You're listening to “Financial Advisor Marketing”—the best show on the planet for financial advisors who want to get more clients, without all the stress. You're about to get the real scoop on everything from lead generation to closing the deal.
James is the founder of TheAdvisorCoach.com, where you can find an entire suite of products designed to help financial advisors grow their businesses more rapidly than ever before. Now, here is your host, James Pollard.
James: Financial Advisors, welcome to another episode of the Financial Advisor Marketing Podcast. I hope you're enjoying your day. If you're listening on Monday morning, I hope you enjoyed your weekend.
I have a guest this week. It's very rare that I do guests. I love doing them because it's a lot easier for me. I don't have to script out or make an outline. I can just have a conversation with someone and that's a lot easier on my part.
I have a great guest this week. It’s Dave Yeske. He is the co-editor of the Psychology of Financial Planning from the CFP Board, and the reason why I wanted to talk with him is because we're going to have a conversation about how financial advisors can apply the art and science of psychology to their practices to better serve their clients and to become better financial advisors. [01:13.0]
I'm very interested to see how this is going to go because I have a pet love of psychology. If you've been listening to the Financial Advisor Marketing podcast for a long time, you may have heard me mention that I have a bachelor's degree in psychology and now I'm in marketing, and some people think that marketing is a pseudoscience, but it really isn't, and I am so grateful that I weaved, wove, whatever the term is, my love of psychology and marketing together to build a business.
But without further ado, I want to introduce Dave Yeske. Dave, how are you? Thank you so much for being here.
Dave: I'm great, and thank you for having me. This is a topic I'd love to talk about. I think it's really important to the profession for us to deepen our understanding of the psychological dimension of the work we do. [02:00.8]
James: I want to keep the conversation broad, but you can kick us off with something that you want to mention or something that you think is important, and I will play off you how financial advisors can incorporate psychology to better serve themselves and their clients, and grow their practices.
Dave: I like to say that the quantitative part of what we do as financial planners, honestly, is kind of the easy part. It's various applications of time value of money concepts, but change is hard and that's really our most important role. Clients come to us because they need to adapt to change, and it's either environmental change—because something good or bad happened to them. They had an inheritance. They gained a job, they lost a job, or something—or volitional change. They want to set, they develop a plan to be able to retire at 60, or they want to be able to educate their kids or buy a vacation house. That's our biggest role. It’s helping them not just develop the strategies. That, in a sense, is the easy part. It's helping them make changes in their life so they can adopt, embrace, and live out that strategy. [03:07.5]
But there's a psychologist named Stuart Heller who used to speak to financial planning groups quite a bit and I remember him saying in one presentation, when you talk to a client, you're really talking to two people. You're talking to the client you think you know, but you're also talking to their bureaucracy of habits, and he said, habits eat change—and so, if we don't understand a certain amount about human behavior, we just can't be effective financial planners.
James: I think we all know certain things that work well. Eat less. Exercise more. Sleep more. Spend time with your family. These are all rules of life that lead to people being happier, healthier, and more prosperous. Why do you think change is so gosh darn hard for people?
Dave: There's a lot of findings in the area of behavioral finance, behavioral economics that show that defaults are really powerful in our minds, and so, always, wherever we are now, that's where our bureaucracy of habits wants to keep us. [04:10.7]
So, change being hard, I mean, honestly, the inability to adapt to even ordinary life cycle changes has been shown by the World Health Organization to be the single largest source of depression, anxiety, and disability. It's just who we are as human beings that we become sort of like we get structured into certain ways of behaving and interacting with the world, and getting out of that rut, whether it means taking up an exercise program or improving how we eat or sleeping more, it requires us to make changes to what's already in place and those defaults are powerful, and so a special skill set is required. You have to have an understanding of what the elements of change are, how human beings change. [04:57.8]
As Stuart Heller said, habits eat change. You can't go head-to-head with a habit. You have to find ways to sort of jujitsu it. There's a great book by Sunstein and-- Why am I going to draw a mental blank on the economist’s name? I'll come up with it. But called Nudge.
James: Oh, Richard Thaler.
