Ben, Belgium, and Behavioral Finance

This week we had the pleasure of sitting down with Ben Granjé, a behavioral psychologist. Ben has worked for Morningstar in the past, and is now the managing director at Beconomics, a consulting firm in Belgium. He’s focusing on the financial industry to highlight the difference in money mindsets around the world, and to help planners push their clients toward positive change.

Ben has some fascinating insights in this episode, and we were thrilled to chat with him at the FPA Annual Conference. It’s always exciting to see what the financial planning industry is up to on an international scale.

If you haven’t yet, make sure to join our brand new FPA Activate Facebook Group! We’ll be hosting ongoing discussions about this episode, and all things financial planning.

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“I usually tell young planners to go out and fail…Because experience is the thing you gain just after you needed it.”

 

Things You’ll Learn in This Episode:

  • How behavioral psychology applies to financial planning.
  • How money mindsets differ between the US and the rest of the world.
  • The different ways student loans impact different cultures.
  • How financial planning looks on an international level.
  • What stays the same across cultures when it comes to financial goals and setbacks.
  • How we can help our clients achieve positive change.
  • Why it’s important to fail early (and big) early in your career as a financial planner.

Loaded by Sarah Newcomb

WAARDE(N)VOL! LOADED

Zen and the Art of Motorcycle Maintenance

Institute of Personal Financial Planning at Kansas State University

 

Show Transcript

Ep66 Transcript


 

Ben:                       No portfolio is an island. You may have the best asset allocation, the best portfolio in the world, but it only makes sense in the wider picture of a person’s life. You can be 100% correct technically, and tear this family apart. The human aspect of financial planning, to me, is that much more important.

Hannah:               You’re listening to You’re A Financial Planner: Now What? The podcast to help you fast-track your career by bringing you meaningful conversations on topics that influence new financial planners, their careers, and the lives of their clients.

Charlie:                 This episode is brought to you by FPA Knowledge Circles. Be a part of FPA cross border knowledge circles were you can hear voices from around the world, like today’s guest and others like

Robert:                 Hi, my name is Robert van Beek. The knowledge circle is the place to be, not only physical but also online. We have a nice sharing place of experiences, knowledges, and also not only know-how, but know-who. I think that’s a very important thing, so it’s a network of passionate financial planners, professionals.

Hannah:               We’re back from the FPA Annual Conference, the largest international gathering of CFP professionals. Recorded and interview with Ben Granje. Ben stopped by the NextGen lounge to talk to us about behavioral finance and financial planning in Belgium and around the world. Ben has worked with Morning Star, he’s helped translate Sarah Newcomb’s book “Loaded” for Belgium, the Netherlands, and Luxembourg and continues to help advisors with tools to serve their clients better.

Financial planning transcends borders and Ben’s interview highlights that. He shows how we can be better planners by truly engaging with our clients right where they’re at. It’s a great interview. Here’s Ben.

Ben:                       Good afternoon. My name is Ben Granje. It’s a French name, in the US you would pronounce it Granje. I have trained as a psychologist around 25, 30 years ago and somehow ended up in the financial industry, so I worked for an investment bank, which was Citigroup at time, as an investment advisor and wealth advisor. From there, went on to a fund house which was Investo, you might know that here in the US as Amvescap. And from there to Morning Star which I’ve done for the past 12 years.

The reason you cannot find me online today is simply because I’ve just left Morning Star and started my own business which is called Beconomics. B for Belgium, for behavior, and for Ben which is my name. Together with a business partner, we have a consulting office called Bias. Bias in this case stands for Bias, Insight, Applied, and Sourced. What we want to do is take all this research that is available, but bring it to the advisor who often wonders, “This is all great, but what does it for me? What’s in it for me and my practice? How does it help me grow my business?”

Sourcing means that we know the software available, that we know the people available, and we try to help both institutionals, advisors, and retail investors, individual families or what have you to do better with their money, feel better with their money. In that sense, I’d like to sometimes refer to myself as Chief Happiness Officer because in the end, the pursuit of happiness is the reason that we would invest.

Hannah:               Yeah, well that’s a huge vision and mission for what you’re doing. I mean, talk about changing financial advisors, institutions, and the clients, that’s great.

You’re from Belgium, so what would you say, because you kind of have an interesting perspective between countries. What is the biggest differences that you see between Belgium and the United States when it comes to financial planning?

Ben:                       I would say that it comes down to the belief in social security. In the US, people are raised to believe that they have to take care of themselves in terms of pension and wealth planning, while in Europe I would say as a whole, but Belgium also specifically, the government has always provided a pension which was sufficient to live on. I do not, I am not convinced that that is still the case, but most people still live in that idea that they are working now, saving up for their pension, and by the time they retire, I would say at least a minimum living wage.

I do not believe the money is there simply because of the demographics. You used to have five working people let’s say for one or two retired people, but that is shifting to where you have maybe two working for every four or five retired people and that simple is unsustainable in terms of the taxes you have to levy on the working folk in order to pay for the retired folk. In that sense, we are training them, bringing the message that they have to invest, they have to provide for their own pension.

The problem is not that they wouldn’t understand, the problem is as it always is, in their head. Very famous investors have said before in the past, “You are your worst enemy.” I would switch that a little bit around because I don’t want to be so negative. We try to keep it upbeat and positive. It is, “Man is the measure of all things,” and people can only react and interpret by what they know. Because they have always know this retirement system in Belgium to be true and correct, they want to believe that and it is hard to overcome that, I would say, resistance to change.

Hannah:               I think this is a great question for a behavioral expert. How do we help clients overcome that resistance to change in that situation?

Ben:                       It has to do with the confirmation bias, mainly. Well, two things. I am going to talk about confirmation bias. The other thing is something called [foreign language], which basically means you do not know what you do not know and this is, I would say, the main problem in Belgium.

Step one is education. We are doing that with adults. I think we are failing that with young ones, with children in high school. I have worked 10 years for Morning Star. What we did is we go into middle school and high school and talk to children about money. We know that actually playing with money changes your mindset. There is something called Money Mind which changes your goal orientation which makes you more target oriented. All these little things help.

Once education is there, then we still have this problem whereby people glean from all the available information only those aspects that confirm what they already believe to be true. What we want to do and that is basically the basis of all presentations we do, is break off the blinds. We usually start by shocking people a little bit and saying something that they would not expect like, if you talk about pensions, I tend to start with, “Live fast and die young because the pension simply is not going to be there so if you want to enjoy your money, do it now.” Then everybody sits up and pays attention. “What is this guy saying?” Then we can start explaining to them why I’m saying this and how they can overcome this issue.

Hannah:               So you’re telling them to die early, and they’re like, “Oh. Okay. That’s a first time people have said that.”

Ben:                       Yes. You prefer to say this to the retirement industry and then they’re a bit, “Is this person insulting me here?” Yes, we are insulting you because it’s the way to get your attention, it’s the way to get you out of your safety zone, out of your comfort zone, and by that, open up your mind to actually listen to something.

Hannah:               So you talked about the money mind. Can you talk a little bit more about that?

Ben:                       There has been some research, some experiments, AB experiments whereby they say, “What happens to you if you play with money?” This is all about the stories you know. Everybody has grown up with Disney movies or with stories. Somehow it always seems to be that rich people are not social, don’t care about anybody else, don’t want to help you while the poor people are all about loving, caring, about their friends and family. It’s cliché, but all cliches are somehow rooted in truth.

What we found is if you play with money, actual money in your hands, and then do a test versus if you don’t play with money but with anything else and then do the same test, those who have worked with money in their hands become more focused, more goal oriented, but also bit more ego-centric. They don’t want other people to copy off their tests while those who haven’t played with money would more easily allow you to look at their answers and sort of cooperate. There is a little truth to that. Working with money sort of makes you more selfish.

At the same time, if you then talk to them the next day, people tend to justify whatever situation they’re in to say, “Well, I wasn’t helped here. I’m just that smart.” I would say that in American politics today it’s funny to me, I had in the part, sometimes a hard time explaining these concepts, so I’m very grateful to the current administration because they make my life easier in that sense, to explain what justification means, to explain what the [foreign language] effect means.

We always say it’s difficult to win an argument from a smart person. It’s near impossible to win an argument from a person that doesn’t know because if they don’t know all those things that they don’t know, these are not elements that factor into their reasoning.

Hannah:               Mm-hmm (affirmative)-

No, that makes a lot of sense. I met you at the Knowledge Circle Summit here at the FPA Annual Conference. We were working through a case together. We were at the same table working through a case. Our table was tasked with finding the risks that were involved with the case that we were looking at and most of the people at the table were really drawn to the technical risks that they were seeing. Your point was that the human and the relationship risk was the most significant risk present in that case. In your experience, is that human and relationship risk often overlooked with financial advisors?

Ben:                       I would say it’s not limited to financial advisors. It is typical for experts in a certain field. By being an expert, it means that you’re focused on what you know best. That’s simply how the mind works. You seen any problem in relation to what you know to be possible solutions.

At this table, talking about the risk of a case study, everybody’s looking at the technical aspects. My point was exactly this and the reason I’m here at this FPA Conference. You can be 100% correct technically and tear this family apart. The human aspect of financial planning, to me, is that much more important.

