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Talking With Your Clients: The Origins of Elements

What do baseball cards, consistent tracking of net worth growth, and the frequently asked client question, “Am I doing OK?” have to do with the evolution of the Elements Financial Monitoring System? As an advisor, you could ask a client hundreds of questions about their finances. How did those questions get narrowed down into a series of indicators that help tell you how healthy a client is financially—and what kind of progress they’re making in key areas?

On this episode of Elementality, Reese talks to the clients of his RIA, Dentist Advisors, about the fundamental ideas that sparked Elements development. As the industry moves beyond traditional planning, it’s a unique look back at the origins of the innovative system that’s changing financial planning.

 

 


Podcast Transcript

Reese Harper:
We went through that process for several years of figuring out what are the real key indicators that we’re going to use that measure someone’s overall financial health. And we had several versions of visuals and charts and graphs that would measure these things. And it wasn’t for a few years that until it finally kind of came together where we had this idea of a periodic table. And I think there was a lot of different visuals that we could have gone with. I think a lot of it had to do with wanting to see a lot of information in a small area.

Abby Morton:
Hey, Elementality listeners, it’s Abby. To help you better understand Elements and its origins, we’ve chosen another episode from the podcast at Reese’s RAA, the Dennis Money Show. During the podcast, Reese and his co-host, Ryan Isaac, discuss what led to the development of Elements, a fascination with data, and how to apply it more successfully to financial planning, frustration with not having a good tool to track client networth over time. And how the client question, “How am I doing?” played a central role. When you get to know its origins, you’ll have a more in-depth understanding of what Elements can do for your firm as you use it to monitor client financial health. Enjoy.

Ryan Isaac:
We’ll start with a story though.

Reese Harper:
Yeah.

Ryan Isaac:
My story.

Reese Harper:
Yeah. It’s kind of both of our stories.

Ryan Isaac:
I was gonna say, I think that you’ve experienced the same thing.

Reese Harper:
Yeah. So let’s… Do you want to tell it or do you want me to tell it?

Ryan Isaac:
I want you to tell it.

Reese Harper:
Okay.

Ryan Isaac:
I feel like…

Reese Harper:
Well, look here…

Ryan Isaac:
I wanna hear your version of it. [chuckle]

Reese Harper:
So let’s just say I go into the doctor’s office, just my primary care physician, okay?

Ryan Isaac:
Good guy, gal.

Reese Harper:
I tell him what my problem is. Okay? Now there are two options that he has. He can test my blood pressure, look at my BMI, maybe do some allergen testing, or run a variety of blood tests to verify what I’m saying. He could take some MRIs. He could take some X-rays.

[chuckle]

Reese Harper:
He could put… He could take a lot of diagnostic tests to just verify.

Ryan Isaac:
Spend some time.

Reese Harper:
Spend some time on verifying what I’m talking about.

Ryan Isaac:
Get under the hood a little bit.

Reese Harper:
Yeah.

Ryan Isaac:
Okay.

Reese Harper:
Or option B, he could just listen to what I say and then take me at face value. [laughter]

Ryan Isaac:
You bring him the data.

Reese Harper:
Yeah, and then prescribe a treatment plan without running any diagnostic testing. Just like if I say I have a real bad stomach problem and I need medication to help me process my digestive issues, then he’ll just gimme the medicine.

Ryan Isaac:
It feels like, doc, when I eat cookies all the time and tons of chocolate milk, which is my…

Reese Harper:
That’s your issue.

Ryan Isaac:
Which is my issue.

Reese Harper:
That’s your issue.

Ryan Isaac:
I love my chocolate milk.

Reese Harper:
So let’s say every time I have a problem with Dr. B, the only input into my situation that they really have is what they observe from what I’m saying and what I’m talking about, and that’s where the diagnosis comes from. But what if the problem is something they can’t see, right? Or…

Ryan Isaac:
Something you don’t even know about it.

