As an advisor, you may prefer focusing on numbers, but how a client’s finances look on a spreadsheet and their story when it comes to their relationship with money rarely line up. While both the math of finances and emotions about money are incredibly important, understanding client anxieties, especially when it comes to their debt, is essential before offering solutions that can help them move forward.
On this Elementality, Carl and Dan Rooker, whose firm Rook Financial services healthcare practitioners with typically large amounts of debt, discuss why you need to first understand what stresses a client about money before helping them develop pragmatic wealth-building habits that can alleviate money anxiety.
Show Notes
rookfinancial.com
Podcast Transcript
Carl Richards:
I think what you’re pointing to, and for people listening, this is… Like, if you remember nothing else, please remember this, that the story and the spreadsheet are two different things, and rarely do they line up, but they’re both really important to understand. We often think the job is just build the spreadsheet, find a bigger calculator, just like all of… And that technical job is incredibly important, but it’s really just table stakes now for real financial advice, because it’s the story that matters.
Jordan Haines:
Hey, Elementality listeners, it’s Jordan Haines. As more advisors implement elements into their financial planning service models, we decided to interview a few of them to see what challenges have come up, plus what successes they’ve enjoyed while using Elements. We believe learning from other advisors will help you see how Elements can revolutionize planning for you. Enjoy.
Carl Richards:
Greetings. Carl Richards here, and welcome to the Elementality podcast. So excited to have a chat today with Dan Rooker from Chicago. Dan, thanks for joining us on the podcast.
Dan Rooker:
Thanks, Carl. Happy to be here. Looking forward to it.
Carl Richards:
Yeah, I would love to start where we try to start with everybody, and that’s at the beginning. I’m curious about what… So speaking broadly, what got you into the craft of giving financial advice? What got you into this business to start with?
Dan Rooker:
So I think that financial planning specifically, it was an accident. I swam in college, and I taught a swim lesson after college to a guy as a promise for helping me prep for an interview for a different industry for a job I never got. And I followed up on that promise after I graduated and didn’t have a job but had an internship and just said, “I promised you a swim lesson, two in fact. I’m actually in the city that you’re in, so by accident, do you wanna do that swim lesson?” First swim lesson, he asked me what I was doing that summer. I was doing a bunch of odd jobs, didn’t have a full-time job yet, and then second swim lesson at the end of the summer, he offered me a job, said, “I just bought this financial planning firm from my dad, and I used to manage 100 employees at this larger logistics company. I think I know how to manage employees, and I’d like to mentor you.”
Carl Richards:
Wow.
Dan Rooker:
So, by accident, really, and it was just more from following up on a promise.
Carl Richards:
That’s very, very… It’s really… The only reason I’m laughing is the number of people we’ve interviewed that have said by accident. It shouldn’t be surprising to me because that’s exactly how I got into the industry. I thought I was applying to be a security guard, and I didn’t realize that there was a difference between what the ad said, ’cause the ad said securities, I thought that meant like mall cop or bouncer, which is why… This is… Sets this up perfect for this next question, and like, okay, great, you got into the business by accident, and I want you to be really thoughtful here. What is it that has kept you here?
Dan Rooker:
Yeah, so I think helping people figure out light-bulb moments or reach a light-bulb moment in their personal finances, or just helping them understand what they’ve done. I started working for a mature solo practice, and so everybody in that practice was what you’d normally see out there for retirees, near retirees, but they’re still figuring out how to manage their retirement, how to manage tax planning, so that side of it was different for me as a 22-year-old. I couldn’t even conceptualize being retired, I was just starting, but I was still for a couple of years a fly on the wall and just watching my employer go through and help people figure out things on the go, and it made me realize that if they’re figuring out things on the go as retired folks, what about everyone else who’s my age?
Dan Rooker:
And so eventually, a few firms later and a few light-bulb moments for me and my personal finances later, I realized I wanted to do it, but I wanted to help a different demographic, younger people, and specifically in healthcare who have student debt, but it just… I think that’s been my… The driving thing that’s kept me in financial planning is I get to help people figure out their personal finances, get to watch them take that next step, whatever it may be, and that’s exciting to me. Very different from what I thought my life would be when I was an undergrad. I was a physics major and I thought I would go work for a lab, and then I had a taste of that in an internship and realized I didn’t wanna do that.
Carl Richards:
Yeah. Yeah, this word help, and two things I’m really curious about, light-bulb moment and help. And so let’s put a pin in those and circle back to them after this next question. Who is your… So now you’ve got your own firm, and tell me that Rook, is it Rook Financial Planning? Rook…
Dan Rooker:
Yeah. Rook Financial. The tagline is “habit tracking for healthcare practitioners.” The niche is… Healthcare practitioners who have boatloads of student debt.
Carl Richards:
That was my question was, who’s it for? So who is it for is healthcare practitioners. That seems like a very intentional name. Why practitioner?
Dan Rooker:
Practitioner because I wanted to focus on physicians, dentists, and other advanced practice providers, so nurse practitioners, PAs, and also other doctoral degrees, like physical therapists, pharmacists, that kind of thing, but I’m just thinking they’re practicing medicine, and that’s different from a healthcare provider.
