Host of Elementality, Jordan Haines, CFP®, and Josh Humada, founder of Boundless Wealth, discuss the value of focusing on core financial behaviors with clients rather than over-optimizing each person we work with.
They explore the question “what if we could build a successful financial advice business by only delivering on these core habits and behaviors?”
If you’re an advisor thinking about how you can scale your advice, deliver the value your clients actually want, or want to scale your personal time then this episode is for you
Transcript
Joshua Humada: There’s so much complexity in all these tools. There’s more tools coming out for each specific tool. Use case,
but it comes back to simplicity. Like why, like, why do we have so many tools? Like, is there a way to get 80 percent of what needs to be done for a client and bring it down to, uh, one tool?
Jordan Haines: That’s the question, man. I listen, I, I have been harping on this for the last, I feel like six months. Is there a world in which we can get 80 percent of the way there and have that be okay? I don’t know. Like this is, I mean, [00:02:00] what, what I wanted to talk to you today about, which had nothing to do with this, uh, was about core financial habits and behaviors.
And the reason I’m thinking about that is like, I, there’s this general feeling I have now, this is not based in any sort of realistic data. Like, I don’t have anything to back this up. This is a feeling and an anecdote that I’ve felt as I’ve talked to advisors and clients and consumers and you name it.
And it’s this general feeling that I, I feel like in our industry, the vast majority of advisors are spending 80 percent of their time doing 20 percent of the work. Or adding 20 percent of the value and doing 20 percent of their time, adding 80 percent of value. What if we just got to 80 percent of the value?
Like, it’s like this weird concept. I don’t know why, why this is a thing. Is there any other industry in which it’s like. Not acceptable to think that you can help more people and do less for them. Because I’ll be [00:03:00] honest. I asked that question to a lot of advisors and it’s like unheard of, right? Like go listen to Michael Kitsis on the Kitsis and Carl.
And you can hear this anxiety coming through. You’re like, no charge more work with less people. That is the way, and there’s no other way to do this. And my question here is like, okay,
well, there’s two paths forward. What if we did, what if we just cut it down and we said, we just do good enough financial services?
Because that’s what we think the vast majority of Americans actually want. Right? Like right now we’re serving the top tier clients who want a hundred percent. Sometimes I would venture to guess that half of those don’t want that. They just want the 80 percent of the way there. And my question is, okay, what, what, what does our industry do?
Getting 80 percent of their time back. We serve more people. We have more time with our family. I think that’s up to the advisor, what to do with that. But that’s just like this question that is ruminating in my head of like, have we over engineered the financial planning process? And [00:04:00] because of that, we have too many tools and there’s too much bureaucracy.
There’s too much infrastructure. It’s the barriers to entry of actually receiving financial advice are too high. So we’ve edged people out of the market. Like. This is again, I found a day. This is me wondering right now, that’s where it’s like, and maybe AI is an answer, one of the answers to be able to do that.
But I think it actually comes with a, like an acknowledgement that 80 percent is probably good enough for most people, right? Like, it’s not going to tell me the exact strategy for every single individual client, like that’s up to me if I want to do that, but what if, what if we were just fine with good enough for most of our clients?
What if we didn’t over optimize? What if we said directionally, this is okay. And we just did that for all of our clients. Is that crazy? Is that a crazy thought?
Joshua Humada: I love that man. And this is something that, um, I’m currently restructuring the business and the programs that offer. And this is something I’ve thought about a lot. And I think you’re spot on because we’ve, if, if we were doing a really good job as [00:05:00] advisors in the industry, we wouldn’t be where we are right now.
Like, you know, there’s a, obviously a financial epidemic in the country. Like we’re doing. I think a really bad job, collective, collectively
Jordan Haines: Yes.
Joshua Humada: America. And I think it comes back to, like you said, we’ve, we’ve over engineered what we, the solutions, and I think getting back to the basics is. The next steps. And I have a site. It’s like an idea in my head that you have to teach people the ABCs of finances. I think that’s like, that’s the next steps is getting back to the basics, budgeting, cashflow. It gets really the simple stuff that we often overlook and not advanced tax planning or this, you know, specific crazy type of trust or whatever it is.
