Ben Coombs, CFP®, CLU, was part of the first class of CERTIFIED FINANCIAL PLANNERS™. When he got started, nobody had jobs for financial planners. He struck out on his own in 1971 – and was broke in a year. However, even after taking a full-time job for a period of time, Ben kept pushing. He firmly believed in the importance of financial planning as a profession, and he was thrilled to find like-minded individuals at the onset of this profession as he continued to build his practice.

Ben has developed an incredibly unique view of financial planning. As he’s honed this mindset over the years, he has created a beautiful metaphor: The Iron Butterfly.

An iron butterfly is beautiful. It’s ornate, and it looks great on a coffee table, or hanging on the wall as decor. But an iron butterfly doesn’t actually fly – and what’s the point of a butterfly that doesn’t fly?

Ben views financial plans as individual, unique butterflies. But it doesn’t matter how beautiful they are if they don’t fly. This is why he calls his financial plans “financial action plans.” He believes a financial plan might take years to fully implement as an advisor and a client gets to know one another, and as their goals become solidified, and that consistent action being taken proves whether or not a plan is successful. This episode is full of wisdom, from small nuggets of advice to larger life philosophies that this amazing financial planner abides by.

Hannah's signature

 

What You’ll Learn:

  • What the beginning of the financial planning profession looked like
  • How a seasoned advisor views financial planning software
  • How financial planning has evolved over the years
  • Where financial planners find the most opportunity through market ups and downs
  • Why a financial plan is worthless if it’s not actionable
  • How to create actionable financial plans
  • How to put your clients at ease and learn more about their hopes, dreams, and financial goals
  • Why financial planning is more consistently valuable than investment management alone
  • How career paths have changed the game in the profession

 

10 Wise Lessons Learned About Being A (Better) Financial Planner

 

Show Transcript

Ep122 Transcript


Hannah: We are live here at the FPA Annual Conference, and in the NEXGen Lounge I have Ben Coombs, who was part of the first CFP class ever. So, what was your CFP number?

Ben: Well, they didn’t have numbers then. So, because I’m a Coombs, I was near the front of the alphabet, so if they had numbers I would have been a low one.

Hannah: Single digits?

Ben: Yeah.

Hannah: Yeah, single digits. So, when did you take your CFP exam? What year was this?

Ben: I took two in 1971, and two in 1973.

Hannah: So, in 1973, financial planning was not a prevalent field to go into.

Ben: No.

Hannah: When was the moment that you realized that financial planning was what you wanted to do, or you realized that financial planning was something that you needed to pursue?

Ben: Well, it was when I was employed as Director of Equity Training for California-Western States Life, and I had been in the life insurance business as an agent and a district manager for The Equitable Life. I had been Training Director for Occidental Life. And then I was in the job I just mentioned, and I knew what I liked about the insurance business, but I knew more about what I didn’t like about it.

And so, I felt like I was an answer in search of a question when I was in the life insurance business. And I was trained to help you redo your question, if I didn’t have the right answer for the question that you had. And I wanted to be answers in search of questions, so that regardless of what your question was, I could respond with advice, and in those days, product. Everybody was commissioned, compensated, in those days.

So, I didn’t know about financial planning. I thought I created the concept of financial planning in my own mind. And when I left California-Western States Life to set up my business, I discovered the International Association for Financial Planning, and was a little chagrin to find out I hadn’t made it up all myself. Somebody else, by the name of, Loren Dunton and a few other people had figured it out before me.

Hannah: So, was there any client or any situation specifically that made you, when you were that life insurance agent, wish you could do more or wish you had better answers?

Ben: I’d run across people from various walks of life from … You’d go down to the County Recorder’s Office and get a list of all the births, probably would have gotten your name here recently, and start calling on young families, and get referred to their extended family, so you’d see a lot of different situations. But you only had one product, Whole Life, and various iterations of Whole Life, but … There was a lot of other things that needed to be responded to that you couldn’t respond to unless you could convince them Whole Life was the answer to everything.

Hannah: So, the new CFP exam, is that where you learned more about the estate planning and the …

Ben: I knew all about estate planning. I was a CLU, and my dad had been in the life insurance business and had been an estate planning in the life insurance business, so I was as well versed as anybody in that era in the subject of estate planning. But, you were selling liquidity for people to fund their estate plan with, when you were selling life insurance, and I wanted to help create estates and not just preserve estates.

