Webinar Build better advice: how to boost your emotional intelligence

(00:00) Hello. Good morning. Welcome to this session within Money Mindshift Week. It's great to have you. This is the third session that we're running this week, adviser facing within Money Mindshift Week. We had an initial session just by me, by myself on the Psychology of Financial Advice. Yesterday we had a session with Dan Haylett on Retirement Planning Beyond the Maths. And today we look at emotional intelligence and why emotional intelligence skills are so important for modern financial advisers. Just to set the scene very quick, Money Mindshift is, of course a campaign that we run at Aegon that I head up and what the purpose of Money Mindshift is. I mean, you perhaps know the term money mindset and money mindset that always suggests that the way we think, feel, behave around money is set, but we call it Money Mindshift to suggest that the way we think, feel, behave around money can be shifted.

(01:00) How should it be shifted? Well, in a way that suggests that money is a tool to live and fund the life that you want to live, right? It's never about earning money for the sake of money, saving, investing, spending, protecting, borrowing, et cetera, money for the sake of spending, earning, investing, et cetera, the money. But to use it as a tool to, to fund the life that you want to live, or in your case that the clients want to live. And this is why we believe financial advisers are so important. So to help their clients do this. That's the vision that we're wanting to bring to life. I will say that much of the stuff that I am learning as part of this campaign is stemming from guests that I welcome on the Money Mindshift podcast. Many of those that are on that show, they are doing financial adviser training themselves.

(01:55) I'm thinking of Brian Portnoy. I'm thinking of John Dunkley and so on. So if you find this material here, interesting, go check out the Money Mindshift podcast. Go check out other educational material that you find on Aegon's pages, the financial adviser facing pages. But that being said, let's go into this particular session here today on emotional intelligence training. And I'm so glad to be joined here by a true expert on this subject, which is James Woodfall. James was a financial planner himself, but he re-educated and now is the director and founder of a training and educational platform called Raise Your EI, where he offers emotional intelligence training for financial advisers. James, thank you so much for joining. I hope you're well today. Yeah, good. Yeah. amazing. I want to give you the opportunity to flesh this out a little bit. This, this story of yours. You were a financial planner, now you train financial professionals in emotional intelligence. Walk us through that journey. What shifted for you and what are you offering to advisers today?

(03:15) Yeah, thanks. I ran a financial bank business, which I sold probably about three and a half years ago. I don’t know where that’s gone – that’s blown by. And I wasn’t planning on exiting it, interestingly. So I was in a situation where I had quite a serious health issue I had to deal with, and that meant the business had to go. Then it was a case of sorting that out and seeing what happens when the dust settles. But when I had the business, it went through a phase – I think like a lot of advisers have gone through – of moving from a transactional service to a financial planning-led service.

(04:03) So as part of that journey, when you start utilising cashflow modelling tools, was that a phase where I started thinking, well, look, the outputs from that planning exercise with clients are only ever going to be as good as the inputs. And quite often you find that you’re asking clients in some of those planning meetings questions which no one has ever asked them. So I found it quite interesting initially, actually – I thought it was going to be a lot easier to get information out of clients about their future plans than it was in reality. So I did a couple of things. I thought, well, maybe I need to invest in myself and get some additional skills. So I did a diploma in executive coaching, which actually one of my clients recommended that I do.

(04:52) Funny enough, I was having a chat with one of my clients about this exact problem and said, look, how could I serve you better throughout this exercise? And the conversation just drifted into coaching. So I ended up doing a level four diploma. When I was doing that, there was an exercise around a particular coaching model – I think proactive coaching, if I remember. They were talking to the group about different levels of listening. So this idea that you’ve got level one listening, which is where we’re not really listening to understand – we are listening, but internally we’re thinking about what we’re going to say next. So part of our mind is preoccupied by our own thoughts. They then said, well, level two is where you quiet that voice down and really give your full focus and attention to the person you’re communicating with.

(05:42) And I thought, well, that’s useful, actually – that’s quite a useful habit and practice to do. It’s quite tiring when you – it’s exhausting as well. Yeah, it’s exhausting. And then level three – they said, read the room and pick up on the energy and what the client’s not saying. And I thought, okay, that’s interesting, but how do you do that? And then I remember I saw, at a conference, a speaker talking about behaviour analysis and actually understanding behaviour through things like facial expressions, gestures, and linguistic analysis. And I thought, well, that’s fascinating – maybe that’s how you read a room and understand what people aren’t putting into words when you communicate with them.

(06:29) So I went off and did a masters in behaviour analysis just before I sold the financial planning business. The dissertation I did as part of that project was a research study looking at the relationship between emotional intelligence and job performance within financial planners. Because it turns out, effectively, emotional intelligence is this ability to read and understand behaviour in ourselves and others. The project I did with <inaudible> was taking a group of financial planners and looking at things like their performance metrics – so in terms of sales performance, client retention, referrals, things like this – but also looking at emotional intelligence scores. So I put them through an emotional intelligence assessment and did a correlation. It was a correlational study, so it looked at how the scores matched up to performance.