Dave: Thaler and Sunstein. Thank you.
James: Yes, I love it. That's one of my favorite books. Thank you for mentioning that. Financial advisors, if you're listening, go to Amazon right now and get Nudge. It's a wonderful book.
Dave: And they talk about how you could use the findings of behavioral finance, using what we've learned about human behavior and how we change and how we tend not to change, and create nudges.
For example, I can't remember if it's in their book or if I read it somewhere else, but there's an interesting fact that two countries, Austria and Germany, which are right adjacent to each other—the European Social Index gives them a value of close to one, which means they're almost identical culturally—but if you look at the organ donation rates in the two countries, in Austria, it's something 98% and in Germany it's something closer to 30%, and you have to say, if they're culturally almost identical, how can that be that the organ donation rates are so radically different? [06:21.2]
It turns out that the method of becoming a donor in Austria is opt out and in Germany is opt in, and the default is the most powerful option always, and if the default is opted out, very few people will opt out, or if the default is to be a donor, very few people will opt out and vice versa. We have to find new ways, and having the default be that you're an organ donor is a nudge. It doesn't rob you of the ability to change that, but it uses the fact that defaults are so powerful. That inertia is so powerful in human behavior. [07:04.5]
James: It's very interesting that you mentioned that because I had that book on my mind when I was creating a couple of marketing campaigns, and since it's the Financial Advisor Marketing podcast, I want to share with financial advisors, I had a brilliant idea that I would send people to a video directly, no email opt-in, nothing. I'm just like, Go directly to this page and watch this video, thinking that because there's a lot less friction, that it would have better conversion rates and people would engage, and so on and so forth.
It flopped. It did not do very well at all compared to people who opted into a list and we're nurtured after the fact and along the way. It's precisely because, once you're in an email list, that is the default. The default is to continue hearing from me or the other person.
I do have a question for you about when it comes to changing behavior in personal finance and financial planning. In your experience and in your knowledge, have you found that it is easier to change smaller habits in finance or to do a large overhaul of someone's complete life where they say, “I'm going to change everything and I'm going to make massive changes right away,” or is it better to just take something small? [08:13.8]
Dave: In my experience, the small incremental changes are the ones that are the most powerful. It's kind of like all the advice I get from health professionals and exercise professionals about losing all of my Covid pounds, I used to joke that I earned my Covid-19, but in reality, I think I earned about a Covid-35.
I've been having a lot of conversations about that, and their advice, and it comes from, obviously, decades of experience on their part, as well as research, is to start small. Just go to the gym, go to the workout room, whatever, and even if you only go there for 10 minutes, the fact is you're creating a habit of going there. Eventually, 10 minutes becomes a half an hour becomes an hour, whatever, but the small incremental change has less of a barrier to get over. [09:01.4]
I find the same thing in financial planning when we're asking people to change their habits. For example, if someone's not participating in their employer-sponsored retirement plan, you don't necessarily want to say, “All right, so I want you to enroll. I want you to do the maximum 15% up to the maximum dollar amount right off the bat.” You say, “Just enroll,” and maybe you say, “Enroll, at least. Participate at least up to the point where you're getting an employer match,” maybe that's 3%, because that's less of a barrier. They'll see less of an impact on their paycheck, and then as they get raises in the future, you can encourage them before they acclimate to what that raise means for their lifestyle to maybe up it a percent or two.
Actually, Thaler and Sunstein, they cite an example of some research that was done on that where they talked to employees into joining at a very minimal level, and then every time they got a raise, the default was that some fixed percentage of that raise automatically got added to their retirement savings, and they found that it was incredibly powerful. At the end of five years, the employees had saved vastly more than the control groups that they were looking at. Yeah, anyway, that’s-- I like to give the long answer to the short question. [10:16.6]
James: I'm trying to think, with financial advisors, they could use this to strengthen their marketing practices as well. I wonder if there's a way where they can ask for a small commitment from a prospective client where they don't have to necessarily come for an hour-long meeting and bring this tax return, and bring brokerage statements and bring everything that they have, and get financially naked, which is the phrase that I like to use, with a person.
