Hannah: Well, thanks for joining us today, Nathan.
Nathan: Thank you for having me. I look forward to it, Hannah.
Hannah: So I am so excited. I know we met years ago, and I think we were just talking at a gathering, at a FPA annual conference, and you always stood out as having some of these brilliant ideas. And so I’m so, so happy to have you on the podcast today.
Hannah: Today I want to be talking about financial planning and how does financial planning adapt in this accelerated world? So this was a topic that you had wanted to talk about at retreat, and obviously retreat was canceled. But I’m curious, how did you come up with this topic? What kind of really spurred you to really think deeper about this?
Nathan: What the idea really came from, I took an advanced financial planning course at Golden Gate University last year, which Elizabeth Jetton taught. And in the course, we had to pick a book from a variety of books to read. I had chosen Thomas Friedman’s Thank You For Being Late. It’s a book that goes into… And that the book’s five years old, it’s remarkable. But how much the world has changed since 2007, and how that rate of change is accelerating dramatically. So I had to write a paper about it, think about it, and by the end of it, what I came to was kind of this idea, and he discusses industry after industries being completely thrown on its head by technological change, by the world becoming smaller, by communication change.
Nathan: And I thought, all right, so we talk about it in professional circles, but always pooh-pooh it a little bit. What does the world look like for financial planners, if tomorrow we wake up and someone’s removed the need for us to do any of the technical work? What’s left? Is that a scary place for us to be, or is it maybe an exciting place if we don’t have to touch an Excel spreadsheet anymore or a piece of software. And that’s where it came out of, just the simple idea, take the software away, we don’t need to do it anymore. What do we do?
Hannah: It’s really interesting, as we’re recording this, I know I’m in a shelter in place here in Dallas, and I think all 50 States have some form of that going right now. And I thought of all of this accelerated change that our clients are experiencing, and I remembered back to several retreats that I’ve attended to, and the whole theme was, how do we handle this accelerated change? So help set this up, what’s difficult about this accelerated change and how quickly things are changing in our world today?
Nathan: Well, the argument is change has become so fast that it’s now past human’s capacity to adapt to the change. At least that’s the argument Friedman makes, is if you plotted two curves over each other, what can we adapt to versus what are we… or what’s actually changing? We’re not able to keep up anymore. Too much is happening too quickly. And that’s why you’re also seeing around the world some of these disconnects and unhappiness between countries and rise of new authoritarian regimes because we don’t know what to do when we’re afraid, and we start to retrench.
Nathan: For planning specifically, I think to me the big challenge of it is… And it’s not even… The accelerating just makes us even more so, and the Coronavirus really throws us out there. I think financial planning, in the traditional sense, we kind of plan in a way that we expect the world of tomorrow to look approximately the same as it does today. And I think that’s a pretty ridiculous assumption.
Nathan: I’m not young, but I’m not terribly old. And the world that I grew up in has no commonality with the world of today. And that’s just going to get quicker and quicker. So how do we work where projections, it is kind of silly, it’s built on an assumption that’s not true.
Hannah: So help me make this concrete. So when you say the world that you grew up is fundamentally different than the world you’re in today, can you give me examples of that?
Nathan: Born in 1978. Cold War. Berlin wall. AIDS didn’t exist. Apple and Microsoft, I don’t know, were a year old. There was no internet available to the general public. It’s just there’s no similarity. It’s a different, it’s a completely different world. That’s 42 years ago. If I were to put a plan together for myself today, I project 42 years in the future and say, “It looks about the same as today.” That’s crazy. That’s not what it would look like at all.
Hannah: So how do planners adapt for this? So, we’re listening to this, and we agree, who knows what the next innovation is going to be that’s going to completely upend the workplace and just everything we know. How do you plan for that?
Nathan: This is the struggle. And the conversation I had hoped to have at retreat was, so let’s recognize this challenge. What does that mean for us? And I have some ideas, but they’re just my rumblings in my own brain and in the dark.