(07:22) And it was interesting, because there was a link – not just in the literature review, but in the data as well – which I found. There’s a link between job performance and emotional intelligence scores on a self-report assessment. So it got me thinking that the literature review I did in the research says that emotional intelligence is a trainable skill and is predictive of job performance. So when I was post-exit, twiddling my thumbs about what to do, I said, well, actually, I think there’s potentially a gap to provide training in non-technical skills – bringing some of the science about how people communicate and how emotions are involved into professional services to effectively help people improve their performance at work. So I know that’s the longer version, but there you go. <laugh>.

(08:17) So then you set up that business to do exactly that for finance. Yeah, that’s it. Yeah, fantastic. Can we just zoom in a little bit and define emotional intelligence? I mean, there are different types of intelligence, aren’t there? There’s cognitive – like when you take an IQ test, that’s typically cognitive intelligence – and then social and emotional intelligence, different types of intelligence. Can you just contrast and define these, with a specific interest, of course, in emotional intelligence – what exactly that is?

(08:50) Yeah, absolutely. So you’re right – IQ is cognitive ability. One of the things with IQ is that it’s been around for quite a long time as a concept. The measurement of IQ became quite accurate around the 1940s and 1950s, I think. So cognitive ability has been measured for a long time, and it’s actually one of the biggest predictors of performance at work across a range of jobs. And it’s quite obvious why that is – not everyone is smart enough to be a doctor, for example, and the level of salary a doctor gets is different to other jobs where you can’t meet the required standard of work.

(09:40) But I think it was in about the 1970s or 1980s if you've ever read the book by Howard Gardner Frames Of Mind, but he introduced this idea of multiple intelligences, right? And I think Howard Gardner wasn't really an empiricist, so he didn't say, I'm gonna go out and conduct research, and I've found these intelligences. He sort of said, theoretically, here's a range of different intelligences. So he was theorizing. So it was things like, social intelligence you know, physical intelligence, sports you know, if people don't necessarily have cognitive ability, but they have physical ability, like they can be a good dancer or a good football player or something like that. Musical intelligence, spiritual intelligence but actually social intelligence is one of these and effectively that kind of evolved into, kind of evolved into the first kind of research into actually is there such a thing as social intelligence?

(10:38) And now we have emotional intelligence, with about 30 to 40 years of research behind it. Effectively, the definition – and there are various definitions – but one that was more recent comes from Dr Lansley, who I co-authored a book with. In his PhD, he interviewed around 120 different researchers who study emotions and emotional intelligence, and found about 75 to 80 percent agreement on a definition. That it’s an ability – the ability to perceive emotions in ourselves and others, and to utilise that information to help communication and influence across a range of different contexts – at work, at home, with family. So that’s effectively what it is – an ability. And unlike IQ, which is relatively fixed and there’s not a lot we can do about it, emotional intelligence is different.

(11:42) You know, IQ is what it is. There's a really, I can't remember the name of the author of the book, but there was a good meta-analysis around about 2016, I think was looking at the impact of brain training apps on cognitive ability, right. That you said they're worthless <laugh>. So if you sit there and do Sudoku for example you get good at Sudoku, but what it doesn't do is translate into performance in another task. So effectively, yeah, brain training actually just do that. You just get good at brain training. You know, little puzzles they give you, it doesn't translate. But EQ has shown to be different to IQ and is that every, regardless of what your baseline is now, training has a meaningful impact on scores. So it separates it slightly in terms of in terms of how it's how it's measured and how it plays out.

(12:41) By the way, before I ask the next question, I wanted to invite all the viewers to ask questions along the way. There's a q and a feature above the two of us. So feel free to post your questions for the time being, I will ask the questions, until there are questions from the audience. I mean, the way you say this, the way you speak about this really highlights that this distinction that we oftentimes make between rational and irrational or rational and emotional or whatever is perhaps not that useful. Because essentially what it, what it suggests is that there are different types of rationality. Is that right? And then and I wonder is that how neuroscience would put it there? There's different types of rationalities and we've kind of gotta work with all these types of rationality.

(13:39) Yeah, well, I think emotions – it’s interesting, isn’t it, that we tend to think logical arguments are rational, and emotional reasoning is irrational. I think one of the journeys you go through when learning about emotions, or through any emotional intelligence training programme, is building a common understanding of what emotions actually are and how they work. So neuroscience – just to explain what that is and separate it from psychology – psychology has been around since the late 1800s and early 1900s, with William James as one of the first true psychologists.

