Welcome back to the forty-second episode of the Financial Advisor Success podcast!
My guest on today’s podcast is Carol Craigie. Carol is the co-founder of Fiscal Fitness Clubs of America, a financial wellness company that aims to expand the reach of financial planning advice using a combination of online education and Group Classes.
What’s fascinating about Carol’s business, though, is that while the idea of providing financial advice in a group format may seem alien to the traditional financial services industry, the reality is that it’s already established as an effective model amongst psychologists, and is used for a wide range of successful counseling programs, including Weight Watchers and AA. And not coincidentally, Carol’s training before she joined the financial services industry herself? She has a degree in Psychology, and a Master’s in Counseling.
In this episode, we talk in depth about how financial planning advice can be delivered in a group format. We explore the highly structured way that Fiscal Fitness Clubs takes clients through its process, starting with a series of 8 “Taking Control” classes, and followed by an ongoing series of Monthly Action Classes. The process is built entirely around focusing on cash flow first, and tackling the underlying issues that cause money stress, with the idea of breaking up financial self-improvement into a series of small bite-sized tasks that can be accomplished every month… and then using the group format as a way to create peer-to-peer accountability, including the fact that everyone gets a “money buddy” when they first start.
From there, we also talk about the business model of doing financial planning and financial wellness in a group format, the experimentation that Fiscal Fitness Clubs is doing with various price levels and group sizes, and how financial advisors can actually get paid upwards of $100 per hour to facilitate these financial wellness groups… which suggests that financial advisors could actually make a very solid income, serving a group of consumers that the industry has long claimed “can’t possibly” be economically feasible to serve as a financial advisor!
And be certain to listen to the end, when Carol shares her own journey from having served as the National Director of Financial Planning for both a wirehouse and a private bank before making this substantial pivot into financial wellness, and her perspective about what it will take for financial advisors to really succeed in an increasingly technology-driven future.
So whether you’ve ever been curious about the idea of delivering financial planning in a group format, or want a glimpse of how a financial wellness program can deliver financial advice value to the masses, or simply want some ideas and inspiration about the value of financial planning, I hope you enjoy this episode of the Financial Advisor Success podcast!
What You’ll Learn In This Podcast Episode
- What most individuals really struggle with when it comes to money – beyond the traditional financial planning topics – and how Fiscal Fitness Clubs of America tries to address the issues. [3:46]
- Why data gathering with clients can be a major roadblock, and how advisors can help by encouraging ownership of their own financial future. [8:30]
- How financial wellness differs from financial planning, including its defining characteristics. [13:29]
- What facilitating group financial advice classes looks like, and how it can helps clients be more effective in creating results. [20:03]
- What the challenges are in making sure that group financial advice is economically feasible, yet still intimate enough for clients. [22:25]
- Why sharing stories and vulnerability is crucial for connecting with clients about their money issues. [24:50]
- How the lessons of “what works” in the field of psychology for helping patients can be applied to the common practices in financial planning. [55:04]
- How the financial services industry can be profitable from serving the masses effectively. [1:16:26]
Resources Featured In This Episode:
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Full Transcript: Building Group Financial Wellness Classes To Expand The Reach Of Financial Advice with Carol Craigie
Michael: Welcome, everyone. Welcome to the 42nd episode of the Financial Advisor Success Podcast. My guest on today’s podcast is Carol Craigie. Carol is the Cofounder of Fiscal Fitness Clubs of America, a financial wellness company that aims to expand the reach of financial advice using a combination of online education and group classes. What’s fascinating about Carol’s business, though, is that, while the idea of providing financial advice in a group format may seem alien to the traditional financial services industry, the reality is that it’s already established as an effective model among psychologists, and is used for a wide range of successful counseling program, including Weight Watchers and AA. And not coincidentally, Carol’s training before she joined the financial services industry herself, she has a degree in psychology and a Master’s in counseling.
In this episode we talk in depth about how financial advice can be delivered in a group format, the highly structured way that Fiscal Fitness Clubs takes clients through its process, starting with a series of eight taking control classes followed by an ongoing series of monthly action classes, all built around focusing on cashflow first, tackling the underlying issues that cause money stress, and the idea that breaking up financial self-improvement into a series of small, bite-sized tasks that can be accomplished every month is more effective, using the group format as a way to create peer to peer accountability, including the fact that everyone gets a money buddy when they first start.
From there we also talk about the business model of doing financial planning and financial wellness in a group format, the experimentation that Fiscal Fitness Clubs is doing with various price levels and group sizes, and how financial advisors can actually get paid potentially upwards of $100 an hour to facilitate these financial wellness groups, which suggests that financial advisors could actually make a very solid income serving a group of consumers that the industry has long claimed can’t possibly be economically feasible to serve as a financial advisor. And be certain to listen to the end, when Carol shares her own journey from having served as the National Director of Financial Planning for both a wirehouse and a major bank, before making this substantial pivot into financial wellness, and her perspective on what it will take for financial advisors to really succeed in an increasingly technology-driven future. So with that introduction, I hope you enjoy this episode of the Financial Advisor Success Podcast, with Carol Craigie.
Welcome, Carol Craigie, to the Financial Advisor Success Podcast.
Carol: Oh, thank you. I’m excited to be here.
Michael: I’m looking forward to this episode because you followed a really interesting path in financial services. I know you were National Director at a wirehouse at one point, you’ve worked in private banking system and trust companies, and now you’re at what I feel like is the opposite end of a spectrum with a business that’s trying to do financial planning, or I guess as you frame it, financial wellness for lower and middle-income folks through employers. So I don’t think you can bookend the extremes much further than going from private bank, trust company, wirehouses to financial wellness for lower and middle-income folks. So I’m really excited to hear from you this journey that you have gone down to navigate that path.
Carol: Well, it is an interesting path, and I think it does say something about my personality, that I like different experiences.
What Most People Really Struggle With When It Comes To Money [3:46]
Michael: Yes, you clearly have some drive to find a range of experiences. So maybe as a starting point, why don’t you tell us a little bit about the business that you’re working on now, Fiscal Fitness Clubs of America. What is that?
Carol: Yeah, so Fiscal Fitness Clubs of America is a financial wellness company, and our goal is to help people get what they really want from their money. I stress that because our society and our culture pushes spending money in lots of different ways, and we also keep money in the closet. So out of all the topics we don’t talk about, money is one of the biggest ones. And one of the results of that is that people don’t think about what they really want from all that labor, right? We spend 35% of our life energy in work, and then we ignore it. That seems kind of silly to me.
Michael: So it’s sort of that there are people who live to work and there are people who work to live. Most of us, it seems, work to live because we don’t necessarily find that passion consuming job where we just live for our work. So we’re doing all this work so that we can get the money to live, and then never actually really spend the time thinking about why we’re working for all the money or what it actually, how we use that money to actually find some happiness or fulfillment, or as you put it, how people get what they really actually want from their money.
Carol: And I think it even goes beyond that. We don’t even spend the time to manage it, pay attention, do the tasks that we ought to do on a regular basis to keep it under control. It just seems like our industry has managed to make money management into either an Alfred Hitchcock horror movie, right? Somebody is waiting right around the corner and you better get somebody between you and them because they’re going to get you.
Michael: Yes, it’s sort of the fear-based, “You’ve got to work with a financial advisor to protect you from all the evils that are out there to part you from your money.”
Carol: Or you better put it under your mattress or don’t trust anybody, or don’t talk about it, don’t share what you’ve got because your friends will take it. Or we make it a boring documentary, “Blah, blah, blah,” and nobody wants to do it. We happen to think it should be a romantic comedy. We’re silly with money. We’ve got a love-hate relationship. It’s going to be in our lives for the rest of our lives. Let’s just find it, figure out how to have a relationship with it, make peace, and do what we need to do to take control of it.
Michael: I like that framing. Talking about money is either a horror story or a boring documentary. Let’s just go for the rom-com. Let’s just go for the romantic comedy instead. Just thread that needle right down the middle.
Carol: Exactly, and let’s see how silly we are with it, because let’s face it, people do a lot of crazy things with money.
Michael: Right, it’s the last great taboo topic. You’re not supposed to talk about sex, money, politics, and certainly as Facebook makes evident, we’ve clearly gotten comfortable talking about politics. Social media even seems to open up the talking about our personal lives a little bit more. The only thing left that seems to be sacred that we can’t talk about is the money part.
