What if you could cut your client meeting prep time in half and double the number of people you serve without feeling overwhelmed? In this episode of Elementality, Jordan Haynes shares a transformative conversation between Reese Harper and Carl Richards. They dive into the costly and time-consuming nature of traditional financial planning and unveil how Elements simplifies data gathering and analysis. Learn how to deliver personalized advice efficiently, scale your impact, and make financial planning accessible to more people. If you’re ready to give advice really fast and revolutionize your practice, this episode is a must-listen!
Transcript
Jordan Haines: Hello friends and welcome to another episode of L mentality. What would you do if you were able to cut the time it took to prepare for your client meetings? In half. What would you do if data gathering? I took only 10 minutes instead of four hours. What would you do? If you could have all the [00:01:00] context in front of you for a client? And be able to deliver really meaningful advice.
What would you do?
If you could double the number of people that you could serve tomorrow and not feel overwhelmed or stressed?
I think for many of us who got into this industry to make an impact. Many of us wanted to serve our peers, those who needed the financial advice the most, but didn’t have access to it. And we were confronted with the reality that in order to make it in this business, You needed to move up market to serve those that already had some wealth and some net worth. And those who could pay a premium on the service that you provide.
And when we all got to this place. We realized how difficult it is to deliver customized, personalized financial advice to those who maybe can’t afford a 5,000 or $10,000 a year fee.
Now I wanted to share a conversation. That we aired probably two or three years ago between our very own Reese Harper and [00:02:00] Carl Richards. And in this conversation, they talk about the cost and the complexity. Of traditional financial planning. In particularly they address the technology landscape of today and the problems that it has and how and why we created elements to be able to satisfy that need. So stay tuned, listen up.
It’s about a 20 minute conversation. I think you’ll enjoy it and love it. And I want you to walk away thinking how can you start offering financial conversations at scale? I hope you enjoy the episode.
Reese Harper: I, I think what we wanted to cover today is we’re going to, we’re going to start a series of main problems that we see with the traditional financial planning service. And traditional tool set that has really caused the cost to serve and the cost to acquire customers to just be far too high in order to really reach the masses.
You know, our industry has still kind of struggling [00:03:00] to really scale our influence into the hundred million households that are really being either on underserved or completely left out of the picture. It could even be more than that. So.
Carl Richards: Yeah. And so this episode is about a very specific problem. And by problem, we just mean a thing that we need to solve.
Something that we like to think about, a puzzle that we need a solution for. And what’s this problem we want to talk about? This problem. And we’re going to talk a little bit about the solution.
Reese Harper: Yeah. The, the, I think of the way we would say the problem is that the traditional, um, financial planning service and the software we use to support that service is too time consuming to set up and it’s too time consuming to maintain.
Carl Richards: So bringing on a new client to get them set up costs us
Reese Harper: too much time. Yeah. I mean Michael Kitsies estimates it’s somewhere around 15 hours on average. Um, if, [00:04:00] if you’re doing a comprehensive financial plan, And you’re truly trying to serve someone in a comprehensive way.
Carl Richards: Yeah. And that’s normally like nobody comes in, which is interesting to me.
Nobody comes in and says, Hey, I need a comprehensive financial plan. They come with a question, you know, maybe asset allocation or investment performance or insurance or whatever they question. And in order to answer that question, we’ve got to do this 15 hours worth of set up and then 35 hours worth of maintenance.
Reese Harper: Well, that’s the second part that we didn’t say, which is there’s about 34 hours of maintenance time in that first year. So if we’re looking at 15 hours of set up, uh, that Kitsie, Kitsie’s estimates and another 34 hours, year or a total of 34 hours in the first year is what he’s estimating. Um, and there hasn’t been a lot of research into the second, third, fourth, fifth year.
It does go down, uh, slightly. I think we can all attest to that anecdotally. Like once you’ve had a client for a long time, the, [00:05:00] It becomes a little easier, but if you just think about the cost of that, I mean, it’s just going to price out it, that’s, that cost forces advisors to have to go up market. If it really costs that much, there’s no way to get the majority of people to, to subsidize that cost.
And so what we try to do is we try to just make it simpler, but use the same tools. Yeah. And the same service, but like, do it light, like a light way of, it’s like planning light. Yeah. And it’s just like cutting corners. Right. What, what is most of that time made up of? I mean, if, if we had to kind of extract it, it’s going to be data entry.
It’s going to be data entry, data maintenance. A lot of it is interactions between, it’s the time spent between the advisor and client trying to agree on the numbers and make sure the numbers are accurate. Am I looking at an accurate picture here? Yeah. There’s this, this real inefficient. Are we on the same page?
