As an advisor, you want to build a strong relationship with each client. To do that part of your role may be to help them feel better about their relationship with money. You may not have realized this when you started as an advisor, but there are times when clients need you to be therapeutic and caring as you counsel them about their money.
In this episode of Elementality, Reese Harper welcomes Dr. Meghaan Lurtz to discuss the role of therapy in financial planning. According to Dr. Lurtz, guiding your clients through their feelings about money can be a necessary building block to a strong overall relationship. Unfortunately, many advisors don’t know how to start. To build stronger relationships, Dr. Lurtz shares a few ways to help clients celebrate their financial accomplishments.
Podcast Transcript
Dr. Meghaan Lurtz:
In the world of finances, we don’t have financial joy. What the hell that even look like? [crosstalk 00:00:10].
Reese Harper:
I know, that’s the point.
Dr. Meghaan Lurtz:
What does it mean to have financial joy? Most of the time, people are coming to financial planners speaking, “I just don’t want to die broke.”
Reese Harper:
Yeah, it’s fear.
Dr. Meghaan Lurtz:
“Can you just make that minimum thing happen?” We don’t ever talk about, “Yeah, I want to do all this stuff during my life. I just don’t want to die in the gutter.” There is zero financial joy in that.
Abby Morton:
Welcome to Elementality. I’m Abby Morton, CFP, and producer of our podcast here at Elements. I love being a financial planner but I know it’s a challenging profession as well. That’s why the number one goal of our show is to help you prosper as an advisor as you better connect with your clients. We know your time is very valuable. Plan on a good return when you spend it here with us.
Reese Harper:
Welcome to another episode of Elementality, everybody. I’m your host, Reese Harper, excited this morning with an expert in a field that I’m particularly interested in; the field of industrial and organizational psychology, and Meghaan has also spent her time kind of narrowing her focus into the financial and money aspects of this really important degree and field of study. Meghaan, thank you so much for being willing to join me today.
Dr. Meghaan Lurtz:
Thank you. Happy to be here.
Reese Harper:
How about we start a little bit with telling people when money started coming into your interest as you studied psychology? I don’t know if that was something in your bachelor’s degree when you were thinking about it, but I would imagine… It looked like to me, you had degrees in both psychology and philosophy and potentially Spanish, if I remember right.
Dr. Meghaan Lurtz:
Yeah.
Reese Harper:
Right?
Dr. Meghaan Lurtz:
Yeah.
Reese Harper:
Did you have three undergrads?
Dr. Meghaan Lurtz:
I did.
Reese Harper:
Okay.
Dr. Meghaan Lurtz:
Yeah.
Reese Harper:
I would imagine [crosstalk 00:02:11]…
Dr. Meghaan Lurtz:
I was going to be a lifer. I just thought go to school forever.
Reese Harper:
Yeah, that’s cool.
Dr. Meghaan Lurtz:
I don’t ever have to pay back those student loans, right? [crosstalk 00:02:18] going.
Reese Harper:
Yeah, I think some academics tend to feel that way, right? It’s just like, well, you can’t pick.
Dr. Meghaan Lurtz:
Yeah.
Reese Harper:
I think there’s so many things to learn in life.
Dr. Meghaan Lurtz:
No.
Reese Harper:
You got to the point where…
Dr. Meghaan Lurtz:
There are so many things.
Reese Harper:
You didn’t think about money in your undergrad at all then?
Dr. Meghaan Lurtz:
Not really.
Reese Harper:
Just a normal person?
Dr. Meghaan Lurtz:
[crosstalk 00:02:35] Yeah. Yeah. I had jobs and things like that and I knew that I would eventually have to get a job. Making money was important, but at the time during my undergrad, although both my parents were like, “You should be a CPA.” I’m like, “Probably not,” but nothing against CPAs, but it wasn’t on my radar per age 20. But I did get out of school and with anybody that has a degree in philosophy, psychology, and Spanish, I had to find a job because jobs were fine with me.
Reese Harper:
You got a ton of options.
Dr. Meghaan Lurtz:
I actually went to work. My mom, of all people, worked for a company called Total Rebalance Expert. She was the lead programmer, she was the chief information officer, and they wrote software that sat on top of Schwab’s PortfolioCenter and it rebalanced software or it rebalanced portfolios.
Reese Harper:
Okay.
Dr. Meghaan Lurtz:
I started working there and learned lots of money things. I was working in a CPA’s office, working with financial advisors, dealing with portfolios and just like the way things work, and I took a couple of classes just to kind of like learn the lingo, if you will. I found, in all of the talking that I did with the financial advisors, rebalancing for this reason or rebalancing for that reason. Sometimes, it was for tax reasons, that was kind of the niche of that particular software at the time, that it was tax-efficient, so you could rebalance so quickly, you could take an advantage of a dip in the market or something like this.
