Hannah: Well, thanks for joining us today, Rick.
Rick: Thank you for having me.
Hannah: So, you have an accomplished career with writing books. I know you’ve built this really strong financial planning practice in Rapid City, South Dakota. Much of your thought leadership though is around financial therapy, these money mindsets, and integrated financial planning. What prompted you to go down this path?
Rick: Well, the short answer is a divorce. And that really introduced me to therapy, more specifically, group therapy. And, because I seem to be a slow learner, I was in group therapy for 12 years. And saw a lot of things discussed and a lot of topics, but money wasn’t one of them. And I suppose, folks fantasize about a lot of things, I fantasized about, I wonder how it would be to do therapy around money. You know, it was just the black hole between the mental health profession and the financial planning profession because mental health profession doesn’t talk about money, and has quite strong projections onto money, and the financial planning profession certainly back in the 90s didn’t talk about relationships or emotions. So, that was really at the very beginning of my wondering of, I wonder if we could blend these two areas? And that really started peaking when I joined the Nazarene Project in 1996, and started doing teaching with George Kinder, his two-day workshop, which was really transformational for me. It was the first time I saw money and spirit and emotions come together.
And then, of course we know the findings right around that time, the turn of the century, and Danny Kahneman was doing his work where he discovered that 90% of all financial decisions are made emotionally. And, it was around that time that it came to me that eventually, financial planning would be commoditized. That was at the beginning of investments being commoditized. And that if I wanted to stay relevant, I had better figure out how to add value around the relationship with money, which I just didn’t see would be commoditized.
Hannah: So, you just said that you wanted to figure out how to add value to the relationship with clients, basically around that emotional side of it. So, how did you do that?
Hannah: How do you do that?
Rick: Well, if 90% of all financial decisions are made emotionally, it’s first recognizing that. And beginning to learn how to be with a client rather than throw numbers and throw mutual funds and charts and statistics at them, which is what I used to do. It’s learning that there’s a human being sitting in front of me. And this person does not think logically and does not act logically, and does not … at least … now, that’s a very judgmental statement based on my baseline of what that is and is not going to make decisions on their own self-interest. And this flies against everything that we learn in economics and certainly back in that day, and a lot of what financial planning teaches us. Even today, I employ … I have a residency program, three-year residency program, we have two residents in that right now, and even coming out of some of the cutting edge financial planning programs in the nation, they’re still struck at how much emotion plays in the financial planning process, and how little all the numbers really mean in the end of the day. And I don’t want to minimize the numbers; they’re really important. I don’t want to minimize the financial part of financial therapy, but I don’t think in the past, that the emotional side, the human side, has been really underscored.
So, we start by simply learning how to be with the client. And I know that that can kind of sound spacey and not very logical, but it is actually incredibly logical because it’s learning how to be present with the client and understanding the research that we are not going to change this client, no matter how much they’re overspending or they’re not saving or they’re not going to action around their wills. We’re not going to change them. We are going to, at best, be facilitators of helping them make the decision to change. So, it’s really at the heart, whether it’s coaching, financial coaching, financial therapy, it is learning exquisite listening skills and learning how to be with the client. 70% of successful therapy is based on two things: 40% is does the client trust the therapist and 30% is based on the listening skills of the therapist.
Now, if you look at what we as financial planners do, it’s all about trust, isn’t it? People are coming to us, telling us their money story, which they haven’t even told their therapist, and can we learn how to listen? Listen. If I can learn how to listen, anybody can learn how to listen and I’m not suggesting I’m a great listener, but exponentially, I’m far better than I used to be. So, I’m just saying that it’s not as hard as we make it sound sometimes, and that’s saying that I’m gonna do double speak and say probably learning to listen has been the hardest thing I’ve ever done in my life.
Hannah: You said that 90% of financial decisions are emotional decisions. So, I agree with that and I completely understand that, but that sounds really negative towards the client. Like, we’re viewing our clients in a negative way. How would you respond to that? Like, are we really viewing them in a negative way, or do you bring that up with clients, or how do clients respond to that?
Rick: Yeah. I bring that up with clients, ’cause guess what? Financial planners are not excluded from that statistic.
Hannah: I love it.