Hannah: One of the hot topics today is niching, and having a niche for your practice. When you got started with the idea of financial planning, was there a specific demographic that you really wanted to serve, or were you just wanting to help anybody who came?

Ben: I wanted to help anybody that would hire me, quite frankly. But I worked more with school teachers than any other employment category, because the company I’d been with, sold tax sheltered annuities, so I had a lot of contacts with school teachers from prior employment.

Hannah: So, you come out, you have your CFP designation, and you have, “I’m going to do financial planning”, how did the public respond to that? How did the people you pitched financial planning to … what was their response?

Ben: Well, you gotta remember, when I got my CFP in 1973, interest rates were double digit, and a two-income school teacher family was in the 50% marginal tax bracket. And they had just lost a lot of money in the stock market in 1973-74, so there was a lot of financial angst out there, and they were looking for somebody that had more arrows in their quiver than just one particular financial product. They were looking for advice and not product.

So, I’ve often said, if you want to start a dentistry practice, the best place to do it is in the land of tooth aches, and everybody had a financial tooth ache at that time, so it wasn’t too hard to get started.

Hannah: The story that I’m kind of hoping you’ll tell, is the one about the check that you wrote.

Ben: Oh, as I mentioned, I got my CLU in 1966, so I had on my checks, “Ben Coombs, CLU” for a number of years. And when I got the CFP in 1973, I proudly put, “Ben Coombs, CLU, CFP”. And I remember the first time I went to the bank, you used to go to the bank in those days to cash a check … Went to the bank and wrote a check to get some spending money, and the teller said, “What’s CFP?” She didn’t bother to ask me about CLU, she immediately focused on CFP, and said, “What’s CFP?” So, I proudly told her. And I immediately realized that there was something about that name, if you remember that song, but it immediately rang true with people. Her reaction was, “Oh.” As if, “I should have known that.” And she’d never seen it before, nobody else had ever seen it before, but she immediately thought it was something that had been around a long time.

Hannah: Well, I just love that financial planning is … people want financial planning, and it just makes sense on a really intuitive level for people.

So, when you started your financial planning firm, did you find immediate success?

Ben: No. I started in 1971, and it was broke within a year. And had to take a salaried position, and so I worked as a divisional sales manager for a real estate syndication firm that sold real estate syndications and tax sheltered annuities to school teachers. And it was from there in 1976, I started my own business again, and the second time it worked.

Hannah: Second time it worked?

Ben: Yeah.

Hannah: That’s encouraging. I know a lot of young planners really struggle as they start their own business, and it’s …

Ben: Well, the nice thing today is you don’t have to start with your own firm in order to be a financial planner. Nobody had a job for a financial planner, they didn’t even know what the job looked like. So, in order to be a financial planner, you had to start your own firm, you had to be an entrepreneur, sole-proprietor.

Hannah: As you continued as a financial planner, starting in 1976 … So, you retired in 2000?

Ben: Mm-hmm (affirmative).

Hannah: So, that’s almost a quarter of a century that you worked as a financial planner. Did clients’ expectations change in that time?

Ben: Only in regard to the fact that more and more people were aware that there were financial planners. I built my business solely on referrals, and referrals became a lot easier as time went on. People would wander in. I used to give out cards to clients, about the size of a three by five card, “Good for one free hour”. And I’d have people wander in with this card that a friend of theirs had given them years before. It was all bent and worn out, been in their wallet for a long time, and they’d come into the office and present that to get their one free hour. So, in the beginning you had to go find them, and eventually they were finding you.

Hannah: What did you learn about working with clients as a financial planner?

Ben: That the key is the relationship. Everything you do as a financial planner today can be farmed out. All these booths around here, you can find somebody to do something for you in every aspect of your business that needs to be done. Only thing you need is a cell phone and an automobile to be a financial planner. But the one thing you can’t farm out is the client relationship. So, the key, in my mind, is not what you know, it’s who you have a relationship with.

Hannah: As a financial planner, the information that you had access to had to have increased dramatically from when you started to when you retired, and even now it’s grown even more exponentially. What is your advice on where to get information from or how to filter through some of that information that’s out there?

