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Sympathy, Empathy and Compassion: The Pillars of Better Client Relationships

Put succinctly, emotions and finances go hand in hand.

Many emotions are associated with financial decisions—so many that clients and prospects may have a hard time talking about it with anyone in their circles, and often even with an expert like a financial adviser.

So what can advisers do to enable their clients to circumvent emotional barriers and make them feel more at ease in talking about their dreams, need and fears?

There is an abundance of literature offering instructions, tips and guidelines on this topic. Frequently it is stated that exercising sympathy, empathy and compassion toward clients can help advisers attain a more in-depth understanding of their clients’ needs and emotions and develop more solid relationships. However, the often-inappropriate use of these three terms seems to lead to confusion. Below, I provide more accurate definitions of the terms and how they relate to client relationships.

Sympathy is feeling compassion, sorrow or pity for the hardships that another person encounters. We feel sympathy toward a client experiencing an unusual chain of negative family events. However, sympathy is characterized by a degree of emotional distance because we are not experiencing the pain ourselves. Ultimately, sympathy is the ability to express culturally acceptable condolences to someone else’s plight. Sympathy, however, fosters disconnection. This is because it sparks in us the desire to identify a silver lining in the situation—lamentably and in some cases a banal cliché—which does not really help relieve an individual’s suffering.

Empathy goes beyond sympathy. While the latter focuses on finding a response that does not necessarily help make things better, empathy aims at establishing an emotional connection with someone. Empathy makes us vulnerable, because to create a real emotional connection with the one who is suffering we must first connect with that part of ourselves that knows that feeling.

Subsequently, empathy forces us to experience some of the pains that the other person is experiencing. Research conducted by neuroscientist Giacomo Rizzolati, proves that about 20 percent of our neurons possess mirroring functions. Accordingly, when we witness another human being’s emotion through their body language, voice intonation or spoken word, those neurons dispatch signals that enable us to feel and know what that emotion is. For this reason, we do not have to work hard at developing empathy, as we have an inherent disposition to it. Real empathy requires being mindfully present with our clients and prospects, listening wholeheartedly to what they say, recognizing their emotions and reflecting them back.

Compassion is empathy in action. The word compassion is composed of com (together with) and passion (to suffer). Despite the word’s etymology, exercising compassion does not mean that we have to suffer to help someone. A financial adviser just like a doctor can relieve suffering without having to experience a client/patient’s exact pain.

Compassionate listening may be hard to master, particularly when it requires listening to the suffering of others. The fact that we all experience pain and grief makes it very difficult for us to listen to others. To be able to truly listen to someone’s suffering, we need to first listen and transform the suffering that dwells within ourselves. The foundation of compassionate listening is self-awareness. This may sound paradoxical, but lacking clarity in our relationship with ourselves severely impairs our ability to improve relationships with others.

Compassion is the ability to listen in a receptive, generous, supportive and non-judgmental way. Ultimately, it is the practice of abandoning our self-oriented, reactive and opinionated thinking and expanding our awareness to make room for the suffering of another human being. A client or prospect brings more than words to a meeting. There is a plethora of unexpressed feelings, anxieties, fears and thoughts that only compassion enables you to recognize, understand and speak about.

I exhort you to master the art of compassion. In addition to being pleasant and caring, compassion makes you trustworthy. Eventually, it will contribute to elevate your professional image, build enduring relationships and make a difference in your life and those of your clients.

Claudio PannunzioClaudio O. Pannunzio
President and Founder
i-Impact Group
Greenwich, Conn.

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Everybody Calm Down: 4 Tips to Navigate the Market Correction

This hasn’t been the best week for investors. Many of you probably got calls from scared or frustrated clients wanting to do irrational things—like sell stocks—to make themselves feel better.

And fielding these calls might not be easy, but we’ve got four steps for you to help you navigate the market correction and comfort your clients.

No. 1: Make Sure Clients Don’t Panic, Don’t Flee
It’s our natural instinct to want to flee a painful or uncomfortable situation and while that may work in life, it doesn’t work in the stock market.