Reese Harper:
Something I don’t even know about. Or…

Ryan Isaac:
Yeah. Or you’re getting wrong or you’re misunderstanding something. It’s possible.

Reese Harper:
Yeah. ‘Cause it’s not really my area of expertise, strangely enough.

[laughter]

Ryan Isaac:
It’s possible.

Reese Harper:
Human anatomy and o chem and such was not a real high interest for me during my collegiate days. But they just take me at face value and give me the diagnosis.

Ryan Isaac:
Now, when you’re saying this, ’cause I’m thinking about some of my own experiences in dentists or doctor’s offices where one of ’em does seem faster and maybe cheaper. I’ll just walk in and tell you what’s going on and hurry and get me a treatment. It seems like I get out of there a little bit quicker. I don’t spend as much time in the…

Reese Harper:
Yeah. You go in. You’re just gonna go into your general dentists office and you’re gonna be like, “I need a root canal on this one.”

Ryan Isaac:
I’m not gonna tell him there. I’m…

Reese Harper:
On this root. Just go for it.

Ryan Isaac:
Just get it done.

[laughter]

Ryan Isaac:
Can you just get it done? And I just saved us some time, now you don’t have to take those X-rays. You don’t have to send anyone in.

Reese Harper:
So this is is the general problem of financial planning. Okay?

Ryan Isaac:
And health, I would say, it’s probably…

Reese Harper:
And health.

Ryan Isaac:
It’s pretty, pretty…

Reese Harper:
This is the problem when it comes to getting advice, if you’re getting advice from anyone, could happen in… I’ve seen it happen in home design, I’ve seen it happen in health and wellness, almost any medical career. I’ve seen it happen in consulting all the time. Business consulting, practice management consulting, where prescribed treatment comes really pretty quickly without a lot of diagnostics or research or testing or measuring or sampling…

Ryan Isaac:
Business owner engages a consultant, says, “Here’s the five problems that you need to fix.” We just fix ’em.

Reese Harper:
Fix ’em, and whoever quotes me the lowest cost, sometimes…

Ryan Isaac:
And the fastest, just get to work and…

Reese Harper:
Get to work and just get it done. And that happens all the time.

Ryan Isaac:
But the problem is that those five problems might not even be the real problem with the business.

Reese Harper:
Exactly. You get advice, and the data that people collect, the questions they ask, they’re just really surface level. And so in order to get to a… The recommendations that are the best for you, they never have time ’cause they don’t get enough information. And so I think this is why we kind of decided to create a series of, number one, a bunch of questions and several statistics and ratios that we measure, and the system that we call the Elements. Like how it came to be was some of it was based on this. I’m just gonna ask you though, to go back in your memory, if you can and say…

Ryan Isaac:
The archives. The mind palace.

Reese Harper:
First, define the Elements. If you just had to say in simple terms, what are they, what exactly are the Elements?

Ryan Isaac:
Yeah, it’s how we would define financial planning. People ask that question all the time. What are the Elements? It’s how we define financial planning. More specifically, it’s just, it’s a series of indicators that tell you how healthy you are financially. And what kind of progress you’re making in specific key areas.

Reese Harper:
So you could compare it to taking someone’s blood pressure, X-rays, measuring someone’s periodontal disease, measuring how much, how many millimeters of recession they have on a molar. There’s just a lot, there’s these specific ratios that we know that they don’t indicate necessarily… I’m gonna add something to what you said.

Ryan Isaac:
Yep.

Reese Harper:
Not necessarily indication of financial planning, but maybe someone’s financial health.

Ryan Isaac:
Health. Yeah.

Reese Harper:
Like someone’s overall…

Ryan Isaac:
Did I say health?

Reese Harper:
You said planning.

Ryan Isaac:
I said planning. I thought I said health. Alright.

Reese Harper:
It’s okay.

Ryan Isaac:
Oh, let’s edit that. So I say health the first time.

[laughter]

Ryan Isaac:
Yeah, yeah, so it was overall financial health. And more than how healthy are you now, but how healthy were you a year ago, and based on progress you’re making or not making, how healthy are you gonna be in the future? ‘Cause that’s really what people wanna figure out.

