At that moment of insight and discovery, when you’ve inspired a client to make their best financial decision, that’s when you know you’re succeeding as an advisor. Unfortunately, the traditional tools advisors use are designed to present information to clients, but can actually get in the way of the right kind of conversation. What advisors need are deeper conversations, not more extensive presentations. So how do you lead clients into discussions where real financial planning takes place?
On this Elementality, Reese and Carl explain how the Elements scorecard provides the framework for values-based planning that results in deeper discussions. Find out how Elements encourages regular interactions that build ongoing relationships.
Podcast Transcript
Reese Harper:
When you have a completed scorecard with Elements, you’re ready to have a conversation that could go any number of directions. I mean, you can go down values and purpose. You can choose to go after a functional point of reference that’s really glaring, like your liquidity is super low. Or it looks like your savings rate, like best case scenario, we’re looking like at a 4% savings rate. Do you feel stressed right now from a cash flow perspective? It looks like your debt to income ratio is super high. You have so much more power because the analysis has been done by the scorecard to surface to you the places, the opportunities, to jump into a deeper conversation.
Carl Richards:
Yeah.
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 a 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 we’re continuing our conversation with Reese Harper.
Reese Harper:
How’s it going, Carl?
Carl Richards:
Good, about The Way.
Reese Harper:
I love that we’re doing this segment.
Carl Richards:
Yeah. So let’s talk about deep conversations. And so we’ve titled this little declaration of The Way, if you will. We’ve called it Jump Right Into Deeper Conversations. Tell me about the thinking that went on behind the design of Elements, the way it’s used to help enhance and make deeper conversations easier. Because I… Let me just mention, I’m sorry, one last thing. Real financial planning happens in conversations. That’s where it happens. And so having a tool, a lot of my work, I’ve just felt like, is purely, in fact, I call the sketches conversation grenades. You throw them into a room and conversations break out. I’ve been thinking about this for two decades. How can we have better conversations with clients? How can we sponsor conversations around the dinner table? How can we encourage better conversations to be having? Because nobody has them. So tell me about deeper conversations and The Way.
Reese Harper:
Well, just to pick up on what you said, I think the thing to remember here is, let’s take an analogy like exercise and wellness. Is it more important that someone can get ready for a marathon, complete it, and then fall off the rails for four years until they decide they’re going to do another marathon? A marathon every four years? Or is it better to get someone to build a habit of working out for 20 minutes a day, 30 minutes a day, 40 minutes a day for their whole life?
Carl Richards:
For sure.
Reese Harper:
And we know the answer to that question. It has all kinds of benefits. I mean, if we take financial planning and we kind of compare that to wellness, what we’ve seen, I think, has still been an improvement over where we were. We used to be at these very marathon-esque kind of sales moments where you bought something. And that was kind of the time that you spent on finances. Now we’ve moved to where you do financial plans and sometimes update the plan. Turns out the plan tends to be, sadly, not quite as conversation-stirring as it would need to be to drive advice adherence and deep adoption of good financial habits, as measured by the American Psychology Association that still says we’re as stressed as we’ve ever been about money and we’re saving as little as we’ve ever saved. We’re not actually moving the needle. There’s an increasing income disparity. There’s an increasing liquidity gap between the haves and have-nots. And there’s an increasing national deficit. We’re not actually objectively moving the needle as much as we would like from a functional objective perspective. And we’re not actually reducing people’s stress and anxiety. So the theory here is, how could we design a system that was more in line with working out for 30 or 45 minutes a day?
Reese Harper:
Not that you’re going to spend 45 minutes on your finances every day, but could you spend five? What could we do to bring, instead of being like this… And by the way, back to the analogy, how many of you, if I told you the way to get into shape is you’ve got to run a marathon, would choose to gracefully bow out like me and be like, “Sorry, dude. I go on walks at night with my dog for a couple of miles. And I like to ski with Carl.” God willing, my foot isn’t broken like it is right now from dropping a turkey dinner on it a couple of weeks ago. But we need to design something that brings people into this idea that it’s an ongoing, it’s a conversational, fluid, never-ending process. And there isn’t a right and wrong way to do it. There’s just an exposure of time that we want to give to this part of our life. It starts with purpose and values. It starts with next actions, single things to go do. Like, we can really quickly overwhelm people. We can really quickly turn them off. You do one comprehensive financial plan with people. That first time they do it, if you’re objective and honest with me as you’re listening, you know they loved it the first time, most of the time.
