The well established businesses bear the comprehension that investment in the maximization of skills for the human capital is as essential and key to the development of the staff as the development of the physical assets of the company. For the financial planners, the one question that lingers is, “What are is the specific skills set I need to be equipped with for me to succeed in the industry?” One of the most pertinent agenda regarding the human capital is the development of soft skills among the workers. As alluded to, the soft skills are just as important as the technical ones especially with regards to the fostering of certain employees into leadership roles. Additionally, the skills are critical to the company’s organization, profitability, and performance. This paper makes a comparative analysis between the technical skills and the soft skills, pointing out how the two differ from one another. It also features a discussion of the set of skills which are most important to an entry-level financial planner.
In definitive terms, soft skills are non-technical abilities and personality qualities that impact the capacity of a person to interact effectively with fellow workers and clients (2017). They are alternatively referred to as people’s skills. They are indicative of the individual’s level of emotional intelligence. They include: Conflict resolution, problem solving, communication, organizational skills, passion, decision making, capacity to handle stress and pressure. For the leaders, it includes coaching. It should be noted, however, that soft skills are not supernumerary to the technical hard skills. Rather, they complement these technical know-hows and field areas. They mark the difference between demarcation as a subject matter expert and a dependable resource who can adequately relay information with effectiveness to others. Hard skills, on the other hand, encompass the range of technical abilities to perform tasks. These skills are based on the knowledge gained from education in that subject area. It covers the procedural ability to deliver a high-quality product from a given task. Examples are the knowledge to deal with stocks in actuarial science, the scientific knowledge in Civil Engineering, the ability to diagnose a patient in medical professions, and the ability to identify potential sale points in financial professions. It is commonly said that these are the set of skills that land one a job interview, but getting the job itself is dependent on the soft skills of the person.
Ideally, the most important skill set to an entry level financial planner in the market place is the soft skill set. Assumedly, an entry-level financial planner is equipped with the technical skills necessary to land the job itself (Anderson, 2014). The person is presumed to have the fundamental knowledge on how to identify potential clients, solicit for possible new businesses. Additionally, the financial planner will have to be equipped with skills necessary to establish the interactive base for business to be conducted.
The most important skill is communication and interpersonal relation. The job description of a financial planner encompasses soliciting for new ventures, connection with different clients, and working together with fellow companions. As such, it is pertinent for the financial planner to be able to relate well and communicate effectively. They should be courteous at all times and have proper writing skills. One must be able to elucidate the terms involved in business in the clearest of ways for the client to make an informed decision. Fostering a new relationship is critical to the career and the ability to retain the built relationship is similarly important. Proper communication is an enabling factor to productivity and efficiency. For those in leadership positions, it enhances the group performance and improves work place safety. (Jamson, 2014)
Another fundamental attribute is the resilience to handle stress. As is the case with most professions, stress is inevitable. A financial planner takes care of the clients’ portfolios and influences the decisions that they make which may have drastic impacts on the lives of their lives. As such, the financial planner must always be ready to dispense his or her duties at high stakes. They must be able to put aside any pressures and perform their duties without any prejudice.
A financial planner must be assertive and decisive. They must appear to waver on their plans. Of course, this quality needs to be backed by the facts necessary to pursue the idea put forward. If all else is right, the individual must be able to take decisive action with the conviction required. The advisor should be able to collect the relevant data, single out the facts, analyze these points, then consider the best alternatives. After taking into account all the pros and cons, the advisor should be able to explain with clarity how and why he chose the idea he has settled on to the client. The ability to arrive at sound decisions is one of the most important skills in this line of work. (Jamson, 2014)
For a financial advisor, meetings are part of the everyday routines. It is a prime function for one who should appear corporate at all times. It creates a suitable environment for the client and the planner to discuss the issues of importance with regards to the portfolio. Meetings are an important platform to issue instructions to the fellow workers, presenting ideas, assigning duties, and passing information. It is often the difference between the implementation of an idea and the discarding of the same. The idea may be brilliant but if the meeting is not properly held, the idea may be dismissed thus passing the opportunity to make good returns on investments. If not done right, an ineffective meeting results in wastage of time, prevents the taking of opportune moments, and reflects badly on the organizer.
Lastly, organization skills pivotal to any profession. So is the case with financial advising. It enables one to manage their time well. This, in effect, helps grow the clientele of the individual as one will be able to work on many portfolios effectively. Time allocation also makes sure that the client is served in the best way possible.