Nathan: I do think, going back to that beginning piece, let’s assume we don’t have to do any more of the technical work. That’s just wiped out. Someone writes a piece of software that can do everything without us touching it, and then we walk into the room and all the analysis is there. What does that leave for us? And I think this also fills the space in a world where we can’t assume the future looks like it does today.
Nathan: I think it means we slow down with our clients and help them understand the uncertainty, help them understand that we really don’t have any clue, nor do they, so let’s make good decisions. Let’s think about different options that are available as that uncertainty begins to develop. Coronavirus is really that. How many of our plans look relevant today that we’ve put together for clients? Sure, there are some, it hasn’t been that dramatic, but we don’t know what things are going to look like on the back end. Hopefully, we’ve sat with most of our clients and had the conversations about if things don’t turn out the way we anticipate in this plan, what are we going to do? What are the alternatives? What are you willing to give up? What might life look like? And I think that’s where planning moves to more, is sitting with our clients, working through the uncertainty, acknowledging the uncertainty, and having thought about it so they’re prepared to respond when it happens in a way that’s healthy and not trying to make all of these big decisions when overwritten by emotion and fear.
Hannah: So what’s really cool, listening to you talk, is that you’re talking about the process of financial planning, that this is an ongoing… This is not a we do a plan, and then we’re done and we walk away. This is really the value of the ongoing planning relationship that we have with clients.
Nathan: Yeah, absolutely. I was just speaking with someone and made the comment, the value’s in the planning, not in the plan. Who cares about the plan? In fact, in my retreat presentation, what I was hoping to do at the beginning was ask people to… I really wanted them to bring an old plan with something from wherever, whenever they began. Pull at the old plan or just an assumption page, bring it with, and let’s look at those. And I bet most of those assumptions are wrong.
Nathan: And then the question is were they actually wrong, or were the best we had at the time? And I would assume most of them were the best we had at the time, so who cares? They look silly now in retrospect, but the value was still there. The value was sitting there and working through the decisions with clients and helping them understand where the assumptions were that probably we’re going to be wrong. Not that piece of paper or electronic, if you now do it electronically, that printed out some projections.
Hannah: That’s so interesting of almost building in that assumption that we know some of these are going to be wrong with the future. That’s a humbling place to be as a financial planner.
Nathan: It is. It’s really challenging. What I’ve been experimenting with just a little in client meetings is walking into meetings… I was trained, I think in a traditional classical sense, walk in with all the answers, have done all the work before a client meeting, so anything the client asks, you can respond to. And I’ve been experimenting with walking in blind. Know the things you need to know. I’ve parsed names, children’s names, all that family stuff that’s really important, but don’t have looked at anything else or looked at it in a really cursory sense. And then when the question arises from a client, be surprised with them as you work through the question, as you work through the numbers, and as you find some results that are kind of surprising. I think the learning is in that surprise, not in giving an answer.
Hannah: Yeah. We just had Carl Richards on the podcast, and he was talking about how we’re not in the solution business. We’re in the identifying problems business.
Nathan: Yeah. I would expand on that. I’d say yes, we want to identify potential problems. Even more important is being able to help our clients be prepared and resilient and flexible in the face of the unanticipated, in the face of what we’re going through right now. Yeah, there were epidemiologists who were yelling about a pandemic and everything that would do, but by and large, I think we ignored it. We had Carolyn McClanahan, I remember, I don’t know, eight years ago, seven years… I don’t know how long ago, at a conference talking about pandemic, but how many of us built that into any planning work? Yet, even having ignored that, I think if we’ve helped our clients be prepared for the unexpected and be adaptable and flexible and resilient, they’re better able to deal with this, at least financially at this point.
Hannah: You said a great word in there, and that was a resilience. How do people in general build resilience, and how can we help our clients build resilience?