Reese Harper:
It felt like a colonoscopy, but they were like, I did my colonoscopy. I feel great because I did the hard thing I know what it’s supposed to do, and then they’re done. I mean, they are done because that was, it’s too hard. It’s too heavy of a lift. So we really thought, you know what’s more important than a completed, “comprehensive financial plan” is more regular interactions with a human, more regular interactions with a professional. How can we train the client and the advisor to sort of see this more as a like ongoing relationship and as opposed to an event that was too heavy of a lift so they would just die off and be bored and overwhelmed by the entire process. And that’s the philosophy under-guarding this principle of get into deeper conversations. Before we jump into that, I wanna hear your reaction to that.
Carl Richards:
Yeah, well, I just think it’s so smart because it’s, first of all, real planning happens in conversations, right? We start to observe things, we notice things, and none of us have been trained on how to talk about money in the first place. So giving somebody a framework around which those conversations can take place, like something as simple as a scorecard, right, is a huge, huge thing. And the other thing that’s really important is that we hired a new financial planner about two and a half years ago, and she builds these really comprehensive, big, huge plans. She’s super technical, really amazing. And it went like a month and two and three before, like there was no plan. And I finally was like, “Christy, where’s the plan?” She’s like, “This is the plan”, right? The plan doesn’t exist. Like there is no plan. It’s this never-ending, and she started quoting things back from me, which was always super, super, super annoying. But she was like, look, this is no, because it’s never done. Like I talked to you on Friday, and by Monday you guys have changed your minds.
Carl Richards:
It turns out you’re human, just like everybody else. So we’re just gonna keep iterating. Well, how does that iteration happen? Small little bite-sized micro-actions, I call them, like small little micro-actions at a time. It’s the same, like, I don’t know why we got this wrong. Like to me, it’s like, go run a marathon. How about you climb a mountain? Like we all say the same things, one step at a time, right? Can I do the next step? We all say the same things. And then when we go to planning, like, “Oh, let’s build the whole thing.” Nobody does this anymore. We do agile software development, because we don’t do waterfall, right? The lean startup world, like everybody else has caught on to the idea. Well, where does that, where is that going to happen? It’s going to happen in conversations, right?
Reese Harper:
I think that’s the best place for it to occur. So as we looked at our design, I was always joking about this with my CTO, but I just said, what I want to do is I want to get a person to enter one data point. And the minute they enter one data point, that’s when the planning begins. Planning begins…
Carl Richards:
Like BJ Fogg used to say at Stanford, Tiny Habits, his book, like floss one tooth.
Reese Harper:
Yeah.
Carl Richards:
I know, I’m not asking you to floss, would you just floss one tooth? Yeah. Right, because of course, like we all know what happens.
Reese Harper:
Yeah. And I think if, you know, that’s the beauty of what we’ve tried to create at Elements is by clicking a button, we’ve created an onboarding flow on mobile that within five minutes, someone can populate their family information, their income estimate, their spending estimate, their asset estimates, connect accounts, create a net worth statement, give you a sense of where cash flows at, give you a sense of where their asset allocation is, especially at a macro level. There’s just so much you can, when you have a completed scorecard with Elements, you’re ready to have a conversation that could go any number of directions. I mean, you can go down values and purpose, you can choose to go after a functional point of reference that’s really glaring, like your liquidity is super low, or it looks like your savings rate, like best case scenario, we’re looking like at a 4% savings rate, do you feel stressed right now from a cash flow perspective, it looks like your debt to income ratio is super high, like you can, you have so much more power because the analysis has been done by the scorecard to surface to you the places, the opportunities to jump into a deeper conversation.
