As an advisor, you provide the catalyst to get clients moving forward with their financial health. Without you, they get stuck in a rut and can go years without making progress or decisions. Often paralized about what to do, they can be confused by an overload of information. So how do you increase the importance of finances in someone’s life? By discussing even simple financial issues, clients get better at managing their money—plus they gain trust that you can help them solve their bigger money matters.
On this episode of Elementality, Reese Harper and Matt Glazer discuss financial salience. It’s the idea that the more finances are put in front of a client, the more they will think about their finances, which results in greater long-term rewards than you might expect.
Show Notes
The Role of Personal Financial Salience
Podcast Transcript
Reese Harper:
If your goal is to actually improve their financial behaviors, actually improve financial wellness, increase salience, which then has a domino effect into making good decisions, and you wanna actually be a financial advisor that increases your client’s net worth, increases their savings rate, decreases their effective tax rate. Those are all objective measures that I care about. Then the frequency of contact, how often you touch base with people has a direct impact on the salience of the client or the nature that they’re gonna be thinking about this. So for me, it was developing a series of questions, developing a series of calls to action or interaction for my client that just brought finances to the top of their mind. And I just think it’s as simple as that, man.
Jordan Haynes:
Welcome to Elementality. I’m Jordan Haynes, Financial Planning Specialist at Elements. Each episode, Reese and Matt will discuss major challenges faced by financial advisors and the things they can do to navigate the complexities of delivering quality financial advice to clients. We hope you enjoy this episode.
Reese Harper:
Welcome to another episode of Elementality, everybody. Excited to be here today despite the rainy weather that is wiping out the last remaining few inches of my skiing dreams.
Matt Glazer:
So sorry to hear that.
Reese Harper:
I’m here with Matt Glazer everybody, America’s financial advisor. Matt had to pile like nine books…
Matt Glazer:
I wish we could send a picture to the listeners of the situation we have here. Folks, if you want a podcast and do it well, don’t start with the $57 blue Snowball mic because you’re gonna find yourself with a stack of very thick finance textbooks supporting your effort.
Reese Harper:
All of which Matt has underlined and read and spent a lot of time in. And for people like me, we listened to the compact discs, retained very little knowledge from that recording, but that was our experience in studying for the CFP. Matt actually read the books.
Matt Glazer:
Well, that’s debatable.
Reese Harper:
I just referenced them at various points in time, but that’s a depressing thing to do, like referencing those texts. I just wasn’t that into it.
Matt Glazer:
I don’t know why, the CFP books aside, like in my stack here are some finance textbooks from college, like 2004, 2005, why am I still holding these? At what point am I gonna be…
Reese Harper:
I ask myself that about all my college books, but they’re gonna… They’re expensive, man.
Matt Glazer:
I can’t get rid of them. I can’t bring myself to just to throw them out.
Reese Harper:
Maybe one day when the internet goes down and I decide to check the book. [laughter]
Matt Glazer:
Why do we do that? I’ve got a whole shelf of these.
Reese Harper:
It’s just an intellectual thing, dude. It’s like books. You gotta have them. Matt, we’ve got a very interesting research paper to discuss today. I haven’t had lunch or food at all for almost 12 hours now, and someone just delivered me a meatball sub at my door. So while you’re introducing the topic, I’m gonna walk over and grab that meatball sub and bring it back over here to my desk. Listeners, Matt Glazer, everybody.
Matt Glazer:
Alright, so when Reese comes back, it’ll be amazing if we can just kind of jump in seamlessly here and segue into this. There was research published last year in the Journal of Financial Planning by a professor named Blain Pearson in the Financial Plan Department at Kansas State. The article is titled “The Role of Personal Financial Salience” and…
Reese Harper:
I’m back. To everyone really worried about me, I’m back now.
Reese Harper:
Carry on.
Matt Glazer:
We’re getting to the meat now. Salience is, generally speaking, the act of allocating more attention, more focus, more thinking, more cognitive load to the thing at hand. And in this case, personal financial salience is allocating more attention and thinking to your personal financial situation. What this study hypothesized is that increases in personal financial salience as measured by the frequency of app-based or web-based financial planning product use, so how much you use a financial planning tool, whether it be on the web or on a mobile app, increases in personal financial salience would lead to increases in the likelihood that individuals would have healthy financial behaviors.
