The Surprisingly Superior Empathy Alternative: Compassionate Objectivity
I’d bet a pint of Guinness on St. Patrick’s Day that anyone who’s 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’t had someone cry in your presence as a financial advisor, you’re probably not doing it right. 🤣
But almost none of us have gotten any training on what to do—and what not to do—when 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.
In this week’s post, I’ll share what I’ve learned from some of the sages from within the financial planning space—as well as the field of behavioral economics—but here’s the short version:
Genuine empathy may be superior to patronizing sympathy, but there’s a surprisingly superior alternative to empathy, too: compassionate objectivity.
And any chance you’re looking for some clarity on what’s going on in the crazy markets? Tony Welch has our backs and will bring us up to speed, all while offering a fantastic Chart for the Kids.
Also, we’re also featuring a special video podcast this week that is oriented toward financial advisors—as well as other professionals, like lawyers, accountants, and consultants—who are interested in growing their businesses without feeling like a “sleazy salesperson.”
Thanks for joining us as your March Madness bracket falls apart! (It can’t be worse than mine!)
Tim
Tim Maurer, CFP®, RLP®
Chief Advisory Officer
In this FLiP weekly you'll find:
Financial LIFE Planning:
The Surprisingly Superior Empathy Alternative
Featured Video Podcast:
Sales Without The Sleaze: Mo Bunnell’s “Give To Grow” Approach
Quote O' The Week:
Anonymous
Weekly Market Update:
A Chart For The Kids
Financial LIFE Planning
Compassionate Objectivity > Empathy
The Elephant In The Room
The elephant is, quite appropriately, according to Jonathan Haidt’s beloved analogy for Daniel Kahneman’s System 1 / System 2 duo, emotion itself.
The quick episode recap is that Kahneman (whose death surprised us a second time when we learned that he chose 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.
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 “seemingly” because even the most complex and numerical investment, insurance, estate, tax, and retirement analyses are still emotional at their core.)
Furthermore—and no doubt frustratingly—we cannot counter emotional conundrums with rational calculations. That’s why the University of Chicago professor who coined the term “behavioral economics,” Richard Thaler, told me years ago that advisors need to be just as skilled in the personal and psychological realm as they are in the numerical and financial.
“No one would think that somebody’s qualified to be a financial adviser if they don’t know the difference between a stock and a bond, but people think it’s perfectly fine to be a financial adviser without knowing the difference between ‘System 1’ and ‘System 2’ or loss aversion,” Thaler said.
He even gave more specific instructions: “If the main thing that a financial adviser does in a session with a client involves looking at spreadsheets, then they’re not doing their job.” [Wow!] “It is as much psychology as it is finance.”
The Tools At Our Disposal
What, then, are the tools at our disposal? The 101 answer is empathy. You probably remember that empathy means putting yourself in someone else’s shoes. It’s not easy, and it takes practice, but it is an effective way to better understand another person’s perspective. Although empathy’s positive impact is limited when it is taken too far.
My wife seems almost to be a magnet for these types of conversations. She’s one of those people who other people call when they’re going through any challenge, big or small. I think that’s partly because she has grown to be a person of wisdom, but even more so because she is a skillful empath.
Yet because she’s wise, she knows that truly identifying with someone through empathy can lead us to actually feel 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.
This is why Dr. Moira Somers, author of the financial advisor must-read Advice That Sticks, taught me years ago that the 201 tool in our kit that is preferable to pure empathy is compassionate objectivity.
Why Compassionate Objectivity Is Preferable To Empathy
"You cannot make good decisions if you are lost in someone else’s emotions," Dr. Somers writes. 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:
It strengthens client trust. Clients need a steady hand—not someone who simply mirrors their distress.
It improves decision-making. It balances genuine care with clarity, ensuring emotions don’t override sound financial choices.
It protects the advisor from burnout. Maintaining a professional boundary avoids emotional exhaustion.
Would you like some practical examples about how you can do this, whether you’re a financial advisor or not?
5 Practical Tactics to Implement Compassionate Objectivity
Listen with presence, not absorption. Be fully engaged, but don’t take on the client's emotional weight. Use phrases like, "I see how hard this is for you," instead of, "I know exactly what you’re feeling.”
Validate without enabling. For example, “I can understand this feels overwhelming. My role is to help you take one step at a time, so you don’t have to carry this burden alone.” This communicates care but maintains role clarity.
Avoid further sensationalizing or labeling emotions. Avoid phrases like, “Oh, that’s horrible!” or “That’s amazing!” Emotions may be strong, but they are neither good nor bad; they just are. Therefore, superlative labels and exclamations are rarely helpful and can harm.
Broaden their perspective and stretch their timelines. Emotions are especially powerful in the present and tend to fixate on singular factors. Therefore, when emotions run high, expanding one’s perspective and gently bringing the conversation back to future well-being is beneficial. For example, "I know selling the house feels like an impossible decision right now. So let’s explore how this choice could serve your long-term security."
Set emotional boundaries. Recognize when you’re feeling too much and step back to refocus on your role. Practice self-care to ensure you’re emotionally available but not drained, and if you know you’re heading into an exchange that is likely to be emotional, instead of responding to one more email or phone call, take five minutes to center and calm yourself.
What To Do When A Client Cries
Now we’re ready to address the question I posed at the top of this post: What do we do when a client cries in our presence? I learned this from one of the great sages of emotional navigation in the financial planning space, George Kinder, and what surprised me is that most of our go-to impulsions in this scenario are the wrong things to do:
We should not jump up out of our chair (or leave the room) to grab a box of tissues and shove them toward the client. This signals surprise and abnormality and could make the client feel like this occurrence is a rarity. The better move is simply to ensure tissues are within arm’s reach in every client meeting room.
