When a prospective client seeks out the services of a planner, it’s because their life has become financially complex. What they are seeking is guidance that can help them ‘make sense’ of their situation. Unfortunately, the language used by financial planners often seems like puzzling jargon that ends up confusing people.
On this Elementality, Reese and Carl talk about why Elements uses new terminology that is more relatable—and more motivational. The old planning language is based on a solitary event, the plan. Elements uses words that tell an ongoing story focused around financial vital signs. It’s a story that is easier to understand, easier to share, and leads to an enlightened agreement between an advisor and their client on a course of action.
Podcast Transcript
Carl Richards:
The barrier or the hurdle that it sometimes feel like, oh, this is a new language I have to teach my clients. Actually it turns out that you were either gonna teach them an old language.
0:00:11.7 Speaker 2: Yes.
Carl Richards:
That it wasn’t really serving anybody anyway and you were gonna sit there and try and explain it over and over and over and you weren’t gonna do a good job ’cause you’re not very good at it, no…
0:00:18.8 S2: It’s hard.
Carl Richards:
No offense. I think I’m really good at language and I couldn’t get it done and I had to draw it, right? And I think you.
0:00:26.7 S2: [chuckle] You had to draw pictures.
Carl Richards:
Yeah, I had to draw pictures.
0:00:28.7 S2: Yeah, that’s… It’s true. Yeah.
Carl Richards:
Things like in Pictographs it. And so now I think the other thing that new language showed up here is in the form of design like we talked about earlier. The, just the way it feels is a new language, and I think there’s something really powerful to that, like, well, this is fresh, this is new.
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 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 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.
[music]
Carl Richards:
Greetings. Carl Richards here, super excited to continue this discussion with Reese Harper.
Reese Harper:
Boom boom.
[laughter]
Reese Harper:
Welcome.
Carl Richards:
Boom boom. What?
Reese Harper:
It’s a new thing.
Carl Richards:
Okay.
Reese Harper:
It’s the new me 2023.
Carl Richards:
That’s perfect. Nice.
Reese Harper:
Boom boom.
Carl Richards:
Nice. We’re talking about the way, and one thing that I remember saying to you early when you were encouraging me to get involved in Elements. I remember saying to you, “This feels like a new language.” And now that I’ve talked to a bunch of our users, Elements advisors, we like to call them, I’ve heard that from them too. Like, “This feels a new language. We’ve been so steeped in projections and returns and Monte Carlos and simulations and assumptions and language that we were comfortable with, this feels like a new language.” And I know from talking to you that that was intentional, so help me understand that. Teach them a new language is what we’re talking about here.
Reese Harper:
Well, the underlying assumption I’m hearing is what… Why go to all of that effort? What’s the point? Why teach a new language if…
Carl Richards:
Yeah. Why did we need a new language?
Reese Harper:
Why did a new language need to exist?
Carl Richards:
Yeah.
Reese Harper:
So this is my experience, it may not relate to everyone. But I started an RIA and I worked with dentists throughout the US, and found that almost everything I said was a new language.
Carl Richards:
[laughter] Right.
Reese Harper:
To them.
Carl Richards:
Right.
Reese Harper:
I mean.
Carl Richards:
So we had an inside language.
Reese Harper:
We have an insider language that I had to teach to them, meaning like what, I don’t know, inflation, for example was that’s new.
Carl Richards:
Volatility.
Reese Harper:
Volatility, expected returns.
Carl Richards:
Standard deviation.
Reese Harper:
What do you mean by expected return? What returns? It’s just returns, right?
Carl Richards:
Yeah.
Reese Harper:
I’m like, “Well, there’s some nuance here.” Everything has got nuanced to it, everything’s not just what it looks on the surface. So say I’m not gonna… They say returns they’re thinking one thing I say returns, I’m thinking something else.
Carl Richards:
Risk. Yeah.
Reese Harper:
It’s just, it is steeped in our industry is a deep language, it’s got nothing on the surface is what it seems, and you can’t just say, here it is and the client has intuition. I started realizing that and the funny thing I found myself doing was basically, I was kind of to some degree in order to help get advice, adhered to, in order to get clients to do things, they had to have some level of understanding of where I was coming from.
Carl Richards:
Yep.
Reese Harper:
So I was involved in quite a deep process of educating somebody, to almost to the point where I’m feeling I… At some… I literally would have some clients after working with them for three or four years, they would be smarter than some of my employees.
Carl Richards:
Right.