Reese Harper:
Okay, so I gotta back up ’cause these words really confuse me as a baseline listener. I didn’t…
Matt Glazer:
Yeah, sure.
Reese Harper:
You read all the textbooks. So you’re saying… If I were to restate this in other words, to the degree that I spend time on financial apps, I will pay more attention to my finances?
Matt Glazer:
To the degree you spend more time on financial apps, that is, at least for the study as a hypothesis for a proxy for financial salience, the more you spend time on these apps, the more silence you have about those personal finances. And as a result of that, increases in financial salience could lead to increases in the likelihood that you would have more healthy financial behavior. So they’re just using your app usage, whether it be a mobile app or a web-based tool, they’re using that as a proxy to measure your level of financial salience. More usage, more salience, less usage, less salience.
Reese Harper:
And salience, since it’s not a typical word everyone’s using, it was the… Everytime I see one of these studies, I’m like, “Why did you pick that word? It just seems like you could have used a word like focus or attention or something… ” I mean literally, how do you define it a little bit for me pre-show? So salience is attention. Salience is focus.
Matt Glazer:
Yeah, it’s all these things like. To me, something…
Reese Harper:
I mean I’m hearing kind of like knowledge or somewhat too.
Matt Glazer:
Something is more salient when it’s more present in your thinking and that means… That Matt, I think that materializes…
Reese Harper:
Comprehension? Is comprehension kind of not…
Matt Glazer:
I think that’s different. That’s like an understanding. Salience is more of like a presence, I think.
Reese Harper:
As a presence in your… Presence… Awareness of this topic.
Matt Glazer:
It’s a well-defined term in this paper in academia, so I encourage you to go to the Journal of Financial Planning and read it to learn more. But like…
Reese Harper:
No I’m not gonna do that. Nope, nope. Just kidding. [laughter]
Matt Glazer:
I know that’s not for you. But salience generally speaking is like… It occupies more of your thinking. It’s more like…
Reese Harper:
Okay, I like that…
Matt Glazer:
I think that’s a good way to think about it for us.
Reese Harper:
Okay, so how about, what did that trigger for you and how is that related to Elements?
Matt Glazer:
Yeah, well… I mean this is not meant to be a self-serving podcast episode here, where we say, Hey, increases in mobile app usage will lead a better healthy behaviors. I think it’s clear that like, Yeah.
Reese Harper:
We didn’t strain that much I keep getting criticized for not selling enough ever, so… Yeah.
Matt Glazer:
No the intention here is not to be self-serving. I think we can all agree that, yeah, the more you think about and play with your finances, the more salient they are in your life, and the more likely that you’ll have more healthy financial behaviors, and it’s like that doesn’t take a while stretch of the imagination. But what the study found is they actually found this to be true that when compared to people who never use app-based or web-based financial planning products, those who sometimes or frequently used these products are more likely to have an emergency fund. They’re more likely to find it easy to cover their bills, to save for the children’s college education, and to have a plan for retirement. So it was an interesting study and that they used this proxy of financial planning tool usage as a proxy for salience. I don’t have an interest here, I would love to get Blain on our show here and talk about the research a bit more, but I kinda wanna move on from the research, I just wanna use you as a frame for the conversation today, and I’m interested Reese in your… The application of this concept to your personal practice, and my question for you is two-fold, the first part, now, and we can say the second part later. My first question is, what has been successful for you in creating higher personal financial salience with clients?
Reese Harper:
Let me give you an example. I started a book club recently, and we were doing book club meet-ups once a week, and it was really consistent, and then at the end of… After having read a few books, I did a little survey and I asked everybody if they wanted to meet once a week, or if that felt like it was a little bit too fast of a pace, and they wanted to meet every other week. Then… So we went to every other week because the majority of people, like six out of 10 people said every other week could probably be easier for me to actually keep up with it, to be able to read at a better pace. But what I found was that when I shifted to every other week, it actually resulted in the same amount of procrastination in reading. It was just spread out over two weeks, and they read the night before, two weeks later, instead of the night before once a week. It didn’t result in any more dedication of time to a text. We were still like, everyone showing up and I’m like, What’s your favorite passage? And everyone’s like, Oh, I didn’t get to my reading, but next week I Will [laughter]
Reese Harper:
There wasn’t a correlation with having more time and the dedication that they were putting towards it, generally speaking. I’ve found that if I don’t talk to people about their money, it doesn’t come up without me. It only comes up when I show up. If I show up at a meeting that my client… I got a client reach out to me last night, “hey Reese can… Me and my wife wanna get together ’cause we gotta make… We wanna talk about our finances.” I’m the… I’m the catalyst for that. And so sending, I don’t wanna dive into that more yet, there’s ways I specifically have done that in our practice to improve that for the frequency, but I just wanna get your response to that general idea, mostly I’m interested about your response to my book club.