(14:27) But before that, it was the philosophy of mind, which goes back thousands of years. Neuroscience is a relatively new field, but it’s the study of looking at the brain – scanning it and understanding which brain regions are involved in different tasks and processes, all the way down to the level of individual neurons and what they’re connected to. So looking at circuitry, for example. For instance, understanding that there is thirst circuitry in the brain – neurons that take information from the blood vessels about concentrations of different particles within the blood, relay that to the hypothalamus, which acts as a control centre, and then feeds through to the cognitive part, which produces the experience of “I’m thirsty.”

(15:21) What would I like to drink? So actually, there is a thirst circuit – that would be a neuroscience finding. And I suppose understanding that neuroscience isn’t entirely precise, because we don’t yet have the scanning technology to see exactly what happens at the level of individual neurons. Often, what happens is you study someone who has brain damage in a particular region and look at what they can’t do – that’s where some of the strongest findings in neuroscience have come from. But emotions are tricky, because what hasn’t necessarily been agreed upon is where emotions are located in the brain. If you look at brain scans of people experiencing emotions, the activity is distributed – lots of different areas of the brain are involved.

(16:12) So I think neuroscience still has a lot to teach us about how emotions work in the brain. But this idea that they’re irrational is, I think, just lazy language. Because we all have emotions, and they’re hardwired – our neurology has evolved for us to have emotions, and they’re triggered in specific contexts and scenarios. So we have universal triggers for emotions. For example, fear – we all feel fear in the same way, and it has the same reaction on our nervous system. The universal trigger for fear is the threat of harm. Now that could be a direct threat of harm, or it could be imagined – you might be thinking about your future and the impact that an event might have.

(17:12) And even memory or thought can trigger that response. But what emotions do is change your thinking. Once that pattern is triggered, it responds by affecting the nervous system, and it also affects our ability to think and process information. One of the things that happens with emotion and cognition is that we have the experience of emotion, which is usually quite brief – seconds to minutes, with a quick onset and then it subsides. But after we experience an emotion, we enter a period called a refractory period, where our thinking becomes biased towards helping us understand and explain the emotional experience.

(18:03) So if you’re dealing with fear, for example – perceiving a threat of harm in something – after the peak of that emotion has passed, you’ll still be filtering information from around you to justify the threat of harm, if that makes sense. And that’s where this thinking is often described as not logical, because we don’t necessarily process information in an unemotional way where we can think things through objectively – our thinking is biased for a period of time based on that emotional experience. It’s why, for example – and I know you read the book I put out about 18 months ago – one of the things we talked about was why emotions are linked to vulnerability. That experience of intense emotion changes the way we think and impacts how we process information, even after the peak of the emotion has passed. So it speaks to understanding when clients might be in a vulnerable situation, or unable to process information in what we would call a logical, rational way.

(19:16) Yeah. That's great. That's why I wanted to go actually, because to those perhaps more hard-nosed advisers who are sitting here and perhaps find this interesting, but they're perhaps going like, well, you know, why should I be interested? I'm after all not a neuroscientist. This, you know, I'm not a therapist either. Perhaps they go further and say, this is just psychobabble <laugh>, which I think is a term you've heard. Like, why is this important? Help, help translate this to advisers? Why is this important to their practice?

(19:49) Yeah. It's, it is interesting. I think having run a kind of a financial planning business and having done the job for well over 15 years, but what was interesting is learning, I suppose, a totally different discipline, and then seeing the connections for how that information, how that knowledge can be applied within another domain which I've got experience in. And I think the, the idea, I suppose, or goal of learning about how our brains work isn't to become therapists. It's not to become neuroscientists it's to increase our understanding of how people think. You know not understand what they're thinking, but understand how they think. Because what that means is that if we understand a little bit about how the brain works, especially when it comes to dealing with people, dealing with life events and money because of course the role of the financial planning, you can't separate emotion from the job role.

(20:59) You know, there was a research study done – I can’t remember when – that surveyed about 2,000 advisers, and over 75%, maybe higher, said they’d experienced clients becoming overwhelmed with emotion – crying, for example, or trembling in meetings. So we know, and many people listening will have had experiences where clients get irritated, get angry, or cry, just through what’s happened. Because actually, life’s most important events tend to have a financial implication. In which case, advisers are involved, so you can’t separate emotion from the role. Understanding a bit about how the brain works increases our capacity to empathise with what clients are going through, but it also allows us to think about how we design our advice process – how we present information to people and the types of steps we go through.

(21:58) How do we look at our business processes – are we set up to support clients through those different life events? But also, do we set our business up to deliver great service? Because of course, what are the emotions around great service? It’s happiness or joy. So can we create moments through the service we provide which are good for business practices and support things like referrals, recommendations, and clients doing more business with us? So it gives us a framework for increasing our understanding – not to be therapists and not to solve clients experiencing trauma or grief, for example.