Rick: We have the same brain they have. 90% of all my financial decisions are made emotionally. Now, that is really … I don’t like that, you know? My 10% cerebral brain would like to think it’s 90% logic and 10% emotional. So, that’s the first thing we as planners … that’s a great reflection, Hannah, because somehow, we as planners think we don’t need this stuff. That we’re above needing financial therapy and we’ve got it all together and nothing could be further from the truth. We might have some of the numbers and some of the basic understanding, but we have just as many money scripts and money disorders and problematic money behaviors as our clients do. So, it’s really important that we’re not judging the client and making them the patient, so to speak. We’re in this with them, and I think we hear a lot about partnering, co-collaborating with our clients. Well, this is really at the heart of it is understanding that even though we … I was telling client this just a few days ago, that while there might be a right financial decision that would maximize dollars in some situation, it doesn’t mean it’s the right decision for the client.
Firstly, we need to drop our judgment that we know what is right for this client. Are they coming to us for advice? Kinda. They are more coming to us for knowledge. They’re coming to us for education. They’re coming to us for support. They’re coming to us for guidance. But, I think, and this may just sound really crazy, and I know the first time I ever thought of this or heard it, I thought it was crazy too. We need to be real careful before we give advice. We need to be real careful before we say, “This is what you should do”, and attempt to eliminate should from our vocabulary. It’s here’s the options, and it’s listening to the person and helping them make the decision that is right for them and dropping our judgment. Having a beginner’s mind around that client and really serving as a guide.
Hannah: You’ve alluded at how do we get clients to change their behavior? And we’re gonna dive into that later on, but one term that you brought up was mindset. And so, you have written books on money mindsets. For the listener who’s never been exposed to the idea of a money mindset, can you explain what that is?
Rick: All of our clients have a history. All of our clients … And by history, that means they have a life. You could say they have baggage, that’s more of a negative connotation, but we all look at life through a lens that we’ve developed. And we don’t look through the same lens. So, it’s important that our clients understand what their mindset is. How do they view money? What is their relationship with money? And you might’ve expected me to say it’s really important for us to understand how our clients view money. And while that’s a component of it, it’s more important that our clients understand how they view money. And the reason goes back to the fact, we’re not gonna change them. We’re going to help them make sound financial decisions, and one component of doing that is for them to understand how they’ve made it and understand what their biases are and understand what their mindset is and their relationship around money.
So, that’s one part of our intake that’s important is helping a client self-discover some of their own history, some of the way they view money with the money scripts. Brad Klontz has further developed a Klontz Money Script Inventory, which we use with our clients to help them boil down their money scripts into four major categories as the way that they can tend to view money. There’s not any that are right; there’s not any that are wrong. Every money script is partially true, you know? A big one for me is you gotta work hard for money. Well, that works great when I work hard and the money comes in. But, what happens when … There’s been times in my life when I’ve worked hard and the money has not come in. And there’s a great amount of pain there. And so, I found out that heck, I can work hard and money doesn’t come in, I can work hard and money comes in, I cannot work hard and money comes in, and I cannot work and money doesn’t come in. Those are all truths and they’re all based on the circumstance. So, it’s helping a person kind of understand the lens that they have viewed the world and viewed money with, and helping them begin to build flexibility around those mindsets.
Hannah: Can you give us an example of a money mindset that you’ve seen with a client, and kind of how that played out through the relationship with that client?
Rick: Oh, my. There’s so many of them. I can think of a client who … She was an entrepreneur, and just loved to start businesses. And in fact, I remember helping her on Christmas Eve. My wife and I are playing Scrabble, and she’s texting me, and we don’t have any time limits on our Scrabble game. So, while my wife is thinking about her next move, I’m texting her and we’re going back and forth on the terms to buy a business. And she bought that business. And this was actually as she was coming on as a client. We hadn’t done the emotional intake work yet. When we did the emotional intake work, one of her money scripts was, “If I don’t buy or start new businesses, I will go bankrupt.” And that caught my attention because I had made a projection that she bought new businesses and started new businesses because she loved being an entrepreneur.