Dr. Meghaan Lurtz:
Lots of times, we would just start talking about the psychology of just the clients who were upset. There’s a dip in the market and we’re trying to help them with this tax outsourcing opportunity but people are just kind of freaked out or they’re nervous. Then some of my psychology stuff was coming back to me and it was really, really interesting. I was working a lot with the advisor and a lot with the advisor teams. I thought, well, I don’t really want to be a therapist per se and I still wasn’t really interested in becoming like a financial advisor, but I did think there must be something to this whole team dynamic, there has to be something to leadership within financial advisory offices and within the relationship that exists between the client and the advisor.
Reese Harper:
Yeah.
Dr. Meghaan Lurtz:
I went back to school, didn’t have to twist my arm, and picked up my Master’s in Industrial Organizational Psychology and I just happened to be, again, still working for Total Rebalance Expert. I happened to be at a conference, I think it was a TD Ameritrade conference. All these students walk up from Texas Tech and they’re like, “Whoa, cool software. I could use this to run this thing for my dissertation,” and I’m like, “What are you writing dissertations on related to investments?”
Reese Harper:
Yeah.
Dr. Meghaan Lurtz:
I got talking to their chaperone, if you will, 20-year-olds need chaperones too, and his name was Dr. Barry Mulholland, and we were talking about my background in psychology and just how some of those things just oddly translated into calling to talk about rebalancing but we wind up talking about as well as other stuff.
Dr. Meghaan Lurtz:
And he goes, “There is a school out there, four of that.” And he goes, “Georgia has a program, Texas Tech,” where he was at at the time, “has a program, and Kansas State has a program.” And I go, “I’m a military spouse. I can’t really go to the university as much as I would like to do that.” And he goes, “Well, the one at K State is at least primarily online.” He goes, “And I know one of the women that’s there, Dr. Sonya Lutter,” used to be one of Dr. Barry Mulholland’s students, and he goes, “I’ll hook you up with an interview.”
Dr. Meghaan Lurtz:
I call and I get an interview with them and I’m talking about all this financial money stuff and I’m like, “This is my jam.” I have found my people, this is totally interesting, totally amazing, I’m in love with all of it.
Reese Harper:
Cool.
Dr. Meghaan Lurtz:
[crosstalk 00:06:42] I had always thought even as when you ask me when I was five, “What do you want to be?” I said, “A professor.”
Reese Harper:
Interesting.
Dr. Meghaan Lurtz:
I wanted to do research. I always thought that as a kid, I dressed up as Indiana Jones, I don’t know how many times, for Halloween. I always thought professor equals archeologist but I love studying culture, I love studying individuals, I love studying cognitive psychology, I love behavioral. It’s just people are infinitely interesting and infinitely amazing. The opportunity to study them in the small way that I study them with finance is a gift.
Reese Harper:
The question I wanted to ask you is what’s on your mind right now as it relates to advisors and the psychology of money? What’s on your mind right now?
Dr. Meghaan Lurtz:
Lately, I’ve been really obsessed with the transtheoretical model of change, which sounds really fancy, it’s just in the same way that there are stages of grief, there are stages of change, and people need to go through them to have the ability to change and to change with some sort of ability to sustain that change. But like grief, you usually don’t hear there are multiple steps of grief until you’ve lost somebody or something and you’re in it and they’re like, “Oh, you’re angry because this or you’re not looking at it because of this.”
Dr. Meghaan Lurtz:
There’s lots and lots of research on change mostly related to health, like smoking and starting to exercise, things like this, things that we use all the time for a mirror in financial planning. Financial planning is amazing and that the way that we work with our clients is structured in a particular way for a particular reason and we can kind of bring people through that structure and get them on a plan that’s going to allow them to have wealth for the rest of their lives, but we also know from change research that only about 20% of people are really ready to make change.
Dr. Meghaan Lurtz:
You had actually written to me about my nudge article. A nudge is great and amazing and a very useful thing for people that are ready to make change, but there is 80% of people out there, they’re just kind of like thinking about it or maybe even not even thinking about it because if we think about this, that people know people may have low financial literacy. We kind of know that in the United States, we know that globally. But if you ask somebody, “Well, what do you need to for wealth? They all know they have to save. They all know that. That is not rocket science.” But they don’t do it.
Dr. Meghaan Lurtz:
Did they not do it because they don’t understand? Did they not do it because they don’t think they have enough time? Those are the 80-percenters, the ones that they know that this is the thing but they either think it doesn’t apply to them or they’re not quite sure. Financial advice is kind of working with that 20% that is kind of ready. I mean, I’d even say 30% maybe. Sometimes we get those people that are in preparation phase, meaning not quite action phase, those clients that come to you, they’re listening to you, they’re saying, “Mm-hmm (affirmative), I agree with that.” And then there’s like, “Yeah, yeah. I’ll get that done,” and then they leave and they don’t get it done.