(22:45) Because of course that oversteps the line professionally. But it’s about moving away from this idea of the brain being a black box, where we don’t know how it works, and instead spending a bit of time understanding some of what psychologists have uncovered over the last 30 to 40 years with emotions, and using that to inform how we do our work. Because of course, underpinning this, as I mentioned at the beginning, is that people who can do this effectively tend to perform better in the job role.

(23:18) Great, no, that’s really strong. I totally see the argument. Let’s look into how this could show up at different points in the client–adviser journey – I’m thinking the initial meeting, the fact-find, client review meetings, et cetera – and how emotional intelligence shows up. Before we do this, though, there’s one quick clarification question that’s been asked: which body did you take your level four coaching diploma with? Oh it was the Academy of Executive Coaching.

(23:52) Okay. Great. Super. Thank you. Yeah. Now back to unpacking emotional intelligence and how that shows in and practice. What would you say? How do you show you are an emotionally intelligent adviser at different points in the client adviser journey?

(24:15) Yeah, well, just to take a step back – emotionally intelligent behaviour, I suppose, is what’s sitting behind the question, or what that looks like. If you break down emotional intelligence in terms of what it is, the most common model suggests there are four quadrants, or four components, that make it up. As I mentioned before, it’s an ability – the ability to understand emotions in ourselves and others, and to influence and manage those across a range of contexts. So you can break it down into four quadrants. One is self-awareness – the ability to perceive and understand our own emotions. Self-management is another quadrant. Once we can perceive and label our own emotions, can we implement strategies and tools to regulate them if the context requires it, or initiate them if the context requires it?

(25:14) And then the other two quadrants are about doing that with other people when we’re communicating with them. So can we read and understand emotions in people? Not just through their verbal behaviour, but through their non-verbal behaviour as well. So can we pick up on things like changes in muscle tone, facial expression, gestures, and body language? Can we utilise that information to understand emotions? And then what do we do with that information? If we’re reading and understanding people, how can we use that to influence, manage, and regulate emotions in others as well? So across all four quadrants, we’re utilising these all the time across different areas of the client journey. One of the things that reflects emotionally intelligent behaviour is the empathic response.

(26:08) So I’ll talk about that in a second. I think one aspect is an approach to understanding through questioning. It’s a questioning strategy that reflects what emotionally intelligent behaviour looks like in an initial meeting or client meeting. A lot of time is often invested in rapport building – small talk, or whatever you call it – but actually being curious and trying to understand the person you’re meeting for the first time is key. Because it turns out there’s a strong link between rapport, time spent on rapport building, and trust formation, which is quite interesting. There’s even some research – some of the work we’ve done on this draws on findings from security services.

(27:01) And I think police officers have studied this – if you engage in small talk while taking someone down to the interview room, you actually get more information out of them when they’re in the interview room. Because you’ve built a relationship, their guard is lowered, and they’re more open and receptive. So of course, we’re not there to interrogate clients, but it’s clear that if you invest a little in small talk, especially if you can find common ground quite early, that’s really important for trust building. I often use the analogy with advisers – if you’ve ever been on holiday and met someone, and you find out you’re from the same country, then the same county, and maybe support the same football team, and have two kids of a similar age, all of a sudden you realise you have so much in common that you feel a real connection and relationship.

(28:01) There are a few other theories that support why, but finding common ground is important. Because what that allows people to do, once they’ve relaxed, is freely express their emotions. Once their guard is down, they open up, and they stop suppressing or holding back and regulating their emotions – they’re more comfortable sharing what’s on their mind. And that leads to another behaviour, which Joe talks about, which is the empathic response. This is when someone starts talking about something and we think it might sit on an emotional topic. The empathic response is about demonstrating understanding. So it’s not giving advice, it’s not criticising, and it’s not asking additional questions to unpack it. It’s simply, if someone says, “I’ve had a really tough time recently because it looks like my company might be going through a restructure…”

(28:54) “I don’t know how that’s going to impact me, or whether I need to go and get another job.” An advising response would be, “Well, why don’t you start looking for another job now, just in case?” – you’re giving people a solution. A seeking response would be, “What’s been said at the company so far? Have you gone through a consultation?” – you’re obtaining more information, not to help, but to increase your understanding. A critical response would be, “I wouldn’t worry about it. Lots of companies are probably going through it, but you’ll be fine.” But the empathic response – this is the one that works every time – is to say, “It sounds like that must be really difficult.”

(29:42) Yeah. You can, you can see what difference that makes. You show that your understanding, you show your motive of wanting to help you show your character. Yeah, you do those things. I can see how this is trust building.