Carol: Absolutely, and that’s one of the tenets of our business. So Fiscal Fitness Clubs is based around the concept that, one, that the people who need the planning and advice simply are not getting it. Our industry has not figured out a cost-effective way of delivering planning and services to the masses. The second component is that we need to bring money out of the closet. So when we looked at the most successful behavior change programs in existence, one of the ones that comes to mind is Weight Watchers. Even before they started selling product, they had a model in which they brought people together to talk about diet and weight loss, and it was one of the first times that they’ve done that. If you look at other models, AA, bringing people together in groups to talk about things is a more cost-effective way of delivering services. So my background is in psychology. I have a Master’s in counseling, and I looked at this and said, “You know, we could break these two problems by combining looking at how can we provide cost-effective service to large numbers by helping lead people through the process in groups.
Why Data Gathering With Clients Can Be A Major Roadblock [8:30]
Michael: So that’s what the focus is for Fiscal Fitness Clubs of America? You’re trying to do a Weight Watchers style, sort of facilitated group therapy environment? Maybe therapy is the wrong word, but like facilitated group financial planning?
Michael: Obviously that changes some of the business metrics when you put 10 people in a room at once instead of one at a time, but that’s the framing? Group delivery of financial planning?
Carol: Yeah, that’s part of the framing. What we found is that a significant portion of people are willing to do things on their own, but we all know that if we give our clients these questionnaires, many of us have trouble getting them back, right?
Michael: Yes. A lot of financial planning starts and ends with the inability to get data. Just, “Hey, I’d love to do some financial planning for you. Here’s the data we need,” and that’s the end of the planning process.
Carol: Yeah. As a matter of fact, I discovered early if I wanted people to not hire me as a financial planner I would give them large assignments to do, and then I would know that they wouldn’t come back.
Michael: That’s a fantastic tip. I’ve just got to recognize that. So word of advice out there, if you get one of those client prospect inquiries and it’s not a pleasant person, you don’t really think you want to work with them, but you’re not comfortable telling them no, just give them the most comprehensively onerous data gathering process you can, and the odds are they’ll never call you again.
Carol: Exactly. Or you can refer them over to Fiscal Fitness Clubs.
Michael: Or you can refer them over to Fiscal Fitness Clubs.
Carol: Yeah, or your worst competitor that you don’t like, depending on how bad the person is.
Michael: I love that. So I never quite thought of the data gathering process actually as a screening tool for clients. But it does make the point that, I feel like we forget this sometimes, as advisors, that for us it just naturally starts with, you gather the data and then you analyze their situation, and then you can formulate recommendations. And we kind of forget that a lot of people aren’t that organized in the first place to be able to bring together and give us the data. If they were that organized, they probably would already be well on their way toward a better financial situation than maybe they have and that they’re upset with, and that often the reason they’re coming to us is because there’s some financial issue and they’re not organized and structured enough to figure out how to solve it on their own. That’s why they’re coming to you as a professional. But it means if you start with, “Well, I’m going to assume you’re organized enough to give me your data,” that may be a very bad assumption, and undermines the whole planning process.
Carol: Yeah, so part of my background in psychology means I follow behavioral economics a lot, and that data gathering is a roadblock, and there’s lots of research that shows if people have a little bit of input into building something, it increases their feelings of ownership, and the chances of them implementing are much higher. On the other hand, if you give them too much or a task that they don’t feel competent to do, it makes them avoid it and become a procrastinator. And I have to tell you, I’ve done things like when I was Director of Financial Planning at Wells Fargo, I took the standard data gathering and I just went out and I asked people, “Do you know what these questions mean?” And about a third of the questions, the people would finally look at me and go, “I don’t really know what it means. I don’t know how to answer this question. I feel stupid.”
Michael: Right, just little things like, “Please list your securities portfolios.” I don’t know what a security is.
Michael: It could have said investment accounts, but it says securities portfolios, and we’re stuck on jargon.
Carol: Exactly. So we tend to, as an industry, put lots of roadblocks in clients’ ways, and I think data gathering can be one. So what we’ve found though, is once people get engaged and once they are clear on what they want from something, then they’re willing to put more time and energy into that data gathering, and especially if they feel like it’s okay to not know what those words mean, it’s okay to not be organized, it’s okay to be messy and realize that, “Well, yeah, I don’t know what these words mean.” I once did a program where I explained what’s a stock and what’s a bond, and at least ¾ of the room wrote down those definitions. You don’t write down “2+2=4.” You don’t write down things you don’t know. So when you realize that people are out there not knowing what’s a stock and what’s a bond, you start going, “Oh yeah, maybe we do have jargon.”
How Financial Wellness Differs From Financial Planning [13:29]
Michael: So you framed the Fiscal Fitness Clubs of America as a financial wellness platform where you’re trying to help people get what they really want from their money. I feel like a lot of us as financial planners say our job is to help our clients get what they really want from their money. So I’m wondering what you see as the difference between financial wellness and financial planning. I’m assuming you chose those words deliberately, that you said you’re a financial wellness company. So what’s the difference in this to you?
Carol: So there are a couple of subtle differences. Number one is, we believe that people need to learn how to take control of their money, not just give it to us, but how do they actually do all of those tasks that a person ought to do every year to really stay on top of their finances. And second, we believe that, while some parts of financial planning are rocket science, a lot of it isn’t, and if we can empower people to know the questions to ask, to know for example, how do you evaluate your homeowner’s and automobile insurance, how do you even compare just a little bit of what the fees are and what the risks are in your investments, and whether or not they’re appropriate, how do you organize your paperwork so, if a disaster hits, like we’re seeing happen a lot right now, that you’ll be able to access your files if your house burns down or is flooded or is wiped out with a hurricane. So we think that financial wellness is more than looking ahead and saying, “Where do I want to be in five, 10, 20 years and how am I going to achieve my goals?” but financial wellness is accepting responsibility for the financial issues in your life, and knowing how to address those on a consistent, easy basis.
Michael: Okay, so I can kind of distinguish, financial planning is very forward-looking, financial wellness is about dealing with the here and now and just getting it organized and sorted out and putting yourself on a better track of habits and organization? Is that a fair characterization?
Carol: Well, financial wellness also incorporates financial planning, because if you don’t look forward in the future, then you’re going to not make good decisions today.
Michael: Okay, yeah.
Carol: So it’s combining both, but recognizing you may need some expertise to help you with some of the financial planning components, but hey, you’ve got to learn how to deal with your taxes, you’ve got to figure out a debt restructure and you ought to learn how to look at your debt and analyze it on a regular basis and say, “How am I going to get off this horse?”
Michael: And I thought you had an interesting point as well, that this framing around helping people to take control of their money and not simply managing it for them. As advisors we’ve long recognized that we tend to work with people who delegate. I mean it’s sort of the nature of managing portfolios and giving them guidance on what to do, that almost by definition, if they didn’t want to delegate that stuff, they probably wouldn’t work with us and do that. They would be do-it-yourself-ers, kind of literally. So is there a distinction here as well, that financial wellness, you’re targeting the non-delegators a lot more, who actually want to be able to do it themselves or at least be able to do more of it themselves, they just need the help or education or understanding or empowerment to be able to do it, and that’s the void that you fill for them? Not to turn them into delegators or turn it over for them, just to help them be better, call it, do-it-yourself-ers?
Carol: Well, that’s something I haven’t really thought about in those terms. What I’ve discovered is that there are so many people who would even like to work with financial planners, but they don’t see it as reasonable or cost-effective or they haven’t found those that are willing to take them if they don’t have $500,000. So there are people out there who would love to be able to delegate it, if they could afford it, who can’t afford it or who haven’t found the person yet. And then there are those people who need help in guiding through it. So we’re trying to meet both groups’ needs. We do have people who follow our content and material and resources kind of on a self-study and then call when they have a problem. Then we have our group model which takes people in groups through the process. I think the other thing I want to point out is, we believe cashflow is king. And let’s face it, most planners do not have the time, it’s not cost-effective to get into budgeting. And yet, until you get control of cashflow and budgeting issues and debt issues, then to accumulate the money that you need is a struggle.