Reese Harper:
Yeah, and I think that’s what you want out of your doctor, it’s what you’re hoping to get out of your… Any kind of professional advisor, is some kind of frame of reference for where you’re at now and where you have been and where you’re going, so that they can give you the right kind of advice to take the next step, so let’s talk a little bit about… Now, jogging your memory of how the Elements started, how they began. If you can think back of before we even called them the Elements, what was happening that kind of… What do you remember about what we were going through that made me kind of feel like we needed something or what was going on there?

Ryan Isaac:
I remember two specific phases, the first was, and this is probably nine years ago, I remember preparing manually by hand quarterly reports every three months, and there was a list of probably, I don’t know, maybe 20 or 30 questions, these things were tedious to do, we’re making them in Excel and Pages on Macbooks, but what we we are trying to do is let’s… You were saying, let’s take a balance sheet, what is this person worth today, and let’s compare it to what it was three months ago in all the categories, and we’re trying to compare categories like liquidity. Are we more liquid or less than we were three months ago? Or what is the practice worth or based on what did it collect in the last three months? We were comparing categories of a balance sheet. And then we were asking questions about those categories, like what did they spend in the last three months and what would happen if they just decided to stop working today? Could they last very long on these different categories in the balance sheet? Do we have cash or we would have to sell things? We gotta sell the house? We’re asking a lot of just comparison questions with net worth and progress and net worth, that’s the first thing I remember, and it was kinda crazy to try to… [chuckle]

Reese Harper:
Why do you… What do you remember about why it happened? Do you remember anything about that? ‘Cause we weren’t doing… We were doing financial planning kind of the traditional way, which when we first started, someone would come in and we’d design a plan, we take all their information and put it into a bunch of software programs and then kind of…

Ryan Isaac:
Build some portfolio, save some money here in these places, pay down debt this way, save for our taxes this way.

Reese Harper:
Yeah, I can remember in my head why I remember doing what we were doing, I’m just curious, in your head, do you remember what the stimulus was?

Ryan Isaac:
Yeah. Okay. I don’t know if this is what you’re thinking, but there’s been one question since right from the beginning that’s always stood out to me that has been fascinating, and it would come… It’s the same question and it’s with the same level of anxiety, and it comes from a brand new dentist making at the lower end of income, and it comes… The same question comes from a specialist, multi-location specialist making the seven figures upper end of personal income, and it’s, am I doing okay? Are the things that I’m doing, the sacrifices I’m making, all the decisions I’m making in the business, is it actually pushing me in the right direction? And I remember thinking how interesting that was to see very wealthy people ask that same question, is like new docs buried in debt for the first time, it’s like a negative net worth. And to me, I think that’s what I remember it starting is people wanted to just have some kind of closure. And not just emotional closure, but can we quantify this closure and show it to you contextually with numbers? That’s what I remember.

Reese Harper:
Yeah, well, I think that’s actually a good insight, good for me to hear that when I remember thinking back to… I remember going around to different… Because if you remember, when we started, when I left the previous firm I was at and started this, I was kind of frustrated with what was going on in the industry, that was kind of a big motivator for me, I was like, “I just… I hate how everyone’s being sold products and calling it a financial planning.”

Ryan Isaac:
And calling it planning. Yeah.

Reese Harper:
This isn’t planning. This is just salesmanship. And I remember being really surprised. I had to go and I did some research with maybe 30-40 different financial advisors, just calling people, asking them how they were doing business, learning about them, trying to just figure out how they were building their practices before I went and started this. And I remember thinking, “Okay, why is everyone saying they do the same thing? Everyone is saying they do financial planning, but it’s so different what that means to everyone. Shouldn’t there be some kind of standard measure of what’s healthy?” In dentistry you can say, “Well, this person has… They don’t have visible gum disease and they don’t have any decay, and there’s no pain and their bite looks good, and their overall total oral health appears to be objectively in good shape. Saliva testing is normal, whatever,” there’s all these things you can do to quantify, and it’s because the industry’s been around for…

Ryan Isaac:
Or if you say I went in for my six-month check-up with my dentist, you kind of… You know what that means.

