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The Importance of Empathy in Financial Planning

Being able to empathize with clients is paramount in the wealth management business. Knowing the depth of a client’s concern helps an advisor internalize the importance of a particular financial goal. Financial security to someone with a $1 million net worth is far different than financial security for someone with a $15 million net worth.

This fact hit home with me several years ago with one of my colleagues at a previous firm, who I’ll call Will. Will’s multi-generational family business had been very successful. They’d long ago sold the family business (long before Will graduated from college) and Will’s inherited net worth was in the tens of millions of dollars. Will wasn’t dependent on his advisory position to make ends meet.

One day during the course of a routine conversation the discussion turned randomly to the price of a gallon of milk. Will sheepishly admitted he had no idea of much milk cost. Curious, I asked “Do you think milk is more or less than a gallon of gas?” Less, he replied. At the time gas was about $2.50 / gallon while milk was over a dollar more. I told him the prices and our conversation continued along other paths. But Will’s detachment from real life financial concerns as evidence by our milk conversation stayed with me.

How can someone advise others without some understanding of their concerns?