So part of our program incorporates that dieting component. We like to talk about how physical fitness and fiscal fitness are pretty similar. Like if you think about the two components of physical wellness, you’ve got diet and exercise. Well, with fiscal fitness you’ve got cashflow and managing your resources. And we like to liken the cashflow like with diet, it’s calories in, calories out, and with cashflow it’s money in, money out. You can’t just do the diet and not the exercise. When it comes to exercise, you’ve got to do different kinds. So it would be pretty crazy if all you did were curls and you didn’t do any sit-ups or leg pushes. So you’ve got to work the different muscle groups. Well, finances, you’ve got to work the different financial resources. So you’ve got to work your insurance and you employee benefits and your legal documents and your taxes and your investments and your paperwork management, and you need to focus time on each of those different areas.
What Facilitating Group Financial Advice Classes Looks Like [20:03]
Michael: Okay, so you’re talking about this in the context of delivering in groups. So can you tell us a little bit more about what this looks like? I mean what do you actually do? What do you do in groups, how do you set them up, how does this actually operate?
Carol: Sure. So we have two different ways that we deal with groups. So first of them are groups that come from the public or are public created. So my massage therapist got some friends together and decided to create a group. We have some cousins from a large family that have recruited and are doing a club as a group. Then we go to companies and offer it as an employee wellness program. So they can offer it either as a fully subsidized program or they can simply offer it to their employees, and we give a discounted group to the employees if they want to join from a company, and so for less than the full retail price they can become a club member of Fiscal Fitness Clubs because they work at a specific company. So in terms of the process when people come on, our intake form is, “How stressed are you with money? And what’s causing stress? So it’s more about the emotions behind money and how you feel good about it, how you feel bad about it, struggling with spouses, etc. So if you go on our website, that’s one of the questions that pops up all the time, “Take this quiz on your financial readiness, how ready are you to take control?” So our intake is, tell us about the emotions behind money and the stress. Because I’m sure you’ve seen all the research, it comes out all the time right now about, finances are the number one stressor in America, and it beats both jobs and marriages combined, as causing the most stress for Americans, which also impacts their health. So financial wellness actually can improve people’s health, which is kind of funny, right? I guess we wouldn’t eat all that chocolate and drink all that wine if we weren’t quite as stressed out.
What It Takes To Make Group Financial Advice Economically Feasible [22:25]
Michael: So you mentioned that people have this option to be paying to have access. I’m very curious about what the economics of this look like as well. When we say it’s difficult to do financial planning that gets into people’s budgeting and cashflow because it’s not cost-effective, and then you talk about trying to serve an underserved group that tends not to have the income and assets, and you’re going to focus on the thing that all of us say is the least profitable and most time-intensive thing to focus on, how do you make this actually work?
Carol: Well, so first I’ll remind you we are a startup company, and I think this is going to work, and it does require large numbers. So we have priced it out and we are getting close to that point where we see it is profitable. But for example, for $59 a month you can join a club. So for $59 a month you join a club, and that club meets, and a planner is meeting with those club members once every other week.
Michael: And they’re meeting in group once every other week?
Carol: In groups. We don’t ask people to share their personal how much you owe in debt. It’s not that kind of sharing, but we take people through the process of defining goals, and we give them the tools that they need to do it. And remember when I talked about how getting people to give you data is hard in the beginning? It’s not hard if they’re vested, if they understand why they’re doing it, what they’re going to get out, and they know that other people are doing it. So for example, our Getting Started classes start with an orientation on the tools you’re going to have, and we introduce them to Mint.com. We say, “Okay, everybody. Here’s a little video you can go watch on Mint.com. Go set up your programs, and then text your money buddy when you’ve got it done.” And we get people to pick money buddies, and whether it’s their spouse, their partner, or somebody else in the group, the idea is to find somebody else you can talk about money with. And typically they’re both in the group.
Why Sharing Stories And Vulnerability Is Crucial For Connecting With Clients [24:50]
Michael: And of course, now you’ve basically got an accountability partner. My money buddy knows I’m supposed to text them when I’m done. So I don’t want to be the one that doesn’t get it done, because then I feel bad.
Carol: Exactly. So we break up the tasks into very small bites, and then we ask for people to talk about what the experience was like. So the financial component is maybe 10 or 15 minutes. Hey, let’s get into Mint.com, here’s what you’re going to learn, here’s why you want to do it. We show them our own, because we’re bringing money out of the closet, so I’ll bring mine up and say, “Look at this, you can tell when I look at trends, where my spending is. It’s called kids. I have grown kids. Look at that.” I’m spending more money on my kids than I am on my vacations. You guys can help me with this this year.”
So we share the vulnerability that we have, and what we’ve learned, and it’s fun because we’ve taken our coaches through this, and they were sharing different stories about what they learned with each other and what they’ve learned about their relationship with spouses and dealing with money as financial planners. So I guess that’s part of what the clubs are doing, is they’re taking people through the journey in small steps, but letting them find out, “Hey, I’m not the only one that has this issue.” I’m not the only one that disagrees with my spouse about where we should spend money or that avoids those conversations or that feels guilty about how often we eat dinner out, or doesn’t want to show my spouse where my money goes, because they’re going to attach this one kind of expenditure that I have.”
So by taking people through small steps, like it starts with cashflow and then we teach them how to look at a net worth statement and identify, how long could you live on your reserves? How much cash have you got? And we don’t use the words “emergency funds.” We try to, if there’s any piece of jargon we find, we try to cut it out of the language.
Michael: You think emergency fund is jargon? I would have thought that’s a fairly straightforward label.
Carol: It has emotional connotations. So emergencies are scary, and how many of us think emergencies are going to happen to us this year?
Michael: Well, never. They don’t actually happen to me. They happen to other people, and I hope they never happen to me.
Carol: Right, and I should get this emergency fund thing together, but first I want to pay off my debt and refinish the basement, etc. So we look very carefully at the words we use, and we get people to look at, what are the things that surprised you in your budget? “Oh, you know what, my car broke down.” Now, Michael, if you own a car, can you predict it’s going to break down sometime?
Michael: Not unless I’ve already done some pretty bad things to it. Usually not.
Carol: Yeah, or do you think you might need new tires? Or license tags?
Michael: Yeah, these are always the unexpected things.
Carol: Yeah, so in any case, I can tell people things all day long. We can tell our clients, “Save more money,” but it’s until they discover it themselves that the behavior doesn’t change. So we help lead people through that process of discovering what kinds of things do you need to think about, what kinds of things do you need to prepare for, what worries you? So our Taking Control classes are eight sessions, and it takes people through discovering their cashflow, setting their goals, looking at what resources they have, figuring out how they need to change patterns to get what they really want. And that completes our first section. Through that we’ve given them access to resources such as, we have what we call a playbook, a Fiscal Fitness playbook, and it’s really an Excel spreadsheet with built in formulas. So if they enter information about their, just high level, how much cash you’ve got, how much your investments are, it does some calculations and it helps them see what they’re doing, it can help them track their progress, and we give them access to some planning software, very high level planning software, and they do little steps as they go through this. So by the end of those eight sessions, which, remember, are every other week, they’ve gone through and kind of built a plan.
Michael: So they go through eight sessions every other week. So that runs them four months. They’re paying this ongoing per month fee to be part of the Fiscal Fitness Club. So I’m just wondering, what comes next? I join a health club and I pay an ongoing basis, because I never get to the end of the program. You can always go back and exercise and always go back for training, but if you run people through an eight session program, what happens at the end? They’re done, thanks for joining us for four months, and then you go find more new members?
Carol: No, because that’s just the start. So what we then move into are our monthly action classes, because knowing is not the same as doing. So two things are going on. While they’re going through these eight sessions they’re also having conversations with each other and forming a bond as a club. When we move into the action classes, what we did was we took all the tasks that we think people ought to do in a year, and I was kind of going through some of them before. In January you ought to manage and organize your paperwork. Because otherwise how are you going to do the tasks the rest of the year? And your files are going to be a mess, and you can’t do your taxes. And by the way, while you’re doing that you ought to upload certain files into a secure cloud folder so if your house burns down you’ve got it, or if you become ill, your medical power of attorney has got the information they need. So here’s your challenge for the month. Get your paperwork organized. And here, by the way, is a list of all the files, folders you ought to have, and here’s a secure cloud folder, and it’s already got the folders in it, and here’s a list of what you ought to keep, how long you ought to keep it, where you ought to put it, to follow. And by the way, call in and you can talk about it with your club and go through the class and ask questions or call into coaches’ hours to get help in figuring out how to manage your stuff, because we’ll support you through this. So each month is a different challenge, and they’re designed to make it super easy for people to do that challenge.