Matt Glazer:
This shows up in taxes all the time. We work against working into deadline, the deadline makes it more salient, but in this case, I love the comparison to your book club in terms of me being there, me being the catalyst, is what brings the conversation about in the first place. Now, how that correlates to salient, I guess that’s a different part of the discussion, but I think that it’s a good observation, and I think if I had to Project on other people, I would think that a lot of people would agree with that.
Reese Harper:
Yeah, I’m sorry guys, I kinda know it’s rude to eat, but I’m literally starving. This is like the most… Only hour I’ve gotten… I have to eat all day, so you’re gonna have to hear a chew every once in a while. But what I’m seeing here in my experience is even if I’m just reaching out for a question or a relationship building opportunity like, Hey, talk to me a little bit about how you guys are feeling about the remodel that you were planning on, just randomly connecting with them about something financial gets my client to then be more open to a conversation that’s deeper, like, Hey, guys are auto-drafts, we haven’t started back up our auto draft since we stopped them to do the remodel. But I don’t wanna hit them with the remodel, let’s start, guys, it’s time to start your saving draft again right away, I wanna ease into it with a couple of touches that let them start to be aware of finances again, because these are not… Anyway, you get it.
Matt Glazer:
Yeah, we actually… I’m sitting here hearing you say this, and we hear this, I don’t know why this wasn’t more apparent to me at first, but we hear this from advisors all the time where like my clients don’t like… The amount of times I find out something about my clients, like a financial decision that they made after the fact, where I should have been involved to help them think through that decision in a more prudent way, regardless of the outcome is astonishing, and they just don’t think to think of me, the advisor, when they think about their finances. And they’re not thinking about their finances often at all until there’s a point of decision around something, so.
Reese Harper:
There’s several problems that play there in my view one of them is, How did you position yourself in the first place. But…
Matt Glazer:
But If you have higher personal financial salience, and the advisor is very much part of that context, like you associate your advisor with financials, like when you think finances, think your advisor and the like sites a whole pretty salient picture bubble, the odds of you connecting at times where it matters, and where the clients reaching out to you at times, where matters and perhaps more frequently than less seems like the better odds of that occurring. Which is interesting, I think. Okay, that’s the first half of the question. I’ll ask you one more time and maybe you can summarize your answer here, what has been successful for you in creating higher personal financial salient with clients?
Reese Harper:
I wanted to Google salience and just see what the actual definition was. So I can make sure I’m like really taking this in. The salience definition is, according to the Oxford Dictionary, the quality of being particularly noticeable, or important, or prominent? So, if the question is… I think that’s what I was interpreting from that word is top of mind. So how do you increase the awareness that your client has about you in their life around finances. And the way I have done this before elements, and for all of you who do not know about our next actions or insights feature that we’re going to be putting into beta here, by the time you listen to this, it will have already been in beta for a little bit. I was just doing it through email, and texting and just setting up a frequency of communication with my client that was a little more than what’s comfortable, like a lot of advisors are like, Hey, you don’t need to really reach out. But in order to retain assets, you don’t really need to reach out and do more than one or two meetings a year. Yeah, I mean, that’s true. Like if your goal is just to retain assets and not lose a client, then luckily, the industry does pretty well at retaining customers with pretty little infrequent contact.