Dr. Meghaan Lurtz:
Those people were not ready for action. Those people maybe just wanted to prepare a little bit more, which is cool because it’s eventually going to lead to action but when you’re the financial advisor and you’re like, “I just said all the things and you were saying yes to all the things and then you just do none of the things.” That can be really frustrating and very confusing to understand but if we have reapplied the transtheoretical model of change, all this stuff starts to make a lot more sense and if you’re one of those financial advisors that’s kind of like, “How can I broaden my niche? How can I find more people? Where is my big ocean?” It’s that 80%.
Dr. Meghaan Lurtz:
We haven’t even touched it because we don’t even know how because a lot of the things that we do in financial planning, they are related to the people that are in action. The stuff and things that I wrote about for nudge, as great as nudge as can be for sometimes getting people to take action when they’re mentally tired and things like that or have other things going on in their life, the nudge can be really fast because we don’t have to teach them anything. We could just flip the nudge on and go. The nudge is still ready for those people that want action. It’s been a great interest of mine lately to just figure out where are people really coming to their financial advisor or do we have a lot of pre-contemplators? Do we have a lot of contemplators? Are people really ready for action? What about these other groups? How do we identify them? What kind of messaging can we use to reach out to them to get them to come in?
Reese Harper:
Okay.
Dr. Meghaan Lurtz:
I think that is wildly fascinating.
Reese Harper:
If I’m hearing you correctly, when I asked you this question, the thing that kind of came up for you is we have 20% of people, according to change research, that are always ready for change, ready to engage.
Dr. Meghaan Lurtz:
Yeah.
Reese Harper:
In marketing and business lingo, we’re kind of big around here in a book written by Anthony Ulwick called Jobs to be Done. It’s about organizational business strategy on determining what it is that you’re trying to have a consumer accomplish. And one of the things that he talks about is non-consumers versus consumers. There’s segments of the market that are just not currently engaging in a service or a product and then there’s part of the market that is. One thing that we’ve noticed is there’s a lot of non-consumers in financial advice across that.
Dr. Meghaan Lurtz:
Oh yeah.
Reese Harper:
That statistic, I think, wouldn’t surprise our audience that most of America doesn’t engage in financial planning. I think Michael has written a lot about this, you’ve probably written about this in other places that I haven’t seen, but around the 330 plus million people in the US, how many of them actually engage in this thing, financial planning. Usually, the answer is well, it’s because they don’t have money, right? It’s because they don’t have money. They don’t have money, then they’re not going to engage. The only purpose that our industry serves is finding people with money and then when people don’t have money, we don’t talk to them.
Dr. Meghaan Lurtz:
Right.
Reese Harper:
How much utility do we provide when the people… The only solution we have is for people who are ready for change, essentially, right? They have something or they have income or they have a pain and they engage. What about the 80% of people? Instead of having 10% of the market engaged, can we get to where 30% of the markets engaging or a higher percentage of the market? To me, that represents an opportunity for us to sort of be a little more creative and innovative. How do we get someone to be open to change or what can we do that would increase the likelihood that someone, who’s on the verge, says, “Yeah, I’ll engage,” versus not? As I’m describing that…
Dr. Meghaan Lurtz:
In change research. Yeah.
Reese Harper:
Follow up on that a little bit more. I’m assuming that I’m hopefully articulating what you shared but I also want to know what’s next then, right? If so, then what? What’s the answer to help engage a larger portion of the market in your mind because I’m sure you’ve kind of spun your wheels on that a little bit?
Dr. Meghaan Lurtz:
Based on what we know from change research and the work by [James Petroska 00:14:39] and all the wonderful things that he has done with smoking and getting people to exercise and things like that, and the other beautiful thing about a lot of the change research is it is designed in self-help ways. Not that it obviously would be a bad thing, it’d be a good thing to work with a financial planner but a lot of the things that people need to do, they need to do internally and we just kind of need to give them the tools or maybe have the right messaging that makes them think about stuff in a slightly different way relative to where they’re at in the change process, and that can be done, people have done that with smoking, people have done that with health education.
Dr. Meghaan Lurtz:
Certainly doing some of that works a heck of a lot better than doing none of it, which is we’re doing none of it right now in the world of finance. That’s my million dollar idea.
Reese Harper:
Okay.
Dr. Meghaan Lurtz:
I’ve written about some of it on the Kitces website. I wrote an article about the no-change phases which is the first three steps of the change process are thinking about changing before we ever get to the action stage and kind of what to do, how to identify clients that have come to you but they’re really not ready for action. What do you do? How do you help them continue to move forward and also set your own expectations as the advisor? If they’re coming to you in pre-contemplation, so that means they got to go through contemplation and they got to go through preparation before they ever get to action.
Dr. Meghaan Lurtz:
It can be really frustrating if you’re the financial advisor and thinking like, “Oh, maybe they’re right.” “Oh, maybe they’re right.” Now I’m taking two steps back. I think understanding that process helps.
Reese Harper:
I’m going to back you up to Mr. Petroska’s research, says what about change then? You just listed off a bunch of stages. That was the first time a lot of our listeners would have heard those stages. There are stages to change apparently. Is that correct?