Michael: Okay, and they cycle from there? These are things that would typically be recurring or probably a good idea for me every January to make sure my files are organized for the year, I can review my homeowner’s insurance every February or whatever the segments are. So once I’m into this monthly program, in theory I would just continue indefinitely because these are cyclically good things to keep doing?
Carol: Yeah, and there’s a discount after you’ve been through the first couple of years because you don’t need as much education and support, but people like that they’re going to get this, “Hey, here are the tax changes for this year. Here are the different strategies, here’s the updated form, here’s something new in the property and casualty field that a lot of the policies have added this year. So go back and look at yours now for this issue.” In addition then, there are all sorts of other classes and resources that we offer throughout the month. So you’ll have your monthly action class, then there are two supplemental webinars on things like, between generations, the cost of silence, or, “I’m an executor for a will. What the heck am I supposed to do?” The psychology of money. We have a Couples And Money class. So there are always topics coming on that are of interest to people that help them stay on top of the financial world. So the goal is to become an indispensable resource for people that they know that if they do this, it’s going to be easy to stay on top of their stuff. They’ll get the reminder, they’ll get the form to fill out, they’ll get help if they have questions. We have some attorneys who’ve agreed to discount their prices because they know if they get this form completed from Fiscal Fitness Clubs, that the person is actually ready to take the step to get their wills updated.
Michael: Right, so it’s a much better, more efficient client for the attorney. So they can discount a little bit because they know the process is going to go well.
Michael: So how many people go through a group? Are they in cohorts that they move through together? How many people do you need in a class in order to make this work?
Carol: So we’re still experimenting with that. We’ve had some groups, we’re just getting ready to start with one of the largest companies that we’ve had. We’re not like a Financial Finesse where we’re dealing with 20,000 employees at a time. So we’ve had as few as eight in a group and up to 18. We think we’ve got some ideas how we can actually manage it a little bit more effectively so we could even have a little bit larger numbers. In one place we’re actually working with groups meeting simultaneously in a location where they’ll be meeting in the cafeteria. So I can’t say that we’ve got it nailed down 100%. What we’ve found is people love the discussion. Once that barrier is broken talking about money, it floods.
Michael: Right, most of us have money anxieties. We just don’t talk about it because we don’t know where to talk about it or what’s safe, or don’t want to feel judged, or all the other reasons why our money issues get pent up. But it’s not hard to imagine, once you find the space where you’re actually comfortable to talk about it and say, “Oh my gosh, thank goodness. Finally a place I can ask my questions,” the flood gates open. So you’re running these groups of eight to 18. I can imagine you’ve got the challenges with any business. So the larger the group, the better the economics for the business when they’re paying $59 a month. The larger the group, the harder it is to manage all the people and the group dynamics and the conversation and make sure that they actually get value out of it. So I guess that’s the tension that you’re trying to balance and figure out, is we need enough people for the economics to work, but not so many that it doesn’t deliver the value it’s intended to deliver.
Carol: Right, and the other component that I want to point out is once people have finished the Taking Control classes and they get into the monthly action classes, those classes we teach in large numbers, and they’re recorded.
Michael: The Taking Control series is larger and recorded?
Carol: The Taking Control series are smaller groups because that’s where we’re fostering the relationships. But once they finish those classes, larger numbers go through the monthly action classes and challenges. Then the groups don’t need the CFP to talk through the issues and check in with each other. So for example, “Hey, did you get your,” we see the texts go back and forth, “Did you get your paperwork done? It took me two hours.” “Are you kidding? I haven’t done any paperwork management in six years. I’m looking at the piles.” And so that doesn’t need a CFP to answer the questions. It needs somebody to go, “Yay, you got it done. How’s yours going?” So we use assistant coaches to perform that function. So the cost-effectiveness and the numbers change after they’ve gotten through that first Taking Control series.
Michael: And so likewise, they go through the Taking Control series, that’s more intensive and, I would presume for that, they’ve got to all start at the same time because it’s literally a structured series of sessions, and then once they get through Taking Control and they move onto monthly action classes, now you can merge them in with other groups that have completed Taking Control, you can merge them all together, they don’t have to stay as discreet cohort groups at that point?
Carol: Yeah, although some of them choose to. So if you think back to Weight Watchers, they had somebody in the group take on a leadership role, and they got a discount. So we can have people that want to stay as a group and go through the monthly action classes together, but they can watch the recorded video together in their webinar, and talk to each other, and somebody that isn’t a CFP can lead this discussion, and text us or call us if they have questions.
Michael: Okay, and they’re just paying their ongoing $59 throughout to be part of this structured program, that’s the deal.
Carol: Yeah, and after they’ve completed, and again, so we haven’t been around that long, but our intention is, when somebody has completed all their tasks, and we’re tracking them, and not everybody gets every task done in the first year, because let’s face it, we’re all good at procrastinating, and summer comes and something hits in December and blah, blah, blah. So we’re tracking their tasks, and once they’ve completed them all and we can see them uploading their information and their results in the secure cloud. Then we intend on dropping the fee so it’s just a maintenance, and it’s worth it to stay with us because we’ll give them the latest.
Michael: So what about this from the advisor’s end? How long do the sessions take, how long is an advisor sitting in on these and trying to support the process?
Carol: Each group meets an hour.
Michael: So just one hour, you come in, go through, people share their status and what they’re working on, and that’s it.
Carol: Mm-hmm. Now, they can talk to each other. The advisor, depending on, and of course, like all models, you build one model and then you do all these variations. So the other thing is, each coach has coach’s hours. So in addition to the classes, they host a time where anybody can call in from whatever group or company, whatever they’re supporting, and ask a question. And we have a secure cloud that people can upload information to that the coach has access to. So they can look at that information and say, “I see why you’re confused. Here’s the issue,” or, “Let me show you how to do this calculation,” or, “Let’s talk through your medical enrollment. Tell me about the medical problems you’re having.” So the coach just gives the coaching. So a coach is committing to Taking Control classes plus offering a coach’s hours, and then as a company we host the monthly action classes, and those are offered at least two times a month. People can log in, plus they’re recorded. We have all of the other supplemental classes. Those are recorded and offered by us. So a coach who’s working with us may be in one or two more of those, but really they’re keeping it to the direct hours that they’re meeting with people, the coach’s hours, and then we have assistant coaches who monitor the emails. So if somebody in the group is asking something and needs specific planning advice that the coach doesn’t want to address with everybody else there, then they will spend some time doing that. But we try hard to keep that at a minimum.
Michael: So how can an advisor get paid under this structure? Or if you can share, how do you compensate them? Are you just hiring advisors on salary and just trying to run a business where you generate enough revenue from your classes to pay the salary of the people who are here? Or do you hire advisors to do specific classes and say, “I’ll give you X dollars per class to run a Taking Control series and then a monthly action class”? What does this look like from the advisor end?
Carol: So for right now it’s a combination of things. We don’t think we’ve put on the perfect model, especially because we’re going out to companies. So we have advisors who are working with this that joined us because they say, “You know, I would love to do financial education, but I don’t have all the content and the resources and the structure to do that. So I have these specific companies I’d like to go to and deliver this model.” So anybody who is managing a company relationship and managing that contract is paid a fee for managing that contact. And if they are the head coach, they get a certain percentage. We have assistant coaches that get paid, basically it’s kind of a salary, but it’s based on the number of people they’re supporting. And then Fiscal Fitness Clubs takes a component of it.
Michael: You’ve got to get paid for your business, this thing you made.
Carol: Yeah, so whatever the fee is, and they have to run it by us before they negotiate it. We learned that one already. That’s a mistake you don’t want to make is just full discretion to somebody else to negotiate something and then find out that you were committed to something that’s going to lose you money. Been there, done that. So based on what’s negotiated with a company, now if somebody wants-
Michael: Wait, let me understand it. So when they negotiate with a company, would they be negotiating some flat fee? Or just they might go to the company and say, “Hey, we really want to work with you. So Fiscal Fitness Club is normally $59 a month, but we’ll get it for you for $29 a month,” and then the company signs up a lot of people because it’s going to lose money for you now.
Michael: The advisors quote a monthly fee? Still the same thing, just with a discount? Or you have different pricing structures?