One of the topics that we usually talk about is no portfolio is an island. You may have the best asset allocation, the best portfolio in the world, but it only makes sense in the wider picture of a person’s life. I think that is what focused experts sometimes forget. What we say now is that as a financial planner, I’m happy that you know your stuff. I’m happy that you understand all the technical aspects of it, but please take a step back and look at the broader picture, at the broader vision and look at the client in front of you. Is he happy?

Again, as you travel the world you will find almost all people have the same end goal, being to be happy, being to be safe, secure, in the love of their family. The strategy of getting there is different. In our consulting business what we do is try to change the strategies that people use in order to not irritate your significant other, your father, your mother, your children, whoever it may be but achieve happiness maybe outside of financial strategies.

For women, for instance, that are buying shoes to feel better, as long as you’re aware that that is what you’re doing, I’m saying that is fine. If you think you have to buy shoes to feel good, then you might end up with a problem because how many pairs of shoes can you buy in the end? If we can figure out how they make you feel and figure out a way to make you feel that way without having to buy shoes, then we are stepping in the right direction.

Hannah:               I’m hearing very much a values based approach to helping clients with their money.

Ben:                       It’s funny that you would say that because the title of our book, which is available in English through Ms Sarah Newcomb, Dr Sarah Newcomb I should say, is called “Loaded.” We translated it, my partner and I, in our language which is Dutch slash Flemish. The subtitle is actually “How to live a life of value without losing your values.” It’s a bit of a play on words but it’s exactly that. It doesn’t matter how much money you have if you’re not happy with it. That’s the whole point. Do not allocate power to money to make you happy or unhappy. It doesn’t have that. It’s an instrument, but you have to feel happy with who you are in your circumstances. That’s where we want to help you and I believe that that is, in the end, the purpose of financial planning.

Hannah:               You talk about, you said Chief Happiness Officer is kind of how you identify yourself. You brought this idea of happiness routinely. Is happiness found in just living out your values or how do people identify happiness, if you would?

Ben:                       Well, that’s wherein the problem lies. There was an American writer who died a couple months ago, Robert Pirsig who wrote a book “Zen and the Art of Motorcycle Maintenance”. I would say he wrote something about the metaphysics of quality. Everybody knows what it is but if you try to define it, you lose it. The same is more or less true for happiness.

When are you happy? Are you happy 100% of the time? I don’t think so. But are you content with your life? What we’re trying to say it, if you strive towards happiness, the chances of being happy, feeling happy, are increased tremendously. If you’re not even trying to be happy, then it’s going to be very difficult. It’s a conscious choice, being happy.

I try to use as many examples of every day life as I possibly can. There’s another movie about a lady that has to go to a wedding. She’s quite famous again because she plays the lead character in Will and Grace and she needs a date for the wedding. She hires this male escort. He says, “Every woman has the love life that she chooses.” Of course all women in the movie theater stand up and say, “That’s just not true!” Well why not? You have chosen the guy you’re with or the guy you’re not with. If you’re not happy with your current love life, change it.

Same applies to money management. If you’re not happy with your current financial situation, then we have to start thinking about, “What do we need to change in order to feel happy?” But maybe, and that’s my whole point, it’s not just about money.

There’s a lot of stress. We’ve seen a couple of researchers here discuss how financial stress is the cause of a lot of divorce in the United States. I would say that is probably true, but the money stress aggravates whatever underlying stress was already there in the marriage or in the relationship and if we can take away that financial stress and teach people how to talk about strategies rather than goals, then maybe we can help save a couple of marriages here.

Hannah:               I find this interesting because we’re talking about happiness. It’s almost like you’re saying that we should be focusing more on contentment and people really being able to take responsibility and control of their situation. Would you say that that’s a fair assessment?

Ben:                       It comes into it, but I do not want to sound too sappy. In the end, I’ve spent 25 years in the financial industry advising and I do want to stress we’re in a business environment. I’m not here as a psychologist to have you talk about your relationship with your mom. I do want to stress that if you live your life in line with your values, then it’s easier to feel happy.

Now here’s the problem. Your values, where do they come from? They’re partially culturally defined. They’re also defined by your story, your life. A lot of people are not aware of this but often you grow up with the ideas of your parents, your teachers, your uncles, whoever that may be that are instilled in you without you ever having thought about it. They may be an obstacle in your life or a help.

We have people try to come up, write down, tell the story of what money is in their life. Is it a support like a sidekick character or has it been your adversary all the time? If it was your adversary, we need to figure out why and rewrite that story, find examples of where your preconceived ideas are not true.

This is what happens when you have very smart people who still make mistakes and sabotage their own financial life. It is not that they’re not intelligent, but as we have seen, Professor Clontz just gave a presentation about 90% of the decisions you make are made in your lower brain, meaning that before you start being rational and clever, most of the information has already been filtered, qualified, and only the things that get past your lizard brain are used in your rational evaluation of information. No matter how smart you are, those things that are ingrained on a deeper level determine a lot of your decision making process. It’s hard to change. It takes work. It’s not necessarily easy. If you are aware of that problem, I would say knowledge is half the game.

Hannah:               As financial planners, what can we do to help our clients in this situation? And where does it, planning versus counseling?

Ben:                       Okay-

Hannah:               Obviously we’re not counselors.

Ben:                       Okay, so any presentation to financial planners start with that same sentence. “You are the problem,” because you are here to say you want to get to know the client, but do you really know yourself? All the advice you give, any conversation with your client, you are talking from your own framework and your own experience. First, get to know yourself. Know what you are, who you are, what you want, what your story is. Then you will find that if you have clients that share your values and stories, it’s a lot easier to relate to them.

If you have clients that keep on annoying you, you may want to figure out A) Is this because of my perception and can I get past my own ideas to really listen to what my client is saying, then you can work with them, or you want to make a choice and say, “Well, I cannot relate to you. Our story is that much different.”

If you have a client that earns maybe like $50 million dollars a year and is unhappy, some people cannot get past that because they say, “I would really be happy with that money.” Some people can say, “Well, I understand. This person is convinced his father would have made $75 million dollars. He lives in the shadow of his father. Let’s talk about that. Let’s not talk about the actual numbers.”

Keep this in mind, it’s all about the numbers but it’s not about the numbers. It’s about the feeling. It’s about the experience you have with those numbers.

Hannah:               For financial planners, should they be naming those things with clients? Say I’m seeing that it seems like you’re living in the shadow of your father. That seems like a strong statement to say to somebody.

Ben:                       Ideally you would-

Hannah:               They would say it?

Ben:                       Yes. You might nudge them in the direction and suggest things that lead to that. I’m a big fan of oblique strategies. While I just said in a presentation you might want to offend the audience a bit to get their attention, in a one-on-one situation of course, I would say it doesn’t hurt after you have built a relationship of trust. I wouldn’t start off with a new client to say, “You idiot.” That usually doesn’t lead to the desired result.

At a certain point in time, you may make comparisons with other situations. You may use stories that they would know ranging from The Lord of the Rings, Charlie and the Chocolate Factory. How do you get your money? How do you feel about paying the bills? How do you feel about, have you ever spoken about money with your father? Do you know what he made, how he felt? Was he really stressed by money when you were young? Talking about that situation, we can guide our clients to have an epiphany, to realize what money meant in their life.

I’m not saying it works every time, but I’m saying that talking about it, and yes, at some point in time maybe, pinpointing and labeling what is happening there may help the client reach a better decision process or at least, I would say, feeling better about the decisions he has made.

Hannah:               I like this idea of the clients the hero of their story and our job is to help them be that hero and be the ones to figure some of these things out.

Ben:                       I would say that in the US, you teach children and young people to be the hero of their story, but this is the funny thing that a case study that you get in psychology. It’s a story about a kid that goes camping with friends a counselor and they’re by the campfire and they’re eating peas and carrots and sausage. They ask this kid, “Who are you in this story?” The kid says, “I’m one of the peas because I have no influence whatsoever what is happening here. I’m just there. Things come, things go in my life and I cannot control them.”

Well there is a challenge for a financial advisor. I would suggest you need help maybe with other sorts of counseling as well there, but to teach this kid confidence to make decisions about money and to feel control over the flows of money, the streams of money in his life, that’s not a one session thing. That is a process that you go on.

Hannah:               Helping people guide them through their financial path, if you would, this is something that’ll take years, right? I mean-

Ben:                       It might. It might not because as you do in any … a doctor, psychiatrist, the first thing you want to do is fix the practical things. If a person is in debt, I’m not going to talk about you about how you feel about money. I can guess that being in debt is not a fun thing. Let’s first fix the debt situation. Let’s clean up the retirement situation. Let’s make sure that the family business is okay. That is your first, I would say responsibility then.

Two is if you’re going to work long-term with this client and you say, “Well now we have a path in front of us which we’re going to follow for I don’t know, 3 months, 6 months, five years, to clean up the current mess and to get ourselves moving in the right direction,” that gives us also the time work on the second phase. Here is the thing, if you help a person with a problem, he may or may not come back to you. If you help a person feel good about solving the problem, he will come back to you. In the end, like I say, we’re in business. We want to keep this client long-term, especially if we can solve the debt situation and make him a net worth client. This is how you grow your business, of course.

Hannah:               You said a minute ago, you made a distinction between strategies versus goals-

Ben:                       Correct.

Hannah:               And said that we need to be more focused on strategies instead of goals. Can you talk more about that?

