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Tracking Client Progress and Milestones

Obviously you care about your clients. As a fiduciary you put their needs first. You guide their behaviors as you help them gain confidence in their financial plan. But how do they know you really care about the progress they are making?

On this episode of the Elementality podcast, Reese Harper and Chad Jardine explain why you need to take all client financial data seriously as you track their net worth growth. By tracking progress you can acknowledge meaningful milestones and continue to encourage positive performance.

Unfortunately too many advisors don’t have a process in place to monitor client progress. Reese and Chad discuss why awknowledging the momentum your clients are building towards their financial goals is so critical when trying to improve relationships.

 


Podcast Transcript

Reese Harper:
I take every penny seriously. I look at every dollar. Everything matters to me, because I’m an accurate, highly measured, thoughtful wealth manager, that’s tracking everything to the penny, to the date, on time. That message is way better than the message of, “Yeah, you’re probably right, we don’t need that. Let’s not add that in there.”

Chad Jardine:
Yeah, blasé.

Reese Harper:
“Yeah, whatever.” There’s a reason they have that $1,800 Bitcoin account at Coinbase. There’s a reason it’s there. They emotionally have a connection to it.

Jordan Haynes:
Welcome to Elementality, I’m Jordan Haynes, financial planning specialist at Elements. In this episode of Elementality, Reese and Chad talk about how, by truly understanding and following their net worth, we, as advisors, can gain greater empathy for our client’s financial situation, and their progress towards accomplishing what’s most important to them. As you listen, consider how tracking meaningful milestones in your client’s net worth may improve your relationship with them, and improve the accuracy of their data. Enjoy the episode.

Reese Harper:
Welcome to another episode of Elementality. I’m your host, Reese Harper, here with Chad The Dad in the studio and Ted behind the mic. I’d like to thank both of these fine men for being here.

Chad Jardine:
You’re welcome.

Reese Harper:
We’ve got Abby also with us today. Abby’s been pretty instrumental in observing the mistakes that we were making behind the mic, and making sure that we’re staying on point, on target, making sure that we’re staying on message.

Chad Jardine:
She’s delivering that feedback in such a nice way too.

Reese Harper:
I never feel too bad.

Chad Jardine:
It’s like, “You really stunk at that, but…”

Reese Harper:
She’s gentle and friendly.

Chad Jardine:
She uses the sandwich method.

Reese Harper:
So we’ve found one topic this week that we feel, I asked Chad to go back this week, and find one thing that he could identify, it’s a little bit of a twist for our normal episodes.

Chad Jardine:
Yeah. Normally what we do is we’ll bring up questions that are themes that we’ve seen in our interactions with advisors. This week, what I wanted to do is ask, I heard Reese make this comment recently, and I’d really like you to expand on what you meant with that. And what you said was, how serious are you taking your client’s data? And you can expound on that [inaudible 00:02:31]. But I think that, we’ve talked a little bit about data collection strategies. We’ve talked about different ways that data informs things, whether using the Elements System, or however you’re getting the information that you need to make decisions and give good advice. But going back to that the statement was, how serious are you taking your client’s data?

Reese Harper:
Yeah, another way I would want to restate this is, does your client know how much you care about the changes, the minor changes, in their data? Does your client know how much you care about their financial information? All of us kind of come from a place where we all have our own financial paradigm, our own blueprint. We’ve got our own net worth. We have different numbers of assets. We have different incomes from our clients. Some of our clients will have a net worth and an income and a financial profile that’s more complex than we do as an advisor. And some clients will have a net worth and income profile that’s much lower than yours as an advisor. The thing you have to kind of keep in mind is, put yourself in your client’s shoes, and try to empathize with how they feel at the stage of life that they’re in. And how that might be different from the way you might feel based on the stage of life that you’re in.

Reese Harper:
That’s one, in my view, one of the biggest challenges that financial advisors have, is being able to empathize with their clients who are at different stages of life. Why data is important around this is, if I’m talking to a client who’s at a place in their life where student loans are kind of all consuming-

Chad Jardine:
Yeah.

Reese Harper:
But I’m at a place in life where I’ve seen dozens and dozens of people pay off their student loans, and be fine, and get through all of this.

Chad Jardine:
Sure.