Carol: We have different pricing structures. One of the things we found is that sometimes companies want to dip their toes in the water and they don’t want to sign up for a full package, etc. So we just this last month came up with three different offerings for companies that let them take different components. So for example, if they want to send out newsletters, blogs and videos and access to a library of resources about solving everyday problems and just have their employees have access to two webinars a month, then for a very, very low price we can do that and the advisor really is not doing much with that, other than having the relationship with the company, and can get any of the leads that come from that company, if they’re the contract manager. And then there’s what we call the Roadmap Package, where we’re not having the clubs, but we’re offering those classes for the monthly action classes and people can listen to the recorded classes and call in for coach’s hours and get access to the resource library and all of those other things for a separate fee. And then there’s the full club model. Then to maybe even make it more complicated, companies can decide to buy the culture package, which is blogs and emails and video library and resources to everybody, and then let employees sign up on their own, and they get a discount off the $59 a month for their employees, a substantial discount, is if they agree to market it four times a year.
Michael: Okay, so basically you’re trying to use advisors that have relationships with companies just to help distribute the solution and get the word out, and they can participate and facilitate in those introductions and helping to negotiate those contracts.
Carol: Yeah, and then as we have companies come on, we need coaches who just want to do that. So we are working with people and collecting names of people who want to be able to do that service, but obviously we don’t bring them on until the contract is like, “Yes, we’re going to sign next week.” Okay, let’s add you now to our list.
Michael: Great, let’s do that when it’s signed. For advisors who don’t have all these business contacts, they just think like, this sounds neat, I think it would be fun to be a group coach and facilitator and help some folks that maybe I don’t help in my regular practice, or whatever their motivations are, what do the economics of that look like if I just say, “Great, you do classes. I want to be one of the coaches for one of these. I think it sounds great either part-time or maybe even fulltime, if I’m that excited about it.” How do the coaches actually get paid in this?
Carol: So if you’re a coach you’re getting 45% of the money that’s brought in.
Michael: Okay, so if I’ve got 10 people in my class and they’re each paying $59 a month, we’re taking in $590 a month for this class, and I’m getting 45% of those dollars?
Carol: Mm-hmm, and many of our clients, the other thing that happens is in the clubs when we offer it to companies, we also offer the option for employees to upgrade. So if they want individual coaching and we find that our, lots of times executives and upper management want individual planning or individual coaching, and they can choose to sign up for that and pay for that, if the company agrees with that in the contract. And again, that’s where you get into the complications, but-
Michael: But if that’s the case, then the advisor gets to do some, basically one on one hourly planning work at that point?
Michael: So just thinking about that, I’m doing a class with 10 people, it’s $590 a month, I get 45% of that, which is about 265 bucks. So that covers me for doing one or two classes a month, I guess depending on whether we’re doing two a month in Taking Control time or one a month in the monthly action classes. And I’ve got maybe a little bit of outside work as well, but that’s a good number. I may still realistically be earning $100 an hour or more for my time as a CFP trying to facilitate this. For those of us either who want to give back or maybe even, I don’t actually have enough clients to keep me busy because I’m still getting my business going, doing this on the side and getting paid up to $100 an hour to be doing planning work for people, that’s pretty reasonable money.
Carol: Yeah, and if they are bringing in business, obviously it pays more.
Michael: Now, is there a limitation on just when and how you can schedule classes? I can’t help but think of this in the context of things like Weight Watchers and Alcoholics Anonymous and such, and those are traditionally meetings that happen in the evenings. So if I want to be a successful coach in that context, there are only so many hours that I can do this on weekday evenings and weekends. I couldn’t make that a fulltime job if I wanted to, because there just aren’t enough evening and weekend hours to do classes. So are you finding that constraint? Or can you do them during the day? Are there businesses that allow you to do this onsite during work hours?
Carol: So there are businesses that allows us to do it during work hours, that will give employees time off. We do a lot of these virtually. So most of our clubs are virtual. People are logging in, and we have lunch hour clubs, we do have early evening clubs, we’ve got people in different time zones, and it is a little bit of a nightmare getting it all organized. Like when do you start the clubs, you need so many people before you can get started. So as we grow we find that’s less of a problem, because since it’s virtual we’ll say, “Hey, do you want a Monday night, a Tuesday afternoon, do you have lunch hour on Tuesdays at 11:30? Then we can form a club then.”
Michael: Okay. So a few questions that come to mind. Number one, just trying to facilitate all these group dynamics and such, this works in a virtual context? I’ll admit, for better or worse, I was thinking of a room with 10 chairs in a circle and an 11th chair for a facilitator, and we’re having a conversation facing into the circle. I wasn’t envisioning this as online in front of my computer. So you’re finding that the connections work just as well in an online environment?
Carol: Yes, as a matter of fact sometimes it works even better.
Michael: Why is that?
Carol: Because you don’t have to turn your camera on. People don’t have to turn their cameras on. They can. They don’t have to be in the same group as their company. So sometimes we have people go, “I don’t want to talk to the people in my company. I want to join a different club.”
Michael: Particularly I would think if, well A, there’s awkwardness with coworkers in general. It’s even worse if it’s within a company and they’re not at the same tier. A group with an employee and their boss would be a little bit awkward, which is hard if you’re all coming from one company that’s in a company contract, but much easier if you’re coming from one company but the contract is to do the groups online and you all never have to see each other interact in the same group.
Carol: And we even say you can pick a handle. You don’t even have to sign in as yourself. It’s kind of like Vegas. What happens here stays here. Although we do strongly say you don’t need to disclose the personal stuff, the details. We just want you to talk about the process. So what we’ve found is that sometimes people like that club model virtually better than in person.
Michael: Interesting, because of just the comfort that comes with the anonymity that you can’t create for yourself once you actually make it in person.
Carol: I have to say, the other thing is we have really worked hard to incorporate, into the content and the approach, the humanity of it. So for example, we always tell stories on ourselves as coaches first. We always share a vulnerability, just like I talked about showing my Mint and showing that I spent a fortune on my kids last year, who are all grown, I laugh about that in myself and say, “Now, this is not always rational. I can still do this, because I’ve projected how much, and you’ll notice my vacation budget from the year before was cut way down. That’s because I chose my value, to give the money to the kids, because they were struggling this year.” So by making it human and vulnerable, and then the other thing is we do a lot of laughing, and we set that whole system up so we have jokes that we tell, we use silly analogies, we make sure that everything has laughter in it. And so that really breaks those barriers down quickly.
How The Lessons Of “What Works” In Psychology Can Be Applied To Financial Planning [55:04]
Michael: Interesting. It strikes me though, just all the stuff that you’re talking about, you use account aggregation to get organized, you’re using Mint. A lot of advisors do the same with eMoney Advisor or an independent platform like Wealth Access. We have similar tools. Cashflow is king, start data gathering on their personal issues, like what’s causing their money stresses, not just the numbers, try to create these person to person accountability partnerships. It strikes me, all these things that you’re talking about that you’re doing, I could do in almost any financial planning practice, and it would be effective and valuable for those clients. I might frame it very slightly differently, but I could do all of this in a traditional financial planning business as well in a way that I think is valuable and meaningful for clients.
Carol: Absolutely. So my background is in psychology, and I spent a lot of time studying how people make decisions, how people react in different circumstances, and I taught at the College for Financial Planning on, I created the textbook on developing delivering financial plans. I have spent a large part of my career looking at processes for delivering planning and what’s effective. And I think our industry has set up some common patterns that really are counterproductive to the planning process, and we actually have a planning process at Fiscal Fitness Clubs that we think is fairly streamlined that we use with individual clients that takes a lot of these components and puts them into practice for individual clients. Because let’s face it, there are enough roadblocks in the way. We don’t need to add any more for clients.
Michael: Yeah, I mean it’s an interesting point that…Again, you’re both serving a market that most advisors don’t serve because we said we can’t do it well, and you’re getting into all the messy issues that we say we especially can’t do well because it’s so time-consuming and you can’t do it profitably. And you’re doing all of it anyways, built on the back of having a clear standard process of what you teach people and how you take them through it to the point that any advisor can come in as a group facilitator and do it, and then all of a sudden the math starts to work. It’s an interesting point to me that it basically just comes down to, it’s incredible what you can do in a business once you really systematize processes.