Reese Harper:
Because they’re meeting with me quarterly, I’m diving really deep, they’re starting to pick up on stuff, they’re getting this. I’m like, “Dude.” I remember having one of my clients ask me if he could come work for me, because he felt he had now learned so much that he’s ready to sort of start being an associate advisor. I remember actually considering hiring this person, it was a spouse of a client, they were both coming to meetings and the client was a female dentist and she was just crushing it. And her husband was coming to these meetings and after a while he’s like “Man, I think I kind of wanna do this.” But it’d been five… Almost five years. And so the problem with the language I was teaching him was just he became familiar with all these terms, but then he was also… There was no… It didn’t mean he didn’t know what to do he just knew a lot.
Carl Richards:
Yeah, yeah.
Reese Harper:
So the language wasn’t a fast way for me to communicate what I wanted to, to the average person.
Carl Richards:
Well, to just to normal people, right?
Reese Harper:
To normal people.
Carl Richards:
Like non biased people.
Reese Harper:
So I was like okay, the learning curve of this language which was very steep and I was like, “Okay, is there a way… I gotta simplify this down.”
Carl Richards:
Yeah, yeah.
Reese Harper:
And part of simplifying it was creating some of the measurements that I wanted to teach to people. And then if I could teach these measurements to people then maybe that would simplify the amount of information I need to teach and I could be faster. I could repeat, I could spend less time teaching.
Carl Richards:
Right, it’s just a shared common language that you.
Reese Harper:
Shared common language.
Carl Richards:
That you both understood.
Reese Harper:
To get to the point quickly.
Carl Richards:
To shortcut.
Reese Harper:
To shortcut our way to the advice, that they wouldn’t question ’cause they understood it so simply, it wasn’t they had to have a ask again to have things repeated. So, I take one of the terms, if we just wanna talk about saving a lot of money for retirement, you can talk about that and you can explain what savings is and explain exactly how we save money and what a Monte Carlo simulation is. And you can explain how more is better and or you can say one of the areas of your finances is savings, and I measure it in this way. And we call that your savings rate, your savings rate is how much money you save divided by how much money you earn, yours is a 5%, yours is 6%. And you show them an image, you show them the this score and how it’s calculated. And now I’ve gotten past kind of the information stage of language and there they’ve learned something about savings that has been simplified, we’ve cut to the chase, we’ve gotten to the point to where they know what I care about.
Reese Harper:
What I care about is that this savings rate moves in a positive direction and as your income climbs it at least better stay flat, and as your income grows, that savings rate probably should go up. The more money you make you should probably save a higher percentage of it, because in theory you’re spending a lower percentage of the total pie as your income climbs.
Carl Richards:
Right, right.
Reese Harper:
And so by teaching them that concept once and calling it savings rate, I cut to the chase, I skip through a lot of things, we get to a place where they’re starting to comprehend the point of the learning, the financial vital sign that I want them to understand. And now I don’t have to talk about a lot of other ancillary kind of information that’s more for the professional, I can just focus on this one thing I want them to know. It’s a simple thing I want them to know and it’s just this one thing, you don’t need no whole thing, but I just need you to know this one thing, because that’s what you need to focus on. And what ends up happening is they stop asking as many questions, because it’s clear to them that I’m the professional, I’m taking in a lot more into account, but I just want them to learn this one thing and be reminded of this one thing.
Carl Richards:
Yep.
Reese Harper:
And, so that’s the kind of first basis of it, before I jump into item two, I’d love to know if you have any questions or thoughts about it.
Carl Richards:
Yeah, no it’s to me…
Reese Harper:
How would you reframe it? That’s a long way of kind of describing it, but I’d love to…
Carl Richards:
Yeah I… This is where the sketches came from, was because I was sitting in front of clients, super smart, intelligent, successful clients.
Reese Harper:
Yes.
Carl Richards:
And I was trying to describe a concept to them, I can’t even remember what it was, I remember who the clients were, but I can’t remember what it was. But it was something like volatility or accumulation, decumulation or some crazy idea like that, and I couldn’t get them to understand and they were smart, successful people. So it became quickly apparent to me that I was the problem, I wasn’t doing a good job, so I stood up and was like this, just drew something on the board. They were like, “Oh, I get it.” And so that idea of a shared common language, I was using visuals, Elements is heavily visual, but even if it’s words, we teach somebody a new language. And the other piece that’s super interesting to me is, the idea that this didn’t exist before, because…
Reese Harper:
Okay, that was my second item. Yeah.