Like that’s a really hard with your data. Do we agree that this is right? That’s a hard [00:06:00] thing to do, especially when you get at scale Um, and that problem I I just don’t think we can solve That problem Like in the traditional, using the traditional means of service where we’re going to take on that
Carl Richards: problem.
What else, what else is in that time? So like getting the data, agreeing with the client, what else is in that time? I mean, we have a lot of
Reese Harper: assumptions that we have to make and think and analysis time. Well, let’s,
Carl Richards: let’s think about real, just real quickly. Like we’ve got to decide what something like, Oh, it used to be really simple to decide what inflation number we’re going to put in.
Turns out, Yeah. You got to think about that now. Yeah. You got to think about rates of return, standard deviation, correlations for every asset class just to build a Monte Carlo. Yeah. You got all of that stuff.
Reese Harper: You also have to, I mean, if you think about a traditional like job map, if you use Anthony Olwick’s definition of a functional job, you know, you always have the gathering of information kind of upfront.
Yeah. Right. Which we talked about. You, you also have this analysis of information stage, and advisors spend a lot [00:07:00] of time looking at different screens, comparing different documents, thinking about whether a piece of data they’re looking at is the right thing, or they need to ask a follow up question to the client to clarify what they’re looking at.
There’s just a lot of analysis. And, and because it’s not all in one place, it’s not in one easy to view location, then it, it’s, it’s a, a lot of time is spent kind of inefficiently analyzing information.
Carl Richards: So that’s where, that’s where a lot of the 15 hours come from and the 34. And what’s the reason we’re even like, I always think it’s interesting to think about if for what purpose?
Reese Harper: Well, one more place where the time cost is that is between the advisor and the associate advisor. And the paraplanner sort of agreeing on whether this plan looks good. It’s like, there’s not like a, because it’s a presentation, it’s like a deck, right? You’re trying to get something ready to show people.
Carl Richards: Yeah.
Reese Harper: And it’s got to be pretty, and it’s got to feel good, and it’s got to like, have the right wording, and it’s got to be not just what the [00:08:00] software is putting out, but whatever custom documents you’re going to create to supplement that. Yeah. That then becomes like a whole presentation and visual aesthetic thing and design aesthetic thing and like now I’ve got to make it look good and make sure that copy and the font and the everything just kind of fits right on the page.
Yeah. So it’s, it can be, um, depending on the level of complexity you’re going for. you might, some people can choose to do that all within software and just say, I’m not going to do anything else. And so that’s why it’s an average of time. Some people are going to be less, some are going to be more.
Carl Richards: Yeah. So that’s the problem.
And that’s what, so the problem is it takes a lot of time. We understand a little bit about, we’ve all experienced this, how much time it takes to do all these things. We didn’t even talk about the idea of like, okay. Deciding who’s gonna be the assumer. I mean, we pointed to it. So,
Reese Harper: so the, the, I want to just go back to the Anthony job map.
We have gather and collect, we have analyzed the data, analyze stuff. This is like the CFP planning process almost. Yep. Making [00:09:00] decisions is that third step. Yep. Making decisions happens before the client meeting. In the client meeting, and then again after the client meeting. Yeah. Like you never can, you’re never making decision making’s challenging.
Right. And then you also have this kind of like action implementation kind of like. Stage two like it’s like a whole thing, you know, I have implement and act I have decide I’ve got analyze and I’ve got gather data and all of that Complexity is where the problem where the cost problem comes in and
Carl Richards: it largely almost feels like a cost When we say customized and comprehensive, sometimes we mean that.
Like it almost feels like a new process each time.
Reese Harper: Someone’s worth like a lot, a lot of money and they’re hiring you for this in depth customization. It’s actually a great process for that. I mean, it works well. It’s purpose built for that top 1%.
Carl Richards: Okay. So that’s the problem. That’s where the time is spent. What problem does that introduce in terms of the business model, right? [00:10:00] For an advisor, trying to serve people, like, why is that a problem? It sounds like an interesting model. Like I’m curious what you think
Reese Harper: you answer that question. Well,
Carl Richards: yeah, I, I’m.
generally only interested in questions that I don’t know the answer to, but I do, I do, I do know the answer. I do know the answer to this one. Yeah. Like it, it feels to me like that present the reason that’s a problem. That’s how it’s done now. Like we’ve got a problem. Here’s how it’s done now. Here’s the outcome of those of that, of how it’s done now, which is a, I, I, I just simply can’t serve very many people.