Carl Richards:
Yeah. Why boatloads of debt? Why that focus? I know that’s a common problem, but why that focus?
Dan Rooker:
Sure. So I was listening to a podcast a few years ago called ChooseFI and I heard this guy come on there named Travis Hornsby owned student loan planner. And I just heard him talking about debt and I thought, I had student loan debt, I have four siblings, we all had student loan debt we swam in college, which took care of a lot of it, but we still had student loan debt and he was talking about the amount of student loan debt. And I just was like, that’s a crazy amount. If there’s things out there, and I’ll just… I think just in a couple weeks ago pointed back to a happiness study about certain income level in a household. I’d read that too. And at this point in time, it’s probably 2018, I thought, overlay half a million dollars of student loan debt and that just doesn’t work out. There’s a lot of stress and anxiety here and this is an area, a snowfield that no one has planned in or very few.
Carl Richards:
Yeah, and light-bulb moments. Can you think of an example recently where… ’cause it’s funny, I’ve been asked for years, for 18 years like, “What is financial planning? What do you do?” And I remember getting a little frustrated at this in 2008/2009, seeing the difference between what people perceived of the financial “financial advice industry”, speaking broadly. This is big industry that includes banks and insurance companies, and it’s really hard to know who does what and why. But I was getting really frustrated by the perception of that industry, and I’m using the term industry on purpose and the difference between how people saw that industry and what I saw my colleagues actually doing. My real financial advisor friends, you think in 2008/2009, the global financial crisis, all that. My colleagues, I don’t… Maybe it’s a little hyperbole, but they were saving people’s lives, you know what I mean? Really, really doing deep work, helping people in lots of trouble and you could trust them.
Carl Richards:
But all we were hearing about in the industry were these crazy people who should have been selling shoes, but instead were selling financial products. So painting a picture of life light-bulb moments. And terms like help, and we hear this a lot, serve, solve a problem. You’re pointing to a problem you are super interested in solving, student loan debt. Can you think of any examples? Any stories of light-bulb moments?
Dan Rooker:
Yeah, I’ll go no further than this morning. I did a student loan consult this morning with… You know, and every consult fills out a form to give us a financial baseline. To paint the picture, it was over $400,000 in debt for a tried to be a physician but didn’t and chose a different industry. So making a lot less than a physician would, and finished medical school in 2009. And fast forward, over a decade later and that much debt is still there, household income is 200,000. Have kids and booked the call because, found us online and I can only guess that these loans are provoking some anxiety and stress. Fast forward to the end of that consult and one of the things we show in the consult at the very end is this very quick financial independence calculator. Tells you how long until work becomes optional based off of a couple simple parameters. One of them being student loan payments, another being what you have so far, and a third being your savings rate and every student loan consult, it’s similar where we say, “If you continue at this savings rate, here’s how long until work becomes optional.”
Dan Rooker:
And for her it was 15% savings rate work becomes optional in 40 years. She graduated medical school in 2010. You can guess how old this person is. 40 years isn’t gonna make it work, isn’t gonna cut it. If your savings rate is 30%, work becomes optional in 26 years. And if I wiped away your loans today, the 400,000 was just gone and you had that 30% savings rate work becomes optional in 24 years. So the savings rate made a pretty big impact, 15% to 30%. The student loan decision made a pretty small impact two years. And we built that tab to prove that out exactly mathematically. And the light-bulb moment for them was, “Oh, if there’s anything to lose sleep over, it’s our savings rate, not our student loan decision.”
Carl Richards:
I would imagine, I’m just feeling into that a little bit. You used the word stress and anxiety, I would imagine there’s also a level of release of shame around like, “Oh wait, maybe I didn’t make… Sure, maybe I made a mistake, whatever. But there’s now a way out. There’s a way out.” Have you noticed that with this work? Just like, “Oh my gosh, it feels like such a relief.”
Dan Rooker:
Yeah. Every day with… That’s the main thing, these student loan consults are like surgery to me. And It’s solving a very specific thing. Rook financial is preventative care. It’s continuing to work on the things after we have solved the student loan thing. Because the easy part is telling them how much to save and how little their student loan decision impacts the future. The hard part is curving it out every year.
Carl Richards:
Yeah.
Dan Rooker:
So yeah, I find light-bulb moments in almost every consult and there has been over a thousand in the past year and a half for me.
Carl Richards:
Wow, that’s crazy, talk to me a little bit about the collective benefit of a thousand reps.
Dan Rooker:
Yeah.
Carl Richards:
Right. Like, are you starting to see like pattern recognition now and like you’re getting increased. That’s what I think. One thing that I think people don’t realize is how valuable people are. You’re not getting that moment of advice, you’re getting the collective benefit of a thousand reps, right? Like how have you seen that play out?
Dan Rooker:
Well I’ve seen the… So the math with student loans with nine different repayment plans. The number of outcomes is finite, but the emotion that consults bring into every call is infinite. Like the number of, The types of emotion and the reason for… Behind it is infinite. So I think spending the first five minutes of every call to form a baseline, an emotional baseline to understand where they’re coming from first.
