MONEY financial advisers

A Good Financial Planner Is Like This Year’s Hot Pitching Prospect

150511_ADV_Pitcher
Nick Turchiaro—USA Today Sports/Reuters Toronto Blue Jays starting pitcher Daniel Norris throws a pitch during first inning in a game against the Atlanta Braves at Rogers Centre.

Like the Blue Jays' Daniel Norris, a good financial planner is true to him- or herself.

“Stop asking questions, Maurer, and do what I tell you to do,” said the general agent for the Baltimore region of a major life insurance company.

At the time, early in my career, I was sure this guy watched Glengarry Glen Ross every morning before work. His lines were a little different, but they were no less rehearsed.

“I made over a million dollars last year!”

“I buy a new Cadillac every two years — cash on the barrelhead.”

I was told how to dress: Dark suits, white shirts, and “power ties” that weren’t too busy. Light blue shirts were allowed on Wednesdays. Never wear sweat pants, even to the gym. Enter and exit the gym in a suit. Your hair should never touch your ears or your neck. Facial hair was strictly forbidden. Jeans, outlawed.

When you have a “big fish on the hook,” invite them to the Oregon Grille, one of the nicer restaurants in the rolling horse country north of Baltimore. Get there a half-hour early and tell the maître d’ your name so that he can use it when you return shortly with your guest. Ask where you’ll be seated and pre-greet your waiter. Also let him know your name — along with your “regular” drink, so that you can ask for it momentarily.

As one in a class of newly minted “financial advisers,” who was I to argue with this six-foot-five collegiate lineman as he passionately outlined his method of perception manipulation? Who was I to argue with a million-dollar income and cash on the barrelhead?

Who was I to be original in a world that ranked sales and profit above, well, everything? Who was I to be myself?

This is the old school, and, thankfully, a new school is emerging. The new school doesn’t eschew teamwork, but it questions uniformity. The new school doesn’t worship individuality, but it also doesn’t fear personality. The new school isn’t anti-profit, but it refuses to elevate sales above the personhood of the advisor or the best interest of the client.

While the old school is proprietary and exclusive, the new school is open-sourced and inclusive. The old school insists while the new school nudges. The old school deflects questions and denies suggestions for improvement while the new school welcomes both.

The old school crafts a narrative to which it requires conformity. The new school sees the benefit in allowing advisers to tell their own story and attract the clients who resonate with it.

The financial services industry is not the only realm where this is true. Insistence on conformity may be even more evident in professional baseball, where one of the MLB’s most promising young pitchers is putting convention to the test.

Daniel Norris is a 22-year-old surfer dude who lives in a WalMart parking lot. His ride, a 1978 Volkswagen Westfalia, doubles as his residence. His manner and method might cause any prospective employer to hesitate before bringing him into the fold. But his ability to mow down major league batters with a fastball consistently in the mid-90s earned him a $2 million signing bonus and a spot on the Toronto Blue Jays’ roster. Of course, he’s instructed his agent to limit his allowance to only $10,000. Per year.

Here are three reasons why nonconformity is working for Daniel Norris and could also work for you:

1. He’s authentic. He’s not being different just for the sake of being different. He’s not rebelling against convention as much as he’s being true to himself and his values.

The point isn’t to not be everyone else, but to be yourself. This means that if dark suits, white shirts, power ties and Cadillacs are your thing, that’s what you should wear and drive. But if you prefer no ties—or bow ties—and Levi’s, well, you get the idea.

2. He’s a great teammate. There are certainly players who’ve questioned his unorthodoxy, but no one questions his dedication. “He’s in great shape. He competes on the mound,” says Blue Jays assistant general manager Tony LaCava. “He has great values, and they’re working for him.” And for Toronto.

Being yourself doesn’t mean being on an island. Some, like Norris, might thrive off of extended periods of solitude, but our greatest work often complements and affirms the great work of others.