Dr. Meghaan Lurtz:
Yes.
Reese Harper:
Okay. And what are those stages again?
Dr. Meghaan Lurtz:
There’s pre-contemplation where people that know that they need to save more money but they don’t actually intend to save any money, maybe because they don’t know how, they’re not interested, and they think somehow that it doesn’t apply to them. Some people believe, “I’ll never retire.” Some people believe, “I’m going to die at 27.”
Reese Harper:
Okay.
Dr. Meghaan Lurtz:
Those are the pre-contemplators that can certainly tell you saving is important but for whatever reason, they believe that saving does not apply to them. They’re definitely not going to reach out to a financial planner. The next stage is the contemplation stage where they think, “Okay, yeah. Saving does seem like a good idea even for me, but I’m not really sure about what to do,” and honestly to do that, to save, that means, “I don’t get to go out for coffee every week,” and I really like that. There’s a lot of ambivalence at that stage where you’re in… If you think of contemplation, they’re contemplating both sides of the argument and how it applies to them, and then the preparation stage feels like action because they’re generating all of these ideas, all these ways that maybe they can do this, they can make this jump to action.
Dr. Meghaan Lurtz:
And in any given stage, people can get stuck just from how and where they’re thinking about it. The status of change, the beauty of this where our friend, James, has studied people in these individual stages and learned over time what they need as an individual from a way to view maybe past attempts at changing and things like that. There’s different things that people need at the different stages that are either aspirational, motivational, behavioral, informative, they need information at different stages at different times. Knowing what to give that person, based on where they’re at, to help them move to the next stage successfully and not get stuck in any particular one, I think, is huge.
Dr. Meghaan Lurtz:
That’s one of the favorite things that I love about cognitive psychology and behavioral psychology and all the work of the therapist. They have gotten really good at understanding humans in a way that we don’t even necessarily realize ourselves. We can be such better humans for other people when we recognize things like the patterns of change or recognize things like the patterns of grief, that they’re not an enigma, we’re not an enigma, there is so much more understanding and patience and we know what to do as the person that’s helping them.
Dr. Meghaan Lurtz:
And even, again, the change research, a lot of it is self and so depending on how you want to do it, advisors could set their website up to ask a couple of questions that sort of group people into what stage and then maybe meeting right away isn’t the thing, maybe having them do a couple of worksheets or something like that where they envision themselves as a changer or you gather more information or a different type of information based on the stage of change that they’re in, would dramatically impact the conversations that you have and their ability to move forward.
Reese Harper:
It would seem to me the… What was the first stage?
Dr. Meghaan Lurtz:
Contemplation. The very first one.
Reese Harper:
Do people even show up to a financial advisor when they’re in pre-contemplation mode? Do they show up at the door or they live outside of the financial advisor’s office and don’t come in?
Dr. Meghaan Lurtz:
I think probably most of them don’t come in but I do think there are ones that do because they maybe have that first really painful tax return and they’re like, “I do not want to experience that.” But they may think, “I’m not ready for a financial advisor. I actually don’t want to save any more than what I’m currently saving.” Or maybe they’ve had…
Reese Harper:
“I don’t want them to tell me things are not doing…”
Dr. Meghaan Lurtz:
Yeah.
Reese Harper:
Yeah.
Dr. Meghaan Lurtz:
How many times do we know we need to go to the doctor and we even go to the doctor and we know we don’t want to be there, we know we’re not going to listen to what they say but we’re there.
Reese Harper:
Yeah.
Dr. Meghaan Lurtz:
I think there are times when financial advisors have clients like that or maybe you’re working with a multi-generational family and we’re trying to get the younger ones in. The younger ones are just like, “Money, and my mom said to be here.”
Reese Harper:
Yeah.
Dr. Meghaan Lurtz:
They’re not…
Reese Harper:
Where is the opportunity from a psychology perspective? For me, financial planning is really like, “Eat your vegetables.” That what it is, right? It’s not buy an iPhone or let’s go to the moves.
Dr. Meghaan Lurtz:
I wish it was. I would love to [crosstalk 00:21:26]-
Reese Harper:
Yeah. It’s like, “Eat your vegetables.”
Dr. Meghaan Lurtz:
… how to make financial planning sexy. Yeah, I know. I don’t know how to do that yet.
Reese Harper:
How do we get the person in pre-contemplation mode? Because obviously, there is an opportunity for the small number of pre-contemplators that come to your practice. There is an opportunity for us to convert them to the next stage with reading Meghaan’s work and Dr. Petroska’s work and some other stuff, you get to figure out how to convert some of those people, and we should, and that’s probably the bulk of where our effort should be placed because that’s at least a part of the market that’s not engaging.
Reese Harper:
Where are the opportunities in financial planning for people to feel some dopamine hit, some fun, some iPhone purchase, some go-to-the-movies? Where do those live? Right? It would seem to me the obvious thing to get more people to engage would be find the thing that feels good and then double down on that thing, right? Do more of that thing for people so that they… Then at least you can get them into engage mode. It doesn’t mean you’re always only doing that thing.
