Financial planners working with clients as they confront crises like the recent supply chain disruptions need to have a holistic view of planning, increase their own emotional intelligence and improve their communications skills.


David DubofskyThe recent supply chain disruption and its associated shortages are quickly qualifying as a black swan, a significant economic or financial event that just a few months ago was unforeseeable. Nassim Taleb’s 2010 black swan metaphor captured the attention of futurists across multiple disciplines, including economics generally and financial planning specifically. As with all black swan events, investors are increasingly concerned about the impact of the supply chain disruptions and shortages.

Recently, market volatility has increased. Inflationary pressures have appeared. Needed goods and services are increasing in price, or disappearing altogether. CEOs, CFOs and COOs are forced to carefully consider the financial implications of these supply chain constraints at both the corporate and consumer level. In turn, consumers are forced to tighten their belts and pay more for those belts, if they can even find any for sale. Many individuals are reconsidering their retirement plans for a host of reasons.

Because their clients are often traumatized by these occurrences, financial planners must navigate the current crisis, just as they would every economic or financial crisis. Planners must have the empathic and counseling skills to help their clients get through the traumas, both financial and nonfinancial, even as they themselves face their own personal turmoil.

Clients disclose more than just their financial concerns to their planners, and such disclosures will increase during this period of market volatility and economic disruptions. They reveal nonfinancial problems such as health issues, family pressures and family dysfunction. Financial planners may have to make changes to some of their clients’ financial plans and discourage other clients from acting in a short-sighted manner. Maintaining a long-run view on investing decisions is important because while we don’t know how long supply chain issues will remain, the invisible hand of economics will ultimately correct these problems.

In a 2009 paper, we spelled out the competencies required of financial planners when confronting crises that their clients are experiencing. These include taking a holistic view of financial planning, increasing their own emotional intelligence, or EQ, and improving their communication skills. Such skills aren’t provided by robo-advisers. They are the distinctive values created by the financial planning profession.

Emotional intelligence will guide planners when they face their clients’ fears, concerns, impulses, and frustrations. Their interpersonal relationships with their clients will be different than they were before the shortages, just as relationships changed after the Covid pandemic, another black swan event.

If supply chain problems persist, planners will increasingly have to listen patiently to their clients’ financial and nonfinancial anxieties. Even more so, they will have to listen to what their clients are feeling but not actually saying. Probing with open-ended questions, focusing on nonverbal cues and responding empathically are all techniques that will help the client and assist the planner’s efforts to manage the crisis. Planners will truly become financial therapists, either knowingly or unknowingly. And in so doing they will set themselves apart from commoditized robo-advisers.

David Dubofsky and Lyle Sussman are co-authors of Your Total Wealth: The Heart and Soul of Financial Literacy.Dubofsky previously taught finance at Texas A&M University, Virginia Commonwealth University and University of Louisville. Sussman is professor emeritus at the College of Business, University of Louisville, and a frequent speaker in the banking industry.

David A. Dubofsky

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