What she found out, and I found out, was that she was doing it out of fear because if she didn’t do this, she’d go bankrupt. Now, any financial planner listening to this is going to go, “Well, that sure doesn’t seem logical, because don’t we know one of the fastest ways to go bankrupt is to buy and start new businesses?” So, with that knowledge, we were able, every time that she was polled to start a new business or buy a new business, we’d bring that up. We’d kind of laugh about it, and we’d use that as a touchstone to, oh, what’s really behind this? Is it fear that’s operating around this, or does this really make good sense?
So, I can’t tell you how many times that clients that have, you know, maybe the market’s going down and they’re getting scared, and they’ll refer, “Well, there goes my money script again.” And this particular client had a money script that being in the market was gambling and eventually, she’d lose everything and be a bag lady. So, it really helps a person begin … Once we build awareness, I mean, we’ve heard awareness is 50% of making progress or growing, and it is. And so, it’s just raising awareness to, oh, there’s that mindset. There’s that money script that I developed you know, as a five year old, and be acknowledging it. And actually, having some compassion around it, that it was developed to keep us safe and help us cope and then being able to set it aside without acting on it.
Hannah: Do clients know that they’re gonna be looking at kind of, how they viewed money as a child when they start working with you, or what is that conversation look like?
Rick: I’m thinking of one client who you know, half way into the on-boarding process, said, “You know, and all I thought you did was manage money. I had no clue you did any of the rest of this.” Our clients come to us largely for the same reason they come to any other financial planning. Number one, our investments, and number two, our retirement plans. So, you know, maybe a few more come to us because we do financial therapy. I mean, we are developing a over-financial therapy department of our practice. So, more and more people are coming from that. Our current clients are learning. Gee, I had a touching experience just two days ago. I had a physician become suddenly disabled. I mean, just boom. He was done with his practice. And they came in, it happened a couple months ago, and his opening remark, and this is not a client you would … a pretty gruff client. His opening remark was, “Is Sarah still doing that financial counseling? I think I need some. It’s really hard to go from being in charge of a staff and seeing patients 12 hours a day to the biggest thing I’ve got to do today is clean out my basement.”
Rick: And so, our clients are asking more and more for those services. But, when somebody comes on … I digressed a little bit. When somebody comes on as a client here, we just have a default process. And the default process includes a … we call it Interior Intake, our discovery of what they think, feel and believe about money, and we have about six exercises we give them, and they’re all the exercises we have in facilitating financial health. And we tell them very clearly that, “Here’s your homework. And there’s some good news here. It’s not like the homework you got in college or high school. You get to not do it and there’s no penalty whatsoever. And that no is a complete sentence. So, anything we give you, if it isn’t working for you, you’re not interested in it, you can completely not do it. It’s absolutely okay.” I have had one set of clients out of, I don’t know, 150 or 200 that have said, “No” to any of it.
And I’ve had clients complete that that my staff said, “Okay. This is gonna be the first person that is not gonna do this ’cause this guy is not gonna do this.” And I’ve had that same guy do all the exercises and at the end of the intake period, when we went over everything suddenly say, “Well, this was really good. This was really insightful stuff.” So, it’s just our default, and we give people complete permission not to do any of it.
Hannah: Yeah. I have my clients, probably not to the extent that you do it, but do a lot of, dare I say, the touchy-feely type of stuff. And I found that, if I’m comfortable with it, then they are too.
Rick: Well, that’s a great point. That is a great point, because I was one of the planners in 1989 when a Dr. Nixon psychologist talked to the … I see a peer he treated that time that came out of that meeting saying, “What is he doing here? We are number crunchers. We do not belong in doing anything with psychology.” And the truth of the matter is, generally, when we planners are pretty skeptical and resistant about this is because we’re not comfortable with it. A lot of planners don’t know a therapist, don’t know what goes on in therapy, it’s a big black hole, they have a lot of projections onto therapists and therapy. Just the word therapy is a terrible, terrible word. I have done focus groups where everybody in the group had a different definition of what it was. And in fact, it’s not a legal definition anymore than financial planning is not a legal definition.