Ben: Well, make sure your sources of information aren’t redundant. When I got started I was securities licensed. And as a securities broker-dealers is responsible for your training and supervision, and so you have to go to broker-dealer meetings. And the FPA’s revenues is strongly influenced by products providers, and now service providers, but in those days it was solely product providers. And then they’re all commission-based, or they were at that time, so you heard from the same people at your broker-dealer meetings as you heard at the IAFP meetings. And then the magazines all had the same advertisers, so the information in the magazines and periodicals were all paid for by the same group of people you were hearing from in the other two places. So, I woke up to the fact that I was hearing the same thing from the same people no matter where I went for learning.

So, I joined the CPA Society in California, and started going to CPA meetings, and I rekindled my relationship with the American Society for CLU to go to CLU meetings, and join an estate planning council, so I could hang out with estate planning attorneys. And make sure that I got conflicting information, different perspectives.

Hannah: And did you find that that information was conflicting often or …

Ben: A CPA community has their biases and preferences, and the estate planning attorneys and bankers and everybody all have their biases and preferences. And they have a tendency to look down on each other as not being quite the fount of perfect information. So yeah, you get conflicting opinions. And that’s very helpful in forming your own opinions.

Hannah: How did you do this or how would you advise new planners to really challenge the biases that they have, that they may not even know that they have?

Ben: Well, the only way I knew how to do it was to put myself in contact with people with different perspectives, so it’s what I was just describing. Go to estate planning council meetings, go to CPA Society training meetings. Go to CLU-oriented life insurance meetings.

Hannah: So, a lot of that … Yeah, different perspective, different … Almost that diversity of ideas.

So, I’ve heard you talk about iron butterflies in the past, can you share with our listeners, what is an iron butterfly?

Ben: Well, an iron butterfly is a very pretty thing. It’s very ornamental, and it might look good on the wall or on a coffee table or wherever you might display it, but it can’t fly. And a butterfly, to be of any use in this world, needs to be able to fly. So, I use that to describe financial plans that you might develop that look really good to the experts, but if it doesn’t communicate to the client and if it isn’t responsive to the client’s motivations and desires and goals, it won’t fly.

Hannah: So, that’s not because the client doesn’t want to implement, it’s because maybe the advisor or the planner isn’t doing it in the right way?

Ben: Well, it hasn’t heard the client. The client may not tell you everything you really need to know about their fears and their hopes and their dreams. That comes over time with a continuing relationship with a client. So, it’s easy when you know what you know and you’re in a fact-finding interview, to start developing solutions to the client’s problems, as soon as you start gathering the facts from the client. But you need to be careful that you’re hearing what I refer to as, metamessage. What is the client saying between the lines?

I would tell a client, I need to know three things about you. I need to know where you are today, and where you want to be tomorrow, and what you’re willing to do to get from here to there. And it’s that willing to do that’s probably the most critical thing you need to know about a client. Because if you design the perfect solution to their financial problems, then they’re not willing to do those things, then of what use is it?

Hannah: So, it’s better to maybe not have something quite as beautiful, but it flies? Is that kind of what you’re saying?

Ben: Yeah. I used to call my financial plans, financial action plans. I’d tell my clients, this plan is of no use to you unless you’re prepared to act on it. So, we shouldn’t even get started in this process, unless you’re prepared to act. And it’s my job to find out what you’re willing to act upon.

Hannah: And how do clients respond to that when you ask, what are you willing to do?

Ben: They’re all open to it, but they don’t really know …

Hannah: That’s why they’re visiting you, right?

Ben: Yeah, right. They don’t know what they’re going to be asked to do. So, a financial plan probably takes three to five years to really get fully implemented, because both you and the client are learning about each other.

Hannah: So, it’s not about having the perfect plan, it’s-

Ben: No. It’s about making progress.

Hannah: Making progress?

Ben: Yeah. Taking action.

Hannah: You said, financial planning is a neighborhood play, what do you mean by that?

Ben: That’s probably an out-of-date phrase anymore, because in baseball, before the instant replay, the ball only had to be in the neighborhood of second base when the runner was approaching for him, to be called out. It didn’t have to be perfect timing. And so, the double-play was always called the neighborhood play, because the ball just had to be in the neighborhood of the base before the runner got there.

We can measure inflation and rates of return out to seven digits, and all that, but as soon as you come up with a measurement, it’s wrong the next instance because things change. So, you just need to be in the neighborhood to be right.

Hannah: So, it’s not about being perfect?

Ben: No, you can’t be perfect, because we don’t have perfect clairvoyance about the future.