Carl Richards:
Yeah. Sorry to interrupt, but tell me about that. What is an emotional baseline and what do you do during those five minutes?
Dan Rooker:
Yeah, so I start by asking them, you know, I explain the structure of the hour that we’re gonna be on the call, and I ask them to just catch me up to their retrospective on their loans and repayment history and plans they’ve been on over time and I tell them, there’s no wrong answer here. I just wanna hear about your loans from your perspective. We’ll see the story by the numbers here in a couple minutes, but tell me about your loans. And there’s, because it’s open-ended, they, there’s all kinds of things shared in those five minutes. And it’s like this release of, I could finally talk about how I feel about this.
Carl Richards:
Can you give me an example? Like, can you think of something where you were just like, whoa, that was amazing.
Dan Rooker:
Right, right. So, you know, I think that, like an example would be like, someone will come in and say these are the reasons why it wasn’t my fault that I have these loans, or I’ve been paying on these loans for 20 years and the balance has actually gone up, not down. And or you know, I didn’t realize that, you know, when I was in residency that putting my loans into forbearance was a bad thing. So like those kinds of things are, helping me think through how I craft the answer afterwards. ‘Cause the answers are finite and the outcome is, you know, similar but like how they talk about what their past has been based on their memory. And then two minutes later or five minutes later, matching it up against what the story by the numbers tells me in their loan file.
Carl Richards:
Yeah. So good. Dan, like, I think what you’re pointing to, and for people listening, I just… This is a… This is like, if you remember nothing else, please remember this, that the story and the spreadsheet are two different things. Right. And rarely do they line up, but they’re both really important to understand. Like, we often think the job is just, oh, build a spreadsheet, find a bigger calculator. Just like all… And that technical job is incredibly important, but it’s really just table stakes now for real financial advice. Right. Like, because it’s the story that matters. Right?
Dan Rooker:
Yeah.
Carl Richards:
So, so cool. Yeah. What’s your perspective on that?
Dan Rooker:
Well, I think that in every hour consult that I feel, and then maybe this is just me because I wanna talk to them longer, but I feel like there’s so much more to peel back from the onion, so much more to improve so many more things that can be done. But we only have an hour. So I do what I can and it’s surgery. I fix what I can and I, they leave with, you know, bullet point, recommended steps, here’s an email, here’s what to do for your student loans. For the folks who work with me through Rook Financial, we pick up from there and we continue to dive into what else can they do and how can we delicately approach their situation so that we effect change gradually.
Carl Richards:
So good. Well listen, as we wrap up, I’d love to just ask one last question. And take your time answering this. Let’s just pretend like we were talking three years from today.
Dan Rooker:
Okay.
Carl Richards:
Right. And we’re looking back and you’re happy right? You’re happy with what’s happened over the last three years and I’m thinking specifically about the business, like you’re happy with the impact that you’ve made with your craft of advice. Like what would’ve occurred in order for you to feel good about the last three years if we were looking back three years from today?
Dan Rooker:
So if we were looking back three years from today, you know, I had like a five year plan, a 10 year plan for my practice. And by three years I would’ve wanted to template a process that I can use to create a sort of franchise model to then replace Merrill Lynch’s model, but just with my own right. And so, like, I want to have, I’m at, you know, I’m almost at capacity for who I… How many people I wanna work with. Capacity being a half plate, I’d say for a financial planner so that I can spend the other half of my time doing some of this and continue to run the practice. But I want a lifeboat lifestyle practice within an enterprise.
Carl Richards:
So good. And at the level of impact, what do you think that would mean?
Dan Rooker:
10 years from now, like a hundred advisors and I haven’t decided whether it’s gonna be WT or contractor running their own practice with a full plate each 120 clients.
Carl Richards:
Yeah.
Dan Rooker:
And the support system from Rook Financial to continue to want them to stay there.
Carl Richards:
Yeah. Amazing. My friend. Let’s, here’s to, that 10 year plan. I love that Dan, thanks for taking the time to talk today.
Dan Rooker:
Thank you.
Carl Richards:
Yeah. Cheers.
Jordan Haines:
Next time on Elementality.
Carl Richards:
The process of making good financial decisions over your life is the process of learning… Often it’s the process of making trade-offs.
Abby Morton:
Yeah.
Mike Lecours:
Unless there’s unlimited resources, it’s the process of making trade-offs. And when you’re making a trade-off, you often need to say no. And the easiest way to say no is if you have a deeper yes.
Abby Morton:
Yeah.
Mike Lecours:
And the deeper yes is often this, you know, this idea of like, “Hey, is this… This is what you told me was important when we first met, is this still true?” So I really think that’s one of the primary values of a good financial advisor is like, remind, at least in my words, what I want from my advisor is remind me what I said when I’m thinking about doing something silly.
Abby Morton:
You can learn more about The Elements Financial Monitoring System at getelements.com/demo and schedule a time to talk with one of our friendly financial planning experts. Elementality’s executive creators are Reese Harper and Carl Richards. Elementality is produced by Abby Morton and directed by Jordan Haynes. Have a good one.