The financial-plan-in-a-binder doesn’t help clients change their behavior. Despite its detailed projections, people remained confused about what gives them greater purpose in life and how money fits in their search for happiness. Today we know real change only takes place when a client’s core values, purpose, and finances align. And your role as an advisor in helping clients make that connection is pivotal.
On this Elementality, Reese and Carl look at how to help clients better understand the relationship between values, money, and happiness. Your clients are looking for financial peace of mind. It’s up to you to uncover the values that really matter and show clients how their finances give those values purpose.
Podcast Transcript
Reese Harper:
Carl and I both have different purpose statements in our lives. Mine is the relentless pursuit of Ikigai for myself, my family, and those in my immediate circle.
Carl Richards:
Yours is so nice. Mine is ski. Like yours is all…
Carl Richards:
No, it’s time with my family mainly outside.
Reese Harper:
Yeah.
Carl Richards:
That’s my statement of financial purpose, and my question to you about all this, how are you supposed to help me with financial decisions if you don’t know that.
Reese Harper:
That’s it, right?
Carl Richards:
How were you supposed to help me?
Reese Harper:
Like if you knew…
Carl Richards:
And when was I gonna come up on your risk tolerance questionnaire?
Reese Harper:
Yes.
Abby Morton:
Welcome to Elementality. Each week, Reese and Carl share their philosophy about financial planning as they explore the emotional and functional jobs that need to be done. With the focus on the elements financial monitoring system, Elementality will show you how to deliver a modern client planning experience and help you revolutionize how to grow your business. Enjoy.
Carl Richards:
Greetings. Carl Richards here and I’m here with Reese Harper.
Reese Harper:
Boom, loving this. This is my favorite conversations of the week.
Carl Richards:
Yeah, so we are…
Reese Harper:
Except for compliance. I did have some good time on the compliance this week.
Carl Richards:
So we are continuing our dialogue around the way. What does it mean to use the tool we call Elements in a way that will have an impact on clients? And there was some very intentional design thinking that went into how you built Elements. And the second thing we wanted to talk about was that values and purpose increase plan adoption, like increase adherence to a plan. Values and purpose help a plan stick.
Reese Harper:
Yeah.
Carl Richards:
And I’ve come to the exact… Which is so crazy to me is like I was over the mountains thinking much more from a mindset perspective about these things, and you were here building something that actually implemented them, which is really cool because I’ve been thinking about this problem for a very long time. How do I get people to align their values and purpose with the way they actually use their capital?
Reese Harper:
Yeah. And I…
Carl Richards:
So let’s talk about that.
Reese Harper:
At the risk of getting off topic, I wanna go with your side despite what accounts I’d be given from the marketing department to stay on message. When you’re over the mountains for me, and I’m in Salt Lake. Carl is in Park City. We live like 20 minutes from each other, but you gotta drive through Parleys Canyon to get to connect.
Carl Richards:
Yeah.
Reese Harper:
And I actually was probably at a similar time in our careers, Carl decides to start writing and creating content and has had a super successful career that I think all of us are envious of just the experiences he’s had, the writing he’s got to do, the publishing he’s been able to do from New York Times to books to content production. And he’s been talking about all these topics, and I started probably at the same time, I started to write a book, and about halfway through, I’m like, I’m not gonna be able to get anyone to do this.
Carl Richards:
Right.
Reese Harper:
The only way I’m gonna get anyone to be able to do this is to build a piece of software because then I can show them…
Carl Richards:
Smart.
Reese Harper:
How instead of telling them.
Carl Richards:
That’s true by the way. You’re not gonna get that. Yeah. That’s true.
Reese Harper:
And it was beautiful. When our partnership happened, I was like, oh, thanks for doing all of the hard work, Carl, of coming up with all of the written… The way to document all of this and talk about all of it and do all the framework, because I still haven’t done that part. All I did was I thought all of the things you were writing and we built them into software, and now we can collaborate and we can use your strengths and my strengths, and it’s been less work for both of us. Neither one of us have had to do the hard work of this other very heavy lift. Like building a piece of software is very heavy lift and coming up with the words and thinking through the methodology and testing it in speaking, testing it in writing, getting customer feedback, making sure that your ideas are actually being validated, they’re also hard to do. And I just thought it was a beautiful partnership. So I wanted to say that ’cause it’s been fun.
Carl Richards:
It’s super cool and nice but to me, it’s really interesting to see ’cause you’re right. It’s hard to get people to actually do something. I felt a little bit like a circus entertainer every once in a while. Like, I’m up here to tell you fancy things, but nobody actually does anything.
