Figure 3: Hierarchy of interpersonal skills based on perceived importance of a quality
Source: adapted from AFA White Paper (The trusted advisor), May 2013. Beddoes institute; Graphic: BirthStar® Research
It is worth noting that although that emotional intelligence is being emphasised as a key
quality that delivers client satisfaction, technical skills and expertise are equally important. In
the next section we offer an alternative perspective on the definition of advisers which
differentiates their role from those of experts.
A fresh look at adviser value add
While ‘economic’ value added by adviser expertise may be outsourced
to automated systems, the ‘emotional’ value added through
consultation will need human interaction.
In this section we present alternative approaches to defining, delivering and evaluating
adviser value add. Our view is that in an era where technology is taking over many functions
otherwise performed by humans, advisers will continue to add ‘emotional’ value while
functions that create ‘economic’ value are better outsourced to automated systems. Building
on the dual theory of cognitive reasoning, we describe these two distinct approaches to
value add in the context of client servicing by advisers as follows:
Emotional Value Add: helping clients experience greater positive emotions such as peace
of mind, reliability, trust, time-saving and control when they contemplate financial decisions.
Economic Value Add: helping clients realise measurable monetary gains through clear
understanding of objectives, tax-efficient investing, optimal asset allocation, and protection
when seeking financial advice.
When experiencing negative emotions such as stress, anxiety or confusion investors and
their advisers are at risk of falling prey to behavioural mistakes such as not investing early
enough (triggered by inertia) or trading frequently due to myopic loss aversion, or holding
losing positions longer than winning positions (due to the disposition effect). By providing
personalised consultation, advisers can placate client concerns and help clients overcome
behavioural mistakes that can hurt the long term performance of their investments.
Delivering emotional value entails consultation that is conversation oriented, client focused,
tailored to instil trust and should inspire a friendly and genuine relationship. It means helping