So, it’s definitely problematic, but it really does … I mean, you just nailed it. If I as a planner am not comfortable with what I’m doing, my client is certainly not gonna be comfortable. And therein lies one of the secrets … I know Dr. Ted Klontz was asked a lot, like, “You know, how do I know if I’ve gone too far? How do I know when I’ve gotten in too far?” And part of his answers will be, “Well, A, anytime you’re uncomfortable, you’ve gone too far. And anytime you think you’ve gone too far, just ask the person a question, because that puts them right back in their head and you’ll pull out.” So, it’s just not as problematic as sometimes we like to think it is. But, we can … and I’m thinking of Gayle Colman, who’s a CFP, practices in Carlisle, Massachusetts, who said one time, “We can only take a client as far as we’ve gone ourselves.” And that is so true. I mean, we can’t learn to be with a client.
There’s another phrase for coaching, it says, you know, if you want to be a great coach, you’ve got to have been coached. If we want to do this work, we can’t be giving clients exercises and taking them through this process if we haven’t been through it ourselves. It’s not a formula, you know? This isn’t a decision tree of, well, if they object here, then you say that, then if they say this, you go here. It’s a complete mindset with the financial planner of learning to really be with and listen to the client.
Hannah: Well, and I just love how you brought up that exquisite listening beforehand. I know, to share a little bit of my story, you know, I was 26, had bought this practice, felt so in over my head, and I just … I focused on listening to the client and it made all the difference. It took everything, the pressure off of me and it was all about the client. And so, for me when I give advice to new planners, so much of it is, just learn to listen well. That’s the biggest differentiator you can have.
Rick: That’s absolutely true. And, you know, that is … that’s gonna be really hard to commoditize. Somebody, I don’t know who said this quote, but said, “All people need is a good listening to.” I can’t tell you how many times in the trainings that I’ve done that people, planners, therapists would say, “This is one of the first times I’ve ever told that story. This is one of the few times I’ve ever really felt listened to.” It’s a pretty rare commodity. It really, really is. And that’s when we start thinking about adding value, that adds a huge amount of value. I mean, I can remember when finally, I got it, that it wasn’t my agenda, it was the client’s agenda and just simply asking the client, “You know, I’ve got a list of stuff we can talk about, but what’s really important today for you to talk about?”
And I remember one time early on, a guy started talking about his farm and the homestead and his family that came out and where his parents were buried and just going through this story, and I today, forget exactly the relevance of all that. But, we got done. We had about five minutes left, so I kinda hit some of the high points on my agenda. And when we were done, you know, I would’ve normally spent this time going through all the asset classes and the returns and how they were comparing to our benchmarks, and you know, honestly, I love investments. And so, I had to reduce that to five minutes, and so at the end, he says, “Well, you know, this has probably been the best meeting we’ve ever had.” And I’m just like, gobsmacked. Like, you didn’t get any of my brilliance. How is that possible? And I just can’t tell you how many times we love to be listened to.
Hannah: It’s so simple, but not easy.
Rick: Well, then you do come up against some friction. I teach a graduate course, and that’s at Golden Gate University, and we talk about this. You know, there are things that need to be done in an financial planning meeting. When you have an IPS that needs to be signed, or redo an allocation or you’ve got some estate planning issues or some things like this, or something that needs to be tended to on an account. There is this kind of natural friction between some things we do need to accomplish and what’s top of the client’s agenda. So, I did go through a period of time in my career where I just went to, “Well, client, what do you want to talk about? Where’s your energy today?” And it threw my practice into total chaos, ’cause we didn’t know where any client was in their process. We threw the process out the window, and then we came … Of course, before that, had a very structured, inflexible process. So, today, we have a combination of both. So, there is some give and take, you know? We do need to reserve a little time to get some immediate things done, but the important thing is that we address what the client really is on top of their mind.
I remember once, I did a intake. I used to have the mindset that, we are not gonna talk about any financial numbers until we do this discovery period. So, I don’t even want to even know about your numbers, I don’t want to know about your finances, we’re gonna find out about you, and we’re gonna do all this discovery stuff first. And I remember once at the end of doing all of our intake, this client says, “Are we done with this stuff now?” I said, “Well, yeah.” “Okay. Let’s get on to this 401K distribution and what are we gonna do about that? Because I got five days left and I’ve gotta make a decision.” And, I learned to, let’s go with where the hemorrhage is first because you know, even in doing discovery, if a client comes in, and I can think of a couple clients recently … They had a real burning financial issue and we went after that. We took care of that burning issue, and now we’re doing the intake, and they’ve got a lot more space because they’re not … their anxiety has subsided, so they’re a lot more present to do the deeper work.
