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