Your clients want to collaborate with you. And why not? There are so many good things that result from it. It allows the client to understand their financial data better and improves their awareness of what they’re doing with their money. As co-pilot, they feel a sense of empowerment over their finances leading to greater confidence and increased trust in your advisory skills. Best of all, it’s costly for you to do all of the onboarding work, and some of those jobs a client can easily do when using Elements. They just need to know what you want them to do.
On this Elementality, Reese and Carl look at why including a client as your planning co-pilot allows them to feel like the hero of their financial journey.
Podcast Transcript
Reese Harper:
You might not know this, but the majority of people, when they show up to work with you, they expect to kind of be collaborative, they expect to kind of work together, and they just don’t know what job they have, they don’t know what their role is in this.
Reese Harper:
If you set those expectations real clearly up front, be like, “The only thing you’re in charge of is making sure that your numbers are always current, and I’ve got a tool that helps you do that. Everything else, we do.” It’s like that, it’s just a little start-off to the relationship that totally changes the dynamic.
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 Richards here. So excited to continue my conversation with Reese Harper. Reese? .
Reese Harper:
Hello friends. Welcome, welcome.
Carl Richards:
We’re still talking about the way, the Elements way. And what we wanna talk about today, Reese, specifically is this idea of including the client, client engagement, a tool built for client engagement, and the way we’ve titled this is, The Client is the Co-Pilot. So let’s talk a bit about why that was important in the design of Elements?
Reese Harper:
Well, I think that consumer trends in particular now are are going to a place where the consumer has a little more control, a little more control over their data, a little more control over the way they enter information. And we’ve done a lot of research asking clients why they like or dislike current technology that they use with their financial advisors.
Reese Harper:
One of the downsides of a lot of platforms is like it does doesn’t feel snappy, it doesn’t feel new, it doesn’t feel like… I’m not… The technology you guys use seems dated and seems old. And sometimes I can’t even change my numbers, I can’t even enter my information.
Carl Richards:
Right. And log into a portal and I see things.
Reese Harper:
And I just, I get to see what you typed in and then I have to call you and tell you that it’s wrong, but I can’t change it. And I think there’s good reason why systems were designed that way, like in a world where you needed your data to be the same so you could run your modeling and not forget that the numbers were the way they were. You don’t want someone coming in and messing with your numbers that affect your projections, that affect your models, so you kinda wanna lock down the system so it doesn’t allow clients to dink around with it.
Reese Harper:
But in today’s world, clients when they see something that’s wrong, they wanna just change it. They’re used to consumer direct tools, they’re used to a lot of… Especially the YZ generation. So that’s one reason why I think it’s important to let the client be a co-pilot.
Reese Harper:
Probably the more important reason, the second reason, is it allows them to really
understand their information, get comprehension, get advice adherence. It improves their awareness of what a net worth is, of what savings is, what… The scorecard is designed in a way that exposes the calculations to the client.
Reese Harper:
We want them to understand this, all for the benefit of reducing the advisor’s time on the things the client doesn’t really value. Does the client really value all of the things that advisors traditionally have to do to maintain these portals.
Carl Richards:
Really quickly talk about that. ‘Cause it’s, I think we underestimate how costly, and we talked earlier about being able to dive into deeper conversations quickly. And so there’s these two pieces of what allows us to get into the conversation quickly is allowing the client to be more involved here.
Reese Harper:
Yeah.
Carl Richards:
But the one thing I think we almost always underestimate, and [0:04:19.1] ____ has done a good job of trying to put a number around this…
Reese Harper:
That’s what it’s gonna say.
Carl Richards:
We interstate how costly that on us doing all of that work is.
Reese Harper:
Yeah. The cost… You know the numbers as well as I do, that Michael’s published. On a comprehensive holistic plan basis, if you really are covering all of the areas of someone’s personal finances, it could be… Michael estimates somewhere around 15 hours for onboarding.
Reese Harper:
That’s the number of hours required to really currently with current systems and technology. And if you think about, yes that’s a lot of hours, but that’s a very… That’s actually the least expensive part of the cost, is the one that’s disclosed in hours. What’s not disclosed is the bottleneck of marketing and efficiency that that creates in the firm.
Reese Harper:
What happens is in a smaller firm is firms shift regularly from marketing to onboarding, back to sales and marketing, to onboarding. Because after you get through that heavy lift of onboarding, you generally go into a period of service to sort of implement and to talk and work through all of the meetings that are required.