Hannah: So, you have a book on this, and you said that you’re teaching the graduate level at GGU, Golden Gate University, on Facilitating Financial Health. What does it look like to be financially healthy?
Rick: It’s what a healthy relationship would look like. It’s honesty. It’s being aware of what my finances are. Being aware of what my net worth is and my income. It’s being aware of my in flow and out flow. It’s being aware of my money history and how that affects me. It’s being aware of my money mindsets, my money scripts. It’s having an honest relationship with money, with looking at reality, not being delusional. So, you know, I think it’s all the components of a good relationship with anything or anybody would be financial well-being.
Hannah: I feel like these maybe tie in, but what is your goal when you work with clients?
Rick: At the simplest, my goal is to help them sleep better at night … To help support their quest for meaning. To help them have things in order financially so that that’s not filling their mind, you know? To reduce that anxiety so that they can really live the life that they were put here to live.
Hannah: So, looking at this idea of financial health, I mean, I don’t even feel like this is a question. It’s more of a statement of, financial planners are the ones in prime position to help our clients and the general public facilitate financial health. I mean, would you agree with that or maybe put that differently?
Rick: Well, I think that’s very true. Our company purpose is to facilitate the financial and emotional well-being of people. So, we really feel that we’re in the well-being business even more than … certainly more than the investment business or the financial planning business. I mean, what’s the point of all this? I tell clients, “You know, there’s a low probability that on your death bed, your last words are going to be, you know, life was so good. We got 5.8% compounded annually for 20 years with Kahler Financial Group. I mean, just made it all worth living.” You know, the bigger picture is, what are we doing? What are we helping people accomplish and be? And, I don’t think there’s any profession that helps people in this area deal with the well-being. And we include emotional well-being, because we found, it’s really hard to separate financial well-being from emotional well-being. So, it’s really an interesting field and I think it will grow, it will develop. And who knows? Maybe someday, we’ll add physical well-being to that. I mean, we certainly help clients with aspects of physical well-being and making sure that they have enough cash flow to do the basics in life and help them with their healthcare and some of their healthcare decisions. But I think someday, we may be venturing into just the entire well-being package. I don’t know of any other professional that really does that.
Hannah: That’s really exciting, you know, thinking about what financial planning could really be.
Rick: That could be part of Dick Wagner’s Financial Planning 3.0 is continuing to take financial planning toward a profession. And just as law’s a profession and medicine is a profession, and mental health is a profession, financial planning hopefully will step into being a profession and could evolve to the well-being profession.
Hannah: It’s such a fun time to be a financial planner. So many opportunities.
Rick: Yeah, it’s definitely changed. I mean, you know, when I got my start, I was performing a crude form of financial planning in the late 70s. And it looks completely different today than it did back then.
Hannah: Oh, well, that’s great. I’m sure it does. So, let’s go back to this idea of money mindsets. So, when we notice a money mindset in our client, how should we as planners respond to that?
Rick: All of our clients have money scripts. They all have a mindset. They all have a history. They all have a way that they look at money, and so do we. So, it’s really important to understand ours. And, it’s important that we do understand the basics of our clients, the way that they view money. And there’s a lot of different tools. I’ve played with a lot of different tools of helping myself understand my clients, and understand their various personalities and understand how they do money. And there’s a lot of things out there, you know. There’s Susan Zimmerman has an evaluation tool called MAP, M-A-P. Troy Jones introduced me to the Enneagram 25 years ago that probably to this day is one of the most useful tools that I use in helping understand a client, where they’re coming from and how they may make financial decisions.
