Communicating The Value Of Financial Planning That Clients Don’t Come For In The First Place: Kitces & Carl 186

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***Editor's Note: Can't get enough of Kitces & Carl? Neither can we, which is why we've released it as a podcast as well! Check it out on all the usual podcast platforms, including Apple Podcasts (iTunes), Spotify, and YouTube Music.

Show Notes

• K&C 185: The Financial Planning Value Disconnect: When Clients Don't Appreciate The Long-Term Benefits
• Money Quotient

Kitces & Carl Transcript

Carl: Hello, Michael Kitces.

Michael: Greetings, David Carl Richards III.

Carl: The III, that's exactly right.

Michael: The III.

Carl: It's funny, we were up skiing in the Tetons, the mountain range not far from here, and I met a guy who introduced himself. His name is Jed Porter. He's a mountain guide. And then I found out later his full name is Jedediah. And I was like, "Dude, you got to own that. If you're a mountain guide in Wyoming and you have a name like Jedediah, you got to own it."

Michael: The III?

Carl: Exactly.

Michael: I mean, you got families that have been there for a long time.

Carl: Exactly right. That's right. So, anyway, yeah, David Carl Richards III.

Michael: I love that name.

When Does Self-Transcendence Actually Manifest In The Financial Planning Process? [00:57]

Carl: I'm just going to skip right in. Last time we talked a little about this challenge of the most valuable thing we do in people's lives. And again, I'm often wrong, never in doubt, but I kind of feel like the ultimate expression of the work we do is... And you can whatever language you want to use around it, but meaning, alignment, purpose, but I love, we're just going to co-opt Bain's language. Like, the ultimate expression of what we actually do as financial planners is helping clients with self-transcendence.

Michael: Do we need to define this?

Carl: Said exactly no one when they were looking for a financial planner, right? Like self-transcendence, what is it? Helping other people or society more broadly. Getting somebody to the...

Michael: So, I'm a step beyond self-actualization. Is like getting me to the next level as self-transcendence. Like, I'm so beyond myself. I'm lifting society as a whole.

Carl: Yeah. It's not about me anymore. Like, it's my ultimate purpose. And again, independent of whether we use alignment or purpose or turn money into meaning or, like, all of that language, that's the ultimate expression of what we do. The problem, of course, is nobody thinks of that when they're looking for a financial planner, they have a problem to solve. They show up with a presenting problem. It presents us with this real interesting paradox of like, how do we talk about it publicly?

And I want to throw one more angle on this paradox, and here's the angle. You've got one of the dollar sign things up above you to viewers' right, those of you on the YouTube. I've been doing this thing and I'm going to keep doing it because it's been so fun at public events with clients, but also at industry events. And two of them really stood out. So, I'll start a public event. This has been, like, an FPA chapter meetings, we did it at XY... we've done it in a big setting, small settings. I'll just ask everybody to kind of settle in and I'll say, "I want you to pay attention to the first feeling you have when I draw something up on the screen," and I won't tell them what it's going to be.

And then I'll have to give, because it's all... And, you know, except for the public events, at the financial planner events, I have to say, "Okay, feelings. Let's talk about feelings for a second. Let's remember what... I want you to pay attention to the first feeling. Do you remember what that is? What the definition of a feeling is." So, it just sort of as a joke. And then I'll draw the dollar symbol up. And I had this amazing experience. This happens at almost every one of them, but I just want to share one quick story. I may have shared it in another episode. But there was a woman in one of these events that... You know, sometimes I say, "Hey, write it down on a piece of paper. What's the first feeling?" And then I'll say something silly.

Michael: What's the first feeling when you show a picture of a dollar sign.

Carl: I'll draw the dollar sign up. I'll set it up. "Pay attention to the first feeling when I draw this." I'm going to draw something on the board and I won't tell them what it's going to be. So, I get it all set up. I try to get people to quiet down and try to get them out of their heads, down somewhere below their heads, and say, "Okay, pay attention to the first feeling." I draw the dollar sign, quiet, sit there for 30 seconds, and I asked them to write it down. And then I often will say like, "Who has something on their piece of paper that they would want no one to know about? Raise your hands." And people have caught onto that joke, so almost no one raises their hand because I call on them. Somebody raises their hand and she says "terror". Or it was a really dramatic word for fear, and I believe it was terror... And I pretended like everybody else just...