Ben:                       Well, simply said, basically every human being has the same end goals: safety, society and group feeling, and happiness. The question is not so much, wherever you travel in the world, is anybody striving to be unhappy, that wouldn’t happen too much I would say, but how do you get to that feeling of happiness? So the example we use there is, you have a significant other. You first came to live together and you found that it is hard to merge these two visions about money. You come maybe from a family where every night you go out to dinner and to feel good you have to go to the theater and the movies and you have to really live. Money has to roll while the other person maybe comes from a family where they say, “Every penny saved is a penny earned.”

Both might have the same need: to feel good about their life. But if you tell the person that wants to go out, “No, you have to save all your money and stay inside,” he’s going to feel cooped up. If you tell the person that only feels safe if there’s enough money in the savings account, “Let’s go out and spend some money,” they’re going to feel unhappy, but you still love this person, you still want to be together.

The question is not, “Do you really need to spend money?” The question is, “What are you hoping to achieve by spending money?” So your strategy to be happy entails spending money, but let’s talk about the feeling you get from it and are there other ways for you to feel like that without spending money. Then you find sometimes it’s really simple. Reconnecting with nature is a very strange things that sets off endorphins in your brain that makes you feel good and tranquil and at ease with yourself. On the other hand, why do you really need to save every penny that comes in? Why are you so anxious about spending money? Is it something to do with your youth? Do you have these fixed ideas about what it means to not have money? You’re scared of being poor, you’re scared of not being able to do certain things up to the point where you do not even do these things when you would be able to do them. Then we have to figure out why this anxiousness and can we have you come up with examples where it’s not necessary to be so anxious.

You find a middle ground. Most couples do this instinctively and either end up finding a middle ground or end up getting divorced. I would say it’s that simple. If you cannot reconcile these two ways of looking at the world, you won’t stay together. The fights in marriages are always about the strategies employed to feel good. If you can tell people they’re not undermining your ideas, they just have a different way of achieving the same end goal. Let’s talk about how to achieve this end goal together. If you need to go out to restaurants, maybe it’s just you need to connect with friends. Well, can we invite those friends to come over and eat at your house or can you go eat at their house? It doesn’t cost as much money but it gives you the same result. Those are the kinds of strategies we try to help families with.

Hannah:               That sounds like a conversation that a financial advisor can have with their client if they’re really doing planning versus just focused on the investment work.

Ben:                       Correct.

Hannah:               In the meeting, how is this practically brought up with clients? Is it an agenda item?

Ben:                       Well, in the meeting it was a fairly specific case, but yes you can. I would say without going too much into detail, the question is this, you have first generation mom and dad, you have second generation the children. There were two children, two brothers. One was working in the father’s company, the other one wasn’t. So the question was, the parents decide to give the stock to their boys, but one boy isn’t working in the company gets 50% of the stock, the other one is working the company get 50% of the stock. He has a life insurance and his brother is the beneficiary. He’s going to get married. He’s going to have children so you can already see, even if this would be technically correct, which I would say it isn’t, that this is going to be harbor frustrations because, of course, if you get married and you have children, your first concern is for you nuclear family.

Do I understand the mother who says, “I want to make sure that both my children are taken care of”? Of course. But is this the best strategy if you can, I mean maybe this is a really exceptionally close family and it’s always possible, but I would say that there would be resentment between the brothers if the one has to work in the company and sees money flowing to the other guy who doesn’t really do anything for the company. Basically, you have to tell the mother, “Do you understand that this is going to end up in a fight?” Maybe you have to tell the brothers, “Do you understand that your mom is only trying to look out for her both children and she’s anxious that if you get the whole company, the other brother is going to end up with nothing, or if she sells you the company, you’re going to have to put yourself in debt up to a level where the next 10 years are very risky for your financial future only to buy out your brother?”

We have to talk about the strategy to fulfill the mom’s need to take care of her children, for the one son to take care of his nuclear family, for the other son to be financially safe. I would say technically you can all this, but if you do not explain to the family, well explain to the family. I would say, help realize that there are feelings involved here, you could tear the family apart by doing the right technical thing.

Hannah:               It’s having the larger conversation-

Ben:                       Yep.

Hannah:               I mean, that’s discovery, that’s almost every meeting. You’re kind of bringing that perspective, too-

Ben:                       It’s the difference between an investment manager and a life, I would say a financial planner. A financial planner looks at your life, looks at your needs, your goals, your family and helps you build a financial situation that goes along with that. That doesn’t mean it can’t change because as everybody knows, you build a plan and as soon as the first shot of the war is fired, all plans go to hell and you have to adjust. Nonetheless, the making of a plan is an exercise that has value, is an exercise that makes you think about who am I, what do I want, where do I want to be in 10 years?

If you don’t have the plan, you’re just winging it. Some people might lucky. Not everybody will get lucky.

Hannah:               For the young planners who are listening to this and want to develop their skill set on that personal side of it, that bigger picture, if you would, of looking of a family’s life and that bigger financial planning, what would be the resources? Where can they go to help improve their skills?

Ben:                       I’m going to say something strange. When I teach at universities in Belgium and I also taught at a couple universities here in the US, I usually tell young planners to go out and fail. They’re like, “Why? Why would I fail?” Because you need experience and experience is the thing you gained just after you needed it. A planner that has never suffered a crisis, that has never seen things go south, you don’t know how they’re going to react if they can keep focus, if they can keep the path.

I would say that this generation currently being schooled as planners has this great advantage whereby they saw the crisis, saw what it did with their parents, with their peers, without it actually being their own money. It was a great exercise in experiencing a crisis without the actual pain. It’s a start.

I would say maybe go out and lose some money of yourself. Maybe not intentionally, but try some things, take a risk, see what gives. If you win something, feel how happy it makes. If you lose something, feel the pain. Now when you go to your clients, you can put yourself in their shoes. You know what it feels like to win. You know what it feels like to lose. If you’ve never experienced anything in your life, that’s hard to do.

My main advice to young people is travel within the US, outside of the US, around the world. Talk to people. The hardest thing that you find in these classes is a lot of planners are afraid to talk to their clients about feelings, about their money even. That is, I would say, if you’re afraid to talk about money with your client, I’m wondering why you’re in this business. If you’re afraid to talk with your client about how they feel about their money, maybe you’re better off as an investment manager and not a planner.

Hannah:               I love that analogy and I love how you’re drawing these distinctions between financial planner and investment advisor because I think that’s a very clear distinctions that aren’t being made well in our profession and what I’ve been hearing about people-

Ben:                       I would add one to that, one that usually strikes a cord all across the world is dieting. A financial plan has to somehow satisfy your client. If it doesn’t, it’s going to fail. If you go on a diet and it’s too strict, I’m from Belgium, we’re famous for french fries with mayonnaise and you might not like it, but it’s good. If you’re on a diet and it’s too strict, by Friday evening, I’m at the fry shop and I’m eating the greasiest thing I can possibly find because it makes me feel good. In your financial plan, I would say, allow for digression. Allow for sin. Allow for fun because that’s what human needs to be happy and if they’re not happy, if they’re not satisfied, it’s not going to work. I would say that if you just get out of school and you know how it’s supposed to be done, then every dollar needs to be saved and invested and what have you, I would say you’re right, but you’re so wrong.

Hannah:               This idea of these emotions and going out and experiencing failure and experiencing what it feels like to win and lose, I mean it’s almost this idea that all of these emotions are very universal, like everybody experiences that and once you can experience it yourself, you’re going to be able to relate better to your client.

Ben:                       I would say that is very correct. It’s the strategies that are more culturally defined. The way you have learned, maybe even by commercials, that you need to spend money in order to be happy. I’m specifically saying this because I think in the US, that is even more so than in Europe, also we’re not far behind there. Living on credit has been the engine maybe of the American dream. I would advise against it. I would advise that if you want something, work for it, save for it, buy it when you can actually afford it. I’m not saying that you should never buy something on credit because you also want to establish your credit history, of course. Maybe do small things on credit and maybe save up for it first, whether it be in little envelopes, whether it be in savings account or these little money pigs that you have. Have the money, then buy it on credit, knowing full well that you already actually have the money to pay for it. That’s how you establish a good credit.

Buying something that you really cannot afford, that’s a risk that may leave you with bad credit and this short term decision that you have made to buy something that you cannot afford is going to haunt you for a long time.

Hannah:               You know as you were talking about this, student loans came to mind.

Ben:                       Yes.

Hannah:               And how that’s very epidemic in our country and with millennials. You can’t talk about millennials without talking about student loans.

Ben:                       Yes.

Hannah:               From your perspective, how do you view student loans?

Ben:                       We don’t have the same situation. Schooling in Europe is mainly subsidized. The amount of money I paid to go to college was, I may be exaggerating if I say a thousand dollars per school year-

Hannah:               Wow.

Ben:                       That is just the tuition of course. It’s not the living and food and beverage and what have you, but still. The schooling itself is subsidized because in our country, there’s belief that if you educate everybody to be conscious of the world around you, then you will build a better society, and in a better society, more people will have a chance to make a good life.

That said, we also are very aware that in the US, it is the best of all worlds and it is the worst of all worlds. If you can find it, afford it, get a scholarship, you can have an education here that is incredible and tremendous and out of this world. You have the smartest possible people and educators here, if you can afford it.