You know, and bottom line, I think it’s really important, as helpful as understanding the mindsets and the tools and things are, I can tend to start detaching myself from the client or beginning to kind of put them into a stereotypical box and forget that my first duty is to just really be present with that client. I mean, I can’t think of anything else that’s better with the client than to just be focused on them and be listening to what they’re saying and really understanding what they say. Because terminology is so problematic. I mean, even when we use terms like money scripts and the term retirement, what does that mean? I had a client once, I asked him, and he says, “Nobody’s ever asked me that.” He says, “Well, it means you die.” And everybody in his family died within two years of retiring. And he had not been saving for retirement because, in that moment, he discovered, “Well, why would I want to save for to fund my death?” Now, that may not seem logical to some, but it was perfectly logical to him. And, understanding that, he was able to change that around, being saving $7,000 a month.
So, I hate to be simplistic, or beating the same drum, but if we can just learn how to be present with our clients and really hear, really hear what they’re saying, we don’t need a lot of evaluation tools or a lot of stereotypical boxes to put our clients into to try and figure out how to help them or respond to them.
Hannah: One of the things you said was how important it is as advisors to recognize our own money scripts. Can you give us an example of what a money script that an advisor may have that would have a negative impact on how they’re practicing financial planning on their clients?
Rick: I had a money script that everybody wants to minimize their estate taxes. And this was back in the day when … what, I don’t know where the estate tax started, at 250,000 or a million or something pretty low, and I had a client, and I spent 10 hours going through minimizing their estate taxes, and they were probably worth 10 or 20 million at the time. And, the client leaves me. Drops me. And I’m like, “What is going on here? I just came up with a plan that saved these people five million or 10 million dollars or whatever it was, and they quit as clients.” And it was 10 years later, they came back as clients, and I was saying something that, “You know, every decision isn’t about the money.” And I remember the wife just about came off her seat. “I can’t believe you’re saying that.” I said, “Well, what do you mean?” “Well, I’m glad you have finally learned that.” And I said, “Well, what do you mean?” “Well, 10 years ago, we were here. Remember that?” “Yeah.” “Remember, we left? We quit?” “Yeah.” “We quit because I told you that what we pay in taxes when we’re dead is of no interest to us. We don’t care about minimizing our taxes, and you came out and spent all this time and came out with this big plan that minimized taxes.” I said, “I did. Oh.”
So, that was a money script I had, you know? Who wouldn’t be interested in saving taxes and maximizing what you pass on? Well, guess what? A lot of people.
Hannah: That’s such a great example. And letting clients question our assumptions that we make.
Rick: Now, when we’re working with clients, it’s so important that we try to take ourselves off the pedestal. ‘Cause clients will have us on the pedestal, that we must do money right and we must be all together. And that really impedes the relationship. It’s real hard to have a relationship with someone who is superior. I can fill up a lot of time telling people the bad money decisions I make. In fact, I joke with clients. I say, “Listen. My job in life has been to make every bad money decision there was so that I can help you not make those.” And, as I will relate that to clients, I have had so many say, “You know, when you started talking about how you struggle with money, how you and your wife, your relationship, you’ve had your struggles with money, how you’ve made bad money decisions, I just relaxed and felt so much closer to you and so much safer that you’re just like me.” And that may be confounding to the planners listening to this. I mean, there would have been a time in my life I would’ve never told a client I made a money mistake. Oh my … They’ll fire me. They’re coming to me because I know. And I find it’s actually quite the opposite.
I had a trainer once, when I was in a train the trainer course, and he says, “When you get up in front of people, and you’re training them, the last thing you want to do is tell people how you’ve done everything right. Because first nobody cares, and second, nobody relates to somebody who does everything right. When you get up in front of people, you tell them every wart you have, every way you’ve bungled deals.” This was back in my real estate days. “And they’re going to love you, because now they can relate to you because you’re just like them.” And, there was such a core of truth in that. Therapists know this; it’s called self-disclosure.
Hannah: Mm-hmm (affirmative)-
Rick: And a good therapist is going to self-disclose appropriately. So is, a good financial planner. It’s so important that we let them know of our struggles and you know, appropriately kind of how we got through those, you know, if we got through them. That said, I think it’s pretty important that a financial planner not be in bankruptcy, but I can tell my clients how I have faced bankruptcy three or four times in my life. And that can be pretty valuable, ’cause all of a sudden they understand I relate to where they are when they’re struggling.
Hannah: It’s such an important concept and so counter to what we’re taught or what we just assume to believe is true.
