FA Playbook

Taking wider view, advisors move beyond money matters

Key Points
  • Today's investment advisory business is focused more on client needs than on sales.
  • As advisors adapt, they're relying less on traditional financial skills and more on interpersonal connections and offerings.
  • New study finds "soft skills" increasingly will outweigh technical ones in coming years.

When a client told financial advisor Brett Anderson several months ago that she wanted to visit the Grand Canyon before her health worsened, he didn't hesitate to offer his help.

Knowing that his 70-something-year-old client was in an early stage of Alzheimer's disease and had few close relations, Anderson said he'd be her wingman.

"She wasn't sure she'd have anyone to go with her, so I told her if she couldn't find anyone, I'd go," said Anderson, a certified financial planner and president of St. Croix Advisors. "My wife would either understand or want to go, too."

Jordan Siemens | Getty Images

In some professions, such an offer to a client might seem bizarre. But as the investment advisory industry is becoming more client-centric than sales-oriented, financial advisors increasingly are working with clients in nontraditional ways and tapping nonfinancial skills to do it.

While reasons for the trend are varied — ranging from competition brought about by automated investment services to more holistic approaches to clients' financial lives — it's one that's expected to continue unabated.

A recent study released by the CFA (Chartered Financial Analyst) Institute, "Future State of the Investment Profession," shows that so-called soft skills — typically things such as relationship-building and interpersonal communication — will be more important than technical skills in the coming years.

"The report shows it's the human element that will differentiate professionals in the future," said Robert Stammers, director of investor engagement for the CFA Institute's Future of Finance team and one of the study's authors.

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"Advisors will still have to be technically astute, but they'll need the ability to really understand clients and be a real partner in fulfilling their objectives," Stammers said.

As part of the study, more than 1,100 investment management pros were asked to rank the most important skills needed in five to 10 years. Relationship-building skills ranked higher (38 percent) than financial analysis skills (20 percent) for CEOs of asset managers. That ability to connect with people was bested only by "ability to articulate a compelling vision" for the business, at 49 percent.

For advisors who are ahead of the curve, the norm already has evolved into interacting with clients in ways that go far beyond explaining investment benchmarks and portfolio returns.

Anderson, for instance, has visited a client in the hospital and taken groceries to another who had fallen on hard times.

"I think there are lots of advisors who go above and beyond for their clients and you just don't hear a lot about it," he said.

Anderson said that it's rewarding for him, too. He has shared in a clients' sense of accomplishment when one successfully saved for their son's bar mitzvah and when another's son was able to pay his private-college tuition due to effective planning.

Neal Van Zutphen, a CFP, is among those who think interpersonal communication skills are more important to advisors than financial know-how. He points out that advisors are helping to solve real-life problems, such as aging parents, death and dying, serious illness and marital money strife.

"Life is far more than money," said Van Zutphen, owner and president of Intrinsic Wealth Counsel. "Planners and advisors who embrace the bigger picture deliver value beyond portfolio returns."

You have to be a normal, everyday person with your clients and show you care about them. You have to have the heart of a teacher and a coach to be successful.
David Hays
president of Comprehensive Financial Consultants

Van Zutphen is an advocate for more formal soft-skill training among financial advisors. Part of his viewpoint arises from his belief that it's the advisor's job to help clients uncover their own motivation for reaching their financial goals instead of simply telling them the mathematics of how to do it. And that, he says, requires different skills than those used for investment recommendations.

"There's efficacy in what we do for individuals and couples if they can find their own intrinsic motivation to achieve their goals," Van Zutphen said. "You can't do that by ordering them around."

The CFA Institute study showed that when it comes to training programs, respondents think relationship-building should be nearly as much a focus (55 percent) as specialized financial analysis skills (58 percent).

The CFP Board Center for Financial Planning, for its part, recently began work on a research project to explore the behaviors, biases and whatnot that contribute to clients' financial picture. The results of the research could help advisors know how to approach working with different clients to encourage financial well-being and good decision-making.

David Hays, president of Comprehensive Financial Consultants, said the importance of truly connecting with clients is becoming more frequently discussed among his peers at professional get-togethers.

"You have to be a normal, everyday person with your clients and show you care about them," Hays said. "You have to have the heart of a teacher and a coach to be successful."

As for Anderson's potentially Grand Canyon-bound client? He expects he'll have an answer the next time he sees her.

"I hope she says yes," Anderson said. "For me it's just part of the journey with her."

— By Sarah O'Brien, special to CNBC.com

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