Hannah: Well, and the future changes so much.

Ben: Yeah.

Hannah: So, you’ve talked a lot about client trust in the past. How do you build client trust? How do you get a client to trust you? I know that sounds kind of …

Ben: Well, again, that takes time, takes a relationship. But the most important thing is to ask questions. Not give answers, but to ask questions. When I’d meet a client for the first time in the data gathering interview, I’d say … Well, first of all, when they’d come in just to get acquainted, somebody referred them to me, I would say to them, “What’s the one thing I can do for you today that will have made your time here worthwhile for you?” And every time I had a face-to-face interview with a new client, prospective client, existing client, I’d always ask that question, “What’s one thing I can do for you today that will make this time worthwhile for you?” I think that helped me develop a rapport with the client.

And just ask questions. I would have my legal pad of paper out there, and I’d say, “I’m going to be asking you a lot of questions. Now, I’m not calling into question what you’re telling me, I’m trying to find out about you. So, when I ask you a question, don’t assume that you’ve done something wrong.” And then I’d say, “Do you mind if I take notes of your answers?” When they would say something and I’d write it down, the internal reaction to the person that you’re talking to is they just said something important, if you wrote it down.

So, all those techniques would help you develop a relationship with the client, which leads to trust. And so, if they think they’re being heard, you’re taking notes of their responses, you’re asking more questions, one answer leads to another question, you’ll develop trust.

Hannah: Which helps with implementation and helps with really getting the client where they want to go.

Ben: Yeah, well it helps with getting to really know the client.

Hannah: So, it’s so interesting, I’m hearing you talk about working with clients. And so much of what you say is what we’ve heard, contemporaries of ours right now saying, but that was true back in the 1970s as well. And so, is the real core of what we do as financial planning, has that changed?

Ben: No, it’s making a clients hopes and dreams become reality, and overcoming their fears and anxieties while you’re doing it. And that’s always been the case.

Hannah: So, is it the tools that have changed.

Ben: Oh, yes. I started with a slide rule and graduated to the Bowmar Brain. The first handheld calculator was invented in the town I had my office in, in Woodland Hills, California at Pierce College. And it was the size of a shoebox, and it would add, subtract, multiply, and divide. And within about two or three years it was about the size of this business card.

Hannah: So, we have all this financial planning software now. What’s financial planning software’s role in our relationship with clients?

Ben: Well, hopefully it’s in the background. Hopefully it doesn’t come between you and the client. If it does, you’ve created an iron butterfly, I think.

Hannah: So, we’ve talked about the client. Let’s talk about just the business. You’ve seen quite a few market cycles, what have been the places you’ve seen the most opportunity as a planner?

Ben: Well, it’s when things aren’t going well. Whether it’s the layman brothers’ debacle, or the dot com bust, or the demise of real estate limited partnerships, or the 1973-74 market crash, or high interest rates, foreclosures. When people are hurting they’re looking for help. The best time to be in business is when things are going bad in the financial world.

Hannah: Which is very counterintuitive. We’re playing a different game than most financial advisors in that point.

Ben: Occasionally we put clients on, just as investment advisory clients and not as financial planning clients. And that was always a mistake. We would lose those clients if things went bad, but we’d lose more of them when things were going well, because they said, “Why do I need this guy?”

Hannah: Yeah. You were on the ground floor of our profession being built. You’re the first CFP class. How have you seen the profession of financial planning evolve over time?

Ben: Well, the biggest change is there’s a career path, and people are growing up to want to be financial planners. When back in my day it was always a career change, and it was an entrepreneurial opportunity and not an employment opportunity. So, I would say that’s the biggest change. And maybe one other big change is it’s much more highly regulated both by governmental bodies and by the CFP Board of Standards.

Hannah: If you look at the whole world of products and services that clients are offered, from life insurance to some of these brokerage firms, and fiduciary’s a big deal right now. The FPA really stands for the fiduciary, but they feel very much like the little guy when you look at the bigger scheme of things. And often it feels like you’re pushing a boulder up a hill, if you would. But you talked about critical impact is more important than critical mass. What do you mean by that, critical impact is more important than critical mass?

Ben: Well, there was 42 of us in 1973. And there’s 188,000 today. I would say the 42 of us had critical impact, we certainly didn’t have critical mass. So, that’s my point is, it’s the impact you have on the world around you that’s more important than the world around you.

