifiable benefit

“Being a trusted adviser – performing well in these areas – has a quantifiable benefit for financial advisers,” says Rebecca Sheils, leading practices program director at the Beddoes Institute.

“Not only is it good for your clients, but it’s good for the business as well. You have enduring and sustainable relationships with the clients; they’re happier, they’re more willing to pay your fees without question, potentially even giving these trusted advisers more price-setting discretion. They deliver value, they deliver improved financial outcomes for clients [and] higher referrals,” she says.

“We’ve been able to quantify this, so it’s not just the soft fluffy element that we’re talking about. We’re talking about hard benefits to a practice and to the bottom line.”

Sheils says that the research did not formally measure the EQ of the AoY advisers, but given the results of the client interviews, it “must be” the case that they have high EQs.

You can learn it

Brad Fox, chief executive of the AFA, says there are benefits for both parties when advisers have a high EQ.

“The tangible outcomes are that the client ends up better off, the adviser has a better business [and] both the client and the adviser are better fulfilled through the relationship if you can earn the tag of trusted adviser,” Fox says.

“As the research shows, EQ can be learned. So if you’re a good or an average adviser and you want to be better, you should only advise in the areas where you’re technically proficient. So, upskill in technical [proficiency] if you’ve got an area you are not strong in, and the next thing is to upskill yourself on your soft skills, your emotional intelligence.

“It takes time, it takes effort, it takes dedication, it takes application. It won’t just come by thinking you’ll be better at soft skills or EQ. The research shows that if you invest the time into those, and achieve the learning outcomes, you get a quantifiable benefit out of it as an adviser and as an advice business.”