Reese Harper:
If your goal is to actually improve their financial behaviors, actually improve financial wellness, increase salience, which then has a domino effect into making good decisions, and you want to actually be a financial advisor that increases your client’s net worth, increases their savings rate, decreases their effective tax rate, like, those are all objective measures that I care about, then the frequency of contact, how often you touch base with people has a direct impact on the salience of the client, or the nature that they’re gonna be thinking about this. So for me, it was developing a series of questions, developing a series of calls to action or interactions with my client that just brought finances to the top of their mind. And I just think it’s as simple as that, man. Like I do, with personal training it’s a similar scenario with medical and dental and all these professional industries where these services that these people are providing are not things that we’re all super excited about every day, it’s not like going and getting a new iPad. So you have to figure out like, how am I going to just bring it top of mind in a way that’s more accessible, and the more frequent that you’re there the more often they respond.
Jordan Haines:
A big challenge for advisors is delivering a consistent ongoing financial planning experience to clients. Knowing what to do initially with a client is easy, but how do you consistently add ongoing value to strengthen that new relationship? The elements financial planning system is centered on key indicators of a client’s financial health. And it gives you the structure you need to deliver ongoing value through financial planning. Start by evaluating key client financial data, then deliver timely insights that are both valuable and appreciated. To learn more, schedule time to talk with us today by going to getelements.com/meet.
Matt Glazer:
The second part of this question, and just to bring it back to, again, the research that was done here, which says that increases in personal financial salience lead to healthier financial behaviors. The second part of the question to you is, What differences do you see in client behaviors and outcomes? Or even like just your relationship outcomes with your client? What differences did you notice, between those who you would perceive had a higher financial salience than those who didn’t?
Reese Harper:
See their gotta be measurable in kind of a functional way, like, clients that have more salience, do more stuff, like they complete more tasks, they get more things done, like financial planning is just a series of jobs and maybe this group does more functional jobs. Or it’s or and, and it could also be that this client reports a lower level of financial anxiety or this client reports a higher level of financial confidence, or this client reports a higher level of financial understanding, not too basic, like financial literacy questions.
Reese Harper:
I think it’s got to be both emotional and functional, and probably measurable. And in my experience, like, it’s definitely a combination of those things. To the degree that a client engages that I can get them to engage, they do more functional jobs and they have more confidence, they feel more stable, they reduce their anxiety. To the degree that I can’t get them to engage. They start just assuming this is all on Reese. They usually don’t leave they just kind of disengage and distance themselves and kind of just like show up when it’s like once a year there or twice a year, once every other year, when they’re, like, feel like oh my gosh, I probably should meet with a financial guy. Yeah, let’s do it. That kind of customer doesn’t do as many functional jobs and they don’t actually receive any kind of emotional benefit from the service because they don’t have any awareness of these underlying issues. So, to me, it probably boils down to one of those two.
Matt Glazer:
Good deal. Well, that’s all I had on this topic. I do think it’s a good discussion.
Reese Harper:
It’s a good one.
Matt Glazer:
Yeah. I’d love to have a deeper discussion about the research, your thought were interesting.
Reese Harper:
Alright, let’s send it over to Megan, she can make the intro.
Matt Glazer:
Yeah, that’d be awesome. Megan, if you’re listening.
Reese Harper:
Thanks, Matt. This is good. It’s a good discussion. Hope everybody enjoyed it. And we look forward to seeing you guys next week.
Matt Glazer:
See you. Thanks Reese.
Jordan Haines:
Next time on Elementality.
Brendan Frazer:
Well, nothing is going to create more motivation than channeling somebody’s most important things in their life, right? Like nothing ignites behavior change, like getting somebody to tap into what’s most important to them. And if you can highlight the gap and say, Okay, this is what you want, which by the way, you’re doing them a favor by helping them clarify what they want because most people don’t spend time thinking about what they actually want. And then you highlight the gap and say, Hey, there’s, you can do… There’s ways to get there from where you are to this where you want to be, then that’s going to create… That also creates a little bit of an impetus to say alright, you know what, I need to I need a plan to get there. I need to do something to get there. How can I get there? And if you paint that picture, it’s natural to go, here’s where I’m at. I’m here today. That’s where I want to be. How can I get there?
Abby Morton:
You can learn more about the elements financial planning system at getelements.com/meet and schedule a time to speak with one of our friendly financial planning experts. Elementality executive creators are Reese Harper and Matt Glazer. Elementality is produced by Abby Morton and directed by Jordan Haynes. Have a good one.