3. He’s good. Really stinkin’ good. His 11.8 “strikeouts per nine innings” ratio was the best in the minors last season, according to ESPN. And he’s competing for a starting role in the majors ahead of schedule. If Norris were just another dude living down by the river in an old VW bus, we’d never have known about it. That he throws a 96-mile-an-hour fastball low in the strike zone — while doing so in a way that is true to his values — is what makes him special.

If you do things differently, especially in the financial industry, you may well encounter some resistance. You’ll likely have to work harder to prove yourself. But if you do so with a high degree of excellence, you’ll earn the respect of your peers.

There are a growing number of financial advisers who have diverted from the conventional path, and to good effect.

Carl Richards drew criticism from many in the industry when he confessed his greatest financial sin, but a willingness to acknowledge his imperfection endeared him to those skeptical of the industry’s propaganda campaign regarding adviser infallibility (read: everyone).

Carolyn McClanahan gave up her career as a medical doctor when she failed to find a financial adviser who would focus on her as much as her investments. She went back to school and started a planning firm that centers on clients’ values and goals. She’s also become a recognized expert in all things money and medicine.

Recognizing the dearth of women in the advisory realm, Manisha Thakor seems to personify much that the field is lacking, this imbalance considered. Manisha became an industry thought leader, a voice for women advisors and clients.

Michael Kitces is, at heart, a nerd. He struggled with individual client interaction, but turned his passion for education and teaching into a thriving business as the adviser to advisers. “To do anything other than what I do, given my story, would feel like a violation of myself and who I am,” he told me.

How might your life and work look different if you took the same conviction to heart?

Financial planner, speaker, and author Tim Maurer, is a wealth adviser at Buckingham Asset Management and the director of personal finance for the BAM Alliance. A certified financial planner practitioner working with individuals, families and organizations, he also educates at private events and via TV, radio, print, and online media. “Personal finance is more personal than it is finance” is the central theme that drives his writing and speaking.

MONEY financial advice

The Wonderful Thing That Happens When a Financial Adviser Tells You the Truth

A tale of youthful stupidity holds the key to giving honest, genuine financial advice.

The most important event in my life is one of which I was long ashamed.

I was an 18-year-old punk with a monumental chip on my shoulder. You know, the kind of kid certain of his indestructability, sure of his immunity from the dangers of self-destructive behavior.

At 2:00 a.m. on a random Wednesday morning in June 1994, after a long day and night of double-ended candle-burning, I set out for home in my Plymouth Horizon. At the time, my car was bedecked with stickers loudly displaying the names of late-60s rock bands. No shoes, no seatbelt, no problem.

Not even halfway home, I was awakened by the sound of rumble strips, just in time to fully experience my car leaving the road and careening over an embankment. After rolling down the hill, the vehicle settled on its wheels and I, surprisingly, landed in the driver’s seat. But all was not well.

Broken glass. My right leg was visibly fractured. I had hit the passenger seat so hard that it was dislodged from its mooring. Blood dripped on my white T-shirt.

I was well steeped in the Die Hard and Lethal Weapon series, so I knew what was coming next — an explosion. Naturally, I busied myself with the task of escaping a fiery death.

The driver’s side door wouldn’t open, so I climbed across the center console with its five-speed stick shift. I’d later learn I had a broken femur. And a broken pelvis. The passenger door was also inoperable, so I crawled into the back seat, now really beginning to feel the pain. Neither of those doors would open. Metal had rolled down over the doors.

I gave up, right then, right there.

Four hours later, shortly after sunrise, a truck driver spotted the car. Soon thereafter, I was being shuttled into a helicopter headed for the R Adams Cowley Shock Trauma Center at the University of Maryland Medical Center. The last thing I remember hearing was, “This doesn’t look good. I don’t think this kid’s gonna make it.”

That initial prognosis almost proved accurate. At the hospital, my left lung collapsed. Uncooperative even when unconscious, I fought the breathing machines. The medical staff induced a coma, where I remained for five days. My parents were told that my chances of living had fallen below 10%.

Family and close friends were notified.