I think it’s the basics. That are going to help get to the next, um, phase where we get to that 80 percent of America, that’s not being helped.
Jordan Haines: How many? [00:06:00] I’m curious. This, this is a point to this question. Um, you work with clients. How many of your clients would you say you, you’re probably, you’re the first, you probably don’t have the data around this, but you are the first financial advisor they’ve ever worked with.
Joshua Humada: Um,
Jordan Haines: of your clients?
Joshua Humada: probably over 50%. I would say a good portion. I mean, They worked with like the 401k advisors, but I would say that most
of them did not have like someone probably like a higher percentage and have never had anybody like get as in depth as I’m going as far as, and
I say in depth, it’s not even really in depth.
I really just covered the basics, but, um, most advisors aren’t even covering the basics. I
Jordan Haines: Yeah. Well, so, so the reason I asked that question is okay. If we look at like, let’s say 50 percent of your clients who have never had a financial advisor before. What does that tell me about them? Well, it probably means they’re not over optimizing their financial decision making, right? And I’m not, I’m not advocating for removing advisors out of the mix.
My question to you [00:07:00] then is if you were to look anecdotally at those 50 percent of your clients that did not have a financial advisor before, how were their like financial behaviors coming into it? Like would you say most of them were probably okay. Were some of them just like an absolute mess coming to you?
Like, didn’t save enough. Like what, what’s been. Your observation from those.
Joshua Humada: think it was a mixture. I think that, um, a lot of younger clients struggle with, uh, basic cashflow issues. Like they just don’t have a good understanding of how they’re, you know, if they’re using their income correctly, they don’t have a good understanding of debts. And, and that, I mean, I think that that is probably the main thing, like at the core of, of every client, I think it’s, they struggled with just managing their income.
Well, um, and I think that that is probably like, I think if, [00:08:00] if, if. If I had to pin it down to like the root cause of all, like, like poor financial health, like that is it. It’s can you help people just manage their simple cashflow better?
Jordan Haines: That’s interesting. I want to add one more question to maybe help frame this up and get a more specific direction here. If you were to put a grade on every person when they first come to you, right? Not after they’ve worked with you and got their cashflow in order. I think that’s a great. And I want to, I want to double click on that in a second, but if you were to say everyone is one of three.
Situations coming to you, totally screwed up satisfactory or Excel. Like they’re just a plus they’re doing so good. You’re just kind of like the sugar on top. If you were to look at those clients that came to you, never hired a financial advisor, how would you grade them?
Joshua Humada: Yeah. Ah, man. I think definitely a good portion of them are, I would say satisfactory, but there’s plenty that are, that just, they, I’m glad, I’m glad we met.[00:09:00]
Jordan Haines: Like totally screwed up. Yeah. Yeah.
Joshua Humada: No, I,
Jordan Haines: all out of like, they’re not saying, yeah, go for it,
Joshua Humada: Let me put it to you like this. I think that there is, there’s quite a few clients, a good handful of clients. Like had we not met if. You just, if you just look forward a little bit, I think there could have been a pretty, some pretty bad, uh, repercussions of what they were doing. Just, just because they didn’t know. Um, I think
Jordan Haines: coming to you. They’re coming to you for some reason. Right. And it’s probably because of that, which like, let’s be honest, that’s a really good financial behavior. Like, I feel like something’s wrong. I’m going to go find a professional to help right the ship a little bit. And I guess that like, so we could, let’s, let’s take a positive spin on that and say probably ever, like maybe their core financial behaviors were kind of garbage, but just the sole fact that they’re looking for help.
It’s like, that’s a positive thing. Would you agree with that?
Joshua Humada: hundred percent.
Jordan Haines: Okay. I guess the point, sorry, I’m, I’m kind of leading you here because I’m, there’s a point to all this. And I think the point that I’m making is I remember. It was it was like The third or fourth, [00:10:00] uh, prospect meeting I had, um, not as a financial advisor, but as an associate advisor, I was just kind of shadowing.