Reese Harper:
On one hand, I could be cavalier, and kind of be like, “Don’t worry about this so much. It’s not that big of a deal. You’re going to get through it, bud.” On the other hand, I could be like, “Oh man, I completely know how you feel. This is something I see with a lot of people in your situation, and we’re going to keep a really close eye on making sure that we are making progress towards eliminating debt. I know this is important to you right now, and we’re going to take it seriously.” What that means is, when they pay off $5,000 of a student loan, or $7,000 of a student loan, you’re going to respond to that as if it was your $7,000, your 5,000.

Chad Jardine:
Yeah, tell me more about what you mean by that.

Reese Harper:
If you’re using the right tool and technology, which luckily we happened to have one, The Elements Financial Planning System is a generous sponsor of the show, and they’ve got a really good net worth calculator that’s really easy for clients to use and advisors to use. And when someone’s net worth changes, in my view, that needs to be a significant moment for you to interact with your client, and when it’s a meaningful change.

Chad Jardine:
Yeah. I was going to ask, what is a meaningful change in net worth?

Reese Harper:
Yeah. Well, on a percentage basis, a change in net worth that’s meaningful is probably similar to what’s meaningful when an account grows. I mean a change in net worth of one to 2% over a short period of time is a pretty meaningful change. Now, when someone’s net worth gets a lot larger, change could be much more severe than that, but I think it needs to be something that you think about, not only in percentage terms, but in absolute dollars. So there’s two ways to think about changes in net worth, one, is how much is it changing relative to someone’s income? So if someone’s making a $100,000 a year, and their net worth changes by $10,000 to them, that’s a significant change.

Chad Jardine:
Yeah. This is kind of what we hit on with our income element, the efficiency to which you convert income into net worth.

Reese Harper:
Yep. And when there’s a change in net worth that hits a milestone, that’s meaningful to someone based on where they’re at in life, meaning, if you’re at a $100,000 net worth, and you move to a $200,000 net worth, these need to be things that your client knows you are really helping push towards. Even though you don’t have responsibility over their house value going up-

Chad Jardine:
Yeah.

Reese Harper:
They want to know you’re paying attention to that.

Jordan Haynes:
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 a time to talk with us today by going to GetElements.com/Meet.

Chad Jardine:
I am hearing the value of them, the client sees that their advisor is noticing.

Reese Harper:
Yes.

Chad Jardine:
That their advisor is aware, and that telegraphs a sense of peace of mind, and I’m on top of things, and these things aren’t going unnoticed. When you talk about noticing, I’m assuming you’re also talking about that this is something you’re going to communicate. You’re going to give that client an attaboy, you’re going to reach out to them. What does that communication look like?

Reese Harper:
Well, in a lot of cases, it can be something, I often will send a message through some platform that’s compliance approved, I always have to say that, because I know many of you may not be doing that, compliance approved messaging. But whether it’s a text, or an instant message, email generally doesn’t feel the same as an instant message, or a direct message. It doesn’t feel quite as personal. It feels more corporate, it feels more institutional. So I’m either going to-

Chad Jardine:
So you prefer something besides email for a celebration?

Reese Harper:
For this type of thing. Yeah, because it needs to feel like, “Oh wow. They noticed. My advisor noticed. She really is paying attention to my data.”

Chad Jardine:
Yeah.

Reese Harper:
Sometimes I like to share a report to kind of celebrate the milestone, like, “Oh man, we just hit a million dollars in net worth. Can you believe it? We’ve done this together, and we’ve been working together for three years.” I’ve had situations where that’s literally been one of the most meaningful interactions that a client has had with me, and they talk about it for years.

Chad Jardine:
Yeah.

Reese Harper:
“I remember when you first reached out, and told me that my net worth went positive, that I went from a negative net worth to a positive net worth.”

Chad Jardine:
Yeah.

Reese Harper:
Because a lot of students, and doctors, and dentists, and lawyers, they have a negative net worth for quite a while, early in their career. And going from a negative net worth to a positive net worth is a huge milestone. It’s like, “Finally, if I died my family wouldn’t be in an absolute bind.” They don’t always remember that student loans are often forgiven upon the death. But that feeling just feels like such a momentous point.

Chad Jardine:
But it’s certainly a milestone and an accomplishment, right?

Reese Harper:
Yeah.

Chad Jardine:
It’s certainly a step forward in terms of financial health for these clients.