Yeah. Right. And that’s the reason many of us got in this. business, speaking broadly, was to serve people. And I can’t even serve, I specifically can’t serve the type of people I want, I wanted to serve. I can answer questions about the tax breaks for the private jet, but I can’t help somebody decide how much they should put down on their car.
Reese Harper: And sadly, it even starts with your immediate family. You can’t even really service your immediate family. This has been such a problem for me for so long. Like I can’t,
Carl Richards: the number of times I’ve thought about Totally. Gosh, I [00:11:00] really want to help that person. Like, at church, it would happen. Like, hey, could you help me?
And I would be like, I can’t. I remember talking to my friend who was at a big firm that will go nameless, but its initials are GNS. And he was in the same, he went to the same congregation as I did. And I remember asking him, like, how come you never help these people? He’s like, well, because I’m at GNS.
Like I can’t, I can’t help those people. But we’re all trying to get there. So that’s the problem. To me, that’s the problem from an industry perspective. It takes a lot of time. Therefore, I’ve got to move up, up market and if I don’t move up market, then I will die. And that’s why we see this attrition rate.
Reese Harper: Yeah. And, and, and so it’s been really hard for us to come up with a solution to this, you know, and, but I think we have one. Let’s talk about it. It’s going to work.
Carl Richards: So there’s the problem. It takes a lot of time. What’s the solution? Now
Reese Harper: I had this problem working with dentists when I started my practice, I’m working when I’m working with these.
Successful orthodontists that have millions of dollars of income. My traditional model was fine
Carl Richards: and still is and
Reese Harper: [00:12:00] still is amazing. Yep But then I would get because I I positioned myself as dentist advisors. I Wasn’t getting exclusively orthodontists, right? And I was getting general dentists that came out of school with half a million dollars in debt And, uh, reasonably high income, like the 000, you know, um, some of them were over 200, 000.
And but like their ability to pay for planning and maybe their ability to pay for me, right? Through either AUM fees or planning fees was very much, it was very different than some of my high end clients. And I didn’t have the heart to say no. And I was just like, okay, like what do we have to do to re engineer instead of just being like, sorry, come back when you have more AUM or come back to me in 10 years when you’re, when you got some money, because I had, I
Carl Richards: had seen
Reese Harper: all, I was meeting with these [00:13:00] people that were late stage in their careers and they had made so many mistakes.
And I was like heartbroken. Where were you 10 years ago? Yeah. And I was like, oh my gosh. So I’m going to turn away these people. So that they can go get broken and then I’ll fix them at 50 when they have resources. So that’s where elements was born from that problem. And I was like, okay, we’ve got to re engineer this entire thing.
Carl Richards: Let’s just
Reese Harper: get really specific. Why do you have to re engineer it? The time to set this thing up in the software and the time to maintain this thing. It, number one, the whole thing wasn’t what they even were asking for. They, this other customer,
Carl Richards: overkill
Reese Harper: was just saying like, dude, how do I refinance my loans?
Well, I’m like, uh, sorry. It depends. I have to build you a whole brand. Sorry. It depends. I like need to see all of your information. Yeah. He’s like, I literally have like, like I could pay you $400. Yeah. I’m like, I don’t wanna do that. Like, I can’t, I can’t make a living. It’s gonna take me 15 hours. It’s gonna take me like 15 hours and [00:14:00] 34 hours to be maintain.
Yeah. Yeah. And so. So I started by just saying, okay, I can’t just collect data because I told me and Ryan did this experiment. Um, Ryan Isaac, uh, first, first, uh, uh, employee that was working with clients with me. Now he was at the time only had like a year’s worth of experience. And so it wasn’t, um, he would go, I would put him in front of a client and be like, Ryan’s cheaper than me.
So Ryan can beat with him. And then what would happen is Ryan would then gather all their paperwork up and bring me all this stuff and be like, here’s all their stuff. Do you want me to put it inside of the software and start like building a plan? And I’m like, uh, I already am like losing money right now.
Like I’m trying to just do this at the lowest cost possible cost way. And Ryan would put this big stack of papers on my desk and be like, what do you think we should do? And I’d be like, dude, I need you to show me something else that’s faster for me to answer the questions. Cause he’s like, they just want to know this question and this question.
And I’m like, I, I have a stack of papers in front of [00:15:00] me, like, what am I going to do with this? Like, I, it’s going to take me three hours to analyze it all again, the analysis problem. So we started developing some, a little like cheap scorecard, right. Of like some basic, uh, analytics. Like, okay, Ryan, take their income.
And I want you to first take their income and, uh, tell me what they’re spending, and then give me like a ra a ratio of their gross income to spending so I can just see a ratio. Eighty two percent. Right. Start there. Because I at least need to know how upside down is this person on their cash flow. And then like, are they saving any money?
