How emotional intelligence may help you be a better financial professional
There’s a common perception that the best financial professionals are concerned only with numbers - after all, delivering for clients ultimately comes down to dollars and cents. And while it’s undeniable that financial professionals are adept at understanding the markets and making smart monetary decisions, the best ones may offer something more. They develop strong personal relationships with their clients, and can adjust their approach based on each one’s personality. They deploy their strengths the right way depending on the traits of the client with whom they are speaking.
There’s a name for the ability to identify the emotions of others and adjust your behavior accordingly: emotional intelligence. A high emotional quotient, also known as an EQ, can be a gamechanger for financial professionals. It can help you have better conversations with your clients and generate stronger connections with each other. But are there ways to improve your EQ? Let’s take a closer look.
What is emotional intelligence?
The concept of emotional intelligence and EQ is relatively new. According to Psychology Today, its roots only date back to the 1990s when a trio of psychologists brought it to the fore.[i] Emotional intelligence and EQ are difficult to quantify (they don’t have a test the way IQ does), but there are a few common characteristics that people with a high EQ share. According to the nonprofit Mental Health America (MHA), there are five components of emotional intelligence.[ii] They are:
- Social skills
“Emotionally intelligent individuals are able to effectively manage their own emotions and understand the emotions of others,” says Andrew Lokenauth, founder of Fluent in Finance and professor at USF’s School of Management. “This means that they're able to handle difficult situations and clients with grace and empathy, and can create a positive and productive work environment.”
A high EQ can seem like an innate, unchangeable skill, but that’s not the case. You can take steps to cultivate a stronger EQ and learn to recognize and effectively engage with different personality types.
Increasing your EQ
There are a variety of ways to fine-tune your emotional intelligence, but one of the most important aspects to consider is being able to recognize your own emotions. This is part of improving your self-awareness, and experts from Harvard’s Professional Development Program say it’s the first step toward building a strong EQ.[iii]
“It all starts with self-awareness, which is the foundation of EI, and it builds from there,” Margaret Andrews, an instructor of Emotional Intelligence in Leadership at Harvard, said in an interview. “If you’re aware of your own emotions and the behaviors they trigger, you can begin to manage these emotions and behaviors,” says Andrews.
Additionally, they point out that you should ask for feedback — from your manager, friends, colleagues, and peers —who may be able to offer constructive criticism. Finally, they recommend reading literature to strengthen empathy.
This sentiment is echoed by Lokenauth, who adds that carving out time for self-reflection and self-awareness can have a significant impact on your EQ.
“This means taking the time to reflect on your own emotional reactions and how they may have affected your interactions with others,” he says. “It also means being aware of your own biases and how they may have affected your decisions.”
There is also a wealth of information available to build your EQ, Lokenauth says, whether it’s through books, classes, training, and other learning opportunities.
The CORE Four workshop, for instance, teaches you to recognize the four dominant personality types you’re likely to encounter and adjust your behavior accordingly. After all, a communication style that works with one personality type may backfire when used with someone else.
“It’s about adjusting who you are to the level of the person you’re meeting with for more business,” said Global Atlantic Practice Management Program Director Bill Sweeney.
Emotional intelligence and financial professionals
A higher EQ may lead to better one-on-one interactions in both your professional and personal life, but the question remains: does this have a tangible impact on the success of your business? It’s a fair question, and it’s one that researchers from Stanford and the University of Minnesota tried to answer. They did so by having volunteers from American Express Financial Services undergo a year-long training exercise designed to improve their emotional intelligence and seeing the impact it had on their work. The researchers found the participants saw an average of a 25% increase in sales.[iv]
This shouldn’t come as a surprise, says Lokenauth. Better business outcomes as the result of a high EQ boils down to one thing: the ability to forge a bond between you and those with whom you work.
“Emotionally intelligent individuals are able to communicate effectively and build strong relationships with clients, which can lead to increased trust and loyalty,” he says.
Emotional intelligence proves itself useful in having discussions when there is “money in motion,” which is when financial professionals often play the biggest role with their clients. Money in motion can refer to big life events such as getting married, having a child, retiring, or even changing jobs. It also typically requires decisions with heighted emotions — and a high EQ can make or break your relationship with your client.
“As a financial professional, it is important for us to be able to empathize and relate,” says Hunter Baldwin, Chairman & Senior Advisor at Bolt Investment Group. “Having that emotional intelligence and ability to communicate or empathize with the customer will mean the difference between a customer for life, and a customer that stays till they find someone they like more.”