Michael: In a conference of advisors when you drew a dollar sign.

Carl: Yeah. And I can tell you, I can remember FPA Houston, somebody said something similar. I can remember a big conference for an internal firm where somebody, as I recall, her name was Erica, she said something like that, fear. We got into it and she talked about how when her parents got divorced, she ended up living out of the car with her mom for a year. Like, these stories are pretty amazing. But this person who says terror, then I pretend like everybody else has left. And I was like, "Can we just talk about this for a minute? Tell me the story." And she talks about how her dad was a daily commission sales person. And she said, every day between 5 and 5:30, she would go kind of hide a little bit in her room because she didn't know who was going to come in the door that day. When dad got home from work, if it was a great day, you know, it'd be super awesome dad. If it was a bad day, something else would happen. And that's where this word terror came up with. This is just like...

Michael: Oh, and so for her, like, money and the commissions that dad made at work that day were associated with how dad showed up.

Carl: She still when she thought of the dollar sign, she had this visceral reaction. So, we talked a bit more about that. Okay, so that's the setup. Imagine all of you listening, imagine you heard that, or you heard Erica's story about living for a couple of years in the car and really worried and really therefore has cared deeply about owning her own home. Like, there was this whole story, either one of those stories. And here's the question. This is an honest question. Like, I don't actually know the answer. And the question is... And I could ask you, maybe we can have a conversation about it. Actually, I'll tell you what happens. I asked this question, let's call the terror lady, Lisa... if you were Lisa's financial planner, would it be important for you to know what that information about Lisa? And I really set this up, like, please... Like, I can actually think of a couple examples of types of businesses, maybe a super investment centric business I can actually think of, but nobody...

Michael: I'm just here to manage your money, ma'am.

Carl: I don't care. Yeah. Nobody in the room buys that. Almost everybody says, absolutely, I would want to know that about...

Michael: Yeah. Like, I can only imagine the ways that that's going to show up at various points in meetings and conversations. That would be really helpful to know that that is the lens and context that she's coming from when money-related stuff and issues crop up. Like, oh, yeah.

Carl: Okay. So, that's universally. And I really pushed back at this point and I'm like, "Okay, anybody take the other side. Please, we're in an FPA event, and we should feel free to raise our hands and set out." And I've never had anybody take the other side of that. Even though I sometimes paint the other side, which is like, I could see a pure asset allocation, investment centric business. Nobody ever takes the other side of that, nobody...

Michael: I mean, I don't know, there's a level of client's personal lives and history that maybe is a little bit too much information. But to me, that that is so viscerally related to money. When I was supposed to give you advice about money things, I'm like, "Yeah, I would really like to know that because I'm pretty sure that's otherwise like a landmine and some financial conversation I'm going to step on at some point. Because I didn't know that was a trigger for you, that when I put a statement in front of you with a bunch of dollar signs, I'm really happy about how well it's going, and you're on track for retirement and look at all the dollar signs, I'm going to freak you out because you're having flashbacks to some childhood trauma." Like, yeah.

Carl: Yeah. And for...

Michael: It would be helpful to know.

Carl: Yeah, for me...

Michael: And for us to face things differently.

Carl: And even, like, my experience with my house and all of that stuff, I think that's important information. So, here's the question, if we agree that that's important information... And this is, again, another question I don't have the answer to, and I'm okay with it, when exactly in your intake process, was that going to come up, right? Was it going to come up in the risk tolerance questionnaire? What's the...? And this goes back to the value thing. If there's something there that would be incredibly important for me to understand in order to do my job, like, we generally agree – we'll just say for sake of argument, we all agree that that's really important – Isn't it fascinating that we don't have sort of a codified way of reliably getting that information from somebody.

And the conversations have been really amazing because really smart financial planners have been like, "It'll come out over time," right? Some planners say, "It comes out in the first meeting. I'm really good at this." Some planners say, "It comes out over time." Some planners are in problem to solve mode, because that's what they came for. And then she mentioned something about that. And 18 months in, I heard something, and I've learned to pay attention to those. So, there's not a right or wrong answer to this. It's just an interesting thing.