Nathan: There’s, I think I’ve read a little bit, not a lot, there’s research into building resilience or helping people build resilience. You look at some of the work around, I want to say appreciative inquiry perhaps, and motivational interviewing, and a lot of it’s, as the person helping someone build or recognize their resilience, is really that. Helping them recognize the strengths they already have. Helping them recognize how they overcame prior challenges, whether anticipated or not, and understanding those strengths, understanding what allowed them to get through prior challenges, and being ready to draw on that again in the future. And knowing that strength is there is, I think, at least in part what helps build resilience.
Hannah: You said that you’ve been in financial planning a while now. How has your journey evolved? Can you tell me about the evolution of how you’ve viewed financial planning?
Nathan: Oh, a lot. I began, like many people in the early 2000s did, working in sales at an insurance company, thinking more I was going into an investment type thing because investments seemed sexy and exciting, and I wanted to do that. It didn’t take long to realize… Neither was I involved in investments, working in an insurance firm, nor was I interested in sales. So that was a big evolution and required me to really rethink what I was doing and where I wanted to work.
Nathan: And then I had the good fortune of ending up in a small RIA that was really financial planning focused, but really traditionally focused. That’s how I was trained for a long time. That’s what I believed. It’s put together projections, it’s help clients make decisions based on these projections. But then the first inklings of life planning dribbled in there somewhere. And that’s taken me on a whole new journey over the past decade of exploring what can we do beyond the numbers? And more and more, it’s become the numbers don’t matter all that much. They matter. Of course, they matter, but they’re not the central part of our jobs.
Nathan: And that’s where I find myself today is yeah, you got to know the technical stuff, and you’ve got to be able to deal with numbers and interpret them. And it all doesn’t matter if you can’t… It all doesn’t matter to the client, if you can’t sit in front of them and be compassionate and help them understand and help them what it means in their lives. And you understand that they’re the experts in their lives and they have the autonomy to make the decisions they would like to, even if they’ve run contrary to the numbers.
Hannah: I love that line. We use that a lot on our firm, is the client’s the expert on their life. And so we’re coming in as two experts, meeting to come up with a plan together.
Hannah: It’s a very different mindset than a lot of financial planners have.
Nathan: It is, and I believe it’s the right mindset. And wow, do I struggle with it. I still show up in the room feeling like I’m the expert, and I’m here to tell people what to do. And I spent probably five years trying to break that habit, and I still haven’t. It’s really challenging.
Hannah: That’s something we talk about a lot, is we get all this education and we’re supposed to show up as… we are the experts. We are experts. How do you give advice in that scenario?
Nathan: If you’re taking the not expert role or a partnership in expertise, I think you only give advice when you have permission to do so. And you can ask for that permission if it’s appropriate, but without permission, it becomes this patriarchal thing again, where you’re telling someone what’s right and wrong for them instead of working in partnership to try and find the right solution.
Hannah: So as you’re talking about slow… I know the title was slow financial planning or slowing financial planning, Tell me more about what that looks like.
Nathan: I think that’s what needs to be figured out. I think part of it is a recognition that the numbers are kind of secondary, and you don’t have to have them. But what I’ve already discussed, walking in and allowing the surprise to arise in the conversation. I think it’s just sitting with the client. Not right now perhaps, but generally, life is super busy and I think right now as we’re all hunkered down in places, we’re really recognizing how busy life was. What if with clients, we gave them a place where it didn’t have to be busy, where they could slow down, and a decision needs to be made, let’s not make it in a hurry. Let’s work through the money side of things. Let’s work through some of the behavioral challenges. Let’s just work through your family history and how that’s impacting things. And maybe in this meeting, a decision isn’t even made, and it’s just laying out some thinking to go back and continue to work on it.
Nathan: I feel like slow financial planning is very much just giving clients a container of safety and calm and away from all of the busy-ness of life, maybe.
Hannah: So I’m hearing you say all this, and I can hear my process driven friends objecting and being like, but we need a process. And the slowing down and waiting, is there still process that can be built around this?
Nathan: Oh, I think absolutely. Everything that goes on the background, there’s still plenty of process. I don’t think you can dictate to a client when they should be ready to do something.
