Listening is important in understanding clients, developing trusting relationships with them, and helping them plan for their financial future. It’s also a foundational aspect of employing almost any financial psychology tactic.

Recent research by eMoney determined that the clients of financial professionals who employ financial psychology in their practice achieve better outcomes. While adding any FinPsych actions improved client outcomes, we found that there were five that rose to the top:¹

1. Helps me identify meaningful personal and financial goals and objectives
2. Tries to understand my values and priorities before delivering financial advice
3. Always considers what I value most in life
4. Makes an effort to learn about my money behaviors and attitudes
5. Communicates recommendations in terms that I can understand

When I looked closely at what these clients were sharing about their financial advisors, something struck a chord. These clients feel their advisor has really listened to them to create a personalized financial planning process.

Communication is a core skill for building relationships and no communication process is successful without effective listening. A financial plan won’t resonate for a client who doesn’t feel like they have been heard.

I believe that mastering the art of listening creates a financial advisor value proposition that sets you apart when it comes to creating lasting, trusting relationships with clients.

Effective Listening Takes Practice

You may be familiar with the components of active listening, a financial counseling skill that encompasses:²

• Talking less and listening more
• Slowing down to focus on the client’s message instead of preparing a response
• Encouraging clients with “what if” questions or other ways of helping them elaborate
• Allowing for some silence to facilitate a back-and-forth

These tactics are often easier said than done. For example, it’s in my nature to be a “fixer.” When someone is telling me about something in their life that’s having a negative impact, I want to jump right in with solutions. But by doing this, I’m signaling to that person that I haven’t really been listening to what they are saying—I’ve been thinking instead about what they should do about it.

If you find that you too want to quickly offer solutions, challenge yourself to work on your listening skills.

4 Ways to Practice Being a Better Listener

Listening is a skill you can improve with practice. You can start by trying these tactics during non-client meetings.

Focus. Before meetings, take a moment to settle your mind so you can remain focused on those in front of you. Remind yourself to pay attention to not just what they are saying, but also to their body language and facial expressions.

Ask open-ended questions. Another way to practice being a better listener is to ensure you have a good set of questions at the ready that you can use to probe further during the conversation. Prepare and study your list ahead of time so they flow naturally as part of the conversation.

Refrain questions as statements. Keep in mind that sometimes reframing these questions as statements can feel less intimidating to clients. With questions, they may feel there is a right or wrong answer. Changing the question, “Do you have a household budget?” to “Tell me about how you budget for your household expenses,” allows the client to provide a more thorough description of their process.

Get comfortable with silence. Using silence can also be a great tool to let the client think about what you have asked them. While it may feel uncomfortable to use silence, it gives them space to think and respond appropriately. Practice by counting to five while they let your question sink giving them a chance to provide a thoughtful response.

Eliminate Listening Interference

Good listening requires the ability to be present. There are so many distractions in our daily lives that can interfere with our ability to listen.

Think about the things that could impact your ability to focus during client meetings. Is there drama taking place in the office that is causing a distraction? Did you just have an unsettling interaction with a partner, co-worker, or another client that you can’t stop thinking about? Whether it’s a quiet moment to yourself or a quick breathing exercise, the time you take to center your thoughts on the client interaction ahead will go a long way toward ensuring you can effectively listen.

Similarly, make sure your tech doesn’t interfere with not only your ability to listen but also the client’s perception of your attentiveness. If you tend to always have your cell phone visible during client meetings, you are inadvertently telling them that there is something more important to you than they are. Even if the phone is silenced and turned face down, it still becomes a distracting element in the room.

Bottom-line Benefits of Improving Listening Skills

As stated above, our research found that client outcomes are improved when financial psychology is introduced to the financial planning process and I assert that improved listening helps you apply these techniques. Remember that the benefits of incorporating FinPsych techniques into your financial planning process don’t just benefit the client—they speak directly to your bottom line in the form of client retention and referrals.

Among financial professionals who have embraced financial psychology, 68 percent of clients are committed to maintaining a relationship with their advisor. These same clients made referrals to their advisor two and a half times more often than those whose advisor has not embraced financial psychology.¹

Listening Creates Connection

We maintain connections with others by listening—it’s a fundamental skill for any successful relationship. Listening also allows for the development of other skills, such as empathy, which leads to better understanding and collaboration with clients. Another name for active listening is empathic listening because when done correctly, it enables emotional connections.

The fact that financial professionals need to listen to their clients isn’t surprising. After all, to prepare a successful financial plan for a client you must listen when they tell you what they hope to achieve. But if you want to develop a meaningful, lasting relationship with your clients, becoming a great listener can get you there.

When you listen to your clients you have the opportunity to create a financial plan that is truly personal to them. For more ways to personalize the financial planning process, read our eBook Personalizing the 7-step Financial Planning Process Real-world Tactics for Better Client Relationships.

Sources:

1. eMoney Beyond the Plan Research, July 2023, n=504 advisors, n=1,003 end-client investors

2. Archuleta, K. L., Asebedo, S. D., Durband, D. B., Fife, S., Ford, M. R., Gray, B. T., Lurtz, M. R., McCoy, M., Pickens, J. C. and Sheridan, G. (2021). Facilitating virtual client meetings for money conversations: A multidisciplinary perspective on skills and strategies for financial planners. Journal of Financial Planning, 34(4), 82­101.

DISCLAIMER: The eMoney Advisor Blog is meant as an educational and informative resource for financial professionals and individuals alike. It is not meant to be, and should not be taken as financial, legal, tax or other professional advice. Those seeking professional advice may do so by consulting with a professional advisor. eMoney Advisor will not be liable for any actions you may take based on the content of this blog.

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