Carl Richards:
It’s so crazy to me when I talk to my friends in the medical field like, “Oh, it’s a set of financial vital signs.” And they’re like, “What? What are you… ”
Reese Harper:
Oh, you’re hitting something different. Yes, no go ahead. This is good.
Carl Richards:
I’m like, what are you talking about? That I… That there was no objective standard way to quickly measure, orient yourself around the future so I can make the next best decision. In medicine, we, you go in and you just get your vitals taken, how did we not have that? Right? Well, that’s a whole new set of language here. So that’s the other thing that’s been super interesting to me about understanding a new language.
Reese Harper:
Well, yeah, and I feel I can restate the first principle really briefly, now that I’ve had a chance to hear you talk about it. This is us working out in progress, in live what we really have meant.
Carl Richards:
Sure.
Reese Harper:
By all this work.
Carl Richards:
Sure.
Reese Harper:
So that first explanation may have lost a couple of people.
Carl Richards:
Yeah, that’s fine.
Reese Harper:
But hopefully it was clear enough, the way I’d reframe it would be, I’m only sharing what I want them to focus on, I’m not sharing any ancillary knowledge. Because everything I say they think they’re supposed to know, anything I say they kind of will start to go, “I think that must be important.” Or they start writing it down, or like ooh, or they feel emotionally like maybe they should know it, whatever you say they’re gonna think is important. So I would say only share the things you really want them to know.
Carl Richards:
Yeah, yeah.
Reese Harper:
And that’s really, that was principle one.
Carl Richards:
Yep.
Reese Harper:
Principle two is you gotta call it something new, because if you call it the same thing, they already have an assumption about what it is and they already have their… They pre… They bring some preconceived notions to the table, you say inflation, they’re like, “I know what inflation is.” Do they really? You if you wanna say whatever you… Whatever common language they’ve grown up with in money is not serving them very well right now, because they think they either don’t know it or they do know it. They’re either dumb or they’re smart with it, they bring some baggage. And you changing their paradigm on old terms and trying to kind of navigate your way through there, it’s just a long way. So people are like, “Why did you give it a new language? It’s not that complicated. These ratios aren’t super complex, you could learn in them in about two minutes.” I’m like, “Exactly.” It’s stupid simple, but it’s a new thing I can present to somebody and say.
Carl Richards:
Yep.
Reese Harper:
“You should know this.” And they’re like, “What do you mean, there’s 12 things I should be thinking about? What are they?” “Well, you don’t… You’ve never seen these, this is your first time.” “Yeah, I’ve never seen any ratios like this, I didn’t know they existed for finance.” “Yeah, they do. We use them here in our firm and they’re very simple, this one is called liquid term.” They’re like, “Liquid term, okay. Well what’s it?” “It estimates about how many months or years you could go on your current cash and investment accounts, if just you started spending it down right now.”
Carl Richards:
Yep.
Reese Harper:
“Oh, that’s interesting, that seems important.” “Yes it is.”
Carl Richards:
Yeah.
Reese Harper:
“And we ideally want this to get higher over time, not… Sometimes it can go down and that’s okay, especially if we have to buy a house or we wanna take some vacation or take some time off work or whatever.”
Carl Richards:
Right.
Reese Harper:
“But ideally this number moves in a positive direction, just remember that, liquid term means how long can you go on this after tax money, the banking and stuff after tax cash all that. And it should be going in a positive direction.”
Carl Richards:
Right, right.
Reese Harper:
“Okay, cool.” I just teach them the one thing, now they’re… It’s a new thing, so they have no way of saying, “Well that’s not what I heard.”
Carl Richards:
Right.
Reese Harper:
“Or that’s not what I was taught.”
Carl Richards:
Yep.
Reese Harper:
“Or that’s not what they told me at the last place I was at. “And they start questioning your philosophy and the you’re think thinking. It’s clean slate starting from scratch, I got some new things you need to know.
Carl Richards:
Yep.
Reese Harper:
They’re only… I only want you to focus on 12 things, they just happen to coincide with the behavioral choices I want you to improve.
Carl Richards:
Yep.
Reese Harper:
And I’m gonna only teach you those and maybe just maybe in that world where I simplify all finances down to some very simple things, that are new to you, but that you can understand in about two minutes, maybe your behavior then might start to have a chance at moving in a positive direction. Using you, a beautiful human being to help a goat guiding coach you, but man that was kind… So those are the two things I think, give them only what you want them to know so that they don’t get overwhelmed.
Carl Richards:
Yep.
