The path to financial security is never linear. The choices that face every traveler are unique, and unforeseen circumstances make every journey different. No matter their age, lifestyle, or the occurrence of life-altering moments, each person wants to know “Am I doing OK?” as they pass through the twists and turns. And they are looking for guidance from someone who can provide the answer to that question.
On this Elementality, Reese and Carl explain the reasons why today’s consumer wants help assessing and then monitoring their financial vital signs as they progress along their financial journey. And they explain why Elements is the ideal tool for measuring financial vitals and determining if the road ahead is secure.
Podcast Transcript
Reese Harper:
Targeting the financial advisor when I say this and go, if you feel like you’re trying to get people to buy into you as a value, they’re gonna relate more to you saying, Hey, we look at everything and we try to identify when things are out of whack, we just keep looking at things. The word monitoring says that better than the word planning, I think planning is just become this event-focused thing. When you do a plan, a plan isn’t like… We have to quickly qualify it with monitor the plan, we don’t even get to just say planning, we have to say we have to monitor the plan to really have ongoing value. If there’s no monitoring, there is no ongoing value.
Abby Morton:
Hey, it’s Abby. Looking for a way to demonstrate your full value and get more clients. Elements is here to help. In fact, we’re so confident we can help, we’ll Will guarantee it. That’s right. Starting today, if you sign up with Elements and don’t get a new client in the first 90 days, we’ll refund your money, don’t wait, act today, go to Getelements.com/demo, can’t wait to hear from you.
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 here and Reese Harper, we’re still having this conversation around the way.
Reese Harper:
Love it.
Carl Richards:
Yeah.
Reese Harper:
Yeah. This is one of the… This is one of the 10 most important things we want you to know.
Carl Richards:
Nine or 10.
Reese Harper:
Or 13.
Carl Richards:
Something like that.
Reese Harper:
We’re gonna have to see.
Carl Richards:
Yeah, we’re gonna have see.
Reese Harper:
Right now, we’re looking at the… We want you to go back to the beginning, if you have not, and make sure and capture these in order, they really build on each other, so it’s nice…
Carl Richards:
Yeah. For sure.
Reese Harper:
To catch that if you can.
Carl Richards:
For sure. So talk to me, you’ve been really intentional, in fact, there’s one place in Elements where we have financial planning and we have planning crossed off and we have the word monitoring. You’ve been really intentional about this use of the term monitoring. What does that even mean? What are you talking about Financial monitoring? And especially as it’s like the new value proposition.
Reese Harper:
Well, I’m excited to hear what you have to say about this too. I think the modern consumer is shifting their expectation of what their, get it… What they want from their professional, it isn’t kind of an event, it’s not a transaction, it’s not a plan. I think they actually want a relationship, they wanna buy a relationship, and what do they want that relationship to do? I don’t think they would say the word monitor. I don’t think they would say the word plan, they’ll say whatever we tell them to say ’cause they don’t know what they want. What they really want, if you ask them, they’ll say, I want to find someone like Carl to help me. I want to have…
Carl Richards:
I want to know how I’m doing?
Reese Harper:
I wanna know how I’m doing? So I wanna talk to someone to tell me how I’m doing.
Carl Richards:
Yeah. Yeah.
Reese Harper:
I wanna know if I’m okay. You know, I hear that a lot.
Carl Richards:
Yeah. Yeah.
Reese Harper:
And in order… Like I think I use the word monitor, because I think it more precisely describes the function of what the client actually wants. They’re not hiring you to plan, they’re hiring you because this job of organizing all their info, financial information and thinking about it, updating things, identifying when they need to do something, they don’t wanna miss things, that’s really… They don’t wanna miss anything.
Carl Richards:
Yeah.
Reese Harper:
And monitoring, to me, starts to get closer to describing what it is that you’re going to do. To monitor, is just to kind of constantly be looking, to be watching for discrepancies, to be watching for things to get out of whack and check in, and I think that’s what Financial planners do, that’s what they do. They create checklists. They do review meetings. Even in the financial planning process, I think it’s, Step seven is monitor the plan.
Carl Richards:
Yeah. Yeah.
Reese Harper:
I’m like, okay, so now we got two things happening, did the client want us to monitor the plan, was the plan ever that important, they want us to monitor their finances, they want us to monitor the things they’re worried about. So I just, I use this not as like, you’ve gotta use the word monitoring, make sure and change all your marketing copy. I’m more targeting the financial advisor when I say this and go, if you feel like you’re trying to get people to buy into you as a value, they’re gonna relate more to you saying, Hey, we look at everything and we try to identify when things are out of whack, we just keep looking at things.
Carl Richards:
Right.