I wonder if there are any small commitments. Have you seen that throughout the industry where financial planners ask for something small instead of “Hey, sign up for this hour-long meeting with me”?
Dave: I’m going to name a name and it's only because I happen to be familiar with what they do, but we work with an organization called Money Quotient and they've developed a lot of research-based instruments that advisors can use in interacting with clients and prospective clients, and one of the things I love is that they've got so many gradations. [11:14.0]
They have, for example, you can start out with what's called a Financial Satisfaction Survey, which just is a list of 20 items that are elements of your financial life and you just indicate with a checkbox how satisfied you are in each of those categories. Anybody can check a box. That's a really low entry point for someone, and we send it to prospective clients along with a Life Transition Survey, which just says, “I'm currently experiencing this or I'm about to,” and they could be ripe for retirement or inheritance, or having a child, whatever.
Again, it's a very low threshold. We're not asking them to dig through their files and give us all of their financial information. We're just saying, “Check a few boxes,” and it gives us immediate insight into what's important to them, what's going on in their life, and it gives us a little bit of a foothold to then have a larger conversation, but we're not asking them to really take a big lift right up front. [12:08.8]
James: People become more comfortable over time and I’ve found that to be true as well. That's why in my experience with things like email marketing, I mean, I just mentioned that it works very well because it's just a small commitment and you have to opt out, so it's really two in one.
I want to switch gears now because I would like to talk about some of the elements of psychology that financial advisors can implement, namely, listening and improving their listening skills, because I think if there was one thing that I would like to talk about with you and have takeaways for financial advisors and the skill that I think they definitely need help with, and it's a skill that can transform their business, it's just becoming a better listener to both clients and prospective clients. Do you have any takeaways or input about how financial advisors can become more effective listeners? [13:02.4]
Dave: I think becoming a more effective listener starts with knowing how to ask the right kind of questions. For example, it's really important when you're dealing with anyone, whether it's a prospective client or an existing client, if you want to deepen your understanding of what's going on in their lives, what's important to them. Start with open-ended questions.
But everyone, I see this all the time, I just finished running an FPA residency program in Denver for a week, which is for newly-minted CFPs, and it's deep casework and lots of roleplay to help them, technical knowledge which they had to had to master in order to sit for the exam, and translate that into an actual way of interacting with clients that will be effective. But one of the things we see all the time is that people, they'll start with an open-ended question and they'll shut it down. They'll say something like, “What do you like to do with your leisure time? Do you like to take road trips? What was your last road trip?” Then it's like you've just taken an open-ended question that could have gone anywhere and you've just shut it down. Keeping that question open, making it as broad as possible, and then having the patience to sit and listen. [14:12.5]
A few years ago I had an intern who was also one of our students in our graduate program at Golden Gate, and she was in the practicum, which actually allows them to interact with live clients under the supervision of an experienced CFP. At the last minute, I pulled her into a discovery meeting with a new client and it just so happened that that night she and her partner were going to interview their clients for the first time for the practicum.
Anyway, I pulled her into the meeting and I asked this client one big broad open-ended question and she talked for an hour, and we got 90% of anything we would've wanted to know about her. When the meeting was over, I was talking to Beejel, our intern, and she said, “Oh my gosh, my partner and I developed a list of 50 questions for our client tonight.” I said, “If you ask the right questions, you won't need 50. Not even close.” [15:05.1]
James: You won't even need 10 or 20.
Dave: No, you'll probably only need one or two. We like to start, honestly, when we're starting a discovery meeting, our first question is as broad as possible, “Tell us about you.” “Tell us about you.” And we say, “You could be like David Copperfield. You could start with when you were born or you could start before that,” and, eventually, we will go before. We will get into the family history and all of that, but we just say, “Tell us about you.” And everybody likes to talk about themselves.
What's interesting, too, is that the way they answer that question will tell you what they prioritize. Some people will tell you all about their education and their career and some people will tell you all about their family, and people will go in different directions, but it's very telling how they choose to answer that question.