Rick: Yeah. Absolutely. I can remember one of the … When I started doing therapy or playing around with it, I went to a couple psychologists who never said a word. At that time, I didn’t get a whole lot out of listening to myself talk, and I would go to a therapist, and he’d spend 40% of the time talking. And I was like, “Oh, this is so refreshing.” You know, and he’s telling me all, “Yeah. I’ve had problems with that. Yeah. I have struggled with that.” And it was so refreshing to me. So, I think that’s really important. When people come into our office, I mean, they’re typically pretty uptight. I never knew that. I work here. I’m not uptight here. You know? I’m not on edge. But people feel such inadequacy around their money. How many times have we heard, “I don’t know if I have enough to come to you.”
Rick: Everybody listening to this that’s a planner has had that happen. “Do I have enough money?” And I’ll tell people, “You know what? What you have is all you have, isn’t it?” “Yeah.” I said, “Well, that’s a lot of money, isn’t it?” “Yeah.” So, people can feel just less than in our offices, and shame that they’re here. I mean, people don’t wake up one morning going, “You know, this is a great morning. Sun’s shining, birds are singing, I think I’ll go get a financial planner.” They typically are drug into our office by some life event.
Rick: So, I think it’s really important for us to be sensitive to that and to really try to help them relax and help them understand that we are not the gurus and gods of finance. That we are not omnipresent and we don’t know everything. But, we know a lot of things, and we’ve been through a lot of things ourselves. And we’re help. You’re here to just collaborate with them and help educate them. Help give them some things that they don’t know, some benefits of our wisdom, and just to be with them through this process.
Hannah: I’m thinking of all of the ways that I relate to that personally with other professionals that we work with.
Rick: Yeah, people are used to going to professionals and not understanding what they said, you know? They go to the estate planning attorney and I remember the first one I sat through back in the college of financial planning days, and they’re talking decedent and set lower and creator, and grantor and grantee, and I’m just like, Rick Kahler, who are you kidding? This is Greek to me. I’m supposed to learn this stuff? And our clients experience the same thing in their offices and the same thing in the accountant’s office and the same thing in the physician’s office and how many times have you heard somebody just go on and on about a medical practitioner that really took the time and really related and really listened. It’s impactful.
And you know, that’s … more and more, that’s what we’re in the business for. With 20% of our engagements are all of our technical knowledge, but 80% that can’t be replaced or done by a robot or done on the Internet is our ability to listen and to connect emotionally and empathically with that client. And I can hear my old planner voice in my head saying, “Well, that’s not what we’re here for. We’re here to give advice and numbers and help them get the right insurance and everything else.” And we are, but if we really want to help the client and help them go into action around what is a good money decision, we’ve got to hear them so that we really know that we’re going down the right road. I tell a client, ’cause you asked me earlier, you know, do I let clients know all this? And all this, like, 90% of your decisions are made emotionally. Yeah, I do. Because I say 90% of mine are made emotionally.
And here’s what we’re trying to do: what we want to do is find out what your limbic system really believes about money. And, if we can do that, it’s going to be insightful to you. It’s gonna be insightful to us, and that’s gonna help us come up with a plan of action that you have a high probability of actually doing. And that has a high probability of really meeting your needs, rather than one that’s cookie cutter formulated around what you should be doing and what I think you should be doing.
Hannah: We had touched on it just very briefly beforehand, but this idea of how do we get clients to change? Or how do we help facilitate change in clients’ lives around their money? I’m thinking the client that overspends or even the client that under spends. How do you approach that situation? Or how do you help a client change their behavior?
Rick: Yeah. You know, that’s a big one. It’s first understanding that change comes from within the person. It doesn’t come from without. So, we have a list of 12 things that will not help change a person, and actually will tend to set them back, and they were developed by a guy by the name of Thomas Gordon in a book of how not to talk to your child. And it includes manipulating, cajoling, directing, even two of the 12 are praising and … oh, I forget the other one. It’s pretty profound … or asking questions. When you’re done, you go, “What’s left?” I mean, and what’s left is being very, very curious with a client. “Tell me more about this. I’m wondering about this. We said this word. Define that for me. Tell me more about what retirement means.” And really, it’s helping a client discover to kind of run into themselves, especially when there’s maybe contradictions or there’s seemingly illogical behavior.