Reese Harper:
Yeah, you know if you’re good or not.

Ryan Isaac:
You know what you’re doing when you do that.

Reese Harper:
Yeah, and you know what that entails, right? But I just… I was surprised that when someone says…

Ryan Isaac:
I’m doing planning.

Reese Harper:
Yeah, I’m doing financial planning, what does that mean to you? And different financial advisors would have so many different ways that they would say, “Yeah, I’m a financial planner, it says it on my card and we do this or we do this,” and usually, everyone will agree on… Let’s say everyone will agree that you should save money.

Ryan Isaac:
Yeah.

Reese Harper:
Okay. And that’s usually the extent of what I was finding, is people would be like…

Ryan Isaac:
Spend less and save more. Yeah.

Reese Harper:
We’re saving money. Okay. Well, is… Everyone says they’re saving money. So what’s savings? How do you define savings?

Ryan Isaac:
Yeah.

Reese Harper:
Are you saying savings is just money you put into a 401k? Or what if I paid down my mortgage with extra money that I had, does that count? Or what if it just piled up inside my checking account, does that count?

Ryan Isaac:
Or I knew I was gonna buy a building in two years and I needed a down payment.

Reese Harper:
So I saved it up in this money market fund and then put it towards that building, is that savings? And every one of the financial… Most of the financial advisors would all quantify this very differently. There was never a standardized way of measuring it. And so when you have client A and client B that you’re talking to and they both say, “Yeah, we’re saving money for retirement. We’re maxing out our retirement plan and we’re… ”

Ryan Isaac:
Yeah.

Reese Harper:
You don’t really know… You just kind of have to take it at face value and be like, “Oh, great. Well, I guess there’s nothing to do then.”

[laughter]

Ryan Isaac:
Yeah.

Reese Harper:
Like if you’re telling me things are great, then it’s just great.

Ryan Isaac:
Yeah.

Reese Harper:
And I just remember getting really frustrated with these same questions. It’s like with debt, with insurance, with estate planning, with savings, with spending, with taxes, with business profits, with the size of your practice, with how much you should put into each place. I remember we went through that process for several years of figuring out what are the real key indicators that we’re going to use that measure someone’s overall financial health. And we had several versions of visuals, and charts, and graphs that would measure these things. And it wasn’t for a few years that until it finally kind of came together where we had this idea of a periodic table. And I think there was a lot of different visuals that we could have gone with. I think a lot of it had to do with wanting to see a lot of information in a small area.

Ryan Isaac:
Yeah.

Reese Harper:
For me. I didn’t want to have to go through…

Ryan Isaac:
What did you always use to call it? The baseball card?

Reese Harper:
Yeah, the baseball card.

Ryan Isaac:
I don’t know if you were… I never asked if you big in trading, when you’re… You always would say, “Can’t a financial advisor just open his phone or his laptop or iPad and just see like a baseball card. There’s the client’s picture, some basic data and then some numbers.” Like a baseball card stats.

Reese Harper:
Yeah.

Ryan Isaac:
Can we just see a dentist stats below his picture and know how he’s doing in these different areas?

Reese Harper:
Yeah. And I think that… You’re gonna be excited ’cause we’re gonna have that within the next year.

Ryan Isaac:
We’re still building the actual…

Reese Harper:
But I think the numbers finally started to come into a shape that this idea of a periodic table made sense because you could create different rows of relationships. You could have different columns of relationships. You could group things in like, this section is kind of similar.

Ryan Isaac:
Subatomic.

Reese Harper:
Yes.

Ryan Isaac:
Yeah. Financial health and…

Reese Harper:
And it just started making sense. I think initially we had like 30-40 of these numbers.