This has been years ago. Um, and I remember the guy came in and he was older gentlemen. He just like, I think he was a school teacher, like just run of the mill kind of guy, single income household, modest income his whole life. He was like 68 years old. He’d saved into like low interest CDs. It didn’t have any investments had like, uh, uh, Whatever, I think it was a pension or something like that on the side, this guy was nailing it.
Why? Because he saved, he was modest in his spending, he didn’t invest anything, he didn’t optimize anything, and the guy was satisfactory. And so he came to us and we said, this is fantastic. Let’s help you out. Let’s get you some investments. Let’s get your retirement plan in place. Like we’ll help you optimize the situation.
But it was like, he had gotten 80 percent of the way there and he was totally, and it was just because of these core habits and behaviors. And like, I guess what I’m getting at here is I [00:11:00] think. There’s like this anxiety advisors feel of like, Oh, if I don’t like insert myself and all the great strategies and tactics that I know to do, like Roth conversions and saving on taxes and investments and portfolio analysis and all those things, like if I don’t do those things, they’re screwed.
And my, my response to that is we’re screwing up the rest of America because we’re so focused on optimizing that unique niche set of people that we’ve forgotten about these run of the mill people that just need a little bit of help. So that’s where I like to justify doing less. We help more people. Do the right things.
And by just focusing on their financial habits and behaviors, it’s like, I’m sure financial advisors listening to this right now have probably had the experience that I’m explaining, which is like someone comes to us, never having worked with a financial advisor before, never having optimized any of their financial behaviors, they just were doing the right things they were doing with it that were right.
And what their grandpa told them to do when they were young and save money in the piggy bank and, and they come to us and they’re doing great. In fact, they’re doing [00:12:00] phenomenal and they never needed our help. But there’s a lot of people that are not naturally like that, that need a little bit of encouragement.
And if we can somehow create a service model, not a business, I don’t care about how you charge or how expensive it is, like just a way to service people. Cause there’s a lot of advisors that are undercharging and doing way too much. Right. We’re totally missing the mark and therefore they can’t serve as many people.
So anyway, that I just, man, I wish we, I wish we would acknowledge the fact that financial advice in its traditional space, maybe a little bit over engineered and over optimized and. Maybe there’s a place for a business that just focuses on the core habits and behaviors. And when it gets to the point where we need to optimize, maybe we refer them to someone else.
I don’t know. That’s the question at hand today. So I got a little fired up there.
Joshua Humada: no, man, I I’m with you. It’s it’s. And I think that it’s, it’s hard because when you, when you step into the industry, that’s what you’re, you’re influxed with, like, so as an advisor, you’re like, you’re, you’re trained [00:13:00] to come up with these complex solutions. We learn. Um, you know, advanced tax planning and, and, uh, you know, all these different strategies that really are catered to, to higher net worth and wealthier people. Um,
you’re, you’re trained in the beginning to, you know, depending on, you know, where you’re trained at, obviously people tell you to find people with money, and so I think it’s just an industry level problem that exists. But, um, I think you’re right. I think just less is more, and I think that’s where we’re at right now.
And I think there has to be to, to get. America to a healthier financial state. Like I think it’s inevitable that advisors have to get back to basics, like the, the, the core basics of of helping people and not over engineering the solutions. And that’s enough, like that is enough to, to help people. And I think you’re right.
Like there comes a point where, um, it’s like, you can only, you can only go so [00:14:00] far to help someone. I think once you’ve taught them the basics. I think there’s a point at which you should like, you should stop interjecting yourself into their situation.
Jordan Haines: No, knowing full well, you didn’t get him 100 percent of the way there, right? Like that, I think that’s a scary thing. It’s like, I’m only doing this much. Like, that’s not everything. That’s scary. That’s scary.
Joshua Humada: And I think there’s, there’s also another thing to be said about also giving people the option to not need us. This one’s a probably a really controversial one where, um,
we we have this anxiety of around retaining clients. Well, I also have a thought. I wonder about what if, what if we also created something for people who want to learn, right?
