Executive Summary
Although operating a business that delivers financial planning services is called a "practice" the reality is that most financial planners do little to actually practice their skills outside of the ongoing work they do for clients. Yet while this is standard in the financial planning world, it seems almost absurd in other contexts; if a professional athlete only practiced during the time that actual games were played, he/she wouldn't last long. In fact, looking at the history of top performers in most fields, from sports to business, shows that those who are most successful have an ongoing process for effortful practice and a deliberate strategy for self improvement.
Nonetheless, financial planners do little to hone and practice their own skillsets, especially once meeting the experience requirements for the CFP certification. Is the problem simply that most financial planners, like most people, aren't entirely comfortable with criticism and feedback - even if it's purely constructive - and would rather avoid the situation entirely? Or is there some other reason why financial planners don't actually do much to practice?
The inspiration for today's blog post was a recent conversation I had with a fellow planner and manager who works for a "large" financial planning firm, who noted that when he tries to conduct "roleplay" sessions with the planners on his team to practice how to respond to various client situations, they push back and resist. So much, in fact, that they've even tried to send complaints over his head to his superiors, so they can get out of the roleplay exercises.
"My background is as a musician," he said, "and everyone understands that you can't possibly get better if you don't practice. Rehearsal is an essential part of being a top performer."
"That's a good point," I replied. "Why shouldn't that be true in financial planning as well?"
The Value Of Practice
The value of practice has long been recognized in professional services; the genesis of the apprenticeship originates from the concept that one must practice in a supervised manner before being ready to render those skills as an expert with the public. Whether a doctor or a tailor, or the homework assigned by a teacher to the students, it's recognized that one must practice is essential to learning.
And the value of practice applies to physical activities as much as mental ones. Top performers in a variety of sports are well known for their intense practice schedules. For instance, Michael Jordan was well known for the intense practice routines he'd put himself through, after he finished team practice with everyone else. Olympian Michael Phelps is similar, as he practices twice a day for up to six hours, and does so six days a week (a training regimen so intense he's reported to eat 12,000 calories per day just to maintain his energy!).
The importance of practice was further popularized in recent years in the Malcolm Gladwell book "Outliers" which discussed the so-called "10,000-Hour Rule" - that mastery of a skill requires 10,000 hours of practice, such as 20 hours of applied effort per week for 10 years. One of Gladwell's key points was that many of the world's "outlier" successes, from Bill Gates to the Beatles, were heavily influenced by the fact that they simply had opportunities to reach the 10,000 hour practice mark especially early in their lives, which in turn allowed them to better leverage other opportunities for success down the road. In fact, Gladwell found that one of the reasons some exceptional people succeed where others don't is the difference in opportunities they had to practice.
Not Any Practice Will Do
However, it's important to note that just going through the motions of practice isn't enough. In the original 1993 study on the issue, by Anders Ericsson and his colleagues, one of the key differentiators in the success of top performers was not just practice time but deliberate, effortful practice, often with an element of direct, constructive feedback to make improvements along the way.
This is why the mere fact that someone engages in a task doesn't automatically make them an expert, no matter how many times it's done. As Michael Jordan once said, "You can practice shooting eight hours a day, but if your technique is wrong, then all you become is very good at shooting the wrong way." You can only advance so far in a world of practice without feedback to fix the fundamental issues that we can't always see and correct ourselves.
Notably, practice amongst top performers also doesn't necessarily end at the 10,000 hour mark, or when a certain level of "mastery" is attained. Michael Jordan didn't stop practicing once he made it to the NBA, nor did Michael Phelps after he won his first Olympic gold medal. Many of the world's best and brightest (and most successful) are constantly looking for new opportunities to apply, practice, and hone their knowledge and skills.
Where's The Practice In Financial Planning?
With all the known benefits of practice, it appears to be a bit of an oddity that there is no refined element of practice in financial planning. Although the CFP certification does require 3 years of experience (or now 2 years if fully focused on delivering financial planning), in many firms this may still involve a relatively limited amount of actual client contact and interaction - which is notable since "trust and communication" is arguably is one of the hardest skillsets in financial planning to master. And of course, even 3 years of full-time experience barely makes it half way to the 10,000 hour mark, assuming that all the time on the job is truly applied to financial planning skills in the first place and that the individual isn't distracted with other job tasks.
In addition, what little supervised "practice" that does occur while someone is earning their CFP marks virtually disappears once the certification itself is earned. It's not at all common to see an experienced practitioner with 5, 10, or 15+ years of experience still being supervised and coached for better performance and results - again, even though the reality is that would be entirely normal, and in fact expected, to cultivate the best results in many other fields and disciplines.
Nonetheless, it seems that practicing financial planning should be relevant. Not only to hone technical skills, like how to use planning software or analyze a client situation, but also - and perhaps, especially - to practice the softer side of financial planning. Do you know how to help clients navigate through a difficult and intense situation? What if a client couple starts fighting in your office? What if someone starts crying? How do you start the conversation with a client who continues to come back for advice but never implements anything? How do you convince a hesitant client of the value of financial planning in the first place? And how do you know if your solutions to any of these challenges are effective if you're never had the opportunity to review your performance, or have someone give you constructive feedback about it?
Why Don't Financial Planners Practice?
So what is the reason that financial planners don't practice, and why is it that so many push back on the opportunity for practice? (When was the last time you ever heard a financial planner excited for an opportunity to roleplay practice financial planning scenarios!?)
I think the primary challenge is that the performers who have risen to the top and excelled through practice also have a mindset that leaves them more open to constructive criticism and feedback than the average person. After all, the reality is that while improvement is nice, many of us have difficulty hearing the hard truths about ourselves, especially in regards to things we may feel self conscious about or have concern that we aren't doing well. As a result, roleplaying and setting up feedback situations just gives us an opportunity to hear some feedback we may not really want to hear... so consciously or subconsciously, we do whatever it takes to avoid being put in that situation.