James: Now, you've got me thinking of one specific question and I think I’ve seen financial advisors take sides with this question where some love it and others despise it. I would like to get your opinion on it. The question is “What does money mean to you?” How do you feel about asking that question? [16:10.4]
Dave: I think that question is fine. I generally like to connect it to something that has an emotional component to it, because if you connect, I mean, all of our decision making really, in a sense, it's emotion-driven. It doesn't mean that we don't use our intellectual capabilities to reason our way through, but when you actually pull the trigger on a decision, there's an emotional dimension to it. So, I like to ask a slightly different question. “Tell me what you learned about money from your mother.”
James: Oh, I love that. That's fine.
James: I love that one.
Dave: And then you know how, then repeat the question about your father or whatever, but your two parents, and what you find is people immediately connect to that. It's like they'll say, “My mother believed that money was not to be wasted, that it was a scarce resource,” and that that's the way she handled the family budget, or they'll say, “For my father, money was love. That's how he would show love for all of his family members. He'd take them out to dinner or he'd buy them gifts.” But they connect immediately because there's an emotional dimension to that question. [17:21.9]
James: I love that a lot. I have never really thought about that question in an official capacity, but I’ve always talked about it with financial planners and friends of mine, and family members, other family members, and some will say, “Oh, well, my parents never taught me about money,” meaning, they never sat them down and had a structured conversation. “This is how you do zero-based budgeting and this is a taxable account versus…” They never did any of that or that's what they're thinking of. But when they say, “My parents never taught me about money,” believe me, they taught you a lot about money either by commission or omission, so I do love that question.
Dave: Yeah, and sometimes I’ll include in the question, I’ll say, “For example, to my mother, money was…” and then they'll finish the sentence and then they'll often go on at much greater length. Again, the emotional connection gives you an entryway. It connects it to something that's meaningful to them and, therefore, they'll answer it. [18:19.0]
The other thing, so there's a couple of other things, because, I mean, you and I talked about this before you started recording, but the relationship dimension and, especially, the communication dimension, it's everything in terms of how to not just build relationships with people, but how to actually deliver advice that's meaningful that will be acted on.
There's a lot of research out there, including Deanna Sharpe and Carol Anderson did some research a few years ago in which they were looking at communication, planner communication from the sort of what they call the “life planning perspective.” What they found is that clients want you to connect the dots. They will not embrace and act on your advice, unless you deliver the advice in a way that is demonstrably connected to who and what matters to them and why. [19:11.7]
For example, you'll rarely get someone to update their estate plan by saying, “Well, you know, you really need a living trust because it's administratively effective. It's administratively efficient and it may help save on probate.” Instead, you say, “You really need a living trust because that's the mechanism through which you'll be able to fulfill your desires for your granddaughter, Alice.” That's how you connect the dots for them that this piece of advice isn't just some random bit of advice from a financial expert. This is a piece of advice that's actually tailored to what matters, to what I’ve learned matters to you.
James: And in order to do that, you need a plan. That's what I like about you and the CFP Board, that they're focused on planning, putting together a plan for people and it's going to be unique for different people.
James: You can't just have a 15-minute chat with someone and then prescribe something, for lack of a better term, and expect that to be acted upon. Now, anyone can give advice. [20:11.3]
Dave: And I just have to say on that point, I had a friend, it was Roy Diliberto who a lot of people know, he's a very, very prominent planner. He's retired now, but he was a very prominent planner within our field. He was describing a panel he was once on and it was on life planning, and I think it touched on how to do deep discovery and ask good questions and all of those things.
A very experienced planner who I won't name was in the back of the row of the audience and at some point he spoke up. He said, “This is pissing me off.” He said, “I know what my clients need before they ever walk through my door,” and I thought, Wow, I'm so sorry for your clients, because that's a classic example of someone who, if the only tool you have is a hammer, pretty soon everything starts to look a nail, right?