Ryan Isaac:
Well, they were in a checklist. The version before this was years ago, but we’d sit down at client meetings and there would be a four or five page checklist with about 100 questions.

Reese Harper:
Yeah.

Ryan Isaac:
That we’d go through quarterly with someone or more frequently.

Reese Harper:
Yep. It was. There’s a big, long, long checklist.

Ryan Isaac:
And it was hitting everything, but it was still too messy.

Reese Harper:
Yeah. And it was too much for people to digest. And eventually, we got to the point to where I think we could summarize it. We summarized it down. And instead of saying, “Let’s show them 100 things.” We decided, let’s focus on kind of at a high level, showing them the most important things that really need to be measured, the most important things. And then beneath the surface, there’s those hundred questions still exist.

Ryan Isaac:
Yep.

Reese Harper:
But we’re gonna show them at a surface level what are these most important factors. And I guess that’s what the Elements was. It’s basically turned out to be 12 ratios that measure the most critical parts of someone’s financial health.

Ryan Isaac:
Yep.

Reese Harper:
And they kind of answer four main questions. The first one you said is too high level, but that’s what everyone asks, right?

Ryan Isaac:
Yeah.

Reese Harper:
Which is, “Am I okay?”

Ryan Isaac:
Am I okay? Yep.

Reese Harper:
Am I doing okay? Am I heading in the right direction?

Ryan Isaac:
Yeah.

Reese Harper:
I think what we found is, if you list all the questions that people have, they can be summarized usually into these four parent questions. And one of them was how much wealth or how much money do I need before work is optional? That was kind of the…

Ryan Isaac:
When can I be done?

Reese Harper:
When can I be done? Even if I don’t want to quit, when is work optional for me?

Ryan Isaac:
Yeah.

Reese Harper:
The second one that the table kind of answers is, do I have the right mix of assets?

Ryan Isaac:
Or yeah. What’s it gonna look like when it is optional? Where am I gonna pull money from? And where’s it gonna come from? Yep.

Reese Harper:
Yeah. Well, am I putting money in the right places? Should I have more real estate? Should I have more practice equity?

Ryan Isaac:
Yeah. Am I imbalanced in any of these areas? Yeah.

Reese Harper:
Yeah.

Ryan Isaac:
And the four areas that we measured, that we found were the primary four areas were practice value and practice equity in any other business equity people have, real estate and real estate holdings. Those are two. And then retirement plans, like your 401k and your defined benefit plan and your pension.

Reese Harper:
Stuff that has to be taxed later, has a penalty if you take it out too early.

Ryan Isaac:
And then the fourth one was all your liquid stuff.

Reese Harper:
Yeah. Liquidity.

Ryan Isaac:
And so those, your cash, your after tax investments, some of you have money inside of annuities and retirement plans and life insurance policies that have already been taxed. Those are all in your liquid category. And so, ultimately, actually annuities are not in your liquid category. I misspoke. Annuities are gonna be in your qualified category. Even though they’re not really technically a qualified plan, that you still get stuck with ’em and you can’t touch ’em until you’re 59.

[chuckle]

Reese Harper:
Yeah.

Ryan Isaac:
That’s another podcast for another day about how we feel about that. But those four general categories are the essence of what most people ask about in their financial planning. They don’t verbalize them this way. It starts with like, “Am I doing okay? What do you think? What’s wrong with my situation?”

Reese Harper:
Yeah.

Ryan Isaac:
But they…

Reese Harper:
They get more granular. It does get in the weeds, yeah.

Ryan Isaac:
Yeah. So let’s jump into what these… What are the questions that the Elements answer a little more specifically?

Reese Harper:
More specifically.