Michael: Yeah. I mean, I know there are advisors out there that do various versions of questionnaires to explore client's money scripts and history of money experiences. Shoutout for Money Quotient who has some good tools and training on this. All like, "That was never part of my process." There, there is a layer of, you know, I really like to get to, at least, the underlying whys of why we're meeting and engaged, right? You know, what led you to reach out and schedule this meeting with us and some version of basically the, like, why now. "You know, you have not had a financial planner for all of your life. What on this random Tuesday made you schedule a meeting and come into my office and have us get to know each other or schedule this Zoom meeting and get to know each other a little better." And there's always some kind of thing or some kind of triggering about there's something that's going on, which I find gives a very rich, fertile ground, not only to really understand what is the value I can provide, but, like, sometimes there are some layers of that onion that start to start to get peeled a little bit.

But I mean, I'll own like, no, that kind of story would never have come up in my intake discovery process. I mean, like, reflecting even things like that, that got close.

Recognizing When To Go Deeper When Giving Financial Advice [11:45]

I think the thing I, at least, learned and got incrementally better at over time was recognizing times in meetings where the client's emotion or reaction doesn't seem to sync up, right? Like, I'm delivering good news and you seem, like, really upset and kind of anxious and, like, your hands are super crossed. Like, "I thought this was good news that you're on track for retirement and the portfolio finally crossed a million dollars. And it seems like this is kind of negative news to you. Can you tell me a little bit more about what's going on right now?" Just to at least try to name the moment and open the moment if I'm seeing it.

Whereas I think historically, I've been like, "This is weird. I'm going to move on quickly. Please, pass the tissues. Please finish crying and move on," whatever it is. At least now, I would probably hold that space for a moment and acknowledge the thing and, at least, open a conversation opportunity to say, "Can we talk a little bit more about what's going on here? Would you like to tell me more about this?" Or, "Is there something else we should be talking about here?" Like, I find some way to open that conversation. So, at least, if I whacked into this landmine, hopefully, I didn't completely blow myself up, and I can try to open the conversation in that moment. But as you highlight like that, that may be months or years into the relationship when that finally comes up.

Carl: Well, I think the important point here is, and that's okay. Like, I think, to me, this relates back to our discussion in the last episode about the marketing thing. I think what it is like, I kind of where I've settled, and this is a hypothesis that please, if you're listening to this and you have a different view, send it to us, send it to Michael.

Michael: I'll forward it to Carl.

Carl: I love the idea of, like, maybe I'm often in problem-to-solve mode. And what we're saying here, and I love the way you put it, is while in problem-to-solve mode, I'm on the lookout. I'm on the lookout for, I call them crunchy bits, emotional resonance, you know, the little bit where I'm like, "Wait, wait, wait." And then I can develop some ways of opening the space for that. Some of my favorite coach therapist people I've ever met will just be really direct. Like, "Hey, I noticed something I just said may have landed with you." Or, "Bob, I noticed you rolled your eyes." I wouldn't say that, "Bob, I noticed, while Jim was talking, that you shifted or something came up." I wouldn't say shifted a bit or rolled their eyes, something came up.

But the key here to me is we're solving problems. We're helping people with things they need to get done, we're doing jobs to be done, and we're paying attention. And so, if it takes eight... Because one advisor, really smart advisor, planner that I think everybody would recognize the name said like, "When's that going to come up?" And they said, "When it comes up." I love that idea of, like, and maybe I can get slightly better with creating conditions to allow that to happen.

Michael: Yeah. Well, so, yes, but relative to what we talked about last episode, it's when we get to those moments that the relationship and the depth starts to go to the next level. And it's when we help clients through trauma and difficult journeys that the trust and the relationship deepens. And when we get to the other side of some life-changing event. I mean, we talked about death of spouse last episode, but, you know, deaths, divorces, marriages, and positive on the other end.

Carl: Diseases.

Michael: Retirement, business exits is a huge one. When we get to the other end of those transformations and the transformations go well, I mean, those are the super clients. Because I mean, those are usually the super referrers.

Carl: Yeah. And I agree. Let's...

Michael: Like, those moments, right? You know, "My life is completely changed and transformed since I was working with this advisor. We got all the way through the business sale. It went amazing. I love my life now. I'm doing all these awesome things. I didn't become the bored, unhappy business owner after retirement. I found all these new organizations to get involved with and I love it. And my money has purpose. I'm doing these amazing things. It was all because of this advisory firm I work with." Like, those are the, like, the superpower advocates, and very few of us market... what was it, "self-transcendence", on our website.