James: Yeah. I would've just been like, Okay, Steve Jobs, you can leave now, because everybody hears Steve Jobs, like, I know what to give my customers before they do, or if I ask people what they wanted from Henry Ford, they would've said a faster horse. Yeah, okay, you read one entrepreneur book and now you think you're king of the world. No, listen to these people. Right? [21:13.8]
Now I'm pissed off because he's pissed off. It is funny that that mentality, I don't want to say it runs rampant because it certainly doesn't, and it’s definitely in the minority of financial planners in my experience.
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James: But it's sad because these are the advisors, the planners that tend to give the others a bad name, because once the client or the end user, the consumer of these products and services, has that bad experience, they tend to extrapolate it to everyone else, and that's scary. It really is. [22:07.0]
Dave: Yeah, it really is. I mean, that’s the problem. It’s that, from the research perspective, financial planning is a service with what's known as “high-credence qualities”, and high-credence qualities means it's hard for the client to judge the quality of the service, even after it's been delivered. If you want to talk about a service with low-credence quality, you want to talk about getting your haircut. By the time the haircut is done, you look in the mirror, you pretty much know if it was a good cut or a bad cut.
But with financial planning advice, I mean, people are asking us to develop strategies to achieve goals that are often decades in the future, and we're giving advice that they have to trust as advice that's actually going to get them there, and that's why communication ends up being so important.
Because they can't directly judge the quality of the advice, they look for secondary markers, and how you communicate the advice and how you connect the dots and the topics you're willing to lean in and talk to them about, those are the secondary characteristics that they will use to judge whether or not you're actually smart and effective in giving them good advice. [23:13.3]
James: They're looking for things that they can see, because it's selling the invisible, and once they see that you look competent—I was careful not to say that you are competent because you can't see that. We're falling back into that trap.
James: I've had this conversation with people for many years and I’ve always struggled to explain that to where you can't see the service, even after it's delivered. One of the examples I gave to a planner, this must have been two months ago, I’d recently gotten my water heater serviced, and this is a service, it's a tune-up, meaning that it's meant to extend the life of the water heater. I can't see that. I don't have a crystal ball. I can't know that the water heater would have conked out two years from now, but because I’ve got a tune-up, now it's going to be three years. I don't know, so I have to look. [24:06.2]
Do I think it's worth it? I have to make a bunch of decisions in my mind at once, meaning, do I think that it's worth it to pay the $90 or whatever I paid to get this service, even though I can't see it, don't know the future, have no idea if it's worth it or not? I'm really buying something that is intangible and unquantifiable, so I can't create a variable where I didn't get the tune up, because I don't have two water heaters with the exact same. I would never know, and yet, as a consumer, I'm still purchasing and I'm still trusting, and I've tried so hard to unravel that process and I think you're explaining it well.
Dave: The thing is, the secondary characteristics are really important, and this is an evolutionary thing. Evolutionary biologists talk about there being sort of two fundamental methods that species use to select mates. One of them is to fight. That's the image you have of the two mountain rams smashing up against each other, and the other one is shows of display and that's like the peacock. [25:11.0]
When a peahen is choosing a mate, the peahen looks for the peacock with the biggest, most spectacular display. Here's the thing. That big display of tail feathers in all the rests, that doesn't have survival value for that individual peacock. I mean, it's metabolically expensive. It doesn't hide you from predators. It doesn't make it easier for you to escape from predators. But what the peahen is looking at is any specimen who can generate that kind of a display must be physically healthy and, therefore, would be a good mate.
Human beings do the same thing. It's like when they're dealing with a financial planning firm. “Do they always return my call within an hour? Do they always return my email within 12 hours or 24 hours? Do I get a birthday card every year that's been hand-signed by everybody in the firm, and does it happen like clockwork?” They look for all those secondary markers that say, “Wow, this organization is run like a strict military unit. Therefore, the things I can't see and can't understand, they must bring the same attention to detail to those as well.” [26:17.4]
I had an experience before I was ever a financial planner. I was involved in a facility where we were erecting a big building. It was a 7,000 sq. ft. or an 8,000 sq. ft. building, and the original contractor had really screwed up the foundation and had the bolts in all the wrong positions for this pre-engineered building. We finally had to call another firm that had been referred to us as being top notch, and I remember sitting in my office and having someone say, “Oh, they're arriving,” and I looked out the window and, through the gates, come this row of six vehicles and they're all painted the same color and they've got the company logos, and the doors pop open and everyone steps out wearing basically company uniforms with logos, and they go to work pulling out their tools and they look a military outfit, and I thought, Oh, these guys look really efficient, like they really know what they're doing, they operate with precision, and it turned out they actually did. But we look for secondary markers when we're judging quality and nowhere more than in financial planning. [27:12.1]
James: Fun fact about me. I actually used to own and operate a janitorial services business, and I’ve been in the marketing world for so long doing so many different things. I've worked at casino marketing departments and, yes, with financial advisors, and then janitorial services. I've had e-comm, and so on and so forth.
