{"id":12260,"date":"2025-03-23T22:10:00","date_gmt":"2025-03-23T22:10:00","guid":{"rendered":"https:\/\/finderica.com\/?p=12260"},"modified":"2025-03-23T22:10:00","modified_gmt":"2025-03-23T22:10:00","slug":"the-surprisingly-superior-empathy-alternative-compassionate-objectivity","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=12260","title":{"rendered":"The Surprisingly Superior Empathy Alternative: Compassionate Objectivity"},"content":{"rendered":"\n
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I\u2019d bet a pint of Guinness on St. Patrick\u2019s Day that anyone who\u2019s been a financial advisor for more than a minute has been faced with a client crying at some point. Some would even argue, only half kiddingly, that if you haven\u2019t had someone cry in your presence as a financial advisor, you\u2019re probably not doing it right.<\/p>\n

But almost none of us have gotten any training on what to do\u2014and what not to do\u2014when a client reaches that intensity of emotion in our presence. Yet there is a right and wrong way to handle it; or, at least, a better and worse way.<\/p>\n

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There are better and worse ways to help people navigating an emotional experience<\/p>\n

<\/fbs-accordion>getty<\/small><\/figcaption><\/figure>\n

I\u2019ll share what I\u2019ve learned about that, but first, I want to address the elephant in the room and the tools at our disposal.<\/p>\n

The Elephant In The Room<\/h2>\n

The elephant is, quite appropriately, according to Jonathan Haidt\u2019s beloved analogy for Daniel Kahneman\u2019s System 1 \/ System 2 duo, the emotion itself.<\/p>\n

The quick episode recap is that Kahneman (whose death surprised us a second time when we learned that he chose<\/a> the precise date and time for his demise) illuminated our understanding of human decision-making by explaining two operating systems in our brains: System 1, the near-instantaneous emotional processor, and System 2, the slower rational processor. Haidt then gave us the helpful analogy of the emotional elephant for System 1 and the rational rider for System 2, illustrating that the enormity and strength of the elephant suggest that when the elephant and rider are in conflict, the elephant always wins.<\/p>\n

The bottom line for us, as financial advisors, is that we humans are emotional beings; that most of our decisions, maybe especially financial decisions, are made on an emotional level; and that an integral part of our development, therefore, is to learn how to navigate the emotional complexity of our clients with the same degree of professionalism as we do our more seemingly rational analyses. (I say \u201cseemingly\u201d because even the most complex and numerical investment, insurance, estate, tax, and retirement analyses are still emotional at their core.)<\/p>\n

Furthermore\u2014and no doubt frustratingly\u2014we cannot counter emotional conundrums with rational calculations. That\u2019s why the University of Chicago professor who coined the term \u201cbehavioral economics,\u201d Richard Thaler, told me years ago<\/a> that advisors need to be just as skilled in the personal and psychological realm as they are in the numerical and financial.<\/p>\n

\u201cNo one would think that somebody\u2019s qualified to be a financial adviser if they don\u2019t know the difference between a stock and a bond, but people think it\u2019s perfectly fine to be a financial adviser without knowing the difference between \u2018System 1\u2019 and \u2018System 2\u2019 or loss aversion,\u201d Thaler said.<\/p>\n

He even gave more specific instructions: \u201cIf the main thing that a financial adviser does in a session with a client involves looking at spreadsheets, then they\u2019re not doing their job.\u201d [Wow!] \u201cIt is as much psychology as it is finance.\u201d<\/p>\n

The Tools At Our Disposal<\/h2>\n

What, then, are the tools at our disposal? The 101 answer is empathy. You probably remember that empathy means putting yourself in someone else\u2019s shoes. It\u2019s not easy, and it takes practice, but it is an effective way to better understand another person\u2019s perspective. Although empathy\u2019s positive impact is limited when it is taken too far.<\/p>\n

My wife seems almost to be a magnet for these types of conversations. She\u2019s one of those people who other people call when they\u2019re going through any challenge, big or small. I think that\u2019s partly because she has grown to be a person of wisdom, but even more so because she is a skillful empath.<\/p>\n

Yet because she\u2019s wise, she knows that truly identifying with someone through empathy can lead us to actually feel<\/em> those emotions. This phenomenon can be exhausting, but it can also lead to poor counsel, inclining us to patently agree with the other entity, as we are, effectively, feeling the same emotion.<\/p>\n

This is why Dr. Moira Somers, author of the financial advisor must-read Advice That Sticks<\/em><\/a>, taught me years ago that the 201 tool in our kit that is preferrable to pure empathy is compassionate objectivity<\/em>.<\/p>\n

Why Compassionate Objectivity Is Preferable To Empathy<\/h2>\n

Whereas empathy can lead to emotional entanglement that can distort decision-making, compassionate objectivity acknowledges and validates emotions without being overtaken by them. Here are three more reasons why:<\/p>\n