Herein lies the problem. If you have to put yourself in debt for the next 30 years in order to have that education, I don’t want to say there’s something wrong with that, but it is maybe not conducive to a society where the American dream which is in essence upward mobility, is available to everyone. If it’s not available to everyone, you have these articles for the past few years by Americans saying the American dream is dead. Well why would that be? We still believe in the rest of the world, the American dream is alive because when we come here, usually we already had our education. If you have the education, well the American dream is alive. You can make it here much easier I would say, than in old world countries. Here it’s what you know, not who you know and that is an incredible advantage. I cannot stress this enough.

Young people here are privileged but up to a point. They always make this joke, “The sick stay healthy, the rich stay poor.” The other way around of course. “The sick stay poor, the rich stay healthy.” Sorry about that. It is true in education. It is true in your social environment and that may be even the hardest part. The American dream means leaving your current socio-economic environment behind and moving to a new one. That is the hardest part. If you win the lottery, suddenly you could move up to a different part of the ladder. That is mentally a very difficult step to take. I wouldn’t say that making money is the US is the hardest part. It’s learning how to live with the different socio-economic status that is the hardest part.

Hannah:               That’s so interesting. I love that. What, I know you’re active in research and everything right now, what are you working on that you’re really excited about?

Ben:                       The last book we just published, and this is the Dutch translation of the book “Loaded” if you ever look for it, Sarah Newcomb wrote it. It’s Morning Star research. It talks about the step before financial planning and that’s why it was really interesting for me. I have great confidence that the financial planning aspect, we know. We know how to go about it and technically it’s all right. Then you make this wonderful plan and your client goes out and does something completely stupid.

Why? Did he not hear you? Did he not believe you or did something happen in his decision making process whereby this wonderful financial plan just didn’t stick? That is what we’re looking at, actually the step before the client comes into your practice, but who is he? What’s his story? What’s his feeling about money? What’s his … Maybe he already comes into your office with the idea that he’s not going to like you. It’s quite possible.

We just had an example of a lady that comes in with a financial planner. Financial planner starts paging through his solutions book and suddenly looks up, sees this woman staring at him with a blank stare and says, “Where did I lose you?” She thinks about it and says, “When I got in the car to come here.” He never stood a chance with her if he would talk about financial planning. He needed to talk with her about her.

Hannah:               Yep.

Ben:                       And that is the whole point.

Hannah:               It’s about the client.

Ben:                       It’s about the client. That sounds so easy. The title of one of my last presentations was “Investing: It’s Simple But Not Easy”. That’s the whole problem. Things could be easy except for you get in your own way.

Hannah:               Yep. It’s interesting you took a book and you translated it to Belgium. How does that … I’m just curious about that language difference and-

Ben:                       It’s exactly that if it were a book about the strategies, I might have a cultural issue. It’s a book that talks about the goals, the end goals, then talks about the different strategies people employ, case studies. I would say the strategy may not be universal, but when I first read this book in English, every page was like, “Oh my God, this is my mom, this is my dad, this my sister, that’s my friend, that’s my-” so I started handing these books out to people assuming that we all speak English and assuming that everybody would understand. They came back to me asking, “Well, what does this mean?” And “I do not understand this concept that you’re saying,” and it’s silly little things like I mentioned Charlie and the Chocolate Factory. Of course, the little boy isn’t called Charlie in my language. The movie is translated.

Basically, advisors told me, “It’s very interesting, but somehow I feel like I’m missing something in nuance.” They actually asked me, “Translate it. Explain it to me in the words that I understand.” This is a very important concept. We have this movement in Belgium right now, talks about [foreign language]. Basically that means, speak my language to me. Experts have this tendency to use acronyms, have this tendency to use concepts, assuming everybody knows what you’re talking about. I’m here to tell you, half of us don’t have a clue what you’re talking about.

You’re talking about tax plans that I haven’t even heard about. You’re talking about young people … And this is one of the things we have learned, if you talk to somebody about something they need in their life, they will listen. If you talk to something that they don’t need in their life, it just flies over their head. Talk to a 17 year old about mortgages. He won’t even remember your words until he gets home. Talk to a 27 year old about mortgages, maybe they’re looking at houses. Maybe they’re thinking of going to live with their partner. Then they might listen. If they’re 35, oh my God, yes, they will pay attention because they know what it is.

The timing of your message might also be a very important factor. If the client comes to you in your office, at least there is some sort of question, a need for help. If you go out and have to find new clients, maybe. What is your message? The client might say, “I’m not interested right now in my life because I think,” and this I’ve heard a lot, “you need to have money before you go to a financial planner.” I would say no. Of course, as a business, I prefer clients with money because then I can do something. Actually the people that have money problems, might be the ones that you can most easily help. Millennials, a lot of university are offering peer counseling these days. I would say that’s perfect. You get to train on people with no money. Those are the most interesting cases. When you start your practice, make sure you get a couple of clients with money because they have to pay the bills, of course.

Hannah:               What would your advice be to young planners as they start out their careers wanting to do true financial planning like we’ve talked about?

Ben:                       Get a mentor. Do internship. Look at somebody that has been doing it. Try to figure out what you like about them and what they don’t like about them. One of the problems is nobody seems to know for sure what the difference is between a financial planner, a trustee, a trust company, a life planner, a wealth manager, a family office. All these people are doing, I would say, aspects of a total concept. Some are happy with just that aspect. If you’re not really, I would say, a people person, then money management might be just the thing for you. Maybe you need a partner that is better with the people to relate your very clever ideas to them and to connect with them.

If you do an internship with a trust company, I’ll say this. I visited a couple of planners and trust companies over the past week. There was something that struck me. I don’t think this is typical. I was with a trust company and during the conversation, they said, “Well, we don’t really like our clients to walk in the door of our office. We want to do the work.” That was strange to me because a trustee would be your most trusted advisor, I would say. While the planning office we visited said, “We like nothing better than that our clients walk in to tell us sweet nothings about their life. ‘Hey look I bought a dog. I got a new car. My daughter just graduated.’ Because most of our meetings are an hour long. 50 minutes of them are about their life and in the last 10 minutes, we say, ‘Okay, let’s do a quick check. Where are we with our plan? Is the plan still in tune with your life? Do we need to make adjustments or are we on track?’ That might only be 5 minutes but the whole basis of that plan is their life.”

I don’t want to say that trust company is wrong in what they do. I will say maybe they should, maybe they do, work together with planners that take care of the actual family and they do the trustee work. I would find it very strange. I don’t think I would feel comfortable with a trustee that doesn’t want to talk to me.

Hannah:               Right. Yeah. Great. Well, is there anything else or any final thoughts that you have?

Ben:                       This is my first time here. I am not a financial planner. I just started a business with a financial planner who I believe is already quite good with all this stuff and talking to people but still, this guy, and this comes again to the [foreign language] effect, he knows what he’s talking about. The more he knows, the more he realizes he doesn’t know enough. That’s why he asked me to join his company and say, “Help me think about the behavior of my clients. Help me help them think about their behavior.”

I would say a lot of financial planners have never thought about this and when I was at Kansas State University, the institute of financial planning, personal financial planning, the response I get from the students as well as the response I get from institutional advisors, anybody you talk about this, it reaches them because it’s about their life. If you do presentation, if you go to present yourself with a company you want to apply for a job, try not talking about yourself. I am sure you’re going to get questions about you, but try talking about them.

Look on their website before you go there and say, “I saw that you want to focus on this. That is just great. Tell me more about that.” At the end of a conversation of 30 minutes, 50 minutes, if the person in front of you has talked about their life, they’re going to think, “Wow, this was a great conversation. That’s a great guy.” If you talk about you, you may have given them a good impression or a bad impression. They won’t necessarily remember you. I would say do something to stand out. Say something to surprise them. Say something to get out of their comfort zone, but mostly, have them talk about themselves. That’s what people remember.

Hannah:               It’s all about making people feel good.

Ben:                       Yes. Make them happy. Pursuit of happiness.

Hannah:               Yes. Great. Well thank you so much for joining us.

Ben:                       Thank you for having me.

Hannah:               We hope you enjoyed this episode. Before we close, I want to invite you to join us in the FPA Activate Facebook group. There is a growing group of engaged, new planners who are helping to move our profession forward. Not only is this group a great community to be part of, we’re actually going to show you how to do financial planning and do it well. We’ll get into the nitty gritty of what that looks like and we’ll give you the tools that you need in order to be successful. So, go to Facebook and search for “FPA Activate” and join us. We can’t wait to meet you. And as always, thank you for listening. We’ll talk with you next week.

 

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Live Big with Dr. Dave Yeske

Today we are incredibly excited to have Dr. Dave Yeske, CFP® back with us on #YAFPNW.  He is one of the giants in our profession and was recently selected as the 2017 P. Kemp Fain, Jr., Award recipient.

The P. Kemp Fain, Jr., Award is the highest recognition in the financial planning profession. It’s a lifetime achievement award given by the FPA and the list of recipients holds our profession’s elite.

Dave loves our profession and his excitement about financial planning is infectious. He has a long list of credentials and his articles continue to help move our profession forward.  Dave is continually giving to our profession and helping to shape it as the Practioner Editor of the Journal of Financial Planning and as the director of Golden Gate University’s financial planning program.

In this episode, Dave shows us a blueprint to leaving our mark on the financial planning profession. He shares his insights on what the profession means to him and the importance of growing the financial planning community together.

hannah's signature

“People like to work with people who are excited about what they’re doing.”