Carol: Exactly. And for example, breaking down the tasks, that’s intentional for a couple of reasons. Because one, if I have to just answer questions on life insurance, it’s a heck of a lot easier for me to handle 500 people’s questions on life insurance than it is to switch between life insurance and estate planning and asset allocation analysis and let me go over here. No, if you’re in our system, we’re all doing asset allocation at the same time. We’re all using the same tool, and we’re all having the same conversations. The other thing we’ve done is we have what we call discussion checklists. So before somebody every comes to a class, or even if we’re doing individual planning, before we ever have a discussion on that topic, they’re sent this discussion checklist that asks the tough, messy questions before they ever get to talking with you about it. So part of what takes, part of the joy of financial planning is you take people through this process of discovery, and part of the discovery is, “What kind of life do you want?”
And that’s both the fun part and the time-consuming part. So for example, on life insurance or retirement or between generations or whatever the topic is, we have this sheet we send out that says, for example, on life insurance, “So would your spouse be able to keep their same job? Would you be able to keep your same job?” Forget it. I’m still trained the old way where you think about saying to somebody, “Let’s pretend your spouse dies.” We say, “That’s silly. Let’s just pretend that you die and you want to take care of your spouse? No, let’s pretend they die. What are you going to do?” Because they’re not going to be here to answer this question. So if your spouse dies, can you keep your same job or would you need to change it in order to be able to take care of the kids? Would you want to live closer to family? Would you need to include the cost of moving? So we ask those tough kind of messy questions and say, “Talk about this with your spouse. Write your answers out.” And now come and talk to me.
Michael: Which is a nice way of emphasizing, you can do a lot more of the data gathering, you can have clients do a lot more of the data gathering discovery process ahead of time than we even necessarily do, with the caveat that you have to engage them enough to have them want to go through it in the first place, which I think is perhaps where some of us don’t do as good of a job as we maybe should. I think we all come with this natural presumption, like you came to me and you’re willing to hire me for the financial planning process. You must be willing to do all the work to go through it. And the reality is that’s not always actually the case.
Carol: And we start with numbers, which most people are like, “What? Huh? Forms?” How about if we start with, “What do you think about this?”
Michael: Why are you here? That’s still usually the question I start off with first in talking to prospective clients and new clients, is just asking usually more than once, “Why are you here? What brought you to the point that you wanted to hire our firm and work with us? We’re not inexpensive. So something’s really on your mind that you’re willing to hire a financial planner and pay our fees and all that. So what is it that brought you here?”
Carol: Mm-hmm. We ask something similar, if we’re doing the individual planning. “What is it you want to get from this? At the end of this process, what issues, questions, concerns do you want to have answered?” And then we actually make that part of our scope of engagement. That document becomes the scope of engagement. “Oh, you want us to answer these questions. You want us to look for risks that you might have. You want us to tell you if you really can safely retire within the next two years on this kind of income.” So defining those goals and what they really want from financial planning. So yeah, 100% we need to start there. With groups we need to do it a little bit differently, because I can’t record that. I need them to record it to keep the costs down.
Michael: So what brought you to experimenting with this model of doing Fiscal Fitness Clubs? You’ve mentioned a psychology background and a Master’s in counseling, and at one point National Director of Financial Planning for Wells Fargo, which I feel like is about as far as you could get from a Master’s in counseling. So can you talk to us about, what has been this journey for you? I’m going to guess you didn’t always want to come into financial services, since you started out getting a Master’s in counseling. So what’s the path for this?
Carol: So what’s the story? I have a story that’s interesting. I was a psychologist and I ended up specializing in marriage counseling, and I discovered if I really wanted to find out how a couple got along, how they fought, what kind of games they played with each other, who avoided, who attacked, all I had to do was bring up money. I could get a fight faster than any other topic. And when I realized that, I started using that technique. And of course, if you work in marriage counseling, you also end up working in divorce counseling, and I saw how crazy people were with money, because it’s like, “I’ll lose everything I own to get you,” in divorces. And it’s like, this is not rational. I thought money was like this stuff you add and subtract, but it’s not. It’s messy. So I was doing that and had a long distance with a gentleman out in Colorado, and he kept saying, “Come to Colorado. It’s much more beautiful.” Which is true.
And I said, “Come to Chicago. I make more money,” which was true. And finally he played dirty pool and he said, “You know, if you want to have a baby,” well ding, ding, ding, biological clock, romance, all those good things came together. I sold my private practice, came out to Colorado, got married, full intentions of starting another private practice. But that takes three or four years to really build it up, and I thought, that’s fine. I’m going to be staying home taking care of a baby, and I’ll just build my practice. And I actually started on that process, but he picked up a staph infection from a tooth filling falling out, ended up four strokes, open heart surgery, totally disabled at the age of 38, and I found myself with two teenage stepdaughters, an eight month old baby, totally disabled husband, $40,000 of unpaid medical bills at 21% interest, a noncompete clause in Chicago, and it went downhill from there.
Michael: Oh my god. From a staph infection in a tooth.
Carol: Yeah. Well, the tooth filling fell out and he didn’t go to the dentist right away. And it just so happened, for some bizarre reason, that year in Boulder staph aureus became rampant for a month and a half and killed 15 people. Two survived. My husband was one. But life can throw curveballs, right? So I looked at my options, and the best job offer at the time was live-in director of an adolescent psychiatric home. Think about that.
Michael: With two teenage stepchildren and a baby and a totally disabled spouse at home, and you’re at a live-in facility.
Carol: How much would they have to pay you to live with 20 crazy teenagers? Oh man, it was like, this has got to pay a fortune. Uh-uh. They said, “Hey, well your living expenses are included. We’re only going to pay like $22,000 a year.” So I was like, “Okay.” I couldn’t even pay my own therapy bills for that, living with 20 teenagers. I looked around and I saw this ad in the paper, and it said, “Wanted: Someone to develop a financial planning service for professional women. Will train.” I thought, “I don’t know anything about money except how to get arguments with it, but I can go talk to women.” And really, it was life insurance, Mutual of New York life insurance sales. They really were looking for women to come and sell life insurance. Well, then they explained that they also sold disability insurance, and I said, “What’s that?” and they told me, and I said, “I can go sell that,” because I’ve got a story. I know what this is like, and you will pay me this, and I didn’t understand compensation at all at that time. It was a draw and I thought that was just another fancy word for salary. I mean, that’s how naïve I was.
Michael: Yeah, it turns out those life insurance draws are a little bit different than salary.
Carol: Yeah, but I took my baby on my hip because I couldn’t afford anything else, and I just went and told my story to people, and they’d look at me and go, “Okay, I’ll buy. Whatever. Just go away. Don’t tell me any more of this stuff.” Because it was real, and I had a story, and it was impactful. And I fell in love with financial planning, because I realized, man, I can change people’s lives just like I did in psychology. And the other thing I realized is all those people who had been in my office and they couldn’t make decisions, and they were arguing about money, they were still in my office. It was just about financial planning and it was the same arguments. So I realized my psychology background was going to give me a leg up in helping lead clients through the decision making process. Because when you think about what psychologists do, they lead clients through the decision-making process to change their lives so they can improve it. They have to change habits, they have to change patterns, they have to face issues they don’t want to face.
Well, doesn’t that sound a lot like financial planning? The difference is we’re focused. So I did this for a while, became a sales manager, learned how to teach other people how to sell, and started doing seminars and started saying, “Hey, look, start using financial planning. That’s the best way to find out what they need, how to help them explore the issue, how to find out what they need.” But I got very frustrated with some of the sales processes and that one product was the solution for everything. So I started looking around at options. I was working at the time with a woman on life insurance who had a trust officer, and I kept hearing what this trust officer was doing with her, and I thought, that’s kind of cool, because this woman is slightly handicapped, and here this person is at the bank, and what the heck are they doing?
So I became intrigued with the trust departments, and decided to take my financial planning skills and see if some banks were interested, and I joined a small bank, a regional bank, Norwest. They said, “We don’t know about this financial planning, but you can be a trust officer if you want. And then on the side, if you want to use this financial planning stuff, we’re kind of interested. So why don’t you do that and we’ll see what happens?”
Well, one, I have the utmost respect for most trust departments. They do amazing jobs of taking care of clients. The attorneys are very interested in helping, and many of the clients that they have are trusts that were set up years in advance to take care of handicapped people or people when they’re old, etc. But I started doing financial planning, and all of a sudden I became the top salesperson.
Michael: Not because you set out to it, but because no one else was doing this. So when was this? Can you set the timing context?