Nathan: In fact, I think ,if I’m recalling correctly, there’s research out there that suggests the more you try to force the issue, the longer it takes. So, not only is trying to force process and forward movement going to not speed things up, it might slow it down. And we’ve all had the client that just, you know the right thing… what’s the traditional example? They won’t go get their estate planning done. For a million reasons, but they never do. And so the planner harps on them and harps on them, you need to do this. And this time they try, but what about probate? And next time they try, but what about a guardian? And they’re all reasonable, rational, correct reasons to go get it done. And then at the next meeting, it’s still not done. There’s something going on there. Clearly trying to force the process and forced the issue isn’t working.
Nathan: So what if you just sat down and talked about it instead of trying to force the issue? Now the problem is, it requires learning and skills to do that well. It’s not just two people speaking with each other. How do you listen compassionately? How do you use tools like motivational interviewing to help move people towards change, if they so choose? There’s a lot to learn that isn’t in the financial planning canon at this point.
Hannah: So I’ve been seeing this trend in financial planning of you can make a million dollars working half the amount of time, and things like that. And really if we can build up our efficiencies in our practice in such a way, we can do all of that. And so I’m curious, kind of what is your assessment of that, or what are your thoughts on that?
Nathan: Here’s the challenge. I don’t have any real issue with that. Be efficient with everything behind the scenes. And frankly, I think if you look at what’s happened technology-wise to a lot of other industries, that’s probably going to happen anyway, that all that work just disappears. And all we’re left with is being in front of a client. So better be really good at that part because that might be… It would not shock me, and I don’t believe in prognosticating the future because we’re always wrong about that, but it wouldn’t shock me at all if you found a world in the future where financial planners were like therapists or doctors, and it was open to close client meetings. Because you didn’t have to touch any of the back office stuff. And some financial planners might choose to work for software companies to help bring in planning theory into the design of these things. But by and large, the CFP working with clients, it’s just meetings all day, and you don’t touch any of the operational stuff.
Hannah: How would you answer this question? What is financial planning?
Nathan: So you asked me earlier about how my thinking and planning has progressed. This question has been the one constant, since maybe a second year of my being in the profession. It’s the question that’s always there, that I don’t have a good answer to. I used to respond with, at the end of the day, it’s helping people make good financial decisions. That’s financial planning. I think in a lot of respects, that still holds true, but it’s not complete enough. Because that’s not all I want to do personally with people. But yeah, I come back to that. Everything we do is just helping people make well-considered decisions.
Hannah: So we’ve talked about this, you’ve talked about kind of your journey and kind of how you’ve shifted your perspective with clients. How have clients responded to this? What’s a difference that you’ve seen in clients?
Nathan: Because my experiences with clients… I’ve worked in several different firms. Some and many and myself would say probably too many, though that’s allowed me to have a lot of experiences I think others miss. And each of those places, the work we did was so different, that it’s hard to say how things have changed. I would say recently, I’ve spent more of this time trying to come into meetings less technically prepared, and I thought it would go very poorly, that clients were expecting me to have all the answers. And I think in every single case, it went really well, which has been eye-opening and kind of validating to the idea. Now, I can’t say there have been many, and it might be half a dozen times, but the conversation was so much richer when we weren’t just giving advice.
Nathan: Of course, I’ve had the clients that say, “Just tell me what to do,” and I think those clients will always be out there. And it’s really challenging if you’re trying to not be the expert. And I’ve kind of defaulted, at that point, to giving answers. But trying to put some kind of caveat out there, that you have to own this decision because you’re the one that’s going to live with it, not me, the planner.
Hannah: What would be your advice for new financial planners coming into the profession today?
Nathan: Oh, goodness. Don’t do what I did. Which yeah, real honestly, I think… No, but a more honest answer is this can be a great profession. It has a huge way to go, I think. I think we’re just scratching the surface of what we can be, if we’re willing to take on some big challenges. But you have to take responsibility for your career yourself, and there are periods where it is extremely challenging work. I think we’re in one right now. And there are times when you have to have really hard conversations with clients, and the sooner you can prepare yourself for that, the better.