Things You’ll Learn in This Episode:

  • The why and how of staying passionate about financial planning.
  • The importance of finding your tribe.
  • The background of Dave’s research in Evidence-Based Financial Planning.
  • How financial planning does not simply involve the “art and science,” but how it’s the artful application of science in all areas, including the “interior” side of planning.
  • Where Dave sees the financial planning profession growing when we finally have the confidence in what we bring to the table.
  • How the big problems facing our profession can only be solved together.
  • Why “Live Big” is the tagline of Dave’s financial planning firm.

Elizabeth Jetton

CFP® Professionals

Michael Kitces

Dr. Wade D. Pfau, PhD, CFA®

Retirement Researcher

Michael Finke, PhD, CFP®

Foundation for Financial Planning

XY Planning Network

 

Show Transcript

Ep65 Transcript


 

Dave Yeske:                     Volunteering is kind of addicting, you know? Once you get wrapped up in FPA and any other ways in which you’re engaging with your profession as a whole, it’s not that easy to give up. Passion has a way of building momentum. And so then you just have to figure out how to do both: build your business and manage and maintain all the volunteer activities.

Hannah Moore:              You’re listening to You’re a Financial Planner, Now What? The Podcast to help you fast track your career, by bringing you meaningful conversations on topics that influence new financial planners, their careers, and the lives of their clients. I’m your host, Hannah Moore, a certified financial planner, firm owner, and practicing financial planner.

Today I’m excited to have Dr. Dave Yeske, the 2017 P. Kemp Fain, Jr., Award winner on the show. The P. Kemp Fain, Jr., Award is a pinnacle of recognition in the financial planning profession. It’s essentially a lifetime achievement award given by the FPA. It was started in 1993 and, needless to say, the recipients are some of the best of the best. As a bonus, we’ve Roy Diliberto on the show. He received the award in 2015 and is part of this year’s selection committee.

Thanks for joining us, Roy. Can you tell us why Dr. Dave Yeske was selected for the 2017 P. Kemp Fain, Jr., Award?

Roy Diliberto:                  He was one of the first presidents of the PA back in 2003. So, he served very well as president but after his presidency he went on to many, many other things. He’s a mentor for other financial planners in the residency program. As a matter of fact this year he will be the dean of that program. Very, very involved in academia, he’s a distinguished adjunct professor at Golden Gate University School of Business. And he’s the director of Golden Gate University’s Financial Planning program. They’ve just started a graduate program for financial planners, and they’re now taking candidates for that. He teaches Capstone Cases in the financial planning course at Golden Gate. He’s written many, many articles. And one of the things that I’ve noticed about David is that David is a frequent speaker at the National Conferences, and every time I hear David he has something new to offer. It’s usually very, very thought provoking. He has just given himself so much over the years that he, in my opinion, exemplifies what P. Kemp Fain is about.

And by the way, one of the people who nominated David Yeske this time was Paul Fain. And, as a matter of fact, let me see if I can find this, he said something I thought was really interesting. Ah, here it is. He said, in my 29 years in the financial planning profession, I have never met anyone, other than my father, who has impacted the profession in more ways, affecting more people, with more passion for financial planning than Dave Yeske.

That pretty much summarizes it, doesn’t it? So, I think it was an easy choice this year, for the committee.

Hannah Moore:              Thank you for joining us again today, Dave.

Dave Yeske:                     My pleasure, always happy to be here.

Hannah Moore:              First of all congratulations on the P. Kemp Fain, Jr., Award. That is such a huge accomplishment.

Dave Yeske:                     Well thank you so much. It’s all so humbling. You know, I went back and looked at the list of people who have received this and thought wow, I can’t believe I get to join that club.

Hannah Moore:              So, what was it like when you received that phone call?

Dave Yeske:                     You know, it was just hard to know what to think about it. It’s certain I have so many reasons I have to talk to various people in the profession including Shannon Pike, and so when I saw that he was calling, I didn’t really know what to expect. So it caught me quite by surprise, I’ll just say it felt wonderful. It’s one of those things that gives you the … just the sense that maybe the stuff I’ve been doing, maybe the stuff I’ve been passionate about really is worthwhile. It’s just nice to get that acknowledgement. And I think back, I had the opportunity to present the P. Kemp Fain, Jr., Award to Dick Wagner in 2003. He’s the one, for me he’s sort of been the epitome … I mean everyone who’s ever received it is worthy and impressive and has done great work to advance the profession, but Dick, for me, was a great personal thing. In a sense it makes me feel even closer to Dick, that I’ve been chosen for this incredible honor.

Hannah Moore:              Coming off of that, what does this award mean to you?

Dave Yeske:                     I’m about to use the word validation, but I’m not really sure that’s the right word. For me, I think it means that a lot of stuff I’ve been working on over the years, that really mattered to me, that I thought was important so I put energy into it. You don’t think about it, when you get swept up in something, whether it’s teaching or mentoring or the work I’ve done in the area of evidence based financial planning. Again, you don’t think about it, you just get swept up in it, and to all of a sudden have this award show up in my life. It’s like, wow, I guess the stuff that mattered so much to me maybe it’s real, maybe it matters to other people as well.

Hannah Moore:              So, I think it’s fair to say that the work that you’ve done, even just in receiving this honor, is just recognition that you’re very important to this profession. But, and I know that this may seem like an odd question, but how important is this profession to you? Like what has this profession meant to you?

Dave Yeske:                     Wow. Well this profession’s been everything to me. You know I was one of those people who went through a couple of careers before I found my way to financial planning and this is the one that is just so meaningful. I think I was always called to meaningful work, but I just didn’t know what that was going to be. And then I found financial planning and realized, oh I can do something that it certainly would allow me to make a living, support myself and my family, but it’s gonna be meaningful. It’s going to be something where I feel like I’m making a difference in the world. I call myself a financial planning evangelist, and it’s because I feel that way about it. I feel so deeply that financial planning has the power to transform lives for the better, and that we have a responsibility to use that power to make the world a better place. We’re dealing with incredible forces, when we’re dealing with financial planning.

I’ve been working with Elizabeth Jetton on this new introduction to financial life planning class, and it’s just a constant reminder that, as Dick liked to say, money is the single most powerful secular force on the planet. It is the material force through which we interact with the world and with each other. And so it becomes very fraught, it’s a huge source of stress for people. It’s a huge source of anxiety. It could be a huge negative for people’s health. But flipped around, if people can come to terms with their relationship with money, with the help of a financial planner, all of a sudden now they can feel at ease. They can feel in control, they can know that they can care for aging parents, and educate their kids, and provide for a comfortable retirement. And not have this sort of ill-defined vague fear in the back of their mind all the time, that they don’t know the path they’re on. They don’t know how to control the money forces in their lives.

We as financial planners we’re, again I’m quoting Dick Wagner, we’re kind of the secular priests in this world of money. And we have to take that responsibility seriously. But it’s also tremendously satisfying. You know a month doesn’t go by, that a client on the phone or sitting across the conference table from me, doesn’t say something along the lines of, my life is better because you’re in it. And I know I’m not the only who has that experience. And I know I’m not the only one that feels that way. So, I guess I could go on and on, but that’s what it means to me to have found my way to financial planning and have the privilege to practice this art with my clients.

Hannah Moore:              I love that. So, have you always had this passion for this profession?

Dave Yeske:                     Well, you know, it’s funny. I’m gonna out myself. When I first started to make a move into financial planning, I had a sense of what it could be. I had been working for a company, the Paul Revere Insurance group, which long ago got absorbed into Provident Life and Accident, which got absorbed into Unum. I was a brokerage rep, which means I was calling on insurance brokers, stock brokers, financial planners, anyone with a life and disability license. I was representing my company’s portfolio products. And I fell myself more and more gravitating toward the financial planners, so the certified financial planner pros. And realizing that they seem to have my dream job.

I enrolled in a CFP education program, and I’m making all the preparations to start my own office and really at the time, becoming a CFP was kind of a checklist. It’s like, okay, gotta rent some office space, gotta buy some computers check, gotta have professional designation okay, gonna go for the CFP check, and somehow over the course of the, whatever it was, 18 months that it took me to complete my studies. I just had this utter transformation. Something about the process transformed the way I thought about what I was going to do. And all of a sudden it no longer felt like I was starting a business, it felt like I was entering a profession. And one that was meaningful, one that was where I was gonna make a difference in the world.

So, I guess by the time I opened my doors, yes I was feeling that way. I was feeling passionate about it, I was feeling like I going to be doing something meaningful, or was going to require me to find a few clients, and that took a while. Everybody goes through that if you start from scratch.

Hannah Moore:              So, what were some other of the key or defining moments that you had as a young planner that really helped shape the Dave Yeske that we know now?

Dave Yeske:                     Some of them were really getting involved as a volunteer. I remember I was at an ICFP retreat at Carroll College in Waukesha, Wisconsin. Back in those days the retreats were always held on college campuses. I think partly because college campuses were represented inexpensive housing in the summer. Anyway, I was in a break out section, and Terry Simon, who I think was the president-elect at the time, was leading this break out section. I can be kind of mouthy, and I spoke up and said, hey, if there’s a San Francisco society of the ICFP it’s not on my radar screen. And Terry took two big steps across the circle and stuck his finger in my chest and said, you’re right, it’s a problem, and I think you need to fix it.