(30:04) Yeah, so that’s what I would say – if you just did those two things, that’s a big increase in emotionally intelligent behaviour. One is to try to put aside assumptions and get curious, build a relationship, and ask open questions. And then if you notice it strays into a topic where it’s either difficult, or you think there might be emotion behind this, lead with an empathic response and then pause. Because people might share a bit more information. The reason the empathic response works so well is because it demonstrates a couple of things.

(30:47) One, it shows that I’m listening, but it also gives the other person space to think things through – cognitively processing the emotion. And that’s very useful. We do that naturally with our friends, and we do that at home with our partners. One of the things I talk to advisers about is that half of emotional intelligence is about perceiving and understanding our own emotions, and managing them. And of course, if you’re a business owner in financial services, you’re dealing with clients’ emotions, running a business, and potentially managing staff – you’re carrying a lot. And actually, you do need an outlet for that.

(31:32) Where you come home in the evening, usually you’ve got an understanding partner, and you can just say, “I’ve had a really tough day.” And they don’t go, “Right, well, you know what you need to do.” They sit there and they listen and say, “Right, yeah, tell me about it.” And you get it out – you don’t want someone to give you the answers, you just want to get it off your chest and you feel better. So actually allowing people the space to talk about what’s on their mind is very, very helpful.

(32:07) Yeah, yesterday in the session with Dan, we spoke a little bit about giving people permission. This was in the context of giving people permission to spend the money, but more generally Dan was speaking about permission and how powerful it is sometimes just to provide space and permission for people to do something. The other thing that I see come up on the podcast a lot, in conversations I’m having with guests, is that keyword you just used – curiosity. And I find that really interesting. So it’s not so much about using specific questions – good open questions are important – but I guess being curious as a mindset is probably the more tangible piece of advice.

(33:00) Just be curious. Try to explore, try to get under the skin of what it is they’re saying, what they’re feeling – what is behind a certain behaviour or a certain expression, and so on. So that’s really good. James, I want to take a bit of a sharp turn here. When we had our pre-meeting prior to this chat, you told us that you’ve recently been thinking about the psychology of selling a business, which I thought was really interesting. What you found was that when advisers work with clients through an M&A process, there’s something that tends to get missed. I’m wondering, what is it that tends to get missed here, and what does an emotional intelligence lens add that a purely financial one misses?

(34:06) Yeah, I think it’s quite a scenario that comes along in advice – the business owner who’s exiting, selling the business, or thinking about it. And this was one thing that was on my mind because I did another masters, which I finished last year in psychology. The study, or dissertation, I did with that was looking at retirement planning. But a lot of the theories around retirement and how people adjust to it turned out to be very true for people exiting or selling businesses. So I was reading and understanding some of the theories around why people have a hard time stepping back from work.

(34:59) Well, one, actually, I recognised a few things from my own experience, but two, it started to make sense with clients that I’d dealt with in the past who had a hard time stepping away from their business. So one of the theories that was particularly relevant was something called social identity theory, which looks at this concept of how we create our own identities. We have a sense of who we are, and some of that is internalised – things like our values, our beliefs, autobiographical memory. Externalised is things like the habits and routines that make up who we are.

(35:51) So of course, if you think about running a business, one of the things you might believe is “I’m an entrepreneur, I’m a business owner. I believe in building, I believe in setting goals for the future and building wealth,” whatever it is. Externalised is the fact that you actually have a business – it might be your physical premises that you go to, you have staff and clients, and all the routines around it. You wake up at a certain time in the morning, you drive there, you spend the day there, and so on. And actually, it’s the same thing that happens in retirement. But when you look at exiting or stepping back, I think the reason people find it quite hard – putting money aside for a moment – is that it unsettles their sense of identity, and it takes time to restructure that.

(36:51) So I think what tends to happen is that if you give people a good run-up to it – three to five years – it might take them that long just to get to the decision point that they’re happy to step away, because they’ve had enough time to think and process what might be on the other side of that. So again, put aside the fact that you might need three to five years to set the business up in the right way so that it’s attractive to a buyer. But also, you need to go through that exercise of preparing the client, like you would do with a retiree, to say, well, what’s on the other side of it? Is it another business?

(37:30) You know, is it retirement? Start thinking through what that might look like, because by having a discussion along those lines and getting them to think about what’s on the other side of it, that helps them start restructuring their identity before the event. Because from my own experience, if you happen to be running a business and all of a sudden you’re hit with an event which means you’re not, it can be quite challenging. It’s really challenging to jump from one situation to the other without any preparation – it’s quite difficult.

(38:15) And you had quite a tangible example of how this shows up. Again, when we chatted before this, you had an example – was it your own – where you prepared someone financially, objectively correctly in terms of the sale, but then there was something in the social identity of the client that sort of clashed with that objectively financially correct plan?