Reese Harper:
And there’s bandwidth limitations that people have that go in between those months. If you look at small firms, especially with only one or two advisors, they onboard clients in very lumpy cadences, and the time that they onboard clients is several months after they go and do their sales and marketing. And so they just kinda shift back and forth constantly.
Reese Harper:
And what that means is instead of getting an advisor up to capacity in a year, year and a half, by letting them onboard four clients a month, or five clients a month. Or even right now the average advisor is onboarding like one and a half clients a month, like two clients a month, it’s not four or five.
Reese Harper:
But if you have a good sales and marketing engine, you can go to two to three to four. And five clients a month, you could build a whole clientele in like a year, year and a half with a steady marketing engine, but not if you have these onboarding lumpiness. You only have like 80 hours of discretionary time, really like in a month, and if 30 or 40 of those are taken up by…
Reese Harper:
I’m saying you have 160 hours total, but half of your time is already allocated to unplanned work that’s gonna come up all the time, related to compliance and client service and inbound requests. So you just have this really lumpy calendar, and what it does is instead of building a business in a year, year and a half, you’re building it in five years, you’re building it in four and a half years.
Reese Harper:
That’s why they always say, “You gotta be in the business for like five years.” ‘Cause traditionally if really these are the input variables that are constraining us are the 15 hours of onboarding time, the 20 to 25 hours of first year work, you’re essentially limited by the onboarding constraint and the service constrain. And that’s our main… That’s why you can’t build a business any faster than four or five years.
Carl Richards:
Yeah. And it’s also why we end up moving up market.
Reese Harper:
Yeah, ’cause it’s like, “Well, if I’m gonna only grow at that pace, I better get better bang for my buck.”
Carl Richards:
Which is why we end up giving up on the stream of serving anybody. Right? And so, okay, so let’s talk…
Reese Harper:
Did I just confuse everyone? Or did that makes sense? What are you hearing?
Carl Richards:
No, no, no. That’s from the advisor… I think that’s important to understand from the advisor perspective that’s why it’s really important to have clients as a co-pilot, is there… That reduces your cost to bring on new clients. It allows you to build… If the goal is to build a business faster, that’s one goal.
Carl Richards:
And the other thing it could allow you to do is serve more people or different people or people who are traditionally underserved. Remember the dream you had when you got into the business.
Reese Harper:
Yes. And it could allow you to reduce prep time on appointments.
Carl Richards:
Sure.
Reese Harper:
Prior to those appointments. Gives you a unified place to… When clients call in and ask you reactive questions, you can say, “Well, have you updated that?” And it just starts to become… If you design it well and you actually build it well to where the client can update the information, it unlocks all kinds of possibilities for business models.
Carl Richards:
Yeah, let’s talk about, yeah, for sure. So that’s important. But let’s talk real quickly about putting the client as the co-pilot. We talked briefly about it. I think clients, modern consumers, modern clients are more interested in doing this with having it done with you, instead of to you or for you.
Reese Harper:
Yes, yes.
Carl Richards:
And the idea of being with. And then this concept that you talk a bit about keeping the client as the hero of the journey. So what’s the benefit to the client? Why was that so intentional in terms of the benefit to the client of them being a co-pilot?
Reese Harper:
We talked about the two kind of at the beginning, it’s probably worth just repeating. One is, it’s serving an emotional job that they have of wanting to be in that seat, they want to be the co-pilot. They actually…
Carl Richards:
We do hear that a lot. Like, “I wanna understand this.”
Reese Harper:
“I’m here to learn, I’m here to sort of participate with you.”
Carl Richards:
Yeah, and the word I hear a lot too is, “I feel empowered. Once I do understand this, I start to feel empowered.” Which leads to confidence.
Reese Harper:
Leads to confidence, which if you serve in tha emotional job then you, again, trust is what we’re trying to get at here. At the pinnacle, if you can get someone to feel trust in you through their values alignment, their purpose alignment, all these things we’ve talked about in previous episodes, then they’re more likely to refer.
Reese Harper:
They’re more likely to be a high net promoter, that’s the marketing term for referring people in. And they’re more likely to commit to following the plan ’cause they feel like it’s theirs. They feel like they built it, they feel like they created it. When they enter a piece of data and you don’t change it, you don’t rename it for them, you don’t alter it, you make them alter it.