We have to remember something: that there is no illogical behavior. That every behavior makes perfect sense when we understand what the underlying money scripts are, or the beliefs. And this is true in every case. So, no matter how illogical that behavior may seem to you or others, it makes perfect sense. And it’s helping a client discover that, “Oh, no wonder. Oh, I get it.” And it can take time, which is one of our biggest resistance as a profession. You know, we want to get in, and here’s our schedule, and we got four meetings and we need to get the plan done. And so, we can get pretty anxious ourself about the client proceeding in something that seems so clear to us, is not clear to the client. It’s just really important that we have patience, and that can be so hard. We’ve changed our model to try and work around that, because it used to be that while a client … nothing got done here unless they had a meeting. And we were being told by our client service staff that, “You know, a lot of clients just come in because they can’t get their stuff unless they meet. They don’t want to meet with you as much as you want to meet with them.”
And so, we went to a model where we deliver … we have a four-year schedule where we’re delivering all the financial deliverables, whether it’s an update of the retirement plan or their estate plan, their taxes, looking at those once a year. The insurance, review that. Where that just happens and it’s sent to them. And then, they call us when they want a meeting. And we tell them, “You can have unlimited meetings.” What’s happened, and actually, this was influenced by Sarah Swantner, who’s just about to get her Master’s in Counseling. She’s a CFP in our office, and she said, “You know, in the mental health model, people come in because they want to come in, not because they have to come in.” So, we said, “Well, let’s try this.” So, what happened is we weren’t … actually, our meetings dropped off, which is scary, because I’m like, “Well, gee, if our clients aren’t coming in, are they gonna fire us?” But what that’s allowed us to do is that we are now available. You can get an appointment with me next week. In the past, I was six weeks out, maybe two months out. And, we can see clients, Sarah can see clients weekly if they have something going on. So, we can really begin to spend more time with clients around the issues that are really important.
Part of this is it does take time. Behavioral change takes time. And we can delude ourselves into that, well, my clients change all the time. Enough shaming and beating and cajoling, we can get people to conform for 30, 60, 90 days. That is not permanent behavioral change. So, what we’re talking about is permanent behavioral change.
Hannah: What would be your advice to the new planners who are listening to this and just starting their financial planning career?
Rick: Well, I would encourage them to get all the technical training because that’s really important. The CFP is a great designation. A Masters in Financial Planning I think will continue to bring more weight and be more recognized, and I would add, something like Kansas State has a certificate program in Financial Therapy. Creighton University has the Financial Behavioralist. Susan Bradley has a Certified Financial Transitionist that she’s rolled out. George Kinder has his course of study. And I’m sure that I’m missing some somewhere, but I would absolutely at the same time, if possible, be enrolled in something that’s going to give me skills in understanding people, understanding the human brain, understanding psychology and developing my listening skills. And, really putting that together.
I think the premier financial planning engagement of the future is three-fold. I think there will be the traditional financial planning. Added to that is financial coaching, which has been happening for a long time. We call it life planning, but I like to reframe that as financial coaching, which is being with the client and looking toward the future, what’s possible. George Kinder’s three questions is indicative of financial coaching. What can we create? And then, financial therapy is more taking a look at the past, saying you know, where have been the problems and how can we get you into the present so that you can look into the future. I would definitely work and expose myself to that relational side because it will pay big benefits, not only in your practice, but to yourself personally. It’s real hard to work on the relational side in a context that doesn’t involve yourself because you know, the numbers side is very academic, isn’t it?
Hannah: Mm-hmm (affirmative)-
Rick: We can read books and understand how to do financial planning, but we can’t read books and understand how to do a relationship. It’s experiential; it’s not academic. Yeah. For people who play golf, you can’t read a book and go out and par, right? You’ve got to experience the swing. You can’t read a book and learn how to meditate. So, you can’t read a book, as much I would love to sell books, you can’t read a book and learn how to be an exquisite listener. It’s something that comes through practice and very experientially.
Hannah: So, one final question: how would you finish this sentence? Financial planning is-
Rick: Financial planning is learning how to be with people in such a way that we can help guide them to greater financial well-being.