How to, how to do it themselves, or maybe give them a simple tech stack that they can. Utilize and not need us. And like, why do we have to do it for them? Um, I think there should also be firms that I think people should also focus on building things for [00:15:00] that crowd. Um, that wants to not, not just do it by themselves, but wants to have a framework to work off of and a nice tech stack to use, uh, simple apps that they can use to improve their financial wealth. It’s, it’s like that saying, you know, you feed, you fish for a man, feed him for a day or whatever, teach a man to fish, feed him for a lifetime. Like I think of that, like we need to teach people the basics of finances to get to that next level because we
Jordan Haines: Would it? Yeah. Would it feel less like, would it feel less convoluted to the, in the minds of most rational human beings or most Americans right now? Like, I just think of physical health. I know what I need to do to be healthy. I need to exercise regularly and move. I need to eat well, and I know what to do there.
Fruits and vegetables, protein, not too much. Stop when I’m full. Right. And I know there’s disorders and things like that. And obviously that’s something we can grasp with. But, but the third is, uh, I need to sleep well. If I’m [00:16:00] doing those three things, I’m not a, I’m not a physical, I didn’t go to medical school, medical school, right.
I don’t spend my time thinking about, but I’m sure most Physicians and medical health specialists would look at that and say like, yeah, that’s probably like, focus on those things. You’ll be doing great. Like, and I also know that everything else that like Andrew Huberman talks about is all optimization and maybe I want to deal with it, but also I don’t care about improving my health to the 0.
04%, right? Like I know in my mind as a normal person who is not an expert in physical health. I know that if I do these three things, I’m probably going to do okay. Could I then, could I apply that same rationale to most people when it comes to finances? Do most people know what their core financial behaviors are?
I do. I don’t think so. I think like we could probably, I mean, you go to most people and say like, okay, what are like, what are the top three or four things? If you do, you’re going to be financially over, okay. Over your life. Not like exceptional, but okay. Satisfactory is what we’re looking for. Um, I, that most people would say, like, I need to save for my future.[00:17:00]
I probably don’t need to overspend and don’t take on too much debt. Right? Like that’s something that I’m sure people talk about, then there’s probably so much more and everyone, you probably get a different answer. Like that, that’s my question now. It’s like, what are those core things? I don’t know if I have an answer there.
I think like, I’m a little biased here and I know you probably are too. Like I really like elements. Cause I think it does report on those core things, right? Like liquidity and savings and spending and things like that. That’s the question of the week. What are the core things? Okay. And, and if we got really intentional of solving those things, could we create a world in which people actually know what their core financial behaviors are and therefore making more people sign up for the traditional financial advice because they have done the core things.
Like the gentleman I talked about earlier, and he’s ready to optimize. The problem is right now, sorry, last thing I’ll say on this is, um, I don’t know if you listened to my interview with Taylor Westergaard. I did a couple of weeks ago. She’s a financial coach, good friend of mine. You got to listen to it, man.
It’s so good. I will talk about it [00:18:00] after this. Um, so she’s a financial coach. She does not do financial advice. Half of the client, about half of the people that she works with currently work with a financial advisor. And when she asked them why the vast majority of them say they don’t believe the plan that they’ve been presented with.
So they go back to her because why? Because they don’t have their core cashflow behaviors in place. She’s not doing any investments or tax planning. She’s literally just like budget, save debt repayment. That’s it. I’m going to focus on those things and to get the client ready to then work with that advisor.
And then the client is a lot more ready to work with that financial advisor because they’re ready to optimize. So like if, if we were to focus on the 80%, right, like good enough satisfactory, those are all words we don’t want to hear as advisors, but like, can we create a satisfactory service model where we just train people on the core habits and behaviors?
And then help them optimize. I don’t know. I think we’re onto something there.
Joshua Humada: Yeah, no,
I think that’s a, I think that that’s what we’re missing. I think that’s what, that’s what clients need. Um, 80 percent of them, at least, but not [00:19:00] more. And it’s. It’s sad because I, I think that we have come up with this idea that we, that they need complexity. They need simplicity.
Jordan Haines: Yeah. Yeah.
Joshua Humada: Yeah.