Hannah: So, you were in the original class that the CFP marks. What would you say to people who are just getting their CFP in 2018 or 2019?

Ben: Well, it would differ, I guess, if it was a career change or the start of a career. For those who are just starting, their employment life, I would say, be patient and take advantage of all of the opportunities you have to learn from other people. I’d go to work for a firm and find out what all the different roles are today within the financial planning environment so you can be sure you pursue the roles you really want to pursue.

If you’re making a career change, one of the things they teach new salesmen, or have new salesmen do, is make a list of everybody they know. And then you’re supposed to start calling on them, right? Well, the problem with that is, if you’re making a career change, all those people know you from your former life. So, they know you as a school teacher, or they know you as whatever it was you were doing, and they know you’re brand new in the financial planning business. So, you’ve gotta get outside your natural market quick, and start meeting people who have only met you for the first time in your new role, and that’s all they know you as is a financial planner. So, for people who are making a career change and want to build a business, want to build their clientele, I would say, get out of your natural market as soon as you can and create a whole new list of names.

Hannah: The line that you have on here, it says, “Be sure that the marks stay worthy, and that you stay worthy of the marks.”

Ben: Right.

Hannah: So, as new people are taking the CFP exam, what would you hope that they know about what it means to be a Certified Financial Planner, and the responsibility that comes with that?

Ben: You mentioned fiduciary, they need to have a gut level feel as to what it means to be a fiduciary. If they have family and kids, you’re learning more about being a fiduciary now that you’re a mother than you’ve ever learned before. So, it’s getting a sense of the emotional tie to your responsibilities as a fiduciary. Another word I like better than fiduciary, and that’s steward. You are a steward of your clients’ well-being. It’s an awesome responsibility and a fantastic sense of … Oh, what’s the word? Anyway, it borders on love.

Hannah: So, you’ve had 45 years that the CFP mark in existence, what do you hope the next 45 years brings for the CFP mark and the financial planning profession?

Ben: More of the same. It can’t possibly grow as fast as it’s growing, but I would expect that CFPs would be as invasive in our world community as attorneys and CPAs are today. But in San Francisco, about 20 years ago, I heard there was one attorney for every 850 people. If we have one CFP for every 850 people maybe we’ve gotten there.

Hannah: We’d be able to reach a lot more people than just the top 2% of America.

What would you caution, especially young planners, as we look to the future? What would be your caution?

Ben: Don’t feel empowered by your information, because everything you know is going to change. Don’t go around feeling good about yourself because you’ve passed this exam, or because you’ve gotten a new certificate, or whatever it might be. Just feel good about yourself, because of the relationships you’ve established.

Hannah: It sounds like things are always changing so we have to always keep learning.

Ben: Well, you always have to keep learning, but it’s not what you know that’s important, it’s who you know and have a relationship that’s more important.

Hannah: You’ve talked a lot about service in the past. How important has service been to your career?

Ben: Well, we are in the service business, right? So, that’s another term … We mentioned fiduciary, and mentioned steward, another title I think is very important is servant. You need to be a servant to your clients and that means you need to be a servant to your family, you need to be a servant to your community, you need to be a servant to your church, you need to be … Wherever you are, grow where you’re planted. And the only way you can grow is by being a servant, I think.

Hannah: Did you find volunteering and being involved with your professional peers helped you?

Ben: Well, yes, I probably shared this story with you about waking up to the fact that I was a servant and that I needed to serve somebody. I made a promise to myself I’d serve one person every day. When you have no clients, it’s hard to serve one person every day, so I got involved in my church, I got involved in the Chamber of Commerce, I joined a service club. Went through the chairs of the local IAFP chapter. When you have a lot of times on your hands, you can be of service to a lot of different people and organizations. And they all say thank you, and that makes you feel pretty good.

Hannah: What makes you excited about financial planning?

Ben: Well, now, I’ve been retired 20 years, or almost, and the thing that makes me excited now is hanging out with my peers and watching the growth of this profession, and the excitement that comes with all the new faces at these meetings. I go home very tired from these meetings, because I’ve been having too much. I’m too old to be acting this young, but … It’s still an infant, even though it’s 45 years old. Relatively speaking, it’s still in its infancy, and that’s an exciting period of time.

Hannah: Well, is there anything else or any other thoughts you’d want to leave with new planners?

Ben: Be excited, stay excited, and be a servant.

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