Reese Harper:
The word monitoring says that better than the word planning. I think planning is just become this event-focused thing, when you do a plan, a plan isn’t like… We have to quickly qualify it with monitor the plan, we don’t even get to just say planning, we have to say we have to monitor the plan to really have ongoing value, if there’s no monitoring, there is no ongoing value, so planning inherently just doesn’t carry the sense to the client of like, You’re gonna be here with me forever. It’s like, you gave me a plan, do I have to do the plan? Do I have to implement like, do I have to go make the plan happen. Like, Who is in charge of the plan?
Carl Richards:
Yeah.
Reese Harper:
I don’t wanna hire a person to make a plan, I kinda wanted to get someone to be there with me forever, and you’re like, Oh well, that’s what you’re getting with a plan. If I had plan from us and we’ll be here with you forever, it’s just confusing Language and it oriented from a time where we actually were selling plans and not do anything after that. Like…
Carl Richards:
A plan was a product.
Reese Harper:
It was. And it was a very successful product for a short period of time, like five, seven years.
Carl Richards:
Yeah.
Reese Harper:
You know, in the early 2000s.
Carl Richards:
Well there’s still a whole bunch of people that are still doing that.
Reese Harper:
And charging a high margin for a deliverable to a particular part of the market that’s…
Carl Richards:
And then finding a new person to do it too, ’cause that person’s upset because of the plan to set in it on the desk, and I really think like, Look, financial plans are worthless without the ongoing process of planning, and what you’re pointing to is the ongoing process, calling it monitoring, and the other thing that’s really important here is that you gotta have something to orient yourself around to monitor, and this idea of…
Reese Harper:
That’s the bigger issue. Yes.
Carl Richards:
Financial vitals and the night and wrap them up beautifully in a scorecard. Like, when I go to the doctor, I wanna know what my vital signs are. I wanna know, am I Okay. Well, the first way we do this, we’ve gotta set up objective measures to just see are you in the range, and I wanna understand those pretty regularly. We see this in the health and wellness levels and also…
Reese Harper:
Yes.
Carl Richards:
To companies coming out where you can continuously monitor your health.
Reese Harper:
Yes. Are you gonna… Do you want someone to… When you’re wanting monitoring of your health, you’re thinking blood pressure, cholesterol, FEV and my lung capacity, you’re thinking like, How much can I bench? What’s my BMI? Like a watch that you plug on your arm, that somehow monitors all of these things for you automatically, that’s what you want, you just wanna plug in and have it tell you…
Carl Richards:
And then let me know if I’m outta whack.
Reese Harper:
Health… Let me know if I’m outta whack.
Carl Richards:
We call that in the planning… At least the other way I think about it is like actively looking for disconfirming evidence so that I can course correct micro instead of getting way outside of the range so that somebody’s gonna die.
Reese Harper:
Yes.
Carl Richards:
Right.
Reese Harper:
And Elements was more, this isn’t just a… This first little aside for a few minutes where I talked about the word monitoring is probably a secondary concern. The primary concern is how, what are you actually going to do on an ongoing basis to cost effectively identify where to course correct.
Carl Richards:
Yeah.
Reese Harper:
Like how do you know?
Carl Richards:
Yeah.
Reese Harper:
And that’s what Elements was. It’s like the, it’s the commitment both now and ongoing.
Carl Richards:
Yeah.
Reese Harper:
To continue to identify financial vitals that we can use to determine whether someone’s out of whack given their values and purpose.
Carl Richards:
Yep.
Reese Harper:
Right. And so if you, if your system, if your software doesn’t orient towards the monitoring of vitals or essential data points, then you have to have two separate systems. You have to have the planning system that generates some kind of deliverable to talk to the client about. And then inside of your CRM or inside of your spreadsheets or whatever, macros you’re gonna run, you’re gonna gonna have to monitor. Because you have to take the data from one place, create calculations to determine where there’s a problem and then determine how you’re gonna take action.
Carl Richards:
Or Just, or rely on the client to tell me. I remember how I would go, Hey, what’s changed?
Reese Harper:
Like why is that just, then who’s monitoring.
Carl Richards:
The client’s in charge of like telling me when things change?
Reese Harper:
They’re in charge of monitoring now. Now you’re really not doing the monitoring job. They’re doing the monitoring job. Assuming, well you’re really asking them if they’ve…
Carl Richards:
If there’s anything you should be monitoring.
Reese Harper:
And they’re like, well I wouldn’t know ’cause I don’t know how to monitor whether am I Okay. I’m coming to you for that. And so this whole thing started with like, we don’t know how to define whether someone’s okay with data.
Carl Richards:
Yeah.