But what's interesting is the janitorial services, along this train of thought, it is something that can't be experienced until it's purchased, meaning, you signed the contract. We did month to month. We didn't do a yearlong or anything. But one of the things that we consistently got good feedback about was the fact that we had uniformed employees, meaning, if someone was in the building, they saw the blue polo and everything, they loved that, and if they had a little badge or something, they would wear that, too. Medical facilities want you to wear that badge because you can't even-- so that is a marker that they're seeing. “Oh, these people are uniform. These people will be here at the same time. These people will respond to my messages.” Exactly what you're saying, so it is incredibly important. [28:09.3]
Another thing that's interesting. Within financial advisor marketing, we have tested ads with videos, with this microphone here. This is a professional microphone versus the Blue Yeti. And I love the Blue Yeti. It's the little snowball microphone that a lot of people have, and I used to use it myself or I and other financial advisors tested video ads on Facebook and Twitter and LinkedIn, comparing the professional microphone versus the unprofessional microphone, and the conversions from the one with the professional microphone were much higher, significantly higher.
The only explanation—because they had the same outfits; they had the same background; they had the same script—it's because people trusted. People see this and they think of professional podcasters and Joe Rogan and the whole nine yards, and it was so fascinating to see that that made a difference. [29:02.0]
Dave: It doesn't surprise me at all. It's a secondary marker, as we've been discussing, and it's a powerful one, because that professional mic is an image that's burned in everyone's consciousness. They associate it with people who are seriously in the business of broadcasting in one form or another.
James: One of the things that I have in my notes, because I don't have a lot of notes for this episode and I'm thankful for that because we're actually able to have a conversation. There are some podcast episodes where they're a little more rigid.
One of the notes that I have here for you is the strategic use of silence and it says, “Rather than rush to a reaction to dissipate the discomfort of bad news, the planner should sit with the news, giving the client space to say more or simply be present with the weight of new information.” This is a really sensitive topic because it deals with giving bad news. Are you saying just to tell someone bad stuff and then shut up? [29:58.2]
Dave: You know what? Sometimes it's because you're receiving bad news. Sometimes the clients are sharing something that's deeply emotional that's happened to them, and that's uncomfortable. It's that we've all experienced it. It's tremendously uncomfortable to be in the presence of someone who has experienced something horrible, maybe a death in the family. I mean, that's about as horrible as it gets. And to be able to just be with them, not rush to a new topic, not move on because it's making you uncomfortable, but to actually be with them in the depth of that, and you may not even know what to say.
Brené Brown has some great videos on YouTube that talk about the difference between empathy and sympathy, and I show those, we show those to our students and we recommend that people go look at them, because it's really important to understand that sometimes someone just wants you to be with them, and sometimes you just say, “I don't know what to say.” Sometimes someone just wants a hug rather than saying, “Well, at least--” That's sympathy. “Well, at least--” Don't ever say, “Well, at least--” “Well, at least it could have been worse, you know?” [31:08.6]
James: I do that all the time.
Dave: Yeah, no, you just need to sit with the gravity of the moment, and silence is hard and silence actually manifests. Silence is something to practice for lots of different reasons. Silence is really important or the ability to just sit with someone when there's something deeply emotional happening.
