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Pete Matthew: Empathy is a superpower

Matthew-Pete-2012-700.jpgI wish it was possible to bottle up empathy. If it could be administered by injection to anyone aspiring to be a financial adviser, many of the industry’s biggest issues would be solved at a stroke. Anyone who thinks financial advice is primarily about money is an idiot. We are paid handsomely to help people articulate their goals and dreams, then work with them to organise their finances to achieve those in a time-efficient, tax-efficient and cost-efficient manner.

Unless we can first truly understand the client, we cannot hope to do our job effectively. Yes, we are in a people business.

Last July, I released an episode of the Meaningful Money podcast entitled A Rant About Financial Advice, triggered by the terrible stories coming from the Port Talbot steelworkers being robbed of their defined benefit pensions.

I am amazed that, even now, unscrupulous advisers can find a way through the regulatory net and make a fortune by screwing over unsuspecting clients. If those so-called advisers had just a scrap of empathy, they couldn’t have done what they did.

And don’t get me started on the people behind the London Capital & Finance scandal. Unscrupulous individuals prey on unsuspecting folk because they do not give a damn about them; the antithesis of empathy. We all get tarred with the same brush in the eyes of the public.

We can stand indignantly on our qualifications and our regulatory burden, and claim we’re different, but the only way to prove it is to demonstrate beyond doubt that we are interested in their financial wellbeing, not their money.

How many reading this are prepared to advise a client quite happy managing their own money on a direct-to-consumer platform? How many would recommend the money be moved to an adviser-led platform for shaky reasons like “flexibility” or “professional investment management” when the true reason is we want the trail commission – sorry, ongoing adviser charge?

When will we realise that advising on products is dead? With so much great information available for free online, easy fees from investment “management” will disappear. What then? Only high levels of competence imbued with deep levels of empathy will stand up to scrutiny.

I had a conversation with a client the other day about the fee disclosure in their latest investment statement.

As a firm, we earn about £9,000 per year from this couple. I was expecting a challenging conversation but they confirmed I was worth every penny.

Recently, through deeply understanding their motivations, I had prevented them from making a costly seven-figure mistake.

Their dream house had come on to the market and, while they could technically afford to buy it now, it would have pretty much cleaned them out, leaving them likely to have had to sell the place in less than 10 years’ time to release capital to live.

At the recent funeral of a deceased client, his son thanked me for looking after the widow, his mother, so well and for removing all financial worries at an otherwise challenging time. There is not a chance in hell that family will question my fees.

In a Mifid II world, empathy will keep our clients close. We wield incredible power over our clients’ financial destiny and with that comes great responsibility.

Most of us feel this responsibility deeply and understand that only where we feel what our clients feel and act accordingly – true empathy – will we demonstrate it to an increasingly cynical public.

Pete Matthew is managing director at Jacksons Wealth Management

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Duncan Gafney 7th May 2019 at 11:30 am

    I would also observe that i’m not sure it’s empathy, but a large part of the value comes from telling people things that they need, rather than want to hear.

    An advisers job, is to recommend that which is in their clients best interests and explain why.

    As I’ve said to many an adviser over the years when they say “but the client wants to do it”. They are paying you to advice them, not agree with them.

    What value does a “yes man” add?

    • Peter Matthew 7th May 2019 at 12:29 pm

      I’d agree with that, Duncan. Empathy does not equal being a ‘yes-man’ – but I don’t think you’re saying it is. Empathy means doing the right thing for the client even if it sucks for the adviser.

      • Philip Castle 7th May 2019 at 3:10 pm

        Agreed 100%.
        One of the reasons why I think I can only deal with so many clients is empathy and taking some of their burden as it can become too much.

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