Obviously, I made it. But I suffered immensely with how to knit this incident into my life’s narrative. This wasn’t just some random, tragic occurrence. It was a natural outcome of poor decisions. I couldn’t reconcile why I’d been spared — a punk kid who didn’t care about anyone but himself.

I spurned physical therapy. I didn’t submit to psychological analysis for more than 12 years, until, after a series of panic attacks, I was diagnosed with symptoms of PTSD. There was simply no ignoring or escaping the shame of the most embarrassing event in my life.

But that chapter had to become part of my story.

I began working in the financial industry long before I learned to welcome this reconciliation, and I found myself right at home. Everyone seemed to be in the business of pretending. And it seemed to touch on everything.

How to dress, what car to drive, where to go to the gym. I was even taught how to answer the question, “So, how are you doing?” I couldn’t be entirely honest, of course.

I was just scraping by, in relative poverty, trying to convince the well-off to rely on me for financial advice. So, to salve my conscience, my sales manager had instructed me how to respond to that most common of questions in a way that was, as all the best lies are, partially true: “I’m doing…unbelievable!” Indeed.

I thought to myself: If I appear smart enough, educated enough, credentialed enough, experienced enough, then they will trust me. Believe me. (Pay me.)

Unfortunately, while the financial industry has built its case to the collective client by projecting a façade of impenetrable eminence, it has ignored the opportunity to build trust the way its built best. By being who we are. By being something most financial advisors are taught to never be — vulnerable.

“Vulnerability sounds like truth and feels like courage,” writes Brené Brown in her book, Daring Greatly. (If you haven’t seen her inspiring TEDxHouston talk, “The Power of Vulnerability,” treat yourself and join the 18 million souls who have.)

Perhaps the financial industry could exhibit more truth, financial regulators more courage, and advisers more vulnerability?

One financial adviser put vulnerability to the test on the biggest stage possible.

Carl Richards, one of my friends and colleagues, had reached every outward milestone of success. He was running a thriving independent advisory firm, writing for The New York Times, and working on his first book. But he knew there was a piece of him — a big piece — that he hadn’t yet reconciled with his personal story.

So he did the previously unthinkable. This financial adviser shared the story of his biggest financial mistake. In the Times.

What happened next was both fascinating and frightening. Richards, who wrote about losing his over-mortgaged house when the housing bubble burst, was strongly supported by some people in the financial world. Others, however, decried Richards as a professional heretic. Some even called for his credentials to be stripped. How dare he acknowledge financial fault and crack the public’s perception of our profession as perfect?

That stung, but the broader impact of Richards’ authenticity was remarkable. I asked him recently, “Now, three years since publishing your biggest financial mistake for the world to see, how much of an impact has that step in vulnerability had on your work and life?”

“A massive impact,” Carl said. “The surprising side effect has been what I’ve learned about the vulnerability of the human condition. None of us are immune. People have been willing to share with me because I’ve shared with them.”

My experience has been similar. The degree to which I’ve been willing to reconcile my worst moments with those I’d prefer that others see, the more I’ve been able to facilitate genuine relationships — genuine trust — with family, friends, clients and co-workers.

Of course I’m not suggesting that financial advisers should rely solely on anecdotal authenticity. Education, experience, credentials, a fiduciary ethic, and practicing what we preach are imperative. But they are a starting point. As Brown implores, “What we know matters, but who we are matters more.”

And who knows, vulnerability may even offer a competitive advantage as an adviser. While everyone else is trying to appear perfect, you can just be you.

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Financial planner, speaker, and author Tim Maurer, is a wealth adviser at Buckingham Asset Management and the director of personal finance for the BAM Alliance. A certified financial planner practitioner working with individuals, families and organizations, he also educates at private events and via TV, radio, print, and online media. “Personal finance is more personal than it is finance” is the central theme that drives his writing and speaking.