Reese Harper:
If they put the data in wrong, you ask them to make the change. If they call something a Roth IRA and it’s really traditional, you like ask them to make the change.
Carl Richards:
And one thing that’s important to mention here is because people listening to this won’t believe this, but that was very intentional in terms of the design to make it easy for them to do that. Like if using an existing set of tools and you said, “Hey, make that change,” you’d be like, “Bro, I need 17 passwords, I gotta go to the portal and I gotta have a whatever, a secret code.” And instead like, “Oh, I just need to go change the number from a five to a six, and I can do that on my phone. Great.”
Reese Harper:
Yeah. That empowers them. Then they feel smart, then they feel… If they’re the ones that helped create the score card, they don’t wanna be alone. Don’t mistake in this principle with alone. This is a co-pilot. Not the client’s solo.
Carl Richards:
Solo cross-country flight. “Good luck, we’ll see you later.”
Reese Harper:
Yes, like if you empower them, if they feel like they entered information, there’s so many benefits. Advice adherence, there’s a feeling of confidence and trust goes up, there’s a feeling of participation increases, because they actually know that they’re helping you, they know they’re making your job more… They’re empowering you.
Reese Harper:
When they update data, you let them know you see that that happened. You’re notified when things change, you’re actually able to reach out. The client as a co-pilot is essential. It’s essential to the future of a scalable advice-driven practice. And you’re not going to get there with as much impact if you continue to bear the cost of these things that the client does not really value you taking on. They’re actually annoyed at you.
Reese Harper:
You might not know this, but the majority of people when they show up to work with you, they expect to kind of be collaborative, they expect to kind of work together and they just don’t know what job they have, they don’t know what their role is in this. If you set those expectations real clearly up front, just be like, “The only thing you’re in charge of is making sure that your numbers are always current. And I’ve got a tool that helps you do that. Everything else, we do.”
Reese Harper:
It’s like that, it’s just a little start off to the relationship that totally changes the dynamic. It could be like, think of any professional, they expect to some degree for you to do something in this professional relationship. Doctors expect patients to go home and do the PT exercises, they expect them to take the supplements, they expect you to do something.
Carl Richards:
Right.
Reese Harper:
And in financial services, somehow we’ve gotten to this place where it’s like you don’t do anything, you just show up to the plan and then I do everything, and then we only let you know when you need to do something.
Carl Richards:
Yeah, which I really think leads to some of the dissatisfaction, because what ends up happening is you build a plan that didn’t reflect what they wanted. Like you go away in a room, come back out from behind the secret curtain and have this plan and they say, “Well that doesn’t reflect what I really wanted.”
Carl Richards:
And you only learn that rather than iterating along the way, course correcting, checking in, and the reason you’re course correcting is because you’re literally like the co-pilot. You’re sitting there together.
Reese Harper:
Yeah, and I’ll tell you right now, the majority of the time when clients call me and they ask me a question, the first thing I do, I just pull out my phone and say, “Let’s look at it. Let’s look at it together. Let’s… ”
Carl Richards:
“Pull out your phone.”
Reese Harper:
“Pull out your phone and let’s just look at it together. Did you update this? .” “No.” And then we spend a minute training, then I’m really quickly, “Okay, push this in, do this.” ‘Til eventually they get the pattern down of when you ask me a question, you’ve made… You’ve got your data up to date and then I can answer it more effectively.
Reese Harper:
And man, the downstream effects in your practice, the efficiencies, the profitability, the impact you can have, the number of people you can serve, like the deeper conversations you can have, the ones that get past the functional, get to the emotional. That’s all because you’re helping the client serve in some capacity as a co-pilot, instead of you just punting everything to a pair planner that really has a hard time building a relationship with that client.
Reese Harper:
It’s a difficult… The client has a relationship with you, and it’s hard to bring someone in the middle and sort of say, “Well, I need some help with data entry, and will you work with my team to get it all together?” Most advisors who are successfully using Elements have said, “This has finally allowed me to go more directly to the client and actually have a more efficient interaction, and they’re collaborating with me like a co-pilot.
Carl Richards:
Amazing. Amen, Reese.
Reese Harper:
Carry on, brother.
Carl Richards:
Thanks.
[music]
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.
Reese Harper:
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 can… You have so much more power ’cause 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/demo. Elementality’s executive producers are Reese Harper and Carl Richards. Elementality is produced by Tad Henderson and directed by Abby Martin. Have a good one.
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