Carol: See, now I’m really showing my age, because this stuff, I entered the financial services industry in the 80’s right after the collapse. And I joined the banking around 1992-1994 maybe. But they didn’t have financial planning at Norwest, and then Norwest merged with Wells Fargo. And they saw what was happening in our region, because I had become…After six months they said, “Why don’t you stop being a trust officer and be a financial planner for the region,” and Wells Fargo looked and said, “What the heck is going on there?” And I said, “Well, we’re helping trust clients understand how long their money will last and what they can do and what their options are.” And they were like, “That’s interesting. Why don’t you do this nationally?”
So I became Director of Financial Planning at Wells Fargo, and realized that again, I just kept looking at the issues. Financial planners were reaching the top 1% of 1%. I mean, the wealthy were getting it, and so can’t we bring it downstream? So I introduced the concept of, along with the team, of bringing financial planning to brokers and trust officers and private bankers across the bank and letting them learn the basis of, how do you project things, how do you help people understand, how do you look at the world from the client’s viewpoint?
So it was helpful, we introduced planning across the system. I went and then helped JP Morgan Chase do the same thing and spread it out, and ended up at Key Bank as Director of Financial Planning where we then brought all of the insurance and all of the other services into one giant hub where we could deliver services to clients across the spectrum in their wealth division. But throughout that whole time period I kept going, “Somehow we ought to be able to get it to the masses.” Can’t we at least put a retirement calculator on the website for the banking clients? Can’t we introduce some education for trust clients coming up, the next generation, or can’t we start doing this in other ways?
So I started working with employees and started testing out the model of Fiscal Fitness Clubs, because I thought, well let me get my own employees in this trust division, like the tellers and the assistants and help them understand how their money was working, and discovered that the group dynamics really worked. And group dynamics didn’t scare me because I was a therapist.
Michael: Right, that was part of your roots.
Carol: Yeah. I used to do group therapy and community therapy. So I started experimenting and realized that somehow that was kind of a passion. I needed to figure out how we could get it to more people. And when I decided to retire from the corporate world, and there are things that I loved about trust departments and things that I hated about banks, and worked with insurance companies and brokerage and I’ve done training and various places on how to do planning. I retired and still wasn’t really ready to retire. What was my next venture going to be, and the College for Financial Planning said, “Hey, we need somebody to develop a class on the Capstone Course,” and I said, “Oh, that sounds good.”
I went and did that, and got to one of the things that was both fun and frustrating. In the Capstone class people had to present a financial plan to you. And it drove me crazy to see how our industry had trained people to communicate complex situations to clients, and just what a mess we make of it.
Michael: Well, because no one really actually trains much at all on how to do financial planning, what you actually say and do in the meetings to “do” financial planning. The curriculum is almost entirely about either how to have the knowledge about the things you’ll talk about in the meeting or at least to some extent now with the Capstone requirement, how to make the physical plan. But no one ever really teaches and trains what you say in financial planning meetings to get effective outcomes, which is ironic to me particularly for you coming from the counseling world, because the practice of psychology is years of experiential practice having the actual conversations with clients in supervised environments before you’re even allowed to hang your shingle. And we basically never teach it, just the knowledge that you need to have the right answers in the meeting, not how to actually do the meetings.
Carol: And that sends the message that it’s the knowledge that’s most important versus leading the client through the process. And so time after time students would say, “I’m really excited about this plan,” and they would talk at me 25 minutes straight without giving me a chance to ask a question. And I’d be like, “Did you actually expect me to understand any of this?” It was crazy.
Anyway, so I loved teaching at the College for Financial Planning and I liked writing the textbook, but I decided and discovered that I hate footnoting.
Michael: Because if it’s an academic textbook you have to have all those citations.
How The Financial Services Industry Can Profitably Serve The Masses [1:16:26]
Carol: Yeah, when they told me I had to footnote asset allocation, I thought I was going to explode off my chair. So it’s like, no, no. So after 1,087 pages of textbooks on insurance and risk management in which I had something like 800 footnotes, I decided I’m hanging that one up. But decided that it was time for me to actually see if I could really solve this challenge, and formed a partnership with Catalina Franco-Cicero, who’s an immigrant from Colombia, who’s passionate about helping people take control of their money, because she says, “I came here and the whole financial services was just thoroughly confusing to our family and to immigrants. So I’d like to find a way of cost-effectively delivering services to them.” So we said, “Okay, we’ll go into business together.”
So we spent almost a year and a half developing the model, the content, the materials, refining it, testing it out with small groups, and then explored it. So it’s a challenge that I know I see programs out there starting to do some education, and we’re getting financial education out there more now with some of the financial wellness programs, but the knowing is not the same as doing. So where I’m frustrated with the industry and what I’m hoping Fiscal Fitness Clubs will solve is, how do we get it to large numbers of people on a profitable basis? Because you can’t do it as a nonprofit, because you can’t serve enough people. So if I can have you make a good living delivering services to the masses, then we’ll have enough people that want to do it to deliver it.
Michael: So Catalina is your partner in Fiscal Fitness Clubs of America, you’re working together in building this?
Michael: So you’ve got some background, I guess, with building and scaling businesses and processes because you lived that in a lot of the banking and trust world, and what was Catalina’s background or I guess what is her focus in the business at this point?
Carol: So Catalina’s background is fun. She was actually a physical wellness designer and coach. So she ran the health and wellness program for a university. And she also was an entrepreneur in that she developed some very unique camps for kids that incorporated retaining education throughout the summer in addition to physical education. And the model was so admired that it became adopted by several different countries, and they came to look at it. So Catalina’s very good at taking how do you motivate people and how do you coach kids and adults to physical education, and now how do you combine that with other components? And the other requirement is Cat likes to laugh. Out of all of the requirements, and we do have quite a few for somebody to work with us, it is, you have to have a sense of humor and you have to laugh.
Michael: So are you actively hiring at this point? Like if there are advisors that want to try out doing this kind of group coaching as part of what they do, are there opportunities now for them?
Carol: I’ll tell you in another week when this contract gets signed. So we are collecting the names of people who are interested, because we are on that process of, once we get a contract we know we have a month to two months to bring on the staff that we have. We have enough right now to cover what we’ve got.
Michael: Because you’ve got several advisors involved already.
Carol: Yeah. But we do think that this next year we’re going to be needing to add significance, and obviously if there are people who like the model and go, “Hey, I have companies I could work with or I want to go prospect for that,” then we’re open to discussion.
Michael: Okay, so we’ll make sure we have a link over to Fiscal Fitness Clubs of America in the show notes. For folks who are listening, this is episode 42, so Kitces.com/42, and then just scroll down past the podcast itself, and in the Resources In This Episode section we’ll make sure that we include some links there back to the website so you can contact Carol and Catalina if you’re interested in trying this out yourself, I guess either because you know businesses or simply because you want to be a coach.
Carol: And the other thing I’d add is if you have clients contacting you that you can’t serve, consider sending them over to join a club.
Michael: So I’m curious where you see it going forward from here. Like if this goes well, what’s your hope with it? That this becomes a broad workplace program, that this just becomes a thing that’s out there even more broadly, and workplaces and employers just happens to be one of many ways that people find their ways to a Fiscal Fitness Club?
Carol: So my grand ideal vision is, one, I’d like us to bring money out of the closet and go, “Oh yeah, I could go join a club. I could join my friends and we could join a club and we could learn to take control of our money,” and whether it’s through the employer or individually. The other issue that I see that I’d like to solve is there aren’t enough jobs for people graduating from CFP programs that really train them in how to deliver financial planning, how to take people through the process. And our assistant coach goal is, we believe that a CFP could handle large numbers of clients, I mean large numbers of clients if they have the assistant coaches who can help monitor the emails, answer the basic questions, help people with things like Mint.com, do the analysis and run it by the CFP and let the CFP send it off to the clients. And so we’d like to create a career path, and we’re not there yet, but if we get enough companies in our belts, we could create a program that allows people graduating from college to come in and, under the tutelage of a CFP coach, go through and serve large numbers of clients so they get the experience of seeing what the issues are. And let’s face it, if you’re answering 500 questions on life insurance, by the end of that month you’re going to know life insurance, right?
Carol: And you’d also be getting, because you’re being supervised by a CFP with a client contact, you’d be meeting the qualifications for getting your designation.
Michael: It strikes me, I mean that just supervised assisting with a senior person who signs off, this feels very much like the model for how psychologists are trained in counseling.