MONEY Financial Planning

A Simple Tool for Getting Better Financial Advice

financial advisor with couple
Ned Frisk—Getty Images

If a financial adviser doesn't know what's going on in a client's life, the advice will suffer. Here's one easy way to fix that.

True story: Many years ago, I was meeting with a married couple for an initial data-gathering session. Halfway through the three-hour meeting — the first stage in developing a comprehensive financial plan — the husband excused himself for a bathroom break. As soon as the door shut, the wife turned to me and said, “I guess this is as good a time as any to let you know that I’m about to divorce him.”

That’s just one example of why exploring a client’s financial interior is a worthwhile investment for both the adviser and client. All the effort we had expended on their financial plan, for which they were paying me, was for naught.

So how can an adviser really understand what’s going on with his or her clients?

A great first step is to fully explore the simple question “How are you doing?” Not “How are your investments doing?” or “How is your business doing?” but “How are you doing?”

As financial planners, we are quick to put on our analytical hats. We will gladly examine numbers down to three decimal places, but we often fail to delve below the superficial on a relational level.

Here’s a tool that can help. I include it with permission from Money Quotient, a nonprofit that creates tools and techniques to aid financial advisers in exploring the interior elements of client interaction. It’s called the “Wheel of Life”:

Wheel of Life

The instructions are simple: you rate your satisfaction with each of the nine regions of life listed on the wheel. Your level of satisfaction can range from zero to 10—10 being the highest. Plot a dot corresponding to your rating along each spoke of the wheel. Then you connect the dots, unveiling a wheel that may — or may not — roll very well.

If you’re wondering what value this could bring to your client interaction, consider these five possibilities:

  • It’s an incredibly efficient way to effectively answer the question, “How are you doing?” In a matter of seconds, you know exactly where your client stands. You now have an opportunity to congratulate them in their successes and encourage them in their struggles.
  • It demonstrates that you care about more than just your client’s money. It shows that your cordial greeting was something more than just obligatory. It shows that you recognize the inherently comprehensive nature of financial planning.
  • It helps in gauging how much value you can add to a client’s overall situation. For example, if this is a new client, and all the numbers are nines and tens except for a two on the “Finances” spoke, then it stands to reason that good financial planning could have a powerfully positive impact on the client’s life. If, on the other hand, a prospective client’s wheel is cratering, you might conclude that his or her problems lie beyond the scope of your process. Your efforts may be in vain, and a referral to an external source may be in order.
  • It could tip you off to a major event in a client’s life that should trump your agenda for the day. Many advisers use this exercise as a personal checkup at annual client meetings, sending clients the “Wheel of Life” in advance. Doing so encourages clients to share if they have suffered one of life’s deeper pains, like the loss of a loved one. That’s likely your cue to recognize that now isn’t a time to talk about asset allocation. It’s simply time to be a friend and, as appropriate, address any inherent financial planning implications.
  • You’ll likely find it a beneficial practice for you, too! I don’t recommend putting a client through any introspective exercises that you haven’t completed yourself. So please, complete your own “Wheel of Life” exercise. You’re likely to see this tool in a new light and find valuable uses for it that I’ve not uncovered here.

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Financial planner, speaker, and author Tim Maurer, is a wealth adviser at Buckingham Asset Management and the director of personal finance for the BAM Alliance. A certified financial planner practitioner working with individuals, families and organizations, he also educates at private events and via TV, radio, print, and online media. “Personal finance is more personal than it is finance” is the central theme that drives his writing and speaking.

MONEY financial advisers

Dealing With the ‘Personal’ in Personal Finance

Two people shaking hands above restaurant table with laptop
Tom Merton—Getty Images

To really help people, financial planners have to delve into the the feelings and emotions that drive their clients' financial decisions. One planner explains why that's so hard.

While most of us financial advisers want to do the best for our clients, we often struggle at the task.

The main problem, as I recently wrote: We don’t know our clients well enough. We may say that a client’s values and goals are important, but most of us don’t adequately explore these more personal (a.k.a. “touchy-feely”) parts of a client’s life.