Reese Harper:
If engaging is like, “Hey, eat your vegetables over here. It’s going to be what you need.” Then they are not going to want to do that, but if it’s, “Is there any ice cream? Is there Apple iPhone fun?” Where do you see those opportunities in from a psychological perspective for financial advisors in all the things they offer? What is the thing that actually feels good to the client?
Dr. Meghaan Lurtz:
You may or may not like my answer.
Reese Harper:
Okay. I love answers regardless of what the answer is.
Dr. Meghaan Lurtz:
This is actually something that I have talked a lot about with some of my research friends, that in the world of finances, we don’t have financial joy. What the hell that even look like?
Reese Harper:
I know. That’s the point. [crosstalk 00:23:45].
Dr. Meghaan Lurtz:
What does it mean to have financial joy? Most of the time, people are coming to financial planners speaking like, “I just don’t want to die broke.”
Reese Harper:
Yeah, it’s fear.
Dr. Meghaan Lurtz:
“Can you just make that minimum thing happen?” We will never talk about, “Yeah, I want to do all this stuff during my life. I just don’t want to die in the gutter.” There is zero financial joy in that. And I think this happens for a few reasons. One, socially, around the world it seems, I have yet to meet somebody, and I travel a lot as a military spouse, yet to live in a culture that’s just like, “Yeah, let’s talk about our money. How much do you have?”
Reese Harper:
No.
Dr. Meghaan Lurtz:
“How much do I have? Let’s share.” Nobody does that. I think there’s shame if you don’t have enough and not having enough, you could be a millionaire and hang out with billionaires and think you’re poor.
Reese Harper:
You could be a billionaire hanging out with billionaires and still think you’re a loser.
Dr. Meghaan Lurtz:
Yeah, they could still think they’re a loser. The amount that you have, whether it’s a little or whether it’s a lot, multiple psychological studies have showed that it actually doesn’t matter how much you make, it’s how much you think everybody around you makes, which is creepy and sad and weird and we shouldn’t do that to ourselves, but human.
Reese Harper:
Yeah.
Dr. Meghaan Lurtz:
There’s that. There’s [crosstalk 00:25:07]…
Reese Harper:
Monkeys do it too and animals do it too. Monkeys do it too. Whichever stag has the most mares around, whichever mare has the most stags around, whoever has the biggest turf, whoever has the most square footage relative to their neighbors. We’re a very comparative kind of group, we’re territorial.
Dr. Meghaan Lurtz:
We are brain’s work.
Reese Harper:
It serves some function. It’s not all negative but it comes with more baggage than it does centeredness and piece of mind and kind of like…
Dr. Meghaan Lurtz:
Yeah. The way that it works in today’s society, I think, is very much maybe damaging to us emotionally. There’s a social part that’s going on but there’s not really a safe space to have and to have those moments of financial joy. You might get a new car and maybe you saved a lot and you worked really hard and you’re like, “Yes, this is the car I wanted. I got it.” And at the same time, if anybody asks you, “What did you pay for that?” Maybe you could just straight up lie or maybe you don’t answer at all because there, it gets back into this weird shamy thing.
Dr. Meghaan Lurtz:
I think that a lot of our joy in finances is stolen from those moments of shame. That’s an issue that we don’t really think about, that money can be joyful. And even if we think about money is joyful, what do we think about the person that says that? Do we think that they’re bad?
Reese Harper:
Well, it starts out with…
Dr. Meghaan Lurtz:
[crosstalk 00:26:45] that they love money?
Reese Harper:
Yeah, it starts out with financial advisors who have already… American Psychology Association, for I don’t know how many years, has always said money is the number one stressor-
Dr. Meghaan Lurtz:
Number one stressor.
Reese Harper:
… by far. If money is the number one stressor, a close akin to that would be talking to someone about money in that same vein and…
Dr. Meghaan Lurtz:
Very stressful.
Reese Harper:
And then what [crosstalk 00:27:10] about someone who picked to be a financial person? What about someone who chose a career path to be a money person? How do they see you? Right? “Here comes the person that represents the highest stress I feel across anything in my life.” What do they think your motives were that made you pick that career? Right? The assumption, most often, is negative. It has something to do with the same emotions they feel about money to begin with in the first place.
Reese Harper:
If they feel guilt, shame, anxiety, people could be thinking something about you that’s something negative. Maybe you’re really greedy, maybe you just wanted to make a lot of money, maybe you’re the type of person that money drove you as a child and you were always competitive and wanted to be the richest person. I just feel financial advisors interacting with clients come to them in a really vulnerable position where you need to kind of hit that psychology head on at the beginning because clients don’t assume that you’re this kind of centered, caring, consultative, therapeutic person, right? They assume you’re something else, whatever they think that money and stress means to them.