(38:44) Well, I think there are a couple of examples. One I remember was dealing with a client who was past retirement age, had run a very successful business, but it had been on the market through different brokers for probably about five years and hadn’t sold. And that was because he was anchored to this idea that you sell a business for cash. I think a lot of business owners are anchored to that as a way of selling the business. But of course that’s not always how it works – that’s not always how the market operates. So introducing the concept of anchoring can be quite powerful, can’t it? And I mean, the property market is a good example of this – you have an idea in your head of what your house is worth, and the agent comes around and gives you a figure, and if it’s higher than what you thought, then you’re happy.

(39:46) And if it’s lower, you think, well, maybe I’ll get another agent. But of course then you put it on the market and people start making offers below what you think it’s worth, and you think, well, we can’t accept that because we’re losing money. So actually anchoring is a really interesting psychological effect. And of course the same thing happens with business owners internally – “I’ve got an idea of what I think my business is worth.” You go and see an accountant, they calculate it and say, “Well, this is what your business is actually worth,” and you disagree. You say, “Well, you don’t really understand our IP and plans for the future – that needs to be factored into the price.” But then you go out to the market and people say, “Well, I’m not going to pay you…”

(40:26) “I’m not going to pay you 100 percent of that in cash upfront. I’ll want you in the business for the next five years, and you’ll get staged payments,” or you might need to structure it in a way that the staff buy it, for example. So anchoring is actually quite interesting psychologically when you look at clients stepping away. And as I mentioned, that three-to-five-year window beforehand is an opportunity to start preparing and educating clients to make sure they’re not anchored to the idea that someone is going to write them a big cheque and it will all happen overnight and be straightforward.

(41:10) Yeah, okay, great. I invite the group again – the viewers – to come forward with questions. We have a bit of time towards the end to ask questions, but as I said before, I’m happy to take questions along the way as well. James, we spoke about different types of intelligence – cognitive intelligence, social intelligence, emotional intelligence, musical intelligence. Of course, the new buzzword is artificial intelligence. I want to go into this a little bit. What’s your best guess about how AI may change financial advice, and do you think that emotional intelligence becomes a more valuable skill or component of financial advice as a result of the rise of AI?

(42:09) I mean, I’ve got a few different viewpoints on this. I think at the moment, the landscape has massively shifted in the last two to three months with the introduction of agentic AI solutions. What I mean by that is that most of us, for the last couple of years, have been used to dealing with something like ChatGPT and speaking to a chatbot, asking it queries. That changed quite dramatically when Claude launched its co-worker capability and Perplexity introduced a version called Computer, where it will not just chat with you – it will actually go and execute tasks. So you can now delegate work to it to do on a repeatable basis, or utilise those capabilities.

(43:05) But if you look at it, Perplexity Computer is a good example. If you look at where these companies are focusing, it’s quite interesting. If you go onto Perplexity Computer now and look at the kinds of skills they’ve already built, they’ve pre-designed a whole suite of tools for wealth management – things like drafting client meeting prep, writing an email to a client, analysing markets, writing reports, and so on. So AI companies are thinking about how they can make advisers more efficient by bringing in automation and taking away administrative tasks. So what are advisers going to do with all that extra time – more holidays, or more time with clients? Is it?

(44:05) I’d say ideally more time with clients, but it is interesting. The number of advisers I speak to – the common theme tends to be that they’d love to take on more clients if they had the capacity to do so. So I think if you look at the direction that tools like Claude and Perplexity are headed in, they’re building solutions to support advisers to be more effective. Claude’s co-worker capability is a fascinating tool. What it can do – although it takes a lot of optimising – is actually quite impressive.

(44:48) So the other aspect of this is that if that frees advisers up to spend more time with clients, then brilliant. Does that mean they require more emotional intelligence than they have today? Not necessarily. If people are already successful and spend more time with clients, that’s obviously a good thing. I think where more emotional intelligence might be needed is if AI starts competing with advisers for the things that advisers are doing. There’s research coming out in healthcare, where they are utilising agents to do things like cognitive behavioural therapy. And what they’re finding is that people’s level of disclosure, when they’re talking to an AI agent for CBT – which is just a framework or process to facilitate thought – is quite high.

(45:42) So if you speak to a CBT chatbot and say, “I’ve got a problem with X,” it will guide you through a series of steps to help you think about the problem in the same way a therapist would. But what they’re finding is that people are actually opening up and providing more information, and more personal information, to a non-human agent. And we don’t know exactly why, but one of the theories is that there isn’t a human there to judge their answers. So they feel that they’re not being judged for what they say, and they can open up and speak more about what’s on their mind. You can see that crossover. Does that crossover to finance? Maybe. Because what do clients hold back when speaking to advisers? Perhaps a fear of asking a “silly” question, or being judged. Do they avoid admitting that they don’t understand something?