Reese Harper:
They feel great, but then it’s hard to get the results. The truth is a lot of people have built their careers off of some of your ideas, and that’s awesome.
Carl Richards:
But my point is really here as we’re talking about this, how does… What was the thinking around values and purpose, ’cause traditionally, we didn’t talk about… I don’t know if people remember this, but it wasn’t long ago where you didn’t… Nobody talked about values and purpose when it came to financial planning. Deepest we got was goal-based financial planning.
Reese Harper:
Yeah, yeah.
Carl Richards:
So what was your thinking about values and purpose helping people stick with the plan?
Reese Harper:
Well, I’m probably too philosophical sometimes, but I don’t think I’m too philosophical for what the industry needs right now. I think the industry needs an actual spiritual philosophy behind advice that guides some of our work because we’ve become kind of hollow, we’ve become kind of profiteering, we’ve become kind of we’re not as consumer advocacy focused as we would like to be. There’s massive income disparity in the country, there’s very low market penetration of financial advice down market. We have a problem. We’ve helped a lot of wealthy people who already had high incomes and already had lots of liquidity have a service that they could just buy and then stay and maintain some of the wealth that they got through wealth creation. We didn’t create the wealth for them.
Carl Richards:
Well, let me ask you something real quickly, even for those people, this values and purpose piece was still a problem, right?
Reese Harper:
It matters, it matters.
Carl Richards:
I often say sometimes the system that we’re playing in is broken, how do you know it’s broken? Because even the people who “Win” are still miserable, right?
Reese Harper:
Yes. And I think it’s important to say that and I wish I… That’s an important shadow to the side of what I just shared.
Carl Richards:
Of course. All of it is true.
Reese Harper:
And our system is not built for… It’s built for everyone. It’s built for the top quartile of 1% and the rank and file, my little brother who’s getting into his first job and trying to make things move. And the values and purpose thing started when I realized that I was unhappy in my life many years ago, and started wondering like, why am I not happy? Why am I not content? Why am I not feeling joy, like why am I just feeling overwhelmed and busy.
Reese Harper:
And I went on a long exploration of that, like why was I feeling a little bit depressed? Why was I feeling anxious? Why wasn’t I just happy with this good life that I had. I had some savings that was comfortable, I had a great career, I just wasn’t feeling aligned, I wasn’t feeling like I was… This wasn’t the euphoria I was hoping it would be 10 years ago. I was happier in my early 20s, it felt like than I was in my 30s, and what I found in a lot of the reading I did, and was that most of us are confused about what gives us purpose and meaning in life. And most of us assume that more money, even subconsciously, like a little bit more money, a little bit different job, a little bit different like a new relationship, a new love, like something new, something change.
Carl Richards:
I’ll be happy.
Reese Harper:
That will be… When things will shift and that never ends, it just constantly keeps moving, and so then sometimes we chalk that the solution that we chalk up to is like well, you don’t focus on money, focus on happiness, it’s like what. It’s pretty hard to figure out. How do I figure out happiness? How do I figure out how to not focus on money or focus on what gives you real joy. It’s all these platitudes that are really confusing, it turns out it’s super super simple, in the world, different people will call them by different names, but there’s probably somewhere between on the low end, 50 and on the high end 100 values. That really means something to all of us, values might be.
Carl Richards:
Give us an example real quick.
Reese Harper:
Adventure might be a value.
Carl Richards:
Adventure.
Reese Harper:
Integrity might be a value.
Carl Richards:
Love.
Reese Harper:
Love, wisdom.
Carl Richards:
Honesty. Justice.
Reese Harper:
Patience.
Carl Richards:
Mercy.
Reese Harper:
Right. There’s these values that if you were to take a card deck, which Elements has, if you… Usually, I don’t know what kind of promotion they’ve got going on right now, we’re hoping to get a storefront up one day, we can actually buy the values cards, ’cause I’m so excited about them, but there’s a bunch of values card decks you can get out there. I’ve tried to compile one that took several different card decks and some of my own and then some blank cards just to make sure we had every value covered and put them into our card deck. If you take that card deck, which I do with clients and say, alright, I wanted you to pick your top 10 out of here, you’ll see that it’s really difficult for them to narrow them down, it takes 10, 20 minutes, but they can get there, and if you say okay, once you get to those 10, I want you to build a pyramid, put four on the bottom, three, two and one, build a little pyramid of these 10, and I want the most important value on the top, that to you is the most important. And I want to understand why you picked one, I just did one last week with a client of mine, it was really insightful, ’cause I hadn’t done this exercise, they’re relatively new and I hadn’t done it yet, and asking them the question, what does happiness mean to you? ‘Cause they put happiness in their number two slot.