Dr. Meghaan Lurtz:
Right.
Reese Harper:
That’s the irony of our career.
Dr. Meghaan Lurtz:
Even though I think it’s really difficult to get to that space of financial joy because of the shame stuff, because of the society stuff, because it’s difficult to talk about financial things, I think when that client-advisor alliance is established, that we can help give clients that perspective, and even if they celebrate their financial joy nowhere else but in your office, they still get to do it, they still get to have those moments of financial joy where it probably isn’t just about the money but it’s about what the money represents. When they’ve saved up for that car and they finally get it, go for a ride with them.
Reese Harper:
Yeah.
Dr. Meghaan Lurtz:
When they say, “Yeah, I want to be able to retire.” Well, have those conversations about, “What do you want to do when you retire?” “Well, I want a vacation.” Okay. Well, a lot of people want a vacation. “Where do you want to go? Who do you want to go with you? How long do you want to be there?” And then once they do that, remind them, tell them, “This is what we planned for. This is what we did. This is your moment. This is your joy. Don’t let it just go by without knowing it,” because we don’t experience our money in that way very often because we’re not helped to do it, we’re not helped to think about it.
Dr. Meghaan Lurtz:
But I think that that’s so powerful and I think that’s so important to have a healthy financial relationship with your money and the way that you feel about it in your life. Like all relationships, it’s going to have its ups and its downs, but to just never experience financial joy, I think that that’s unacceptable and I think that financial planners can hold that space, can have those conversations, can help keep clients present, whether you’re a yogi or whether you’re just really into psychology. To experience joy and things like that, you need to be in the moment.
Dr. Meghaan Lurtz:
It can’t just always be about what I’m going to do 10 years from now, 20 years from now, 30 years from now. There needs to be those moments of joy related to our financial lives throughout our financial lives, and I think with the intimate view that financial planners get, they hold the power to make that known, to make that real, to hold that space, to create that moment of awareness with the client and truly celebrate with them.
Abby Morton:
I know one of your biggest challenges is delivering a consistent financial planning experience to your clients on an ongoing basis. You get off to a good start onboarding a client and then what? There just doesn’t seem to be a good process for nurturing the new relationship. The Elements Financial Planning System can help you easily organize and evaluate client financial data. Then based on key indicators of their financial health, deliver timely insights to your clients. Using our system gives you the structure you need for ongoing planning. To learn more, schedule a time to talk to us today by going to getelements.com/meet.
Reese Harper:
That’s reason the career exists in my mind. There’s already accountants, and people ask that question a lot. Like, “Why aren’t the accountants actually thriving as financial advisors? Why is there still 400,000 advisors when there’s millions of accountants? Wouldn’t the market just choose to consolidate? Why not? Right? I’d go in to talk to my accountant, why don’t we just talk about the 401(k)? Why don’t we just do all this stuff?” Look, there is this dimension of therapy, there is this dimension of psychology of emotional IQ of consultative therapeutic interactions about your money that no one’s really been trained to have with clients very well. Right?
Reese Harper:
On average, most people that lean towards the numbers in a real deep, deep way, they tend to also not have strength in the emotional IQ and the art of therapy. That’s not a binary thing but on average, if you’re really amazing at tax analysis, sometimes you struggle to have the right brain side or the art of therapy and the conversation. I think financial advisors live in that middle ground, that beautiful kind of middle.
Reese Harper:
I’ve had people ask me this before. They said, “Well, are you guys just like expensive therapists then?” I think, if you’re maybe that far over and when you’re not doing any of the functional jobs of financial planning, like actually implementing things, then maybe you’re a little too far into therapy. That’s what someone like Meghaan really is the expert at, and you’re an expert in finance too, which makes it nice for you. Lucky you have a PhD. You’re more capable than some of us at both topics but on the financial side, I just feel like people…
Reese Harper:
The reason these 400,000, 300,000, we’ll call it 100,000 independent advisors are still employed has to do, I think, with this emotional experience of celebrating joy of your money. Those people are actually making people feel better about their relationship with money on average. That’s why people keep coming back. That’s why the best advisors continue to get referrals because the clients who are working with those advisors felt something joyous, they felt something that made them feel finally at peace and restful and excited and ambitious, and they didn’t feel pain, guilt, fear, shame, falling short, and it doesn’t matter how much money the client has. It’s just about celebrating their best and finding an objective way to measure their progress.
Dr. Meghaan Lurtz:
I would even challenge financial advisors out there to think about your tagline. People like stuff that’s short, people like stuff that rhymes because it’s easy on your brain. But then also how can you tell, especially if you worked in a niche? Let’s say that you work with all aspiring dentists. What moment did dentists experience in their job where they’re just like, “Yes. I’ve made it”? I would think about that as a financial advisor and I would try to work that into my tagline in a sense that you want people to associate working with you with financial joy. Not just financial safety, this is also important, financial freedom, we see that a lot, which is important, but that can mean so many things. I don’t see all that focus much on financial joy and I think that that should be a thing.
