What are soft skills and why do advisers need them?

Approaching a financial adviser for the first time, potential clients are likely to want to know they have the correct qualifications.

But perhaps what many people don’t realise is how much they will also be relying on the adviser’s soft skillset to help guide them through their financial choices.

Advisers may not even be aware, at times, they are using these soft skills in their contact with clients.

That’s because soft skills are to do with emotional intelligence – most of us draw upon these in everyday conversations to some extent. 

But an adviser will need to bring these skills to bear in every client meeting.

The whole interaction is one that is predicated on listening carefully and using your emotional and intellectual intelligence to give someone your best recommendation.Darren Smith

Darren Smith, head of the Financial Adviser School, observes: “Financial advisers have a unique skill set and need to have a huge depth of knowledge and technical ability. This is crucially important to their career. 

“However, of equal importance are soft skills. Soft skills are around interpersonal skill development and focus on communication and emotional intelligence.”

Tom Hegarty, managing director at New Model Business Academy, points out soft skills are just one of the many talents advisers need.

“There’s the technical knowledge, there’s the conduct and ethics and the regulatory side, there’s [the ability to] run a business but most advisers would actually say, most importantly, is interpersonal skills because all of these things are developing relationships over the long term with clients – building trust,” he says.

Mr Hegarty notes many in the financial advice industry will already possess such skills. “They probably know that they’re quite good with people, which is why they chose the profession,” he adds.

Making it a priority

With so many calls on their time, why are these types of skills so important for advisers? As Mr Smith points out: “Advice in any form, not just financial, is a form of counselling.

“It’s about listening to a person’s story and aspirations and giving them a well-considered view on how to proceed. The whole interaction is one that is predicated on listening carefully and using your emotional and intellectual intelligence to give someone your best recommendation.”

Philip Hanley, director and independent financial adviser at Philip James Financial Services, recognises the importance of soft skills and asserts that establishing a relationship of trust between adviser and client is more important than ever.

He acknowledges: “As advisers, of course we need technical, business and financial skills. But we deal in intangibles – investments and pensions are no more than computer entries these days.

“Just as most interviewees win or lose a job in the first two minutes so, I think, most clients decide if you're OK or not just as quickly.” 

Mr Hanley explains: “You can't teach someone to be likeable, but learning to listen and interpret what you hear is an acquirable skill. 

“Most professionals - certainly most solicitors, accountants and surgeons - rely on their qualifications to do the talking. Advisers, traditionally, haven't been able to do so.”

Adapting to change

The subject matter also means that advisers who draw upon their soft skills are likely to get the most from client interactions. Money, after all, is a hugely emotive subject.

Steven Martin, director of the Financial Planning Training Academy, defines it this way: “Soft skills are all about allowing the client in front of you to explore, often for the first time, what’s really important to them and what version of life they actually want for themselves before you put your technical hat on, build your spreadsheets, create model portfolios, and do the tax planning to deliver it for them.”

But he sees the role of the financial adviser changing over the years, which is why soft skills are increasingly coming to the fore.

He explains how, in the past, the added value in adviser relationships came from their technical knowledge and ability to construct suitable investment portfolios.

“All of which is increasingly going to be provided online or as an online/offline hybrid at unbelievably low cost by institutions that are much more credible and have much better brand value than any IFA has,” Mr Martin points out. 

“To my mind, if IFAs want to have a future, they have to move away from transaction, product selection and fund selection as being their core service because no-one’s going to come to an IFA for that in future.”

While this seems to pose a huge risk to the traditional adviser model, something Mr Martin does not deny, there are still opportunities. 

“Your requirement therefore, if you want to survive or indeed thrive, is to offer something different than a computer can offer, or that a massive institution can offer,” he claims.

That’s where the interpersonal skills come into play.

He explains: “What you [advisers] need to recognise is the individual in front of you is unique. If you can work with that individual and understand that individual on a personal basis, not on a product or financial basis.

"You can work with them to use the financial resources they have available to help them achieve those objectives in the long run. 

“Then you’re in a position that’s very difficult for an online solution or a computerised solution to do their job.”

eleanor.duncan@ft.com