Why is this?

One reason we avoid deeper discovery with clients: No matter how we’re paid—whether by commissions or fees—most of us don’t get compensated until the financial planning process has neared its end.

Let’s use the six-step Certified Financial Planner model as an example. The information-gathering stage, when we have the chance to really understand who our clients are, is the second step. But most advisers don’t get paid until step five, when clients implement our recommendations.

Advisers, therefore, have an inherent economic bias to get to step five as soon as possible.

The second reason we don’t dig deep: Having in-depth conversations with clients can be uncomfortable—mostly for us. We, as advisers, may feel underqualified or inadequately trained to delve into the beliefs, feelings and emotions that drive their financial decisions.

I get it. About seven years ago, I decided that I needed to give and get more out of client interactions, not merely through questions at opportunistic times, but by a deliberate process.

On the day I decided to implement this new strategy, I saw I had a data-gathering meeting on my schedule. Perfect. I was ready to jump right in.

I had met the woman in this husband-and-wife household before—she was a human resources executive at a large company—but not the man. And he turned out to be a “man’s man.” His shoulders were so broad that he had to turn sideways to get through the doorway to my conference room. Scowling, he extended a bear-sized arm and squeezed my hand hard enough to send the clear message that he’d rather be anyplace but there.

“Really?” I asked myself. “I’m going to ask this guy about his values and goals? About his history with money and about the feelings and emotions evoked by his personal financial dealings?”

After I could delay no longer, we got down to it. My assumption that this guy would recoil from an introspective conversation was completely wrong. In fact, my nonfinancial questions clearly set this visibly hesitant client at ease.

The truth is that we’re all capable of communicating more meaningfully with our clients. We do it with our family and close friends all the time. Aren’t we capable of simply getting to know someone?

To claim lack of expertise is a cop-out. There is plenty of help out there for gathering information about intangibles. Here are three resources I’ve found extremely useful:

  • George Kinder: Kinder is a Harvard-educated financial planner who is often dubbed the “Father of Life Planning.” Personally, I find the term “life planning” problematic. It seems to brand intangible data-gathering as something apart from good financial planning, which lets the rest of us off the hook. Kinder’s work, however, should not be discounted. Kinder’s book, The Seven Stages of Money Maturity, effectively started a movement that continues to grow as new generations of planners look for more personally rewarding practices. Another of his books, Lighting the Torch, provides planners with a practical methodology to incorporate into their process.
  • Rick Kahler, Ted Klonz, and Brad Klontz: Kahler, a financial planner in South Dakota, teamed up with psychotherapists Ted and Brad Klontz on two projects that have immeasurable value to the financial planning community. The Financial Wisdom of Ebenezer Scrooge is a short, easy-to-read volume that will help both advisers and their clients examine the motives behind our financial decisions, successes and failures. I had the privilege of studying with Ted and Rick immediately following the release of their second collaboration, Facilitating Financial Health. Written for the serious practitioner, it’s one of the most highlighted books in my library.
  • Carol Anderson and Amy Mullen: Last, but in my opinion the most important, is what I believe to be the ideal resource for financial advisers who truly want to institute more meaningful conversations with their clients. With Money Quotient, Anderson and Mullen have created something very special: a nonprofit devoted to providing advisers with tangible tools designed to elicit intangible information from clients. Various degrees of licensing allow advisers to merely dabble with some of Money Quotient’s tools or transform their entire practice in a way that puts client values and goals at the center of their process.

Acknowledging that personal finance is more personal than it is finance is a great beginning. But the light-bulb moment is only valuable if it leads to the application of the associated theories and concepts.

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Financial planner, speaker, and author Tim Maurer, is a wealth adviser at Buckingham Asset Management and the director of personal finance for the BAM Alliance. A certified financial planner practitioner working with individuals, families and organizations, he also educates at private events and via TV, radio, print, and online media. “Personal finance is more personal than it is finance” is the central theme that drives his writing and speaking.