Dr. Meghaan Lurtz:
It’s kind of related to social but it’s kind of related to being able to communicate about it. Actually, this goes back even to change theory, that there is a step within contemplation or working with someone in contemplation where you would ask them, “I understand that you’re trying to think through what this could mean and what this could not mean. What would it mean to your mom? If you woke up tomorrow and all your financial problems were fixed, how would you know from the way that people around you are reacting to you? Would they be proud of you? Would they be just joyous for you? Would they be envious of you?” Whatever comes up for them, you got to talk about that, because it’s incredibly [crosstalk 00:37:09]…
Reese Harper:
How they’re perceived?
Dr. Meghaan Lurtz:
Yeah, yeah.
Reese Harper:
How people are perceived?
Dr. Meghaan Lurtz:
And how might somebody communicate with you. I remember when I got my high school diploma, my dad took me aside that day and was like, “I am so proud.” I’m thinking, “I’m going off to college, dad. This is only the beginning and I’m never leaving.” But that moment, him expressing how proud he was of me, this was about a college degree and not about finances, but when you buy your first home, the college fund, you have the vacation, you finally get to retire, finally get to take that trip or maybe even you’ve had the “I made it” moment, maybe you’re finally making the amount of money that you want to make and you go out and get yourself a little something-something. Do you celebrate that with your friends?
Reese Harper:
Yeah.
Dr. Meghaan Lurtz:
“Here’s my bag,” or “Look at these new shoes I got.” I treated myself because I earned it.
Reese Harper:
Yeah. Those are really good insights and you and I haven’t had a chance to talk much about the work that we’re doing at Elements but we’ve tried to celebrate things as small as someone’s net worth going from negative to positive, right?
Dr. Meghaan Lurtz:
Hell yeah, that would be a huge celebration. Yes, yes.
Reese Harper:
Negative net worth, 450,000, because you’re a DO that just got through this most expensive private medical school or you’re an orthodontist and your spouse is an endodontist and you both just got out of dental school.
Dr. Meghaan Lurtz:
Yeah.
Reese Harper:
You’re 800,000 in debt with no assets. Going from negative 800 to negative 700 is a massive milestone and we just celebrate the hell out of it.
Dr. Meghaan Lurtz:
Oh yeah.
Reese Harper:
Celebrate all of these little moments. Another one is you saved your first autodraft into an account or you just purchased life insurance for the first time. “Oh my gosh!” You need to know how important that is, how unique you are, how valuable that decision is to your family. You set up a 529 plan for your child. Are you kidding me? Good for you. Wow! Not just casually pass over these things.
Dr. Meghaan Lurtz:
No, I think a genuine [crosstalk 00:39:36] celebration, a genuine communication of pride, acceptance. This is the place to experience that joy.
Reese Harper:
Yeah.
Dr. Meghaan Lurtz:
Yeah.
Reese Harper:
That’s it.
Dr. Meghaan Lurtz:
That’s pretty and that’s great.
Reese Harper:
You look for your advisor to help you have a signal for the good things that you are doing because when you leave that office, when you’re out roaming in the world, those signals are not there as much because these are very private conversations, they not public information, we don’t go flashing our net worth around, and we don’t go showing people all of the financial choices we’ve made. Even though I think there’s room for us to do more of that and not be so… We shouldn’t tie our value as humans so much to the money that we have.
Dr. Meghaan Lurtz:
No.
Reese Harper:
There’s not a better person than another person because…
Dr. Meghaan Lurtz:
I think that goes to having good goals conversations. You can have all the money in the world but if you don’t have a goal for it, it doesn’t really matter, it doesn’t really do anything, it doesn’t make you happy. Having goals and tying the financial conversations we have back to those goals, and I think having lots of smaller goals, certainly having the big goals, but talking about celebrating those, I think, is so important for people to have healthy relationship with their finances and build a strong alliance with their financial advisor.
Reese Harper:
A lot of people have asked me, “Why do you guys have this scorecard?” We have these indicators of financial wellness. “Why is it there? What is that all about?” I just want to interject that this is the reason that that’s there, right? We’re trying to say your debt-to-income ratio is worth celebrating right now, your burn rate is worth celebrating, your savings rate is worth celebrating, your liquidity is worth celebrating, your estate completeness is worth celebrating. If you’ve looked at this framework and you’re listening and wondering why these guys care so much about psychology and why is the scorecard there, why are these prompts coming up inside of the app telling my client… Why are these celebrations? Why is it green? Why is it colorful? Why is it not red? Why am I not putting negative numbers all over? Why are the numbers purple?
Reese Harper:
We’re trying to reduce the guilt, the fear, the shame, the pain around this topic. We’re trying to make sure that your clients and you have the experience of celebrating more milestones all the time, that there’s always a milestone that they’re achieving in some area. If it’s not estate completeness, it is on a debt payment that they just made. If it’s not a savings rate, it’s that their net worth just went up in a positive direction.