And the next thing I knew, he was hooking me up with some staffers. And then the next year of my life was devoted to organizing this San Francisco society. Pulling in friends and colleagues who were financial planners in the San Francisco Bay area. That was really transformative for me. It could be very lonely being a financial planner if you’re just sitting in an office by yourself, which I was. Sort of bouncing off the four walls. And all of a sudden I had a reason, I had a purposeful activity, around which I could gather some friends and some colleagues, and all of a sudden I had a community. And when you have a community it just deepens and activates your focus even more. And so we were now suddenly there were six of us and eight of us, then there were 100 of us that were all focused on moving this whole thing forward in a meaningful way.

I think that was a big part of it for me, was having Terry Simon stick his finger at my chest and say, you need to do something about this. And having an excuse to conjure a gathering of like-minded colleagues and then just building on that energy and building that community. In the San Francisco FPA chapter, is to this day a wonderful community that I’m proud to be a part of. We’re gonna have a chapter meeting this afternoon, and I’m really looking forward to it.

Hannah Moore:              So as you continued with your practice and you started finding clients, and building up your practice, was there ebbs and flows with that? Or how did you really find balance between your practice, your clients, and this passion that you have for the profession?

Dave Yeske:                     That is such a great question, and I’ll say that my commitment to the profession, my commitment to FPA, actually just kept growing, even as my practice was growing. And they seemed to go together. I think back to 2003, the year that I had the privilege of serving as president of FPA, and my practice actually grew at that time even though it was a time of maniac activity. I mean, I think the first five months of the year I figured out I’d been out of the office something like 60% of the time. On the road, doing various board meetings, and meeting with chapters, and meeting with people in DC and New York. And yet my practice was growing. When I thought about it, I realized it was for two reasons.

First of all, I’m a terrible procrastinator, and I heard someone, some time management expert at one point, say that, if you’re not getting your work done in a given day you should crunch the container. Actually artificially restrict the amount of time you’re working in the office. And that sometimes people get much more efficient. And I found that, for me, all the FP and volunteer work was crunching my container. I could put things off one day at a time forever, but all of a sudden if I’m gonna be out of town for a week, I’m not putting it off one day, I’m putting it off for a week. And so I would tend to get much more efficient.

But the most important thing, and I believe this has been true my entire career as a financial planner, is that these activities were so charging my batteries, that when I was back in the office, when I was talking to clients, and most especially when I was talking to prospective clients, I would get wound up. I’d get excited. I mean, their hair would be blowing back. People would say, my God, you’re really excited about this, aren’t you? And I’d say, yes, this is important. This matters. And what I discovered is that people like to work with people who are excited about what they are doing. And so anything that was charging my batteries, to the degree that this volunteer work was charging my batteries, it was actually making people want to work with me. I found, for me, it wasn’t really a trade-off, it wasn’t an either/or, they sort of went hand in hand.

Hannah Moore:              It’s a really good perspective and one I don’t know that I’ve heard before, of how volunteering and really channeling that passion can help you in your business.

Dave Yeske:                     It certainly worked for me. I will say I’ve had a lot of people over the years come up to me and say, well Dave, you seem to have done a lot of volunteer work, and it seems like you’re successful as financial planner, maybe I should volunteer, too, what do you recommend? And my advice has always been the same, and that is if you volunteer because you think there’s gonna be like a one to one relationship between your volunteer work and some subsequent success, it’s just not gonna work. In my experience, it’s the people who volunteer because they’re not capable of doing otherwise, because they are drawn to it. Those are the people who probably are gonna have some success in their profession as well, but it’s not because of the volunteer work. It’s the whole correlation does not equal causation. I think it’s not that the volunteer work causes the success, I think the people who are called to volunteer are also likely to be successful, just because they care, they are passionate, they have energy for it.

Anyway, I think I lost your question somewhere along the way there.

Hannah Moore:              I love what you just said. You used the word called, and I don’t feel like that’s a term … I feel like I hear people using that kind of on the side, and kind of in quiet whispers. But that there is almost a sense of calling when you really start looking at people who have done very well in this profession.

Dave Yeske:                     And it’s a calling that arrives, I think when you look around and you say, first of all, I didn’t create this thing, I have the privilege of practicing financial planning, but I didn’t create it. It was created by others. And it came out of a community of practice, and if we’re gonna be successful, if we’re gonna the impact on the world that we can, that I know we can, we’re gonna do it as a community. We’re gonna do it together. At some point you can’t, for me anyway, you can’t not feel like you owe it to the community to give back. I mean, I’ve been the beneficiary of countless efforts of so many colleagues over the last 45 years, and in whatever way I can I feel like I need to give back. I need to sort of pull my share of the burden. Although, it doesn’t feel like a burden. Everything I do in the profession just feels like fun. So I do think it’s a calling, and so many of my colleagues I’ve gotten to know over the years doing volunteer work, they clearly also feel it’s a calling.

And I love that. I love being around that maniac energy of people who just donate because they can’t not do it, because it’s important, because they feel like they are changing the world and they are. So, yeah, calling. I would definitely embrace that word.

Hannah Moore:              Even just the, you’re a financial planning evangelist, I mean those words are very, very powerful. And I think, I hope, a lot of the young planners who are listening to this can really relate to that on a very deep level.

Dave Yeske:                     I do, too. And I will say that I meet lots of planners of sort of all ages and all stages of career. Some of it through my work with residency, and some of it with my work with students, and I will say I see just as much passion, just as much sense of altruistic mission among new planners as among anyone else. And, in fact, I find that when I’m talking to fellow instructors or when I’m talking to mentors in the residency program, I will often counsel that one must be very cautious or, I’m not sure cautious is the right word, but you just have to be kind of gentle and caring when you talk about the profession around newer planners, or planner wannabes. Because they tend to have a vision of the profession as something really special, and you need to treat it that way.

I knew of a situation in a residency where a mentor made a joke that really upset some of the residents because their view of the profession was so pure and this joke was not so pure, I think it’s something to be cultivated. I think people show up with this vision of the profession as something truly special and something, and as a sacred trust. And so I think that that needs to be respected and cultivated to make sure it really takes root. There’s nothing worse than being cynical about what you do as a living, or what you do for a living. And there’s nothing better than feeling like it’s a calling as we’ve been discussing.

Hannah Moore:              Shifting gears a bit, you’ve been in this profession for a while. So, what are the greatest advances that you’ve seen us make as a financial planning community and profession?

Dave Yeske:                     I’m gonna say we’ve made huge advances on two fronts. I believe that there needs to be balance between the interior and the exterior if we’re gonna be effective financial planners. And, back in the 90s we saw a couple of big shifts. On the exterior side you might say the quantitative side … the work that Lin Hopewell did, to introduce the cast of modeling into our body of knowledge. And I talked to young planners today and they sort of can’t believe that it wasn’t always there, but the reality is that, as a profession, we went along for decades without that in our toolkit. And that turns out to be really important.

The other thing that really came together in the 90s was the emergence of financial life planning. And the recognition that you can’t do good financial planning unless you’re capable through both knowledge and skills of getting deep into the interior realm with your clients. The operating instructions for the plan, they live inside your client’s heads. And so if you can’t get in there with them, you’re not gonna know what the plan should look like.

I once heard a financial planner say, I know what my client’s need even before they walk in my office. I think there were a lot of financial planner at one time who operated that way. And the reality is we don’t know what our clients need before they walk in our office. We don’t know what our clients need in order to live satisfying, the kind of satisfying lives that they deserve, until we’ve done deep discovery. And probably return to it again and again and again, in building our relationship and building our understanding of the interior landscape of the client. Because financial planning is not about maximizing along some financial dimension. If that were the case we’d tell our clients never to retire. That’s not optimal. Now, from a purely financial standpoint, it’s about helping people take whatever financial resources they have and using them to the fullest in order to realize their vision for their life for themselves and their family. And you just can’t do that without deep discovery.

And the other piece that I’ll say is that at one level the quantitative part of what we do is easy. It’s change that’s hard. Individuals struggle with change. Whether it’s environmental change that’s imposed upon them, or there is a death in the family, or loss of a job, or gaining a new job, or an inheritance, it doesn’t have to be bad things. People comes to us to help them cope with that change. And it’s volitional change. People want to figure out how they can retire, how they can educate their kids, how they can achieve other goals. In every case, they have to adapt, they have to change their behavior in some way. And we’re called upon to be those sort of thought partners, those coaches, to help them change their behaviors in a way that allows them to realize their goals. To implement the strategies we come up with.

And that takes a special skill set. You have to be a little bit counselor, a little bit coach, a little bit strategist, and it’s the growing understanding of our role as not just number cruncher, but as strategist and coach and facilitator, that I think has been one of the most powerful shifts I’ve seen in the profession.

Hannah Moore:              You had said that there were two different changes, or was that the interior/exterior?

Dave Yeske:                     That was more the internal/external. If you look at the work that’s being done by MIchael Kitces and Wade Pfau, and Michael Finke, I mean there are a lot of people out there that are doing good quantitative work. They’re talking the work that Lin Hopewell did when he really shifted our understanding of what it means to understand the quantitative or exterior realm, and they keep taking it deeper and deeper. And that’s important. In my own doctoral research, I found interestingly I had built a model, and we’ve talked about this in a prior webcast, but I built a model that described the different aspects of a financial planner’s relationship with clients And it included the data driven realm, the sort of quantitative realm, and also the relationship driven realm. The life planning, financial life planning realm that involves deep interior work. And what I found was that when you’re measuring those modes of engagement against client trust or relationship commitment, that the data driven realm actually scored higher than the relationship driven realm.