Carl: The self-transcendence stuff.

Michael: At least do know a few folks that market some effective like, you know, "We'll help you through...

Carl: Transitions.

Michael: "...divorce or widowhood or exiting your business," but I've never seen anybody actually get the word self-transcendence on their website. Maybe you market for success or significance, which represents self-transcendence about the closest I could get.

Carl: Yeah. Alignment, purpose, meaning. Let's talk about the business one real quick because this is super interesting. I remember having spouses who had a business, they were both running it. She was largely the one who had built the business, but they were both involved. And the presenting problem was not, "What am I going to do with my life?" The presenting problem was, "Hey, we're going to sell a business. We're going to have a pool of money. We want to make sure we do it smart, and we're gonna have a pool of money to invest." That was how they showed up. Like, there was a problem to be solved. But then throughout the relationship, like, you start to notice these ideas of... And I remember it was the first time I sort of got this clarity around, maybe the reason I'm so busy is because I'm scared of what I would find out if I wasn't right. It was working with them that I realized.

Because if you're on the lookout for it, they would mention something of like, you know, the buy sell agreements and the, "We're doing all the problems to be solved." And they were thinking about the money or making sure that it's done in a tax efficient way and all these things and the rollovers and all this stuff. And then there's some mention of like, "What are we going to do with our..." You know, like, "Man," or maybe it's like, "I not even sure I want to sell the business." But I'm just trying to point out places where you can start paying attention, where you shift from problem to be solved planning into purpose-based planning.

And again, I'm trying to figure out a framework for this, so it might feel a little forced, but it feels like toggling a bit. Like, I just heard something that has some emotional resonance. This is actually one of the reasons you're fighting the sale of this business every way, or making it more complicated or making it more hard, is you're not sure what you're going to do. It's not that you don't want to sell the business. And see, your whole identity is wrapped up in it. But listening for that, that's what you pointed out, is like, "I would listen for that. I would pay attention to it. I got a little bit better of noticing when that happens and creating space for the discussion around it."

Michael: I mean, I think the change for me was actually being willing to stop in that moment and try to open a conversation. I don't think I was ignorant of those before. I was like, "Oh wait, things are awkward. Things might be coming here. Let's move on to something. Let's move on to safer grounds."

Carl: Yeah. But I think early in my career, I would have been just completely ignorant to them. I wouldn't have even noticed them. It takes, like, some facilitation skills and somebody else to maybe say, "Hey, did you even hear that? Did you notice what they said?" And I think that's what I'm pointing to here.

How To Tell The Story Of Self-Discovery In A Way Prospects Understand [20:00]

And then, of course, we get back to marketing, which to me still, maybe I can start telling some of these stories in a public way, like, writing these stories, you know, confidentiality, all that stuff, right? But writing these stories of transformation so that a prospective client starts... And so, I can start upstream having more and more clients show up at my door expecting this kind of thing. Not only because the referrals I'm getting are saying things like, "I don't know what to call it, but go see those guys", right?

Michael: Yeah. "I don't know what to call it, but go see it." Yeah.

Carl: Yeah. Or they're saying, you know, "My advisor is Christie. Read this story she just wrote."

Michael: So, I want to take this back though, to where I think we started this conversation arc earlier in this episode and even the prior one, this is kind of like a two-parter now... How do I market this? Like, how do I communicate the value? Like, again, most of us seem to acknowledge these deepest client relationships are when we help them through these major moments. And then they say like just, "They did all the things for me. I don't even know how to describe it. You just got to go see them." And not really what we're supposed to put on our website. I mean, I feel like for a long time, the profession even had a running joke of, you know, we can all say our primary value is peace of mind, but good luck actually writing on your website, "Our primary value is peace of mind," see how many clients you're going to get.

Carl: I think that's exactly. That's where I settled. It was, like, any of these words, trust, peace of mind, couple holding hands, walking on the beach had become so overused and abused and cliched that they were of no value. The first person who says, "You can trust me," loses. You know, so I have two thoughts.

Michael: Except it's actually the value dagnabbit.