Reese Harper:
Actually, happiness was the number one slot, family was their number two slot, just asking them, what does that mean to you, ’cause you’re not gonna get the same color… The word family doesn’t mean the same thing to everybody. The word happiness doesn’t mean the same thing, but there’s a reason that they value it there, so you gotta hear the why behind it, once you get done with that exercise, then you can go into what I think is the real deliverable. The only thing you really need at the end of this exercise is a single sentence or two describing what all of these things mean to you, and in the context of a question you could ask like, why is money important to you then, why is life important to you. Why is money important to you?
Carl Richards:
What does money mean to you?
Reese Harper:
What does money mean to you?
Carl Richards:
What’s the purpose of money.
Reese Harper:
Carl and I both have different purpose statements that in our lives, mine is the relentless pursuit of Ikigai for myself, my family and those in my immediate circle.
Carl Richards:
Yours is so nice. Mine is ski. Like yours is all…
Reese Harper:
No, it’s time with my family mainly outside.
Carl Richards:
Yeah.
Reese Harper:
That’s my statement of financial purpose and my question to you about all this, how are you supposed to help me with financial decisions if you don’t know that.
Carl Richards:
Yeah. That’s it, right?
Reese Harper:
Like how were you supposed to help me.
Carl Richards:
Like if you knew…
Reese Harper:
And when was I gonna come up on your risk tolerance questionnaire.
Carl Richards:
Yes. Like if you know what drives Reese is like he loves seeing Abby thrive in her job and know that she was able to achieve something really meaningful, Abby’s a really big part of what the podcast is today.
Reese Harper:
Our head of community.
Carl Richards:
She’s the head of community, and she makes a lot of things happen here, and she’s grown in her career, like five different roles since I’ve seen her start, and it’s been amazing, but watching that happen to me is like why I’m here.
Reese Harper:
Yeah and if I don’t know that as your planner or advisor. I’ve been giving advice where I’m just like, Bro… I don’t even care about that, like at all. All I need to know is, can I spend more time outside with my family?
Carl Richards:
Which and it might sound like mine’s like super high brow or whatever.
Reese Harper:
No, it was just ’cause my second line is in service in my community, in church.
Carl Richards:
Yes, of course and if you know what I mean by Ikigai, like Ikigai is a Japanese word, that means purpose, and it’s a combination of what I love, what the world needs, what… You guys can… We’ll go into that in another day, but I don’t wanna confuse you all, you can find a blogpost or two on this, but your purpose is essentially helping other people find their purpose.
Reese Harper:
Yes, and my own purpose, if you think about my finding my purpose it’s like my Ikigai isn’t just like that, it’s bigger than that, it’s like I also love experiences and travel and time outside and all the things that I… My purpose is slightly bigger than just this, helping others and myself find purpose. So it’s just that’s the way I’ve chosen to describe it, that’s what line resonates with me, they’re in my own words, like…
Carl Richards:
That’s essentially if we wanted to call it a statement of financial purpose for you.
Reese Harper:
Yes. And so I like living with that, and I like my closest friends, my advisors, to know that about me, because if they didn’t what would they do?
Carl Richards:
Yeah, now there’s so many interesting things on this that we could talk about forever, but one thing I wanna just link back to is adherence to plan, because look, I got to this idea of statement of financial purpose, which showed up in the one-page financial plan book I wrote from a different way, my whole drive here was how… And this is like sometimes we get off on these philosophical discussions and they’re really, really important. This is called The Way, by the way, right? It’s fine, but if you’re an investment advisor who’s come from the investment background, like the way I arrived here, was because I was trying to figure out how to close the behavior gap. I was trying to figure out how to get people to not buy high and sell low, I was just trying to… And I was like, Okay, well, it must be that we need to link these to goals. Oh, okay, yeah, that was sort of helpful. But people would change the goals in order to behave poorly, if I’m scared in the market and you tell me I have to stay this way, I would say, well, never mind, my goal has changed. So then I had to get deeper.
Carl Richards:
What about a plan? I was like, Oh, yeah, plan. Oh, that was really helpful. But where I finally landed, and I just don’t think there’s any further to go, is if I can get really clear about what’s actually important to you, and then I can show you that you are to use investments as an example. Your investments are aligned with what the reason we invested this money is, because it will help you realize this value, it gives us the greatest shot of realizing this value in purpose, then you’re adherence to this plan, I have a chance, a chance at changing your behavior. I have a chance of getting you to say no to really silly things.