Jordan Haines: got, no, I won’t say this. I was this, everyone will judge me. So we can just leave it at that. Um,
Joshua Humada: Now I want to hear
Jordan Haines: no, well, I’ll, I’ll take it offline. I’ll, I’ll just cut it out of the recording. Um, you dude, I, I hate investments. I’m not gonna lie. I always have. They’ve driven me nuts. I never enjoyed learning about them.
Like I’m not, I don’t enjoy investing at all. Like, it’s just, it feels like I’m trying to chase the 0. 01%. And there’s something about, dude, I, you could call me an anti optimist optimization person. Like I just. I’m very much a good enough, like I want to live my life satisfactory, not perfection.
Joshua Humada: Mhm.
Jordan Haines: And, and so like I’m, I’m applying that to my physical health.
Um, I’m, I apply that to my finances. [00:20:00] Like I’m not, honestly, I’m a terrible investor. I just like throw it in there when I can. Sometimes I save. You know, into investments. Other times I’m just funneling it back into whatever venture I want. I’m excited about. So I’m like, since the beginning, every time, like I’m on social media and I get an influencer and they’re just talking to me about like real estate optimization and portfolio optimization, I’m kind of like, turn off.
I don’t care. You’re talking to like, and so then everyone, like I talked to my brother in law. Who’s got like no liquidity and all he can think about is crypto. And I’m like, dude, you’re miserable. Like save some frigging money in your liquid accounts. I don’t like or my my cousin who’s like, I need to invest in the next rental real estate property because this real estate influencer told me I need 100 properties to like break even and like retire.
And I’m like, yeah, or or you could just like spend less. Novel idea, you know, like, it’s just like, we’re, we’re, it’s distraction. It’s we’re too distracted by all the optimism. That’s like me anyway. So I won’t record, but keep that on the recording. [00:21:00] Cause I’m like, I have to have some credibility, but like, I just don’t care.
I don’t care about half that stuff. Honestly, like Dave Ramsey had something, the guy
is a freaking genius. I need, we need another Dave Ramsey. That’s just a little bit less dogmatic about this way of finances, right? Like the guy talked to core financial habits and behaviors and he helped so many people.
Say what you want about Dave Ramsey. The guy knew what he was doing. He helped so many people get out of like tough situations because one of those, which was debt was like, is a hard thing for a lot of people. Anyway, enough, about that.
Joshua Humada: No,
man, I love it. And can you imagine if there was a service model or, um, what we’re talking about, a way to teach people the basics
Jordan Haines: Yes,
Joshua Humada: as advisors not have to be concerned about focusing on AUM, like if, if
Jordan Haines: for real.
Joshua Humada: that was, uh, if that was a, [00:22:00] a service model, I just. Here’s my thoughts. I think investing is wonderful.
Like, you know, all these different ETFs, like they’re, I think they’re necessary, but I also think if you had a service model that focused on those basics, people would be less attached to the stock market. Like, what about
investing in your health? What about investing in, you know, could be, uh, having a self sufficient property, like to, to have an early retirement, maybe you invest in, um, your business.
Like, I think the investing component of what we do could be other things other than just the stock market, other than just stocks and bonds. So I think once we focus on the basics and building these programs to teach people the fundamentals, kind of like Dave Ramsey did, I think there will be this emphasis being pulled away from just. Stocks and bonds and things like that. And, and
Jordan Haines: Well, yeah, dude. And, and then full circle back to AI. [00:23:00] I think the thing I’ve struggled with AI is it does really good on the repeatable constant type of things. Right. And I’m like, well, financial planning isn’t repeatable, but it’s like, Man, if, if we just had a service that was 80 percent core financial behaviors, basically, I mean, Dave Ramsey is repeatable, dude, you listen to any episode, they’re all the same, right?
He talks about the same thing. Well, then we can create, we can start to leverage AI to help even more people because we have a consistent, a consistent value proposition that I don’t think advisors have a consistent value proposition besides like peace of mind. It’s like, that’s nothing dude. Everyone wants financial peace of mind.
What is the actual articulated value we offer people? I would venture. It’s just like, we want to help people know how they’re doing and know what they need to do to get on the right track. That’s it. So could we create a service offering that does that?