Carl: I know. So, I have two thoughts. One, market the way somebody's expecting, like, problems to be solved. Like, I'm just going to be what you kind of expect me to be. And then I'm going to know that this is just a portal. I call it righteous trick, right? This problem to be solved is incredibly important. Now, I'm going to pull a series of righteous tricks over a course of months, days, weeks, or years to help you understand there's this much more important thing. So, that that's kind of where I just settled out.

Like, I'm going to have the office. It's going to feel slightly like an architect. So, I'm going to feel like a bank. Okay, I'm going to make that shift. It might feel like a coffee shop if I want to go really far. I'm going to make that shift. I'm gonna make people feel comfortable. I'm going to sit on the same side of the table. Like, all of those softer things that we've... By softer, I mean, I don't know what the right word is, more comfortable. All of those things that we've all acknowledged and talked about. But then I think there is one thing we can do upstream. Upstream is we can start telling more of these stories, right? In the form of writing these stories in the form of... And not like, "Look at the transformation I took client through."

Michael: I mean, you make these stories, like, these are, you know, right marketing case study articles to explain what you do. I mean, like, are you talking that context?

Carl: Here's what I started doing years and years and years ago when I was running the firm, is I would just... And I noticed that you could get away with telling some of these stories in books much easier than you could in anything called marketing. But I would just start saying, like, "Let me tell you about a conversation I had with a client." But actually, I'd even pull the client thing out, "Let me tell you about a conversation I just had with a friend at lunch. Friend is getting ready to sell a business. And there's all these practical things they need to take care of, problems to be done, problems to be solved, right?

"But then we got to this really interesting thing where they were wondering what they were going to do. And we had this amazing conversation about identity and having passions and hobbies. And it dawned on me that it's really important to be developing that before." And not like, "My work helped solve this problem for..." Just like, I'm just going to paint this picture so that... And I've seen this with the "50 Fires" podcast, like, people reach out saying, I" want that kind of conversation with a financial advisor." So, you just start saying like, "Wait, that's weird. I've never had that conversation with my financial advisor or my finance person." So, I think you can upstream.

And then the other thing you can do is make sure that when anybody, like the client you talked about, refers someone... And I watched clients refer people like I just said like, "I don't know what to tell you, but you need to go see this person." Well, that we treat them really well and that we engage really quickly and that we do what we say we would do and we say, please, and thank you and we reply to emails. Like, all of those things set us up to have an increasing percentage... and this is one conversation I have had with older planners who are, like, almost all my clients now come looking for some sort of... And they definitely don't use self-transcendence, but, "All my clients come thinking it's going to be a deeper relationship." "Where do they come from?" "All of them come from referrals." That's my answer.

Michael: So...

Carl: When I stop you, it's my favorite thing.

Michael: I mean, if you're going to do this as storytelling manner, where do you get the stories?

Carl: So...

Michael: When every client's different.

Carl: I think you get the stories from every conversation you have about... Like, any conversation that to you is impactful. And that's how Behavior Gap started. That's all the book is. That's all the one page plan is, is just remember, every time you have a conversation with somebody, so it could be as simple as asset allocation, right? Like, "Let me tell you about an experience I had at dinner with some friends." And of course, we can't lie, so I'm assuming that you had dinner, and you're just...

Michael: I do almost every day.

Carl: And you had dinner with these clients, and you're just referring to them as friends because they're also friends. And you could say clients, I just don't know the rules anymore about that kind of stuff. But, like, I think it's okay to say, in very vague terms, and not case study-ish, to say, "Let me tell you about a dinner I had with some friends. They found out what I did for a living and we started talking about the investment process. And they have this, what I'd call a smorgasbord. We happen to be at a buffet." That's a terrible setting. They have, like, a collection of...

Michael: I was having this smorgasbord at a buffet.

Carl: "They have a collection of investments, independent, separate investments, a smorgasbord. And we started talking about how important it is that each investment is evaluated for its own merits along with its contribution to the whole. It's this concept called asset allocation. And that there's much more that goes into designing a really great portfolio than just collecting investments along the way." Like, that's literally a column that I wrote. Like, so I think you can look at every one of those conversations, right?