Carol: Imagine that. How about that? Let’s take successes from other industries. How do psychologists deal with people who can’t afford the one on one fees? They put them in group therapy. How do schools, how are we going to solve the cost of higher education? We’re going to have online classes and, oh yeah, webinars and virtual classes. Let’s look at what the rest of the world is doing to solve this problem and let’s find some solutions.
Michael: It’s striking to me that, on the one hand, you’re experimenting with a very innovative model that no one’s really doing very much with here in our industry so far. We’ve seen some that are doing financial wellness and getting some traction with it. We had Liz Davidson from Financial Finesse on in the past. So if anyone wants to go back and listen to that, that was episode 23, so Kitces.com/23. So we’ve seen some growth in financial wellness programs in general, but not many that are trying to do this group style coaching, and maybe not as scaled up as just saying, “Here’s an educational portal for financial wellness. Everyone log in.” You’re much more granular than that because you’re actually doing group sessions, but actual human beings communicating with other actual human beings trying to talk through and work through these issues. So what you’re doing is so different than what anybody else does in the industry. But then I’m struck at the same time, as you pointed out, lots of other professions have adopted group models and shown not only that it works, but that it becomes the primary way that you expand accessibility to groups that can’t necessarily afford one to one professionals.
And so much of what you’re doing, you know, driving to the emotional issues around money and having a financial planner and a group as an accountability partner, and providing the ongoing education and drilling down to the things that actually impact people on an ongoing basis, which is driven so much by cashflow, you’re doing all the things that either we do or at least ideally we should be doing in financial planning anyway, with a format that is already demonstrated successful in many other professions, yet no one’s ever actually put it all together the way that you guys are. So it’s exciting to me to see what you’re building and that it’s all coming together. But it is striking to me that you’re doing something that’s so new, yet things that are already very well established. Does that juxtaposition make sense?
Michael: Which I guess is how a lot of great businesses get built. We already know these things work in some other context. We’re just putting them together in a particular new combination. So as you come at this just from your personal perspective, it strikes me that you came into the industry, frankly, at a time that was not terribly hospitable to women coming into the industry. Now we’re at 77% male to 23% female for CFP professionals. That’s up from 20 years ago on number of women in the industry. Yet you rose to positions of leadership repeatedly in multiple firms and in large firm environment that I think struggled maybe even longer than some of the independents with trying to improve their gender diversity issues. So I’m wondering just, do you have tips or guidance for other women who are listening? Like how do they succeed in following a similar path of being able to move up in a very male-dominated industry?
Carol: That’s another whole discussion.
Michael: Maybe the shorter tips version or the words of wisdom from experience.
Carol: So women cannot do things the same way as men. One of the mistakes that we make is we get trained that way and we think we can follow that. So I think part of my psychology background of how do you lead people through the decision-making process was an incredibly important and invaluable skill. How do you have confrontations without feeling confrontational is an incredibly important skill. I talk about avoiding the bobblehead nod when I do behavioral classes, and that is, don’t assume that people agree with you just because they nod their head. That has no meaning. It means they heard words come out of your mouth.
So as a woman I had to, one, have a sense of humor, two, I had to find ways of leading people through the process of decisions and painting the picture of the future. And in many ways, what I do as a planner is I’m constantly finding out what the client wants, and then painting a vision of how I can help them get to a future. And every time we close a call, I’m painting a picture of the future. And if you’re working in a career and you want to progress, you have to be able to do that. You have to always paint the picture of what the next meeting, the next step, the next place we’re going to go is, because that way I get buy-in for we’re going there together.
Michael: So what advice do you give young advisors coming into the industry then? You talked about it before, of when you were working on the Capstone class, of, we have these gaps around the knowledge and skill sets that you need to really be effective. So for young advisors coming in today maybe looking to become financial planners, maybe they’re in for a few years, but not quite getting the levels of success that they want, where would you tell someone today to focus?
Carol: I’d say first you have to find a company that matches your values. I see one of the reasons we lose a lot of people who come into the industry is they’re not in positions that their values and their processes are matching. Second, I’d say go work on improving your communication skills. See if you can explain a plan to an 18-year old or a spouse. And if they’re not getting what you’re explaining and if they can’t tell it back to you, what it is you’re telling them the person ought to do, then you need to work on those communication skills. I would encourage some learning and classes on behavioral economics and communication patterns, learning to be an active listener and then learning to use confirmation skills, such as, “Tell me what it is you think I’m saying you ought to do.” Just that simple and straight out. I think I’m a brilliant communicator, but I learned that I’m not always. Like for example, last Sunday I thought I perfectly communicated what was supposed to happen at 2:00, and 1:45 comes and my family looks at me like I have never opened my mouth. Has that ever happened to you?
Michael: Yeah, my wife and I have those moments from time to time, usually caused by me.
Carol: So I’ve discovered that if I want to make sure that I’m clear, and let’s face it, when it comes to somebody’s financial planning life, it’s really important that we’re clear, that I need to take a step back and say, “What is it you think I’m saying? What about this plan will work for you, what won’t? What are the characteristics that are most critical? What is it you’re scared about or don’t like? What about this recommendation makes you nervous?”
If I don’t learn to ask those questions and then be quiet and listen, then my success with individuals and getting them to follow advice is going to be tough.
Michael: And so is this a gap to you in the current financial planning education that we don’t have classes on this, classes on effectively communication and counseling? Is that part of what has to get added to the standard financial planning curriculum at some point?
Carol: I think so. Let’s face it, computers are getting more and more powerful. Watson is going to be doing financial planning one of these days. It’s not number crunching that’s the skill we bring. It’s going to be leading people through the process and changing their behaviors so we maximize their success. And so yes, we still need all this technical knowledge, but are robos the last area that we’re going to be impacted by computer technology? No.
Michael: Well, and you make another powerful point, though, and I see this often as well, that the starting point if you want to have a good career is, you have to find a firm where your values are aligned in the first place. I see so many advisors struggling in the first three or five or seven years in their career because they’re getting some traction and working with clients and generating some revenue and getting paid, but they’re struggling or increasingly struggling with the firm that they’re at because it’s just not a fit. And it’s not even about industry channels. I’ve seen people with this struggle in wirehouses, I’ve seen people with this struggle in broker dealers, and I’ve seen people with this struggle in RIA’s as well, that just, the firm has a culture that doesn’t fit their style and that, you know, it’s really hard to lift your career up and go to the next level when you’re just constantly stressed or worse with feeling unbalanced with the firm because you don’t share the values of the firm. It’s like you have to have a good foundation, and then you can figure out how to communicate more effectively and actually connect better with your clients.
Carol: Yeah, and it’s a struggle. It’s not an easy task to find the right home, especially when you first get out because you don’t know anything.
Michael: Yeah, the advice I usually still give new advisors coming in, when you’re getting started, just find a job at an advisor firm that hopefully does some financial planning. You don’t need to worry about finding the perfect firm the first time out, because frankly you might not even really realize which parts of the business you like doing and what you want to do or where you want to focus. It’s about after you get in the first few years, though, and you get some traction, you get some confidence and you’re building your skills, and then deciding, okay, where do you actually want to build your career from here, because now you’re three or five or seven years in.
Carol: I think that’s great advice.
Michael: So as we get to the end here, this is a show about financial advisor success, and one of the things that always comes up is that success means different things to different people, and even different things to us at different stages of our careers. So to me you followed this fascinating path of going through a lot of adversity and climbing up to some very senior positions at some very large firms, and then ultimately retired and went into academia for a while, and then have been sucked back into startup entrepreneurship. And so I’m curious, as you look forward from here, how do you define success for yourself?
Carol: I am in the process of trying to create a legacy. I want to solve some of these problems so people don’t have to go through what I went through. Had somebody just talked to me as a psychologist and told me about disability, I didn’t even know it existed. There are so many changes that, if they American population, we’ll just keep it to America for a while, if people knew what to do and we made it easy for them to do it, a lot more people would have a lot happier lives. So my goal is, hey, if I can find that business model that’s cost-effective, that brings in new planners, and gives services to large numbers of people to let them get what they want from their money and be safe and not have to go through what I went through, whew. I hit the trifecta.
Michael: Amen. I love it. And thank you for joining us and sharing the story of the path you’ve been on and what you’re working on. I hope maybe a few people listening are excited to be involved. We’ll include some links over to Fiscal Fitness Clubs of America and the show notes at Kitces.com/42. But again, thank you so much for joining us and sharing this.
Carol: Well, thank you, and thank you for giving me a place to share my story.