Steve Sanduski, president of Belay Advisor in Mequon, Wisconsin, told U.S. News that the biggest mistake investors can make is fleeing the market at the wrong time.

“We know getting panicky and selling after stocks have already nosedived is a pretty lousy investment strategy, but investors do it anyway,” said David Greene, host of NPR’s Morning Edition.

And many investors did that, said Nigel Green, CEO of deVere Group. “The sell-offs were considerable on so-called ‘Black Monday,’ and the volatility continued in Tuesday’s and Wednesday’s trading,” Green said in a news release.

Boulder, Colo.-based adviser Trent Porter told NPR he’d advised this to his clients: that the stock market is like a roller coaster, “The only time you get hurt in the stock market…is when you get out,” while it’s still running and you’re still strapped in.

“Sometimes doing nothing makes more sense than throwing in the towel,” Brian Jacobsen, CFA, CFP, Ph.D., wrote in a Wells Fargo blog post.

But you, advisers, shouldn’t let your clients be those investors. In order to keep them from panicking, be empathetic, understanding, and (which leads us to our next tip), engage in active listening.

No. 2: Engage in Active Listening
Suppress the urge to launch into a monologue about the market and how it will be OK—let your client talk. Let them vent and say what they need to say. Chances are they’ll be upset and emotional, but once they have the opportunity to get it off their chest, you can swoop in and comfort them.

Psychologist Jack Singer, author of “The Financial Advisor’s Ultimate Stress Mastery Guide,” told Financial Planning that most likely clients aren’t going to be immediately reassured but active listening will help clients feel confident in the financial plan you’ve laid out for them.

“When you initiate active listening, you first just take a breath and just listen to the position of the client without judging it,” Singer told Financial Planning. Put yourselves in their position and say things like, “I understand you’re frightened that you may outlive your wealth because of the value today of your portfolio.”

When clients realize you’re on the same page and that you understand what they’re feeling, they’re open to objectively listening to you.

FPA published an article, “5 Steps to Calming Upset Clients,” that reinforced Singer’s conclusions. Author Barbara Kay noted the five steps are to listen, acknowledge, agree, add your perspective, and resolve.

“These five steps, employed with skillful diplomacy, build a foundation for resolution,” Kay wrote.

But note that if your client is still stuck in an emotionally charged state, it’s best to tell them you’re going to explore options for them while they take a little time to calm down.

No. 3: See the Opportunity
There’s always a silver lining.

With these reduced prices, there’s a buying opportunity, Scott Wren, senior equity strategist for Wells Fargo told Financial Planning.

“You should be buying the sectors that have been hit the worst,” Wren said he advised clients.

Plus, the Fed and the Bank of England are less likely to raise interest rates this year like they’d planned, Nigel Green said. When they do raise them, they’re likely to be more cautious.

“Fortunately the Fed and the Bank of England now have time to evaluate if an imminent interest rate rise is necessary,” Green said in a news release. “If the Chinese stock market had fallen after any interest rate rises, the fallout could have been much, much worse.”

No. 4: Be Comforted by History
We were overdue for a market correction, experts say.

“We have not seen a correction for a while,” Joe Davis, chief global economist at Vanguard told Financial Advisor Magazine. “If the catalyst had not been China, it would have been something else.”

Jacobsen wrote in the Wells Fargo blog post that historically for corrections since December 1949, the average gain is 47 percent (a median of 32.4 percent) and the average duration from trough to the next peak is 495 days (a median of 289 days). The first peak in this correction occurred on May 21, 2015, when the S&P 500 was at a high $2,130.82, and as of today (Aug. 27) we are 96 days into the correction zone.

Plus, Jacobsen said, advances are longer and more powerful than corrections.

“The current correction, I think, will rebound more quickly than 2011’s or 1953’s [corrections],” Jacobsen reassured readers. “Growth is more robust than market prices are suggesting.”