But silence is also a very powerful technique. I always hesitate to use the word “technique” because it always sounds manipulative, but it's a powerful way to be with clients just when you're trying to go deep with them. Sometimes you ask a question and someone thinks about it. They're taking your question very seriously, and this is where sometimes the open-ended question gets shut down because everyone is uncomfortable with silence, and so if there's five seconds of silence, you then modify the question. If there's five more seconds of silence, you modify it further, rather than just sitting and allowing the client to take your question seriously and really go deep and think about how they're going to answer that. [32:14.4]
I mean, practice talking to someone and actually sitting for a whole 30 seconds without saying something. It's hard. Thirty seconds is like an eternity, but it's something to practice to be able to actually sit there and not try and move things along, not try and fill the silence. We always want to fill the silence. So, I’m going to say it's a learned skill to be able to sit with silence, whether it's because something deeply emotional has just been revealed or just because you need to give someone the space to properly answer your question. [32:50.4]
And not everything, in fact, some of the most powerful questions don't even have a question mark after them. When someone will say something and you'll sit with it, and then you can just say, “Tell me more.” There's been a lot of research that's shown that a statement like “Tell me more” is much more powerful and less challenging than “Well, why was that?” or “Why did you do that?” In people, actually, that activates their adrenal system. I mean, it sounds like a challenge, whereas “Tell me more” is not at all a challenge. It's just an invitation.
The way in which you communicate, at least, being able to sit with silence, understanding how to just say, “Tell me more,” not shutting down an open-ended question, these things, when I say them, you think intellectually, Of course, that makes sense, but when you try and actually practice it, it's not easy.
James: It's definitely not easy. I've been trying to practice that in my own life. I mean, I do struggle with keeping silent. Even, if people go through bad things, I'm definitely the “Well, at least--” person. And for the financial advisors out there who are listening, one of the things that I’ve been trying to do this year, and I encourage inner circle members to read ancient text and you have your read stuff like that in the morning. [34:06.2]
I have been going through the Bible cover to cover and just really digging deep, and in the story of Job, for those of you who aren't familiar, a whole bunch of bad stuff happens to Job. House burns down, family gets or family members get wiped out, really, really terrible things, and when the very first friend comes to him, he sits in silence and he doesn't say anything, and it's really profound.
Before I connected all the dots of it being a psychological principle, I accepted it as a biblical principle. It was important enough to be included in this book that he just sat with Job and didn't say anything until Job said something. That's the lens through which I viewed it at the time, just, whoa, this was important enough to put, literally, in the Bible, to just sit there and don't say anything when you're trying to comfort someone. That is what inspired me to start trying to do it, and you're right, it is very difficult.
Dave: But very powerful. The late great Dick Wagner, one of the greatest philosophers of our profession, in his final book, Financial Planning 3.0, he observes that money is mentioned more times in the Bible than God. [35:11.4]
James: Yes, yes, you're a hundred percent right.
Dave: And in the Book of Job among, I mean, fundamentally, all of his material wealth is taken away from him and, of course, he's stricken by that among other things, and so that becomes a very powerful moment when his friend comes and just sits in silence with him.
Money permeates everything. It's the material means through which we interact with the world, so of course, it does. My background was in economics, and when you study economics, sooner or later, you get to the economics of money and you learn that money has three qualities. It's the store of value. It's how we can defer consumption. It's a medium of exchange. It's how we can buy and sell things. And that's a unit of account. It's how we can measure the value of things. Then you start to practice financial planning for five quick minutes and you learn that money may have those three qualities, but they're at the bottom of a really long list of qualities, because money is also about status. [36:09.0]
Dave: It's about love. It's about all these human characteristics. Money is imbued with all of the things that make us human. Again, Dick Wagner, in his book, he talks about looking at literature and film and theater, and what you find is there's always a money character, and sometimes it's obvious and sometimes it's subtle, but there's always a money character present. I always think it's an interesting exercise to watch a television show or a movie, or read a book, and think, What's the money character in this? because it's there every time.
James: I’ll try to be more cognizant.