Reese Harper:
Now we’re getting closer. I’d say at Elements we finally created at least a core set of KPIs, a core set of financial vitals. We can actually identify when someone is outta whack. If I’ve got a 39-year-old, who’s been employed for five years and I can see that from the data, I can see that from Elements. I can see that their TT score is negative three. That’s an alarm bell. I’m just going, man, they’ve got a negative net worth. That’s a long ways for them to even get to break even. Something sad must have happened here in this situation.
Carl Richards:
Yeah.
Reese Harper:
Like the orthodontist I met that had over a million dollars in student loans, you know, and got really started late in his career. Like it makes sense why that is outta whack, but it also gives me a higher sense of urgency of why I need to reach out to that person and go, wow. Talk, let’s talk about how you’re feeling and let’s take the next action that will move you to a place of well-being the quickest. And so you have to define first the metrics. You have to define what to monitor. Net worth, pace of growth, savings rates, liquidity ratios, debt to income ratio, effective tax rate, income conversion. Like you have all these financial vitals that you can look at and then you gotta decide, I’m going to, in my sales process and my marketing process, I’m gonna talk about that value proposition. That I’m not just delivering you a plan, but I’m monitoring you and your overall financial health.
Carl Richards:
Yeah.
Reese Harper:
That just feels so much more relevant to today’s consumer than the one where it’s like, we’re gonna do a plan today then we get together and update that plan. It’s not even motivating anymore to like build a… If the plan means I’m going to tell you when you can retire, you’re gonna get a somewhat dissatisfied. They might say, okay, well if that’s what you say to do, but deep down that’s not what the consumer’s looking for.
Carl Richards:
Yeah.
Reese Harper:
They’re not looking to be told how things are gonna be down the road. They’re looking for someone to tell them what to do now. That’s the most glaring problem now. Like what now would you say to do next With me?
Carl Richards:
Yeah.
Reese Harper:
That’s more the, I think the interaction.
Carl Richards:
Yeah. And I think the really cool piece about that is it suggests rather than like carving a plan in stone.
Reese Harper:
Okay.
Carl Richards:
And then spending as much time as I can defending that outdated map.
Reese Harper:
Yeah.
Carl Richards:
Like I’m… This whole thing is suggesting that, like, Look, I’m a guide in a changing landscape, and I’ve actually got a map in front of me and I got the storm, I understand all this stuff, I know where to make small course corrections, it suggests that we’re gonna be looking for disconfirming evidence, we’re not gonna be running from it. When markets change or when something changes in your life or when the value of the business changes like, We’re gonna know that, we’re actively looking for that information because we don’t have it all right now.
Carl Richards:
And to pretend that we do is silly, this false sense of precision that we’ve had, that’s sort of pervasive in the industry, and everything about the teaching a new language, design matters, everything’s been very intentionally designed so that we can be really focused on that piece, that monitoring, now we’ve got something to monitor against.
Reese Harper:
Yeah. Totally. Well, I think that there’s benefits in all… Any conversation you wanna have with the client, I think there’s a lot of benefit. I just feel like the idea that we’re trying to get across to advisors less to clients, is that this feeling of monitoring is probably the thing they actually are hiring you for, they just… Imagine if you’re able to take the burden off of someone to where they’re like, Whatever system you’re running there, I just know you’re gonna catch everything, and you’re gonna tell me what we need to do, that’s really what they are hiring you for anyway, regardless of what software you’re using.
Reese Harper:
That’s why they’re hiring you deep down. They’re not hiring you to create a map, like you said, that you can defend, they’re actually wanting to be done with this burden of like, I’ve just got all this worry, I’m having to look at everything.
Carl Richards:
Yeah am I okay? Where am I?
Reese Harper:
“Monitor it.” And if you can, with confidence say, Look, if you’re just willing to download this app and keep your information up today, I can do a really good job of telling you when there’s a problem.
Carl Richards:
Right, I’ll be moderating.
Reese Harper:
That’s perfect. And that’s kind of the point of, I think why we arrived at discussing it that way and naming it that.
Carl Richards:
Perfect. Amen Reese.
Reese Harper:
Carry on.
Abby Morton:
Next time on Elementality.
Carl Richards:
And this is the confusion we have, like we think people want financial plans, nobody does, I’ve never… I’ve actually never… And I went back in and thought carefully about this, ’cause I made this claim and somebody challenged me on it, and I was like, I’ll go back and look and sort of think carefully, nobody’s ever asked me for a financial plan. In 25 years I’ve never been asked for a financial plan, certainly never been asked for a wealth management plan, or can you build me a family office.
Carl Richards:
None of those things we think matter. What I have been asked over and over, this financial questions. They don’t have, need a financial plan, they need answers, they need a financial answer, and we get confused by that.
Abby Morton:
To find out more about Elements, go to getelements.com/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.