MONEY Financial Planning

People Ignore 80% of What Their Adviser Tells Them. Here’s Why.

man putting fingers in his ears
moodboard—Getty Images

A financial planner explains why so many clients ignore good advice. Hint: It's not the clients' fault.

I’ve heard it estimated that out of all the financial and estate planning recommendations that advisers make, their clients ignore more than 80% of them. If there’s even a shred of truth in this stat, it represents a monumental failure of the financial advice industry.

Unfortunately, I think there’s a lot of truth to this number.

To explain why, let me tell you a story about a financial planning client I worked with a few years back. In one of our first meetings, she and I were reviewing her three most recent tax returns. As I discussed them with her, it became clear that the accountant who had prepared those returns — an accountant who had been recommended to her by her father — had filled them out fraudulently. A bag of old clothes that she had donated to charity became, on her Schedule A, a $10,500 cash gift. She also deducted work expenses for which she had already been reimbursed.

The client, a young single woman, wasn’t aware of these problems, as far as I could tell. So I gave her my best advice: Turn yourself in — and turn in the accountant, too. Tell the IRS about this before they come after you. “You’ve got to do this,” I said.

That was the last I ever saw of that client. I tried getting in touch with her, but she never communicated with me or my firm again.

Upon reflection, have a pretty good idea why.

Her accountant had been doing her father’s returns for even longer than he’d been doing hers. By telling her to turn in her accountant, I was also telling her to turn in her dad — the person who recommended the accountant and who, perhaps, had fraudulent statements on his own returns. I had crossed a line. And she, I assume, had decided to pretend that we had never had that conversation.

So why did she ignore my advice — or any of the advice I never got to give her? For the same reason that so many clients ignore so much of their advisers’ advice.

To say that clients are just not good at follow-through is a cop-out. I think the real problem is that advisers fail to apply the key discipline I learned early in my training as a financial planner: Know Your Client.

For Certified Financial Planner professionals, of which I am one, a key part of the Standards of Professional Conduct is to “Gather client data and establish goals.” It’s primarily in that step, when we gather client data, that we have the opportunity to get to know our clients. The standard-setting CFP Board offers some further guidance in that area:

The financial planning practitioner and the client shall mutually define the client’s personal and financial goals, needs and priorities that are relevant….”

Please note that the CFP Board specifically mentions both a client’s personal and financial goals. While I’m confident that planners are well-equipped for the collection of tangible, financial information, I’m less sure that advisers are effectively gathering intangible personal information about our clients.

So how do you gather and apply data about your client’s personal life, goals and values? The CFP Board offers further guidance:

…the practitioner will need to explore the client’s values, attitudes, expectations, and time horizons…”

OK now, this has gone a little too far, right? I mean, how exactly am I supposed to explore a client’s values, attitudes and expectations?

Most advisers relegate this warm and fuzzy talk of exploration, values and attitudes to a niche within financial planning called “life planning.” These advisers picture an entirely different breed of Zen planners meditating on a yoga mat with clients, and discount the practice entirely. According to the CFP Board, however, knowing our clients on a deeper level is just plain good, by-the-book financial planning.

So back to my client: Maybe if I’d gotten to know her on a deeper level, I could have helped her with her tax returns — and the rest of her finances. But I’ll never know. I may have been pleased with myself for uncovering her problem, but my recommendation didn’t bring her relief. It went the other way.

Since then, I’ve learned that planners, myself included, can have a more meaningful impact on the lives of our clients by recognizing that personal finance is more personal than it is finance.

And I believe that better understanding our clients’ intangible hopes, dreams, values and goals is also the key to higher implementation rates. So how do we do that?

That’s another story.

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Financial planner, speaker, and author Tim Maurer, is a wealth adviser at Buckingham Asset Management and the director of personal finance for the BAM Alliance. A certified financial planner practitioner working with individuals, families and organizations, he also educates at private events and via TV, radio, print, and online media. “Personal finance is more personal than it is finance” is the central theme that drives his writing and speaking.

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