Dave: Just like it permeates the Bible. [36:48.6]
James: Yes. I’ll try to be more cognizant of that, and for people who have children, when they watch children's movies and they start to pick up on-- If you're an adult today and you're watching Disney movies, like Hercules from the ’90s or even earlier than that, Bambi, so on and so forth, you can begin to pick up on the subtle cues like, Wait a minute, they're talking about money. You’re completely right. You start to wonder.
People are, for better or worse, told that money is used for love in certain ways and, for better or worse, in status, and it's important for financial advisors to recognize that within their clients, to try to draw out those emotions so they can effectively not only create a plan, but as we talked about in this show, get people to act out the plan. You have to connect it to even their most primal desires.
Dave: Right. Yeah, if you can't connect it to who and what matters to them, and why, they won't embrace it. They won't internalize it, and they won't act on it.
James: Absolutely. [37:55.0]
Dave: You have to [understand] how people and how their behaviors arise from these sort of really deep, deep human sources within their psyche. And we're not trying to fix people. We're not psychologists and we're not clinical psychologists or marriage and family counselors. We're not about fixing people. We're just about understanding enough about human psychology to be able to give or to deliver effective advice effectively.
That's really what it is for the financial planner. It's to be that change agent. It's like, I'm going to develop some financial planning strategies and I know that I have to frame them and deliver them to you in a particular way, based on what I’ve learned about you and what I know about human psychology, in order for you to hear what I have to say, understand how it connects to what matters to you, and then be motivated to act on it.
James: Totally. We are winding down this show. Is there anything that we didn't talk about or anything that we missed that you would like the listeners of the show to understand or anything that you would like to add? [38:59.0]
Dave: There's one thing I'd add and that's something that a lot of people don’t work on, but I always associate it with the late Ed Jacobson and that's appreciative inquiry. Appreciative inquiry is also a very, very powerful approach to helping people with change, and the way it works is this. Rather than saying, “Why do you think you've always failed at being able to save and invest?” you start doing an appreciative inquiry and you say, “Tell me about a time when you set a goal and achieved it?”
By doing that, you're activating their positivity and their belief in the possibility of actually achieving something, rather than saying, “You've been trying to do this for years and you've always failed. Why do you think that is?” No, no. “Tell me about a time when you set a goal and you achieved it,” or if someone is really struggling with, say, their business or their job or career, say, “Well, tell me what's the best thing about what you do every day.” It gives you an insight and the ability to activate the possibility of positive change. [40:08.7]
Anyway, I couldn't end without talking about appreciative inquiry.
James: That's some amazing stuff and people can use that in goal-setting, too. If you're trying to set a goal, let's say that you've only made $250,000, that's your highest income year, and you want to make $300,000. Start to look. What did you do to get to 250? What are your behaviors that got you there? As you can reinforce those, you can strengthen those, and you can believe in yourself that, hey, you can get to 300, for example.
Dave: It's interesting what motivates. I had a client who came in as a prospect at one point, and at the time, our firm had an asset minimum of a million dollars and he didn't have a million dollars, and so we said, “We can refer you on, but, really, we have finite capacity and this is one of the filters that we use.”
He came back 18 months later and he had a million dollars. He said, “I went away from that meeting. I thought, what would it be to have a million dollars?” All of a sudden, it just started shifting the way he thought and acted, and he came back a year and a half later with a million dollars. It's like you just never know what will open up a possibility mindset for someone. [41:15.8]
James: Yeah, I couldn't agree more. This has been an incredible podcast episode. I know it's going to serve financial advisors and financial planners in such an incredible way. Is there anything that you would like to share where they could get in touch with you or if they want to learn more, or any sort of plug you want to have at the end of the show?
Dave: I'm findable. Anybody who wants to check in with me, drop me a line, email me, whatever. I'm always happy to provide resources where I can. My email address is email@example.com. That's a contraction of Yeske Buie, which is the name of our firm, so yebu.com. If someone is interested in any of the resources I’ve talked about, I'm happy to forward articles or whatever, so, yeah. [42:04.1]
James: That's awesome. Thank you. This has been great. Thank you so much for doing this.
And financial advisors, I hope you enjoyed this. Like I said, I'm serious about listening to this episode multiple times. Let the concept sink in. And I will catch you next week.
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