Reese Harper:
And give… Those things hopefully are the ones that change the behavior and move things in the right direction. And second, you gotta call them something new, because if you bring them something that they’ve heard of before that has the same terminology that they’ve heard referenced at every seminar and every podcast and every radio program. They’re gonna have a harder time knowing whether you are right or whether the old thing is that they heard is right and they… It just, it’s kind of an unnecessary battle, it’s just conflict that we don’t need them to feel.
Carl Richards:
Totally.
Reese Harper:
‘Cause their old information is probably right and the new information is right, nothing’s bad here, there’s no right and wrong. These are just new things I want you to learn, focus on them, let’s move them in a positive direction. It’s just a simpler way of getting to the behavioral aspects that you want them to shift. So, what’s your thought on that? I’m curious.
Carl Richards:
Well, I just… I think one of the important things too to remember is that, the language that we use internally we think that that’s really important, and, but that’s all inside baseball. Clients have never thought that way, most people don’t drive around wondering about their standard deviation or volatility, I just don’t know that that happens, they don’t put those words on things. So it’s not so the barrier or the hurdle that it sometimes feel like, “Oh, this is a new language I have to teach my clients.” Actually it turns out that you were either gonna teach them an old language.
Reese Harper:
Yes.
Carl Richards:
That it wasn’t really serving anybody anyway and you were gonna sit there and try and explain it over and over and over and you weren’t gonna do a good job, ’cause you’re not very good at it, no…
Reese Harper:
It’s hard.
Carl Richards:
No offense, I think I’m really good at language and I couldn’t get it done and I had to draw it, right? And I think you.
Reese Harper:
[chuckle] You had to draw pictures.
Carl Richards:
Yeah, I had to draw pictures.
Reese Harper:
Yeah, that’s… It’s true.
Carl Richards:
Things like pictographs, it so now I think the other thing that new language showed up here is in the form of design like we talked about earlier, the just the way it feels is a new language. And I think there’s something really powerful to that, like well, this is fresh, this is new, the old thing’s not working. We all know the old thing, version of language is not working and so having the sense of fresh new, it makes sense, this is these are terms that I’ve heard before savings. Oh, I know what that means, super, super interesting. So I think that’s very, very cool. Thank you.
Reese Harper:
Yeah. I want to add one more thing, which is, I don’t think it’s just the words. I think the calculation, the metric, the financial vital sign with the new words.
Carl Richards:
The scorecard.
Reese Harper:
It’s the scorecard, it’s like.
Carl Richards:
The visual language. Yeah.
Reese Harper:
This whole thing is like a new thing.
Carl Richards:
For sure.
Reese Harper:
And so people don’t get bored, it takes… I still have clients five plus years in now, who are still like, “Oh yeah, the scorecard is really cool. It really helps me remember where I’m at and how I’m doing.”
Carl Richards:
Yeah, totally.
Reese Harper:
It’s just still, it’s a new enough thing, when you look at a traditional, the traditional outputs that we’ve been putting in front of people, they just don’t tell a story that’s as dynamic and as agile.
Carl Richards:
For sure.
Reese Harper:
They tell a story about an event.
Carl Richards:
Yeah, and a.
Reese Harper:
This.
Carl Richards:
And a pretend sense of certainty.
Reese Harper:
The certainty in this future scenario that we’re modeling that just is a distraction from their values and purpose and this single next action we want them to take to solve for that next local optimum like you to like to say. And I just think that’s it’s the whole thing that’s the new language, not just 12 terms.
Carl Richards:
For sure. Right.
[music]
Carl Richards:
Amen. Carry on.
[music]
Abby Morton:
Next time on Elementality.
[music]
Abby Morton:
What is the right strategy? What is the right direction to go? How do I know what that monthly cadence is? How do I know how long to run a campaign? How are you guys guiding me through help making those decisions or how does that work?
DJ Highum:
Yeah, absolutely. So that kind of goes back to what I mentioned our… What we call our coal to gold framework. And so we separate those different campaigns into different categories, is it…
Abby Morton:
Okay.
DJ Highum:
More of a top of funnel campaign that’s designed to earn contacts, right? Is it more of a middle of funnel, let’s build credibility with those existing contacts that we have, and try and encourage a conversation? Or is it specific for clients to update them on happenings in the marketplace for whatever might be going on, so.
[music]
Abby Morton:
To find out more about Elements, go to getelements.com/demo. Elementality executive producers are Reese Harper and Carl Richards, Elementality is produced by Tad Henderson and directed by Abby Morton. Have a good one.
[music]