When we’ve actually talked to clients one on one about it, they’ll say things like, well yeah, I want to have a good relationship with my planner, but I need to know they have a big brain first. And we need to remember that as financial planners, we need to be able to go into that interior realm, but we are financial planners and clients still rely on us to have the skill set to understand the numbers and to understand the numbers and the economy, and the markets, and how to analyze them in a really nuanced way. I’ve done some subsequent research in this area, where I’ve tried to measure the degree to which financial planners were balanced across the different realms, you had a balance between the data and the relationship driven modes, and the policy driven mode, which is sort of in the middle. And what I have found again and again is that as a profession we’re balanced. If you mush everyone’s results together, you see really nice balance across these different modes of engagement. But when you look at planners individually, we all tend to have these sort of strategic comfort zones.

And you’ll see that some planners are really skewed very heavily towards the financial life planning side, and they’re spending a lot of their time and resources and developing all of their skills in that area, where others are focusing entirely on the exterior quantitative realm. And everything my research is suggesting is that we need to have a balance. You can’t slip into your comfort zone.

Hannah Moore:              Well I think it really speaks to this idea that we have to continue to hone our craft.

Dave Yeske:                     Yes.

Hannah Moore:              And always be looking for ways to make ourselves better and if you’re too much on the interior side, our clients are expecting the competency of the exterior.

Dave Yeske:                     Right, and you have responsibility to bring both. We owe that to our clients. It’s this whole notion of also being evidence based. There’s a lot of talk about … we always hear about the art and science of financial planning, and historically that referred to … the way it was used often referred to the science being our understanding of economics and financial markets and portfolio theory, and tax codes, and all of that. And then the art was this sort of mushy relationship related stuff. And I always thought that was a mistake. That the interior realm stuff is also science. We have a lot of science related to communication theory, neuroscience, psychology, there’s a lot of science on the interior realm. When I think of the art, it’s more like the artful application of the best available science in both the interior and the exterior. There’s room for creativity, but let’s not suggest the human stuff doesn’t have as much science behind it as the rest.

And so we need to be evidence based, we owe it to our clients, and if we make a recommendation, or we use a technique to try and help them affect change, that that’s founded on some reasonable evidence. They have a reason to ask, is this really the best way to do it, and why do you think so? And we better have an answer. So, the life-long learning, it’s critical, we need to accept it, we need to own it, we need to embrace it. And the life-long learning needs to be balanced. I’ve worked on developing some kind of a scoring system, and I need to probably go back to that, where planners can actually get a score that suggests how balanced they are across these different modes. And if they have slipped into a strategic comfort zone that’s skewed one way or the other, then that could be a wakeup call to go out there and start building up the other skill sets. So that there is that balance.

Hannah Moore:              When you get that done, let us know, and we’ll be sure to send that out. Because it seems like such a valuable tool of just self-assessment. Of saying, where do I need to grow? Do I need to grow in the technical space, or do I need grow in that communication space?

Dave Yeske:                     If you’re paying attention, it’s getting easier in that if you read the journal of financial planning, the research based contributions tend to be balanced over time, over the course of a year, they tend to be balanced across both the interior and the exterior realms. And if you go to a conference, whether a retreat or annual conference, both realms are well represented. I guess it’s just a question of making sure you dip into both realms and not concentrate on just one track.

Hannah Moore:              So we talked about kind of where you’ve seen the profession and your career, kind of the advancements that we’ve made. Looking forward, where do you see the profession continuing over the next 30 or 50 years?

Dave Yeske:                     I think that one of the things that’s going to become a bigger role for financial planners, is represented by what Dick Wagner called finology. And that was recognizing that people have a bigger relationship to money than just saving in their 401k and then trying to put their money into a 529 to send their kids to college. That our relationship with money goes deeper than that. And it’s quite ancient. Money is the second most frequent topic in the bible, and the bible goes back before money existed in the form we know it today. I think there’s a bigger role for financial planners to be the mediators of people’s relationship with money. Not just on specific topics, but in general.

And that means understanding money, in every manifestation. Understanding money more deeply, in terms of the literature of money. Money in art, the history of money, money as sociology. I think there are ways in which we can go deeper and deeper in our understanding of money, and therefore there are ways we can go deeper, not just with our clients, but with the world.

I don’t think financial planners have even come close to showing up in the wide world to the degree we could and should. The government just doesn’t come to financial planners and ask us to opine about public policy that involves money and finances and people’s relationship with it. And yet we are the ones who have a better understanding based on our relationship with clients and based on our special knowledge, of the impact and whether you’re proposing a change to the tax law, or just about any kind of legislation, affects people in a material way.

And we are the ones who are interacting with people, we’re the ones who are advising people on the material aspect of their lives, and so we understand what the impact is going to look like. And how it’s going to impact individuals, and how they’re gonna have to navigate that. And so the fact that we’re not consulted more often by government, by academic leaders, by non-profits, NGOs, it’s unfortunate, it’s a waste. And I think some of it is because we don’t feel grown up enough. I don’t think we have the confidence that we deserve. I think, as individual practitioners and especially as a profession, we need to step into that space. We need to grow up and be confidant, that our opinion matters. And people should be seeking it. And we should be offering it.

And so I think there’s a maturation that we have not yet achieved in believing in ourselves. That I think is going to be an important part of our future development.

Hannah Moore:              From your perspective, again looking forward, what is it gonna look like for us to actually mature in this way?

Dave Yeske:                     I think it’s going to involve financial planners showing up with confidence. And inserting ourselves into public dialogue more frequently. Inserting ourselves into public dialogue and saying, hey, you need to be listening to us because we’re on the front lines with individual human beings and families, and we know how these things are impacting them. And so we need to get noisier in our state houses, we need to get noisier in Washington, we need to get noisier with the academic community.

Economists get a lot of respect, not so much financial planners. And yet economists, their theories of how human beings interact with each other in a sort of material way, in the sense of material exchange, is so incomplete because it’s not grounded in experience. Financial planners, they know what the critical questions of the day are. They know what their clients are struggling with. They know the ways in which they’re struggling. If we think deeply about it from public policy standpoint, we can also ways in which our clients lives can be made better, could be aided by a better public policy.

And so I think we have to get a little noisier. And some of that is already happening. FPA, both nationally and through its chapters, has always had an important advocacy function. And advocacy means reaching out to both government as well as to the media and other channels to speak directly to the public. But I think we need to redouble our efforts. I really think this is where … First of all, we’re never gonna have them monitor resources to change the world. If you look at the money that gets spent in Washington, DC, by any single industry and, for that matter, by just about any publicly traded company, we can never compete with them monetarily. But if, instead, we say, hey, there are 25, 30,000 people who all sort of share this mission, share this purpose. If we can mobilize that, if we can mobilize the human energy, we can start to make things happen. And this is where young planners and old, really need to think in terms of not just how am I going to serve my clients, but how am I gonna serve society.

This is one of those things where it’s very easy to look at government, whether it’s in the state house, whether it’s in Washington, DC, and maybe especially in Washington, DC. And it just seems unseemly. It doesn’t seem like anything we want to be associated with. And it could lead to cynicism about the whole process and a desire to disengage. And I think that’s where we go wrong.

I think we need to lean in, we need to engage individually and as a community. And I think that’s one of the things I’m talking about when I’m saying, we kind of need to grow up, we need to step into our responsibilities as a profession. And not say, politics is unseemly, and nothing I see or read in the newspaper makes me feel any other way. We need to get past that, because we are the ones who understand how families struggle. And we’re the ones who know how we can help them through changes in public policy. And therefore, we need to have a bigger voice, not just directly with government, but through think tanks, and non-governmental organizations, and the media.

I think we need to have some financial planning think tanks. We need to have the equivalent of the think tanks that have been around for decades and centuries, devoted to public policy through the lens of financial planning. Because it’s a unique lens, and it’s a unique perspective. And it’s an important perspective. So, anyway, I could go on and on there. But I think those are some of the ways in which we could step into a new maturity and show up bigger in society, and show up in a way that we are doing more good in society.

Hannah Moore:              I love this. I keep going back to this idea, what does it mean for us to be a profession? And, I think what you’re saying is really that. Is how do we take the next steps? And one of the things that you have said, that we’re the front lines where all these individuals and families, and financial planning still needs to figure out how to serve people who are making $40,000 a year, not just million plus in assets.

Dave Yeske:                     I could not agree more. Now, I will say that not every human being is going to seek out financial planning help. We need to recognize that not everyone is gonna be amenable to that, whatever their income level. But I do think that we need to have different models, especially for the middle range. I mean those who have wealth, they’re always gonna find financial planning advice if they seek it. And then we have pro bono financial planning for those who are particularly in need. And the work of the foundation for financial planning to help facilitate the delivery of pro bono financial planning advice to those in need. And the work by so many FPA members and chapters to come up with programs and to marshal the volunteer energy to serve those in need. I mean that’s just been a wonder to see, and we need a lot more of it. But there’s clearly energy there, there are models for how pro bono financial planning advice can be delivered.

But to your point, if you’re talking about individuals or families, that are living on 30 or 40 or 50 thousand dollars a year, a lot of financial planners are not gearing their services to that group. And we do need to find a way to do that. And I think that people are, you mentioned XY planning network. I’ve not been unaware of the business models that have been emerging out of that group and similar groups. And those, frankly, look to me like some very viable models for serving those of somewhat more modest means.