Nathan: I think the other thing I would say is this isn’t a job you ever master, a profession you ever master. And the sooner you can get to being fully on board with continuing just lifetime learning, and not just in financial planning, but a whole breadth of topics, the quicker you’ll become kind of proficient at it. Although, I don’t think there’s ever mastery.
Hannah: That’s a pretty sobering idea, that there’s really not mastery in financial planning.
Nathan: I believe it pretty strongly, though. I don’t think you ever become great at this.
Hannah: So tell me more. Tell me why you say that.
Nathan: There’s too much we have to learn still, not just an individual but the profession. If we don’t know everything that’s needed to do this well, how could anyone possibly be a master, when the knowledge isn’t even there yet to reach that point? I think if you really want to do this well, you’re going to spend your whole career learning, and then get to the end of it and realize, wow, I just scratched the surface.
Hannah: And so when you’re saying that the information isn’t out there, we have a lot of technical information. Is that what you’re talking about? Or tell me more.
Nathan: No, I think we have a lot of the technical, the really dry technical stuff. We’re starting to build out on the behavioral side a little bit. I think we’re just scratching there. We’re still missing a lot of evidence-based work. We don’t really know what works. Think about it. We do a lot of work where each of us creates our projections based on our own beliefs and experiences. It’s not scientific. That’s not evidence-based. Until that becomes more broad, evidence-based solutions, there’s a lot of learning to be done.
Nathan: And I think, a real challenging idea that I’ve been trying to work through is we focus as financial planners on the individual. The economists and policy makers focus on large systems, the economy broadly. And then there’s this whole space in between the individual and the large system, where no one really knows what happens there. What the individual does impacts a large system. What happens in the large system impacts the individual. And then there’s a space in the middle that no one’s spent any time thinking about. I think we can fill that space, but we have zero, zero academic work or thinking around how the two interact with each other, and how do we work with clients to help them understand their decision, how it plays into the large system, and then how that comes back to impact them in the long term.
Nathan: I think in the poorly paraphrased words of Dick Wagner, we could be the ultimate liberal arts profession. That means we need to be willing to learn a bit about all of the liberal arts. And that’s a lot of material that we haven’t scratched yet.
Hannah: Well, I just love this idea of… We talked about what could financial planning be in the future, and we have the one on one, but how does… This isn’t political at all, but how do government programs impact our personal finances? What are the larger socioeconomic issues that we’re facing? And how does that actually impact the real person? Is that what you’re talking about?
Nathan: Yeah. Yep. Exactly. So what happens there, and what does it mean for my client in front of me? And then the reverse. The one I’m dealing with over and over right now is clients saying, “We’re getting these individual economic rebate checks from the IRS through the Cares Act. I don’t need the money. What should I do with it?” That’s a huge question to the individual. For many of these people, I want to say, “Well, save it. There’s this crazy uncertainty. Just stick it in a bank account, just in case.” But the system needs to be spent. Go spend it on some things on your local businesses that you love and you want to have around, or contribute it to some food pantry because food pantries are empty or whatever.
Nathan: It seems like such a simple question but it’s huge. And you say, yeah, one person asks me that and I answer them, it doesn’t really impact something. But if the clients I’m working with all ask it, and I answer it one way. And another thousand planners are asked that question and answer it the same way, at some point, that does start having impact on the system. And how do we ignore that as professionals? I don’t think we should.
Hannah: What’s your hope for the financial planning profession in the future?
Nathan: Where we adjust for is where I really would like to see the planning profession begin to explore how do we become a part of the bigger conversation? Or can we be the profession that fills the space to understand the dynamic between the individual and the large system? And then individually help our clients make decisions that, of course, are in their interest, yet are also hopefully in the interest of the large system, and it becomes a cycle of beneficial to all. I would love to see that happen. I think it would be… I think we are already, when planning is done well, extremely valuable to our clients, but how much more valuable would we be if we were also valuable to the system, to society at large, instead of just that person sitting in front of me.