Reese Harper:
And you can do that with a prospect, you can do that with a client. And there’s, what we were trying to do is say, I mean, honestly, it’s an ambitious goal, really ambitious goal, but I was trying to say, could we 5X the number of clients we service by essentially reducing the number of staff that are doing really manual labor kind of data entry jobs to get me ready for appointments. And can I just say, well, that role doesn’t need to exist, maybe I could turn them into a financial planner. Could we service more households? Could we go from a 100 to 300, but not drop quality, could quality still stay super high, but increase the volume and all we’ve tried to do is say, well, the real value is in the conversation. The real value is just in that moment of conversation to make that next decision. So why don’t we eliminate everything that we can prior to that moment so that when they come to an appointment what’s their job? Make sure the scorecard’s up. Make sure the scorecard’s up to date and we get into conversation.
Carl Richards:
Quickly.
Reese Harper:
You wanna become a client, fill out the scorecard and I’ll let you know what your price is gonna be. You wanna get started and know which business model to pick from in our services, fill out your scorecard and I’ll tell you which one you’re best suited for. I’m at a seminar and I wanna do an event. I’m gonna put my QR code up on the screen and get people to fill out that scorecard at the seminar. And in conversation right there, I’m gonna say, does anyone have any questions about their scorecard? I’d like to answer them right now. Okay, you filled yours out, let me look at it. And it’s just amazing to get right into the conversation as opposed to being like, well, the first 17 steps are gonna be on a PDF, I’m gonna send you over and good luck on that. It’s gonna take you about seven days.
Carl Richards:
24 months and broker statements.
Reese Harper:
You know, to get me all this data and then you’re gonna talk to my assistant and you’re gonna schedule time and we’re gonna come into the office and do your first meeting. I’m just telling you, that business model has about two years left on it. I mean, it’s not, for the Gen X, for the Y and Z generation in particular, like that business model is done. If they can look online right now at Robinhood or they can look online at Vanguard Advisor Direct or they can look at Wealthfront, we all know that these platforms have had their struggles and Elements is a product of those having a struggle. I mean, we wouldn’t be alive right now if ROBO was working really well. ROBO is, you know?
Carl Richards:
Yeah. And it’s not gonna work.
Reese Harper:
It’s not gonna work.
Carl Richards:
But it’s introduced the idea…
Reese Harper:
But it’s introduced the idea, it’s faster.
Carl Richards:
There’s a better way to do all that functional stuff.
Reese Harper:
It’s faster to get the functional done. They just think that.
Carl Richards:
So I can have a conversation.
Reese Harper:
They just wanna, they want answers.
Carl Richards:
Yeah.
Reese Harper:
And I just think that advisors are in the best position to give the answers to those questions.
Carl Richards:
Totally. Through conversations, quickly.
Reese Harper:
Through conversations, we just are designing a software platform that helps us get into conversations much faster. And avoid the conversations that are not the right ones to have yet. Like avoid the overly in-depth technical conversations that you know are coming. But you got a lot of groundwork to get to first.
Carl Richards:
Yes.
Reese Harper:
We got a lot of information. We got a picture, a holistic picture we’ve got to paint before we wanna go down a rabbit’s hole. And so this just lets us stay at that conversation level as we decide how to sequence the client relationship.
Carl Richards:
Totally. Amen, my friend.
Reese Harper:
I’m loving this. Well, thanks again, Carl, for tuning in and coming to be a part of stimulating these conversations. You’ve got like really good insights and I appreciate you listening like I have some too. It’s nice.
Carl Richards:
It’s been super fun.
Reese Harper:
Thanks a lot.
Carl Richards:
Amen, Reese, thanks.
Reese Harper:
Carry on.
Carl Richards:
Yep.
Abby Morton:
Next time on Elementality.
Reese Harper:
When you have a completed scorecard with Elements, you’re ready to have a conversation that could go any number of directions. I mean, you can go down values and purpose. You can choose to go after a functional point of reference that’s really glaring, like your liquidity is super low. Or it looks like your savings rate, like best case scenario, we’re looking like at a 4% savings rate. Do you feel stressed right now from a cashflow perspective? It looks like your debt to income ratio is super high. Like you can, you have so much more power because the analysis has been done by the scorecard to surface to you the places, the opportunities to jump into a deeper conversation.
Carl Richards:
Yeah.
Abby Morton:
To find out more about Elements, go to getelements.com slash demo. Elementality’s executive producers are Reese Harper and Carl Richards. Elementality is produced by Tad Henderson and directed by Abby Morton. Have a good one.