With regards to technical skills, the financial planner must know the manner through which he or she can evaluate the client’s financial situation. It is the first step and it sets a clear understanding on how the client may proceed since one is sure of the current state of financial affairs. The assessment of the client’s financial status involves the calculation of the net worth, which is the difference between assets and liabilities.
Another important technical skill is the creation of a budget. An effective budget enables the client to keep a record and track the flow of money. For one to plan effectively, the financial planner must advise the client accordingly on how to prioritize the needs. The budget must also cut down on the cost incurred on unnecessary items. A budget enables one to avoid falling into debt and to manage the net income wisely.
Moreover, the financial planner must be well-versed in the skill of setting financial goals. The advisor should be able to differentiate between short-term goals and long-term objectives. Along with the setting of the goals, the planner must know how to work out the best possible strategy for fulfilling these objectives. These goals must be measurable, practical, and realistic.
The financial planner must also be able to develop a retirement strategy for the client. This technical skill involves the development of a strategy that enables the achievement of a fulfilling retirement that is independent of the other priorities with regards to finance. A good retirement strategy must be able to lead to the accumulation of sufficient capital to cover the lifetime distribution.
The financial planner must also be able to manage risks on behalf of the client. To do this, the advisor must understand the capacity of the client to take risks. This is an intuitive skill that requires one to estimate the level of risk taking of the client and advise accordingly. The financial planner must be able to recognize all the risk exposures and insulate the client and the associates from significant financial loss.
The financial planner should also have the knowledge to create a good estate plan. An effective estate plan includes the provisions for asset maintenance and distribution with specific focus on the reduction of related expenses such as settlement costs and taxes payable. The estate regulatory instruments must be placed under regular review. They include: medical directives, power of the attorney, will, inter-vivos trust, and marital trusts (Financial Plan, 2009).
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In line with the ability to create estate plans, the financial planner must develop the technical skill of reducing the tax. With respect to the extent permissible to the tax code, the advisor must be able to develop a strategy to minimize the tax charged on the personal income of the client. One may opt to utilize tax-favored investments that minimize the tax charged on the investments made.
Soft skill sets vary from hard skills in many different ways. Soft skills feed on the emotional intelligence of a person. It is dependent on the ability of the individual to relate with people and maintain a stability in relationships through proper social skills and a welcoming personality. For instance, the ability to communicate, the capacity to handle pressure, and self-discipline are all variants of soft skills. On the other hand, technical skills are reliant on the intelligence quotient of the individual. It depends on the ability of the person to learn various skills. These include programming, economics, solving math problems, and drawing architectural plans.
In dealing with technical skills, the rules of engagement are same at all places. They require one to operate under the same principles and are highly standardized throughout the industry. In other terms, they are rigid. Technical skills are invariable to the circumstances of duty and place of work. For example, the knowledge of identification of a potential business venture and the principles that determine whether the opportunity will be taken or not do not change regardless of the company of operation nor the circumstances. On the other hand, the rules of engagement with regard to soft skills change from time to time. They vary depending on the ethics and cultural adaptation. How one communicates to people in India varies significantly to how one will communicate to people from USA. One has to put into consideration the cultural reservations of people from India. (Han, 2014)
Technical schools are learnt from educative processes such as schools, reading books, and apprenticeship. To achieve them, one has to go through a designated standard of competency and an established procedural set of levels. Case in point, to be a qualified financial advisor one must have an accounting certificate. This requires enrolment into a financial school, taking of examinations which one must pass, then fulfilling the additional licensure requirements such as experience. On the other hand, soft skills are acquired over time. There is no definitive route to achieving these skills. For instance, one cannot go to school to learn how to be resilient. It is rather a skill acquired through experience.
In conclusion, success in the field of financial planning is dependent on the combined ability to synchronize both soft skills and technical skills. While technical skills can be learned from school and is heavily linked to the IQ of the individual, soft skills are acquired through experience. Technical skills enable the person to achieve positive results with regards to the know-how. On the other hand, soft skills gift the individual with the capacity to relate effectively with the client and the co-workers through efficient communication and networking. It goes without saying, technical knowledge will land one an interview, but acquisition of the soft skills will land one the job itself.
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- Han, L. (2014). Hard Skills vs. Soft Skills – Difference and Importance. Retrieved from Bemy Career Coach: http://bemycareercoach.com/soft-skills/hard-skills-soft-skills.html
- Jamson, C. (2014, July 8). The Top 6 Essential Skills of Financial Planners. Retrieved from https://www.linkedin.com/pulse/20140708073029-1247061-the-top-6-essential-skills-of-financial-planners