Just show me that ratio. Like, are they saving anything right now? What’s their debt to income ratio? I need to know that. Um, is, what’s their effective tax rate? I need to know that. You know, um, what, what marginal bracket are they in? Like, uh, what, how much insurance do they have? I just need to know all that stuff.
Can you go and like collect it? And then from all this stuff, like get it down to just one sheet for me of, of, of analysis. Ones in which we started calling financial [00:16:00] vital signs, right? Right. Okay. Okay. Okay. Okay. And that was the beginning of when I started to see in my head, like, if the expensive person, me, the advisor.
Could just sit in front of a screen and see the financial vitals and the question
Carl Richards: which is just a set of ratios Just set of ratios Important
Reese Harper: important ratios holistic ratios. Like I can’t just get one I need like the whole enchilada because I don’t want this to be planning light. This is gonna be comprehensive holistic answers purpose built for the purpose built for this younger accumulator 99 percent of the world.
We have to keep
Carl Richards: in mind, like, this is not purpose built for like, the, the, like, low market. No. We’re talking about a dentist making, like, it’s purpose built for 99 percent of the population. Yes,
Reese Harper: and it, this isn’t poverty, customer. This is, I couldn’t even work with someone making 150, 000, you know, without this.
So, getting, I mean, first it was built in Excel, and then it was built in, like, we just try to advance it. And now, we call it the Element [00:17:00] Scorecard.
Carl Richards: So the the vitals which are the set of ratios wrapped up beautifully in this thing that we call the scorecard is This is what you’re proposing is the solution is what you’ve developed as the solution to this idea that it takes too much time
Reese Harper: Yes, because it already think about if you’re lucky enough to be able to get your clients to engage Like if you teach them about a scorecard, they’re more likely to engage.
And elements is doing all kinds of creative stuff right now that is going to be coming out for the next six months to improve our onboarding flows with like really motivating. gamification, and so we’re gonna gamify this engagement with the end client so that they take a little bit more responsibility under the data collection and data gathering and data and data maintenance.
I’m thinking of a world where There’s a badge and you’re the complete client badge. You’re like, you got the gold star badge of complete your data. Now, if that client can maintain their data, I have eliminated like 30 [00:18:00] hours a year of cost. There’s all
Carl Richards: these other side benefits that helps the client. Yes.
I’ve eliminated analysis time. Something we’ll talk about another time. But the idea that it takes a bunch of time. I can get a set of financial vitals. that will interactively allow me to make critical decisions and answer a question. I can wrap that up in a beautiful package called a scorecard. Yes.
That’s the solution to the problem.
Reese Harper: Yes.
Carl Richards: Yeah.
Reese Harper: And I think that, um, If we go back to the costs, we’re removing costs. We’re lowering costs in data maintenance and collection. We’re lowering analysis cost.
Carl Richards: Yeah. Analysis cost is important. You just don’t think much about that because it’s, it’s the thing that you almost like to do.
Reese Harper: The hard, the cost you really can’t reduce. We’re also eliminating, we’re creating the opportunity to eliminate the implement cost. Like I actually don’t think, if you’re trying to drive cost down, you implementing someone else’s stuff is a pretty big cost. And there’s a customer out there who just wants their question answered.
They want you to do the third step [00:19:00] in that four step flow, which is decide for me. You decide. You tell me what to do. And each question has those four steps. Gather it. Analyze it. Decide it and then go act on it. And most people are willing to gather the data Element scorecard analyzes it for you You just have to make a decision and the client can go take care of it That’s a way to finally get to the place where you’re like, hey dentist.
I can’t give you a comprehensive financial plan the way I do for my most wealthy customers or complex clients I
Carl Richards: have to okay pause me real quickly just because I want to keep this really tight and clean But this financial planning thing, it’s really interesting We were all doing a job that cost us a lot of money, made us unprofitable, and the client didn’t even need, ask for, or want.
No, we didn’t have anything else to sell. We don’t, because this tool was built, it was the only set of tools we had, this comprehensive financial plan set of tools. There’s nothing wrong with it, but we don’t, [00:20:00] If, if I can quickly help people answer questions using an objective set of financial measures, financial ratios called vitals, wrapped up in a beautiful, uh, sort of output called a scorecard, then I’m solving the problem, right?
And I’m doing it in a lot less time. So it’s not financial light. It’s not dumbed down. It’s actually, if we were to scrap, like if we were to say we have no tools. Start from the beginning, but I only want you to build tools to serve the 99 percent of the population Right, and if we didn’t have this sunk cost problem in this legacy problem, we would build a tool like that.