Reese Harper:
We’re trying to create this framework of positive messaging that motivates people to continue to engage. You have to make sure that every engagement with you leaves them feeling like they’re in a positive place. Sorry, Meghaan, for my little aside to the audience there. Once in a while, I’m trying to connect the dots between philosophical and pragmatic and I felt like we have so much opportunity for that to really help people have positive interactions with us as advisors.
Dr. Meghaan Lurtz:
Yeah. I think the scorecard is a great idea but in my opinion, humble as may be, I think that when they’re simple like that, a simple thing that they can look at, a simple thing that the advisor can use, that’s not even hard to do.
Reese Harper:
No.
Dr. Meghaan Lurtz:
We can do this more often. This can be an easy thing. This is not [crosstalk 00:43:42] people out and get a whole degree in therapy. You can, I would encourage you, but is that necessary? No, it’s not, it’s not.
Reese Harper:
You can [inaudible 00:43:51] pad of paper when you sit down with someone just making sure you’re pointing to some of these positive things that have happened, right? Yeah. These are all really achievable.
Dr. Meghaan Lurtz:
We know from all kinds of science that you hear one bad thing, you have to usually hear three or four good things before you kind of stop believing that bad thing, and we hear enough bad stuff about money in the world around us. Yeah. We need to spend more time having those positive conversations with finances so that people feel good and believe it.
Reese Harper:
Well, you’ve given us a time to think about.
Dr. Meghaan Lurtz:
We’ve even talked about dentists and all.
Reese Harper:
Yeah. We’re going to have to bring you back on because I also wanted to talk to you a little bit about a concept around language. I feel like you’re very good and therapists generally are fairly good at language and communication and how that can affect interactions. Advisors are also not very great at listening. It’s hard to do reflexive listening. Active listening is a skill that we don’t get a lot of training on. Thank you so much for taking your time today. I really appreciate it. I got a lot of great insight. I’ll let you leave the audience with the last word on the main takeaway or the main thing you’d like to see change in the industry as we leave people. What’s the thing that you’d like to see change as we part ways?
Dr. Meghaan Lurtz:
I will say related to a lot of our conversation today, financial advisors love behavioral economics, but financial advisors don’t often think about the fact that everybody that works in behavioral economics is a cognitive psychologist. They’re psychologists and they’re doing psychology, and that’s what behavioral economics is.
Dr. Meghaan Lurtz:
We don’t need to, as a group, be afraid or be dismissive of things that are labeled psychology or things that are labeled therapy. This is the study of humans, that’s what psychology is, and the brain and the way it works, and therapy is almost just like the study of being a good communicator. There is more to it than that, greater nuances, and the different disciplines that people go into, but as a financial advisor in a helping profession working with humans to know more about the way that humans work and to embrace even when it’s talking about psychology or even when it’s talking about therapy, to realize that you don’t need to be a therapist, you don’t need to be a psychologist. This is just how people work and you can work with them better if you understand some of these relatively simple things.
Dr. Meghaan Lurtz:
Relatively simple things to implement, relatively simple kind of processes that people work through. Humans are very complex and super, super interesting and super, super amazing and lovely and you have the opportunity, in so many ways, which I think financial advisors are aware of and I’m grateful for that, that they change people’s lives. It’s not just money. It is that financial joy, it is that financial peace, it is those aspirational goals. It can be so much more than just, “Oh yeah, let’s rebalance your 401(k) and look at that 98%. You can live to be 110 and you’ll have $200,000 a year.”
Reese Harper:
Yeah.
Dr. Meghaan Lurtz:
These are great important tools of financial planning but until we make it mean something to the client, that’s where the deeper relationship comes in, that’s where you have those lifetime clients, that’s where you have those individuals that just want to go out and talk to everybody, all their friends and all get all their friends to work with you as a financial advisor because you have made them feel something about themselves, about their confidence, and their financial decision-making, and their feelings of financial self-efficacy, and their ability to make their own dreams come true.
Dr. Meghaan Lurtz:
I think that that’s just such an incredibly powerful, and in many ways, sacred job. Thank you for doing your jobs. I hope that you continue to do them better.
Reese Harper:
Thanks, Meghaan. That was beautiful. Really appreciate all that you’re sharing with advisors and making a big impact on the community. Thank you so much. Looking forward to having you back on again too.
Dr. Meghaan Lurtz:
Thank you.
Abby Morton:
Next time on Elementality.
Reese Harper:
Historically, it was the meetings that drove whether a topic was covered but if someone didn’t show up for a meeting, now I’m toast.
Chad Jardine:
Yeah, would you just let everything slide till the next meeting?
Reese Harper:
Yeah, and then you’re like no…
Chad Jardine:
And how long exactly?
Reese Harper:
And that’s what ends up happening, right?
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’s executive creators are Reese Harper and Chad Jardine. Elementality is produced by Abby Morton and directed by Jordan Haines. Have a good one.