So just like you tell your clients not to panic, we tell you not to panic. As FPA members, you have many resources at your disposal to help you through this correction. Check out our Knowledge Circles, discuss the current market and how you’re handing it with clients on FPA Connect, and stay connected with your local chapter.

HeadshotAna Trujillo
Associate Editor
Journal of Financial Planning
Denver, Colo.

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5 Key Elements to Deliver Empathetic Service and Gain Client Loyalty

Customer ServiceHow important is quality service? Vanguard and Spectrem determined in a 2014 study that the top four causes for adviser terminations were communication or service related; other studies put service failures second behind investment performance as leading dissatisfaction sources. Given the importance of client retention in building a vibrant practice, losing a client due to poor service must be prevented.

In a professional services business like that of financial and investment advice, service is not a thing to do, but rather the foundation of the business. Vertically and horizontally in the organization, every person in an advisory firm is on call to serve directly or serve the server.

The Veneer of Service
Service is focused on doing something—action—for another person by lifting a burden.

Recently, I had a service experience with my wireless carrier in which a problem was 100 percent a result of their process failure. A surface analysis of my service experience would check many boxes: letting me know when an attendant would be available; confirming who I was; ready access to correct account information; a pleasant person taking the call.

The crux of my dissatisfaction was the veneer of service. For example, the attendant would say reflexively, “I apologize for the inconvenience you have experienced,” but it was clear this was no real apology rather an apology to check a box off a to-do list.. What was missing was the idea of service being a helping function, but I kept getting that I had to do the work to resolve the problem.

Empathy is a Core Service Attitude
Empathy begins with consoling words that make a personal statement instead of a script:

“I see why you’re frustrated with [the specific issue], and I would be too. I want to help you.”

Just saying a canned expression like, “I apologize for the inconvenience,” completely misses that a call for service is for something specific. Repeating the specific issue—the burden—demonstrates an engaged conversation, but stating a desire to help cuts to what service truly is.

Actual empathy shows with an action that supports the words. Since service seeks to alleviate a burden, empathetic words come alive when associated with action.

“I see why you are frustrated with [the specific issue], and I would be too. I want to help you. Let me take charge from here and get this resolved.

In this regard, the server’s action becomes an investment of him or herself in the client’s burden.

A Service Infrastructure
There are five key elements required to deliver empathetic service that, in turn, grows the business by engendering client loyalty.

  1. Putting Honor in Service. If a firm’s business is delivering services, then it must be that those in service roles have a place of honor at the firm. Giving recognition (e.g. performance bonuses, awards, website visibility) reinforces that top service wins in every regard.
  1. Authority to Act. “Let me get this resolved for you,” defines action that releases a burden. Giving a service person the authority to make this statement brings the resources of the firm at hand, even escalating to the firm’s leadership.
  1. CRM for Workflows and Tracking. A workflow (a facility common to CRM systems) defines tasks for continued process replication that standardizes “best ideas”; workflows similarly eliminate mistakes that devalue clients (e.g. missing deadlines, forgetting tasks).
  1. Client Feedback. Many companies follow up a service instance with a client survey. This is useful and encouraged, but it’s best done with a phone call. Valuable ideas resulting from the feedback are inserted into the associated service workflow for continuous improvement; this ensures delivery of the firm’s “best.”
  1. Service Reporting. A burden that is lifted is certainly appreciated, but it can also be forgotten or diluted as time passes. Each service instance, when completed, should have an outbound client email summary of the issue and outcome. Then, on a periodic basis, the firm can summarize to each client all these service instances provided in a single document. Doing so gives tangible evidence of the services provided for the fees paid.


Action-Based Service a Precursor to Client Loyalty
A client changes from a revenue source to an asset when loyalty sets in. The experiences a client has in being released from big and small burdens become stories that are retold. When this happens, each story told by a loyal client becomes a market force many times greater than the initial cost undertaken to install an empathetic service system.


Kirk LouryKirk Loury
Wealth Planning Consulting Inc.
Princeton Junction, NJ