(46:40) Do they not admit that they’ve made a mistake? Do they withhold information about products they hold because they think you might have a different opinion, disagree with them, or try to influence them to do something different? So you can see these are the sorts of thought processes that might be going through clients’ minds. But if they get the sense that you are non-judgemental and they have a lot of trust in you, then that’s the environment they need in a relationship to be able to open up and tell you whatever is on their mind. And many advisers already have that level of relationship with clients.

(47:17) I think there’s a phrase I came across when I was reading a paper critiquing these types of chatbots in healthcare. When you ask people whether they feel there is empathy in the relationship between them and the chatbot they’re speaking to, people report a feeling that they’re being understood – which is that empathic response I mentioned. AI can do that. You can say to ChatGPT, “I’ve got a problem with this,” and it will respond, “That sounds like it might be really tough.” And you think, yes, it is. It does that quite well.

(47:59) “You’re really good at this,” and you say, “Thank you.” So people get this sense that they’re understood, but it’s not real – it’s synthetic. And the phrase I came across is “synthetic empathy” – empathy that isn’t real, but it does have an effect on us. So where do we go with this? I think if AI starts seriously competing, and people are prepared to sit down and speak to an agent to build a financial plan, then what’s going to separate AI from advisers is the client experience. It’s the whole experience that sits around that. And I don’t believe that once AI advisory agents come in, that’s where everyone will go, because people do value human judgement and they value delegating tasks to people.

(48:57) There’s probably a bit more time involved in sitting down and chatting to an agent than there is in speaking to an adviser who knows you and has understood you for years. You can say, “Look, I’ve got a problem with this,” or “I want to execute this – can you do it?” and they say, “Yeah, not a problem, we’ll do that for you.” People are very happy to pay for that, and we pay for that across all types of services. I was talking to someone about this a couple of weeks ago, and I said I think one of the biggest shifts we’re going to see is when we start having agents that can talk like you and I are talking – so I’m speaking to you, and you are an agent with a physical appearance and a voice, and we’re having a conversation like this. I think that will change things, especially if we reach the point where it’s hard to distinguish whether you’re having a Zoom call with a person or an agent. Because now you’ve got things like eye contact and facial expressions – you’re starting to replicate the experience of speaking to a human, which is very different from where we are now. How far away we are from that, I don’t know.

(50:13) Well, yeah – it brings to mind that story. I think it was in Hong Kong, or somewhere in China, where a colleague of the CFO of a bank was tricked into transferring $30 million because he thought he’d had a conversation with the CFO, and it turned out it was an AI-generated version. So that is quite scary, what you said earlier about feeling as though you’re having a conversation with someone who understands you. But to your point about synthetic empathy, I notice this on a very practical level – when I speak to a bot, whether it’s Copilot or Claude or whatever, the number of times I say “please” or “thank you,” as though I’m speaking to someone I’m trying to build a relationship with. It’s really funny. James, we have a number of questions coming in now, which is great. I’ll just read them out as they appear. There’s one from John, who asks: you mentioned that emotional intelligence can be learned and strengthened. Are there any tools available that can help develop it – perhaps prompts, exercises, or reminders that encourage greater self-awareness and emotional regulation?

(51:42) Yeah, so I think there are various components of an emotional intelligence training programme. Like any training, for it to be effective, what you’re really aiming at is self-awareness as the right place to start – but it’s self-awareness that leads to behaviour change. Now, one of the things with emotional intelligence, or developing any skill, is that you can go away and read a book, but that doesn’t necessarily mean you change your behaviour once you put the book down. It requires that you actually start doing things differently in practice. So one of the things that works really well with emotional intelligence training is that knowledge and understanding are the foundation.

(52:31) So increasing knowledge and understanding of emotions in yourself and others, but then that needs to translate into skills and application. And that’s where it really helps if you’ve got support from a manager or a peer who’s working towards the same objective or helping you with a development plan. So you can say, “Can you come in and observe me in a client meeting? This is the type of behaviour I’m trying to develop – I’m trying to improve my communication skills. Can you give me some feedback?” Because we are very unaware of our own blind spots. We don’t always have insight, or accurate insight, into our own strengths and weaknesses.

(53:19) But if you’ve got an external observer, they can usually spot things that you can’t see, and that can be quite useful. But really, the development plan is important. So knowledge and understanding combined with building a development plan, and then having someone to support you and take you through that journey. But the development plan needs to have some objectives as to what it is that you’re trying to achieve. If you were at the end of that plan – let’s say six months – what does the new behaviour look like? How is it showing up compared to what you do today? Because what that will hopefully do is allow you to focus on a specific problem. So do you have a particular issue with self-awareness and self-management in a specific context? In that case, increase your knowledge and understanding of emotions, which will help you understand what might be going on. And then you can put a plan together for how to deal with it and manage it.