Ryan Isaac:
Well, let’s take a common one from our industry that everyone has, it’s life insurance. Everyone has life insurance or should, most people should. And it seems like this would be a really easy question to ask, but if you ask anyone who owns life insurance, you ask them, “How much do you own?” And if you ask them, “Why did you pick that amount? If you have two million bucks of life insurance, why two million dollars?” Most people… Here’s what normally happens with life insurance, is either you own about as much as you’re comfortable spending on per month, however far the person could push you to spend every month, or you just kinda pick an arbitrary number that seemed pretty big. Most of the time, if you said you’ve got three million dollars of life insurance, that would seem crazy for the average person. I don’t need to die with three million dollars, [chuckle] what am I… Who am I trying to leave money to? But for a dentist, that might… Hundreds of thousands of student loans and you can have a million bucks in practice in business debt besides your mortgage and other debts, that might not even cover it. So one of those questions would be, how much life insurance should I actually have so that if I died, my family just kinda can continue life as normal, at least from a financial perspective.

Reese Harper:
Yeah, and that’s not a one-time number, right?

Ryan Isaac:
When does that change? It changes every time your spending changes, your debt changes, your assets change, your networth changes.

Reese Harper:
It changes every day, because as you get deposits in your checking account, leaving or coming. [chuckle] Technically, there should be an exact amount that you’re…

Ryan Isaac:
Based on a second… Yeah.

Reese Harper:
Be using as a standard that you’re measuring for, and that’s a big difference between what a good financial plan does and what a average financial plan does, is it’ll measure… It’ll quantify the specific issue that you’re trying to decide on, rather than leaving it up to… Or a subjective decision that you make every time you think about it.

Ryan Isaac:
Yeah, and the crazy thing about something as simple as life insurance too is not only is it usually a number that’s kind of guessed at, but it’s done once and then left in place for a really long time, and it could be very incorrect five years later or one year later.

Reese Harper:
Yeah. Yeah, it could be super incorrect. If you add more debt or if you paid down a lot of debt, or if you earned a lot of money and have a lot more liquidity than you used to have.

Ryan Isaac:
Or you spend more than you used to.

Reese Harper:
Yep, and so… That’s just one example, but that would fall under that fourth question, are you taking the right amount of risk? We talked about the four questions: How much wealth do you need to make work optional? Do you have the right mix of assets? Is your income going to the right place?

Ryan Isaac:
Where’s my money going? Yep.

Reese Harper:
And are you taking the right amount of risk? Those are kind of the four main questions. But underneath those, there’s hundreds of questions that are grouped into those four primary questions. And the life insurance question is one of them, you have questions about, the same rigor would go into how to calculate disability, how to calculate malpractice, how to calculate liability insurance, how to calculate every type of insurance policy. Insurance shouldn’t be a subjective decision you’re making year by year. That’s why we’re so passionate about a detailed process around financial planning.

Reese Harper:
Basically, each of these elements measures something really concrete, like taxes, like risks that you’re taking in your investments. It measures things like your liquidity and your retirement plan contributions, your practice profitability. How much money you’re putting towards real estate and debt reduction. All of these things that we’ve measured, we know that they’re the questions, they’re these hundred… The original hundred-question list that we had, we know that they’re the core of what really drives someone’s net worth growth. And these elements just compare, they create a ratio and they compare you to people that are just like you in your… Someone in your situation. So that we can give advice that’s really context-specific. How has this helped you in your practice working with all the dentists that you work with? How is doing financial planning this way, how has it help you?

Ryan Isaac:
Yeah. It’s so many conversations, man. I was just on the phone this morning with somebody who’s… I don’t wanna be too general about it, like you said, it’s such a high-level question, like, “How am I doing? Am I okay? Are my headed in the right place?” But having actual closure to that question is… It just feels so good. I’ll give you two conversations, one was last week with single location, one doc, private practice office, in mid-career, doing pretty well, but really kind of wondering, “Can I… When am I gonna retire or when can I just not have to work?”

Reese Harper:
When’s work optional for me?