Reese Harper:
I’m gonna give you example in my own life, that I think is really critical here. So this is four years ago, I’m not financially independent. I would be in theory, if I liquidated all my private stock in businesses that I own, but I don’t have enough liquidity to retire, I’m not financially independent at this point, I am still struggling to find peace of mind and it’s like purpose, and I’m struggling with this, when I talk to someone about my purpose, and the purpose that I shared with you guys today. What was interesting to me is, I think a traditional… This person I was talking to, I read this book from a lady named Lynne Twist called The Soul of Money, it had a big impact on me in terms of resonating with me about the role that money played in my life, and I ended up finding that my biggest goal at the time, I didn’t have a lot of money, but I had enough to set up a small foundation, and that small foundation allowed me to do some very important projects that I was really passionate about at the time, that I can only do with a non-profit.
Reese Harper:
And I wasn’t retired and I wasn’t saving like I was saving a meaningful amount of money, but this person that I talked to, my friend who was serving in a sense, my financial advisor at the time, helped me see that the most important next action for me in my life to give me meaning and purpose and feel centered and aligned was to set up this foundation and fund it with some of the savings that I had and start to do a few hours a week focusing on this mission that was really important to me, which I don’t wanna distract today’s conversation by going into that, we can talk about another day, but that’s a really unusual next action for a financial plan, like when someone’s not retired.
Reese Harper:
And they have a bunch of illiquid business assets. They’ve got some liquidity. But they’re probably not saving enough, if I’m applying my values to the conversation with Reese, that I’m an investment advisor, I’m going, “You’re not saving enough and you’re not ready for retirement, and your life insurance don’t have enough life insurance” And I kind of impose my frame, my values, my financial planning playbook onto somebody, then we never arrive at this decision of this next action that gives the advice. It’s teeth the adherence.
Reese Harper:
If someone gets to that place where your next action truly is aligned with their purpose, they’re a friend for life, they’re a client for life, they’re going to stick with you because you’re the first person that helped them arrive at purpose and discover their next action that was aligned with purpose. And it wasn’t just your playbook.
Carl Richards:
Totally.
Reese Harper:
And that’s how the consumer feels right now, they feel like you’re printing plans, you’re putting them through a factory and the output is the same, and so if the output is gonna be the same, they might as well get it from Robin Hood. They might as well get it from Vanguard, ’cause you’re just a more expensive commodity than what they could buy direct, but if you’re the person that has the skill, the niche expertise to extract purpose and help someone align their next action with purpose, it’s really tough to do that with an algorithm, it’s super hard to figure that out.
Carl Richards:
Insanely valuable.
Reese Harper:
So that’s why the Elements is having a lot of success right now, is that we understand the pivotal role the advisor plays in that whole sequence and technology can’t replace that intimate values and purpose-oriented discussion that yields the appropriate next action.
Carl Richards:
Totally, no, and I think that there’s so much of… Let’s just end with the old Stephen Covey quote, why would you wanna, paraphrasing obviously, why would you wanna spend your whole life climbing a ladder only to figure out it’s leaning against the wrong wall.
Reese Harper:
Exactly.
Carl Richards:
The number of conversations I’m having with my age cohort of 45 to 55-year-olds that are like. “Is this all there is? Is this was what it was for” And the difference you can make by saying. No, like why. A bigger house why? More retirement money, why? It turns out the foundation is more important, turns out skiing with your kids is more important to you than…
Reese Harper:
Right now travel happens to be more important.
Carl Richards:
Whatever, which is what we’re talking, values and purpose, help us stick to a plan. Cheers Reese.
Reese Harper:
Love it. Thanks guys, carry on.
Abby Morton:
Next time on Elementality.
Reese Harper:
You might not know this, but the majority of people, when they show up to work with you, they expect to kind of be collaborative, they expect to kind of work together, and they just don’t know what job they have. They don’t know what their role is in this. If you set those expectations real clearly up front, just be like, the only thing you’re in charge of is making sure that your numbers are always current. And I’ve got a tool that helps you do that, everything else we do.
Carl Richards:
So good.
Reese Harper:
It’s just a little start off to the relationship, that totally changes the dynamic.
Abby Morton:
To find out more about Elements, go to getelements.com/demo. Elementality’s executive producers are Reece Harper and Carl Richards. Elementality is produced by Ted Henderson and directed by Abby Morton. Have a good one.