Tell you a story about Dan and Barbara, "When Dan retired a little early, he actually got part of an early termination buyout. And it was before Dan had thought about retiring five years before. But Dan went through the process of trying to figure it out." Like, I don't have to say I took Dan through the process. "Dan went through the process of figuring out if he would be okay. And now, Dan's taking paragliding lessons." So, I just think you look for conversations that you're having that linked to something about, "The portal was a problem to be solved that led to deeper conversation."

Integrating Peace Of Mind Into Marketing As A Financial Advisor [28:12]

Michael: So, I get it. Once I'm in, as I've heard about, a sales conversation, right? I'm talking to someone. I can tell some stories.

Carl: No, I'm saying, like, that story should be posted somewhere, right? That's story on...

Michael: Okay. Is that on my website?

Carl: You could do a crazy thing called a blog. You could do an email newsletter. You could put this up on LinkedIn. You do whatever you do. You could tell this story on a TikTok, Snappy Talk. Like, I don't even know what it's called anymore. Like, wherever you tell stories, tell stories there. Snappy Talk.

Michael: Snappy Talk.

Carl: MySpace.

Michael: MySpace. FaceSpace?

Carl: FaceSpace.

Michael: Because I'm just trying to show the value and the journey and the outcomes.

Carl: I think what we're trying to do is move meaning as the unit. Like, the outcome that we're most interested in, I think, is meaning and purpose as financial planners. We're trying to help people understand that earlier by giving them an entry point. And so, that way, upstream, you're getting referrals now from people who know that you do a thing that's different, like, whatever words they want to use. You're also increasing those referrals by, if my friend tells you like, "You just got to go see Christie." And I go Google Christie. And then I run across some, some articles she's written on LinkedIn that happened to have this kind of tone or flavor. It matches what my friend said. And you're like, "Gosh, I want a little bit of that. Oh, yeah, I want the problem solved." And wouldn't it be interesting if it was linked to some deeper sense of purpose, right? Like, I'm just increasing the upstream. I'm increasing the frequency with which somebody shows up in my office, knowing that's the experience they're going to have.

Michael: And so, my post is something in the effect of, "Hey, funny, interesting situation that happened with the recent client parentheses anonymized for their protection." And then I talk about some stuff, some of their journey, I guess, not investments returns.

Carl: Well, yeah, I think what I was really...

Michael: We're not trying to advertise performance and financial outcomes.

Carl: Yeah, of course. But what I really loved was, if it gives people the entry point through the problem to be solved. So, this sounds like something they would do. It doesn't start with, "Let me tell you a little story about a client crying on my couch." It starts with, "A client didn't understand where all their money was going, so we started talking about cashflow management. But then we realized, once we got a handle on it, we wanted to align their spending and investing to what actually matters to them. And so, we had a conversation. And I didn't know this, and it turns out they didn't even know this because they hadn't had this conversation. It turns out travel is really important to them."

So, then we had the chance to go back and look at how they were spending their money based..." And I'm completely making this one up. I can remember Darren and Alison having this conversation generally with me in my office. "But then we went back and looked at their spending and it turned out they were spending hardly anything on travel, but they were spending a bunch of money on this other thing they realized they didn't even care about. So, man, then it was fun. They got to realign some of their spending, and now, they're taking a trip. They're on their way to Costa Rica next week." Like, that kind of flavor, right? Problem to be solved, led to a portal, had a transformation, off they go.

Michael: And then I point out that we can guarantee this for you with 50% efforts.

Carl: That's exactly right. Like, "If you want more of this, come see me."

Michael: It comes at the end.

Carl: Yeah, exactly. And, you know, I don't even think you have to say, "This is the kind of work we do." People are smart and like, of course, people know, right? So, I don't even think it has to be about you. It's about the client and the transformation, the experience they had.

Michael: All right. Interesting. Interesting framing. So, we're trying to just tell the story, share the story.

Carl: This would fall under show them. I know it's by telling them, by telling a story, so it doesn't quite work. But rather than telling them, "We do transformation, show them what that looks like."

Michael: Like, don't tell them, show them by telling a story.

Carl: Exactly. Well, I don't know exactly how we could make that work. But what I'm saying is...

Michael: I can work with that.

Carl: ...instead of punching them in the nose with the sledgehammer of self-transformation...

Michael: Self-transcendence.

Carl: ...self-transcendence, let's show them how that actually happened by telling stories. Okay, Michael. That was fun. Thanks.

Michael: Thank you, Carl. Thank you.