Ryan Isaac:
Yeah. And is all this worth it? I’m in a lot of debt. I bought a building and I’ve invested a lot in equipment, and I pay people well, run a good business, spend a lot of marketing, and is this paying off? Versus a conversation I had just this morning with someone who’s part of a large group practice and will probably have a large exit one day and get a big piece of money for his equity stake, and he sounded, he needs… He’s having to defer income right now. And he’s wondering, “Should I just be that solo doc guy? Should I just go be that because I think this is gonna be worth a lot one day, but I have no idea if it’s worth it? And I know I’m giving up income now to be part of this big group and I’m having to defer this.” And so, two very different situations, two people that can and probably will end up just fine. But they don’t know, despite all the years of school and the money and the debt and the hard work and the sacrifice, they don’t know if the choice they made is pushing them to the destination they wanna be in. So just providing a little bit of context, just some numbers, not take the kind of trade, take some of the emotion out of it and just provide some numbers, you are half way to retirement.

Reese Harper:
So what was the… What was that solo doc, do you remember in your head, what the closure was that he got from the conversation?

Ryan Isaac:
Yeah, it was we quantified what we call a Total Term, so we talked about this before, it’s… Total Term is a measure of how many years could you live on your net worth, and there’s kind of a magic number there, the way the math works out. If you can hit about a 30, which means 30 times what you spend in a year, you have in net worth, if you can hit that point, you’re probably pretty close to being financially independent indefinitely. So we kinda roughly calculated that for him and explained the concept behind it and showed him that he’s mid-career and he’s a little bit past the halfway point of that 30 TT.

Reese Harper:
So he’s like at a 15 or a 16?

Ryan Isaac:
Yeah. And to have him understand how much progress he makes in one year, in one given year, compared to what the average dentist can make in one given year. And if he’s got 14 points left that he’s gotta make up in that score and he’s moving at an average of 1.2 per year, he’s gonna be done sooner than he thought and wealthier than he thought. But he had no clue. And so, just being… And that took 10 minutes.

Reese Harper:
But it’s the fact that you had that database that you could reference and go, “Well, this is what I’ve seen happen in your situation. And then here’s some… This is where you’re at, and I can compare that and kind of… ” Without the context though, imagine if you were not working with just dentists. Imagine if you’re working with 25 different occupations, and this person called you and asked you these same questions, and you didn’t have this element structure behind you. What would you do if you didn’t know? Well, can you think back to like, what do you think the average financial planner does in that situation?

Ryan Isaac:
Well, I know what our industry does. If it’s a money manager that you’re asking this question to, they’ll answer it with a pretty complex set of helpful tools and software that’ll project what they feel like a stock market’s gonna do, what returns and withdrawals are gonna be and they’ll say, “In 30 years you have between a 70% and 93% chance of having enough money to live indefinitely.” And it should be between these ranges based on this series of possible stock market data. It’s kind of like just a really big general projection. It’s not specific to their situation.

Reese Harper:
And it’s based on, then you have to talk about inflation and how inflation affects that. And then it just gets overwhelming real quick.

Ryan Isaac:
It doesn’t answer any questions. To tell someone, “If you sold everything you have today and paid off all of your debts, you could live for the next 12 1/2 years,” it’s not enough. They at least get some closure to feel like, “Oh, that makes sense.”

Reese Harper:
I think the point we’re highlighting here is, financial planning really needs to be quantified, and I think that’s where this whole… I guess the summary of the podcast is kind of like, “Don’t assume anything about your finances until you’ve quantified them, measured it, compared it. And someone like us, someone who is not going to just sell you a bunch of financial products needs to be able to bring some perspective to the table to give you the right strategic direction.

Ryan Isaac:
Do the X-rays, do the cleanings.

Abby Morton:
Next time on Elementality.

Ryan Isaac:
The challenge is we all want to help. And so the moment that something shows up, so a perspective client comes in, sits down. The moment they mention anything that we can help with, we want to jump in there. Michael Bungay Stanier, who goes by MBS. He’s a coach, and he says that he calls it The Advice Monster. The moment there shows anything we can help with, the Advice Monster comes out and we just wanna give advice. And he suggests, “Just stay curious a little longer.” Curious now, advice later.

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.

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