(54:26) Yeah. Okay. Here's a second question from Mark. Do you think you would've do you think you would've probably would've gotten more for your business if you knew more about emotional intelligence before your training? That's a bit tongue in cheek <laugh>.

(54:46) No, no, no. I mean, I think well, I've got more for my business. What, so look, put it this way, if I still had my business, what would it look like is probably better. Probably more useful. What would I have? So if I still had that business, and I know what I know now I would've been much better at self-care than dealing with stress and burnout. And how that would've showed up would would've been setting clearer boundaries being a bit more self-aware as to what stress and burnout looked like, and knowing when I needed to effectively deal with things. There was a couple of things where I didn't tackle problems when they needed to be dealt with, and I let that take its toll on me personally. So one of the things that you kind of understand about emotions is this is this concept of rumination.

(55:41) And if you don’t close a loop, it can end up filling your thoughts. So I think there are a couple of ways that would show up. One is I would have actually let go of clients that weren’t healthy for me emotionally. One of the things you do is you put off doing that for fear of losing income, or that they’ll be upset and tell others. Realistically, that’s my own fear influencing my thinking. So I think, is that logical, or is that emotional? Is the emotion telling me something, or do I just need to override it and make a decision? Because I certainly had certain clients who overstepped boundaries, and we didn’t have a healthy relationship. Actually, terminating some of those relationships would have been far better. So if I still had the business now, I would have – I know it sounds a bit harsh – but I would have let some clients go.

(56:46) Yeah, I would have set clear boundaries to make sure that stress and my own burnout risk were managed. And then really, I would have set the business up and structured the servicing based on an understanding of clients’ emotions across the portfolio. So, for example, I used to go through a process of segmenting clients – my wealthiest clients are my A clients, and they get the best service. That might mean they’re the ones you have the most proactive contact with. But now I would shift that to: who are my most emotionally reactive clients in the portfolio, regardless of their level of wealth? Because they’re the people who probably need me to pick up the phone when markets are volatile or when a piece of news has been announced. They’re more likely to be catastrophising and thinking about how it’s going to impact them, when actually the answer is that it won’t, or it might not. So those would probably be some of the things I would be doing if I still had the business. Interesting. Would that make it worth more? Who knows.

(58:00) Perhaps. I mean, there’s something to be said for just working with the people you want to work with, because that’s how you grow. That’s where you invest the best part of yourself to build those relationships. Who knows. James, as we’re now reaching the finish line of this conversation – it’s been such a great conversation, by the way – thank you so much for sharing all your insights and your wisdom. There’s a lot of tangible value here for listeners and viewers as well, which is great. I have one last question, and it goes back to something you mentioned before we started recording. You said your approach has recently shifted – that you’re no longer just selling solutions, but helping clients identify the actual problem first. Can you explain what changed there, and can you give a concrete example of what that looks like in practice?

(58:58) Oh yeah. I think with any new business, you can start with an idea of how something will be delivered. I started the business with the idea that emotional intelligence training would be the focus and how that would be delivered. And actually, 18 months – nearly two years – later, the work I’m doing is quite different. So I’m going through a process of updating my website at the moment, and that’s forced me to rethink and look at what I’ve been doing. I spend a lot of my time taking more of a consultative approach with businesses – pretty much doing what I did as an adviser, but taking more of an applied psychologist view.

(59:39) And go into businesses and think, well, what’s going on in the business? What barriers are there to growth? What issues do you have around adviser–client interaction, or are you looking at getting the messaging and communication right, and speaking to clients’ problems and pain points, which of course emotions sit behind? And actually going in with more of a diagnostic lens initially. And then taking a social researcher approach and thinking, is there an opportunity – especially with larger teams – to do interviews within the business and surface things which senior management might not be aware of.

(01:21:00) And then to bring that together and say, well, if you want to improve your performance, either as a business or as individuals, what might that look like? Might it look like spending time one-to-one on development? Might it be helping to put development plans together, or business plans, or running a workshop or a series of workshops to help increase people’s knowledge and understanding of behavioural science, and help them develop a greater understanding of their clients? Which, of course, we can then translate into business processes, tools, or client conversations – or look at it through a business performance lens.

(01:01:00) Yeah, perfect. And you’ve given plenty of examples and insights as to why this is very worthwhile to do. James, thank you so much again for your time. This finishes Money Mindshift Week for us. Links have been sent if you want to recap on this conversation – by all means follow me on LinkedIn, and James, I’m sure you’ll be welcoming connections on LinkedIn as well. There’s going to be a write-up of this conversation from me as well, if you’re interested in that. Check out all the resources on the adviser-facing pages of Aegon, and follow us on the podcast – the Money Mindshift podcast. But for now, thank you so much for joining us and for the lively engagement. And thank you again, James, for joining us and sharing all your insight.

(01:01:58) Thank you.