Elston CPD Redefining Adviser Value - Page 10

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 10