Reese Harper:
That’s everything. Advisors need to take ownership over the precision of net worth. It is what gives people their financial stability and security. So if we don’t believe in the net worth that we’re measuring, if we don’t believe in the number, meaning if we don’t have certainty around what the number is, and our accuracy of the calculation, you can’t really be an effective advisor. And you probably don’t know this as much, just because you’re new to the industry, but most advisors are really, really rough about net worth calculation. I mean, they’re very rough about it. So it’s ballparks, it’s estimates that they do once, but then don’t really maintain, and consequently clients don’t even really know, and just like, “What’s your net worth?” And everyone’s like, “I don’t know between…” 100% swing in their net worth estimate number.

Chad Jardine:
Yeah.

Reese Harper:
That it’s just a guess, [inaudible 00:11:28]. And what I think we need to get in the habit of doing is actually getting buy-in from the client, and from the advisor, that we agree that to the best of our knowledge, your net worth is this, on this day. It’s January 1st, it’s time to do an inventory check, it’s time to measure that, and this is what we think net worth is, do you agree? Is the house value any different? Is business equity as close to as accurate as possible? Do we include all of your accounts? Do we have your HSA balance in here? Even something small like that. Are there any 529 plans that you have that we don’t have in here? Any savings accounts? Any small, little stock accounts that are just kind of floating out there?

Reese Harper:
To the client it feels trivial, like, “Ah, yeah, but that’s just my, whatever.” I’m like, “No, that’s not just your whatever, that’s $490, or that’s $1,800.” I take every penny seriously. I look at every dollar. Everything matters to me, because I’m an accurate, highly measured, thoughtful wealth manager, that’s tracking everything to the penny, to the date, on time. And that message is way better than the message of, “Yeah, you’re probably right. We don’t need that. Let’s not add that in there.”

Chad Jardine:
Yeah, blasé.

Reese Harper:
“Yeah, whatever.” There’s a reason they have that $1,800 Bitcoin account at Coinbase. There’s a reason it’s there. They emotionally have a connection to it. There’s a reason they track silver, coins in their house, or carry $20,000 worth of cash in their closet. These things matter to them for some reason, find it. There’s a reason I have a handmade Czechoslovakian imported piano, that is sitting in my living room. You need to know that when I was in college, I bought that seven foot grand piano before I owned a house, right?

Chad Jardine:
Yeah.

Reese Harper:
And I hauled that around with me to every rental I ever lived in. And it’s not worth anything really, because I’m never going to sell it. But it should be on my balance sheet because it represents something unique about me, and if you care about that, and once every couple of years you’re like, “How’s that piano doing? You still maintaining it?”

Reese Harper:
Yeah, actually, I still am maintaining it. And Bob comes every three months, and he does a special tuning. And the soundboard cracked, and I am a little worried about it. That kind of color that you’re bringing to the relationship, I mean, it’s everything. It turns you from this stale, kind of left-brained advisor into the person that actually knows the assets and debts on someone’s balance sheet, the values that they have, and I just think most advisors just don’t take the financial statement that seriously. And the client definitely does take the assets that they own seriously, and the debts they have seriously. They might not always take their net worth seriously, but that’s your job to bring these two worlds together. That’s your job to mesh the things they value and care about-

Chad Jardine:
Yeah.

Reese Harper:
With an accurate financial statement, and show them why it matters.

Chad Jardine:
That’s great.

Jordan Haynes:
Next time on Elementality.

Douglas Boneparth:
If you’re planning on sticking around for a while, you need to be forward-looking in terms of how you would be building out your firm. And I think that’s just something that I always try and do when thinking about the future growth of the firm. It’s actually just being curious, and it’s networking, and finding cool stuff you’re developing, financial planning software, it’s got me intrigued.

Reese Harper:
Yeah.

Douglas Boneparth:
You got the custom index platforms popping up now.

Reese Harper:
Yeah.

Douglas Boneparth:
This is cool stuff. How can I build out my business, I don’t know if I want it. I don’t know if it’s going to be the prevailing trend over the next few years, but I want to make sure my firm can plug into these things. How do you constantly refine your own operations to be able to latch on to something that very well could provide value, not just to your clients, but provide value in terms of you as an operator and business owner?

Jordan Haynes:
You can learn more about The Elements Financial Planning System at GetElements.com/Meet, and schedule a time to meet with me or one of our friendly financial planning experts. Elementality’s executive creators are Reese Harper and Chad Jardine. Elementality is produced by Abby Morton and directed by Jordan Haynes.

 

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