Hannah Moore:              I keep going back to this idea of we’re a community. It’s not just one person has to figure this out, it’s our community, our body of knowledge. We, as a whole, have to figure this out. Everybody has their role to play in this.

Dave Yeske:                     I agree. We do have to figure it out as a community. The other thing is that we have to figure everything out as a community. It’s been my experience that we all just get better when we come together, and we share ideas, we share our own expertise, but we benefit from the expertise of others. Frankly, I find that when teaching a class or Elisa and I co-teach the capstone class at Golden Gate University, and we also both are deans and mentors in the residency program, and I find that every time I’m teaching a class, every time I’m deaning or mentoring at a residency, I end up coming up away a little bit more transformed myself. I come away as a better financial planner as a consequence of that engagement.

So it’s never a one way street. There’s always an exchange. And every act of mentorship somehow makes me better as a financial planner, every teaching act makes me better as a financial planner. And so that’s the other thing I would invite people to do is step into that role also as a volunteer. Be a guest lecturer at a class, or teach a class. Be a mentor in the residency program, be a mentor through your local chapter. Most every chapter has mentorship programs where more experienced planners can be paired up with newer planners. And I invite anyone with experience to volunteer to be a mentor, because it is an exchange. You will come away transformed. You will come away better for that act of mentorship than you arrived.

Hannah Moore:              And I think it’s important to say, on these mentorships, I mean we’re not saying you have to have 30 years of experience before you can mentor. I mean you can have just a couple years of experience and have the experience and advice to really enhance somebody else.

Dave Yeske:                     I completely agree. One of the things we do … here at Yeske Buie we have an in residence program where we hire new financial planning grads to come in and work for three years and then they graduate. We’re kind of like a teaching hospital. And one of these things as we do as they enter that third year, is we try and find them an external mentor. And very often the external mentors we’re pairing them up with are people who have only been in the profession for a few years.

But they may have a particular kind of experience that’s gonna be relevant to what this resident wants to do when they graduate. You make an excellent point. And the word should go out. You might only have two years of experience, you might have three years of experience, but it might be a really relevant experience for someone who’s just starting out.

Hannah Moore:              It’s such an easy way to give back, and to really help change the profession in very tangible way.

Dave Yeske:                     It really is.

Hannah Moore:              So, Dave, I want to … you talked about Yeske Buie. Your firm’s tag line is live big. So, I was wondering if you could just explain to us what live big means, or rather, how would you explain live big to your clients? If somebody was to come in and say, what’s up with this tag line?

Dave Yeske:                     So the thing about live big is there’s also a further tag line that we use that says, it goes, it’s about the size of your life, not the size of your wallet. And the notion of live big has always been … It doesn’t mean live large, it doesn’t mean be gross about money. What it means is to make the most of whatever financial resources you have, to live an expansive life. And this is the thing that we focus with with clients, is helping them dream their way into the most expansive life that’s consistent with their available resources.

When we started out, when Elise and I merged our firms to form Yeske Buie, it was January 1 of 2008, and we didn’t quite realize at the time that the world was about to come to an end. With the great recession and all of the fear and anxiety that went along with that. And so, we’re rolling out this new firm, this new identity, we’re talking about live big, and the world is coming to an end. People are terrified, and there was a real risk that that was gonna be misconstrued. Especially in a time like that.

And it turned out that we were able to leverage that into an identity that people really understood. So it was early 2009 and the worst of the recession and the worst of the market meltdown, although no one knew that. And people were still feeling traumatized. And Elise had this great idea of a post that was called, what does it mean to live big in these trying times? And what that led to was the Live Big List. We essentially invited people to think about things they could do that took little or no money, but would represent sort of an expansive way of thinking about the world and their lives. I mean it could be something like, write a letter to a soldier, take a dog for a walk around the block, borrow a dog if you don’t have one, invite some friends over and watch all those silly Netflix movies that you haven’t ever gotten around to. The list went on and on.  We actually had a family gathering and we asked everyone to add something to the list, then we floated it out to our clients and they added something to the list.

And it grew and grew. It just became this real focal point, where all of a sudden people were always, oh, live big, that’s not about money, that’s just about having an expansive notion of how to be in the world. And yeah, sometimes it involves making the most of your financial resources, but it really starts with vision. I don’t know if that makes sense, but that’s my story and I’m sticking to it.

Hannah Moore:              Well it’s just this essence of what is financial planning? And I think that’s such a beautiful way of just relating that to your clients and helping them realize money’s just the means.

Dave Yeske:                     Thank you for putting it that way. I do feel that way. It is the essence of financial planning. It’s having an expansive vision.  You know the problem is, and everyone who has practiced financial planning for five minutes has experienced this, people show up in our office and they have no idea how to think about money in their lives. They don’t know what path they’re on, they have no clue what path they’re on, and they’re walking around editing themselves constantly, often assuming the worst. And so what we find is that when we actually do bring the magic of financial planning to bear on someone’s situation, and we do it in service of their vision, their expansive vision of their lives … There’s a bigger vision available for the given resources than they ever believed.

And so we have a responsibility to help bring their dreams into full flowering, and then to help analyze their resources in light of those dreams, and then help them arrive at the biggest version of those dreams that’s possible with their resources. And, as I said, it’s almost invariably a bigger version of those dreams than they even thought was possible. This is the beauty and the magic of financial planning.

Hannah Moore:              And what’s so great is once people taste it, whether that’s clients, whether that’s professionals, and they really see this pure financial planning. It’s like you could never go back. You’re hooked.

Dave Yeske:                     Right, it’s true.

Hannah Moore:              So, your bio is very long and you’re getting the lifetime achievement award of financial planners, and there’s still more to come. At the end of the day, what is kind of the core of what you want to be known for as it relates to your career? What’s been most important to you?

Dave Yeske:                     I think I’d like to be known for sort of the evidenced based financial planning work. This idea of bringing more science to bear on the practice of financial planning. And building deeper and more integrated relationships between the community of practice and the academic community. I’ve done a little, I hope to do more. You can only focus your energies on so many things, and for me that’s a huge one, and that’s the one where I hope to leave a mark. Is, I guess, bringing an acceptance into our community of practice that, you know what, I need that better understanding of the notion of science, and how it can apply to how I practice. I don’t have to be a scientist, I don’t have to be a researcher. I should probably be a good consumer of research done by others, and I should probably understand that I need to have a better relationship with the academic community.

Because the financial planners are on the front line. They understand the critical questions of the day, but they don’t necessarily know how to get those questions answered. The academics have the formal tools of research, that’s their profession. But they’re not on the front line the way the planners are. They don’t know what those critical questions are. And so, we need to have a better partnership, and as practitioners, we still need to have a little bit of a foot in the academic side. So I’ve done a little bit of work in that area, I hope to do more. But I think maybe that’s what I’d most like to be remembered for.

Hannah Moore:              Thanks for joining us in this episode of You’re a Financial Planner, Now What? And congratulations again to Dr. Dave Yeske for winning this well-deserved award. As a reminder, if you haven’t joined the FPA Activate Facebook community, please do so. You can find the link on our website at FinancialPlannerPodcast.com or you can go to Facebook and search for the FPA Activate. We’ll talk again next week.

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Technology Solutions & Skills #fintech #worthdoing

Bill Bill WinterbergWinterberg, the founder of FPPad and one of the leading voices on technology in the financial planning profession, joins us today to discuss his career path, the life of an entrepreneur and the latest trends in technology. Bill shares openly about his journey, what he’s learned and why he has paused his weekly videos.

We also talk about how technology is changing the profession and what new advisors can do now to take advantage of those changes. Don’t miss it!

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“There are more and more technology solutions that advisors and planners can use in their businesses. The downside is, with more choices comes confusion about which is “best”. That often leads to paralysis by analysis.”

How to be Happy, Rich, and Save the World by Mr. Money Mustache

CaseyNeistat – YouTube

XYPlanning Network

Garrett Planning Network

 

Episode 15 – Another Firm Owner’s Perspective

Alan Moore, MS, CFP®

This week we continue our discussion with firm owners to help young planners navigate their career paths. Our guest started his own financial planning firm and sold it, all well before his 40s. He is a XY Planning Network co-founder and champion of fee-only RIA practices that serve young people.

That’s right, our guest this week is none other than Alan Moore (no relation!) and in this episode he’ll share his story. If you’ve felt like a “square peg in a round hole” or just couldn’t sit still because you wanted to make your mark in our profession – this is an episode you wont want to miss!

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“Just because you’re working with clients doesn’t mean that money is flowing in… the one thing you can’t rush is time.”

 

Also, be sure to check out XYPN Radio for lots of great episodes for young planners!

Episode 14 – A Firm Owner’s Perspective

Thomas E. Murphy, CFP®, AIF®This week’s guest is Thomas E. Murphy, CFP®, AIF®, the Chief Executive Officer at Murphy & Sylvest. He has kindly shared with us his insight into the financial aspects of running a firm and what young planners need to know from his perspective. Tom is an industry veteran of almost thirty years and active member of the FPA® – He’s a FPADFW regular and many of you have probably already met him.

 

The best way to prepare to become a firm owner is to start thinking like a firm owner today and Tom’s insight will definitely give you a jump start on that!

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“There’s a lot of difference between information on the internet and wisdom. Wisdom applies to that particular client and that particular client’s situation.”

 

XY Planning Network

FA Insight

Mark Tibergien