We should not turn our gaze away from the client and “give them space.” This, again, signals that this is an unusual and uncomfortable situation. While it is absolutely difficult, the better move is to maintain comfortable and comforting eye contact and perhaps throw in a head nod.
We should not pat them on the shoulder and tell them this will be alright. This signals, “Okay, it’s time for you to stop now.”
The good news is that emotions function somewhat like a wave. They build in intensity, crest, and then complete. So, too, will the emotions of your client. Your willingness to be there for them—to witness, guide, and reassure with your presence—all while sending the unspoken message that “This is totally normal and okay,” is the bulk of your work here.
And here’s the beauty of mastering this skill: By practicing compassionate objectivity, we don’t just become better financial advisors—we become better decision-makers, better leaders, and ultimately, better humans.
The next time you're in a conversation where emotions run high—whether with a client, a friend, or a loved one—pause and ask yourself: "Am I about to absorb (or worse yet, counter) their emotions, or can I be a steady presence that helps guide them forward?"
Financial planning is about so much more than numbers; it’s about guiding people through some of life’s biggest, and often challenging moments. When we practice compassionate objectivity, we don’t just help clients navigate their emotions—we help empower them to make the best choices for their future.
Featured FLiP Video Podcast
You’ll likely notice in this week’s post, as in many, I’m often writing simultaneously to financial advisors—a meaningful percentage of overall FLiP readers—as well as those of you who work with advisors. This featured podcast is no different.
I got the chance to talk to internationally recognized business development consultant, Mo Bunnell, about his newest book, Give To Grow, and we addressed a question that has long perplexed great professional financial advisors as well as other seasoned professionals, like lawyers, accountants, consultants, and even doctors:
Can we be great at sales without the sleaze?
Click HERE or on the image below to find the answer to that question and many others!
Quote O' The Week
I wish I could find someone to whom I could attribute this amazing quote:
Anonymous
"Compassion without wisdom is sentiment. Wisdom without compassion is cruelty."
Weekly Market Update
What a crazy year it’s been so far. The Dow (-1.31%), the S&P 500 (-3.64%), and the NASDAQ (-7.91%) are all down, while international stocks are having a great year so far. (EFV is up 14.20% YTD.):
+ 0.51% .SPX (500 U.S. large companies)
+ 0.55% IWD (U.S. large value companies)
+ 0.44% IWM (U.S. small companies)
+ 0.24% IWN (U.S. small value companies)
+ 0.37% EFV (International value companies)
- 0.26% SCZ (International small companies)
+ 0.46% VGIT (U.S. intermediate-term Treasury bonds
A Chart for the Kids
Contributed by Tony Welch, CFA®, CFP®, CMT, Chief Investment Officer, SignatureFD
One of our core beliefs at SignatureFD is that financially healthy families can change the world. This week, we wanted to include a chart to show the kids and young adults in your life that can help them to get a jumpstart on lifelong financial health.
The below shows two scenarios. On the left, a young investor put $2,000 per year into the stock market from ages 19-26. They invested a total of $16,000 and then stopped investing. On the right, an investor started at age 27 and invested $2,000 every year until the age of 65. That investor put a total of $78,000 into the stock market over time. But because of the magic of compounding, the early investor, despite putting much less of their money to work, ends up with over $1,000,000 at age 65 while the late starter ends up with under $900,000, assuming a 10% annual return.
This is a simplistic example. There is no way of knowing with perfect foresight what the sequence of returns may look like. But this does illustrate the power of compounding. Starting as early as possible is a key factor in long-term financial well-being.
The Message from Our Indicators
The Federal Reserve met last week to announce its interest rate and balance sheet policy. They left rates unchanged and voted to slow the runoff of their balance sheet. Notably, Fed officials revised their economic growth expectations lower and their inflation expectations higher. The median participant still sees two interest rate cuts this year, but looser policy could be in jeopardy if inflation accelerates.
Uncertainty seems to be the word of the year, and that was evident in the Fed’s projections, whereby they expressed less confidence in their expectations, with risks of lower growth and higher inflation than their revised forecasts. Monetary policy is likely in a holding pattern until Fed officials gain a better grasp on the impacts of tariffs as well as falling business and consumer confidence.
Economic data from last week confirm that, while the economy may be slowing, recession is far from evident. That’s important as stock market corrections tend to be shallower and shorter in duration in the absence of a recession. Retail sales rebounded a less-than-expected 0.2% last month, but the yearly change of 3.8% is still a solid spending figure. Industrial production advanced 0.7% and housing starts picked up in February while housing starts bounced a strong 11.2%.
Turning to fundamentals, the correction has thus far alleviated some of the valuation excesses. A continuation of solid earnings growth could go a long way toward justifying current valuations. Analysts expect double-digit earnings growth in 2025. Whether companies can deliver on that will likely be impacted by the level and longevity of tariffs and the timing of deregulation and tax cuts. Additionally, the ability of companies to pass on higher costs may be challenged if the Q1 economic slowdown extends to other quarters this year. For now, the fundamentals remain positive.
Finally, from a technical perspective, market sentiment has reached pessimistic extremes, often coinciding with much worse corrections. Investors appear skittish owing to policy uncertainty, but oftentimes, it pays to lean against the prevailing mood of the crowd. We would like to see a broad-based burst of strength to help signal that this year’s correction is over. The typical bottoming process does tend to include a retest of the low levels, so some weakness following a rally attempt would not be abnormal. For now, longer-term trends remain positive.
Thanks for being part of the FLiP community—it wouldn’t be the same without you!
Tim