Finances and emotions are closely intertwined. Money is one of the leading causes of stress amongst adults, which is why many financial advisors deal with anxious or frazzled clients.
When it comes to discussing matters of money, highly emotional responses simply come with the territory. From positive to negative reactions and everything in between, clients tend to express a variety of emotions. How you handle this emotional build-up is what makes all the difference, though. More specifically, your emotional intelligence can set you apart as a financial advisor.
What is Emotional Intelligence?
Emotional intelligence is the ability to identify, manage, and regulate emotions. It includes the ability to perceive and understand your own emotions as well as the emotions of others and respond appropriately. Emotionally intelligent individuals know how their emotional state affects themselves and those around them. In the case of a financial advisor, emotional intelligence is the capacity to help your clients work through their emotions all while keeping your own emotions in check.
Five Components of Emotional Intelligence
There are five key components that make up emotional intelligence. If you want to increase your emotional intelligence, you need to focus on these core areas:
- Self-awareness – the ability to recognize your own emotions and understand your actions
- Self-regulation – the ability to manage your behaviors and intentionally respond a certain way
- Social skills – the ability to communicate and interact with others
- Motivation – that driving force, grit, and determination that gives you the ability to change your emotions, direct your behaviors, and propel your goals forward
- Empathy – the ability to feel and internalize the emotions of others
Ultimately, the ability to connect with others (a.k.a. your clients) is the heart of emotional intelligence. In other words, emotional intelligence is the act of bettering yourself in order to become a more in–tune person, friend, spouse, family member, coworker, neighbor … and financial advisor.
Emotional Intelligence and Financial Advising
When working as a financial advisor, advising clients on their financial circumstances is only one component of the job. Dealing with clients’ emotions is another.
Clients are entrusting you with personal and sensitive information and potentially their life savings. That fact alone is bound to bring out emotions, but utilizing emotional intelligence skills as part of your financial advising practices can transform how your business interactions play out.
When it comes to managing the emotions of your clients, emotional intelligence allows you to:
- Listen to their concerns
- Acknowledge their emotions
- Ease their worries
- Address their individualized requests
Controlling your own emotional state and reactions to a client’s emotions allows you to respond calmly and logically. Your client will appreciate your cool confidence while navigating their challenges. Your emotional intelligence allows you to:
- Formulate customized plans
- Make informed decisions
- Reduce or even prevent conflict
- Overcome setbacks
- Adapt to unforeseen scenarios
These emotional interactions with clients will help you to:
- Build trust
- Establish loyalty
- Show commitment
- Create deeper connections
Emotional intelligence is a valuable tool that will help you in other areas of your life as well. When you work to incorporate emotional intelligence skills into your life, you will see how emotional intelligence can help you:
- Communicate clearly
- Project ideas properly
- Respond appropriately
- React empathetically
How To Increase Your Emotional Intelligence
How can you increase your emotional intelligence? Remember those five components of emotional intelligence? Self-awareness and self-regulation are at the top of the list for a reason. Increasing your emotional intelligence starts with learning about yourself.
As humans, we naturally (and sometimes impulsively) react to the circumstances surrounding us. When you incorporate emotional intelligence skills into your life, you take the time to reflect on why you reacted a certain way.
For example, laughter is an emotion that can have all sorts of meaning behind it. You can laugh because you feel happiness, gratitude, or a sense of relief. On the other hand, you can laugh because you feel anxious, uncomfortable, or embarrassed.
So if you desire to strengthen your self-awareness capacity, you would make a mental note to identify why you laughed. You would strive to understand the catalyst behind your emotions. You would work to be in touch with your emotions. When you understand your emotional response and the reason behind it, you can learn to fine tune your responses. Your emotional intelligence skills begin to grow and expand. You can choose to react in ways that reassure your clients and build trust.
To become proficient in all areas of emotional intelligence, you can also:
- Listen to podcasts about advancing your emotional intelligence
- Seek out literature about emotional intelligence, including books, online materials, or professional articles
- Record your thoughts and experiences in a journal, then read and reflect on those journal entries
- Practice mindfulness and meditate
- Learn controlled breathing techniques
- Work with a financial advisor sales coach that specializes in business coaching for financial advisers
Your work as a financial advisor relies on client connections. It relies on emotional intelligence. The more in tune you are with your own emotions, the better equipped you become to help others manage their emotional reactions to financial setbacks as they work towards their goals.