For others, I suspect the problem is that they believe practice is unnecessary, because they are already successful. "My business is profitable and my clients continue to pay me year after year," one might say, "so apparently I've gotten all the practice I need." Of course, a deeper inspection of that statement shows its absurdness; just because some clients have decided to come on board and stick around doesn't mean the practice couldn't be bigger, more profitable, more effective in helping clients achieve their goals, or more successful by some other metric, if more practice was occurring.
After all, Michael Jordan and Michael Phelps also could have stopped practicing after the first NBA Championship or Olympic gold medal, but they didn't; instead, they continued to practice, and continued to get better, and reached ever further new heights and levels of success. And all the evidence on the research of practice suggests that this could and would hold equally true for financial planners as well.
So what do you think? Do you ever "practice" your financial planning skills, in a deliberate, effortful manner with opportunities for constructive feedback? What would "practice" be like for financial planners? Should there be a requirement for more practice, either up front or as an ongoing part of being a practitioner? Or is it acceptable that each person chooses how much practice they do or do not want to put into the process?
Great post Michael.
While I was at the University of Georgia, we opened the ASPIRE Clinic, in which financial planning and marriage and family therapy students worked together with clients. The interesting part is that it may be the first time a financial planning program has recorded students working with clients, and then gave feedback. UGA has since made it a requirement for all M.S. students to go through a course that video tapes sessions with clients to help teach them how to become more effective planners.
In many states, therapy students must have 3,000 supervised client contact hours before become licensed. Yet financial planners must only pass an exam and work in the financial planning process, not even directly with clients.
Of therapists tend to have their own therapist, but that a story for another day 🙂
Great post… Keep up the great work.
I require all planners to participate in Bill Bachrach’s Trusted Financial Advisor training program. Establishing rapport and trust with a complete stranger is a beneficial learned skill in direct contrast to the manner in which sales training ruins most candidates I encounter who desire the label of financial planner.
We tape or video record all client review sessions and all initial interview sessions for playback and critique. We review financial planning presentations on a regular basis for feedback and critique.
All advisors should “practice” using roll-play or video for improvement.
I believe CFP Board should require recorded client interaction events much as the dental school in our city requires clinical patient interaction under supervision in order to better prepare those that have completed the book work and initial testing for making a positive contribution to prospective clients’ lives.
Jeff,
Thanks for sharing.
Regarding your comment on “we tape or video record all client review sessions and all initial interview sessions…” – is there any awkwardness in the conversation with the client when asking if it’s ok to record the meeting (I’m presuming that you get client permission in advance to record the session)?
Thanks again for sharing!
– Michael
Two comments.
In regards to role playing, too many people running them don’t run them effectively. They tend to highlight what people are doing wrong leaving people feeling defensive and not wanting to participate again.
If you have ever participated in a good Carnegie course, you know it is much better to consistently praise what people are doing right. It makes the process more fun, motivating and it is amazing how much better they will get.
The second critical piece to improvement is choosing the right metrics. One of the reasons a Phelps or Jordan can practice so effectively is that they have clear metrics to judge whether they are improving.
How many planners track the quality of information they receive through their intake process? How about tracking the percentage and speed of implementing recommendations? The number of unsolicited thanks? You get the idea. Choosing a good set of metrics will drive change in how you practice.
David
Michael,
Love your blog–you ask the uncomfortable questions. Ouch! Practicing is so critical to getting better, and like you mentioned, I hate role playing because I really do have to put myself on the line and be open to learning something new. My limbic brain tells me to avoid the pain. That’s why I think every CFP should be required to go through the FPA Residency Program (Lake Arrowhead, CA again this year). I went last year, and ouch, what a career-changing experience. I wish there were “ongoing” FPA Residency-like programs (2-5 days) on issues like: dealing with death and grief, working with difficult and emotional couples, getting clients to see a therapist, how to deal with non-implementers, etc. Rather than having individual or panel presenters, these Residency programs would ALWAYS involve role-playing and practice, with feedback from mentors and the other participants.
I think there are two types of practice and most of the comments here are addressing just one.
First, is relating to the client and how to handle oneself in client interactions. It’s almost – dare I say – “sales” training. Probing questions, handling objections, etc. While a good “bedside” manner is important, there is a much bigger issue: Competence. We’ve all known the “nicest people” that were sadly, incompetent.
The best way I’ve seen to measure – and improve – competence is using case studies. Working with client data and case facts. Gathering data and goals. Analyzing and evaluating their current status. Developing solutions and alternatives. A good case study forces us to look at the client from several directions and develop and integrated And the more experience one has at doing something the more likely they are to be good at it – i.e. – competent. Do you want the surgeon that that does 6 knees a year or the one that does 60? The pilot that practices 1 instrument landing a year or 15? The financial planner that prepares 3 plans a year or 12? It’s the application (and practice) of what we know that makes the difference.
While many say, “Practice makes perfect,” the better way to say it is, “The RIGHT KIND of practice makes perfect.”
Michael,
The other day I went to my friends house who is a dentist. He had extracted the front teeth from the family dog and implanted them into his daughters mouth and vice versa. I was shocked and asked him why he did this and he replied, “I am only practicing.”
I practiced law before becoming an advisor. One thing missing from this profession is the ability to observe others in action. I was a courtroom rat and would take every opportunity to sit in on arguments in the appellate court or watch a great cross examination during a big trial. As Yogi said, you can observe a lot just by watching.
Interesting…
Good article, Michael. I think this idea of practice ties in with the concept of mentorship and study groups, especially for solo practitioners. Having an older, more experienced advisor to speak the hard truths about one’s own skills, while having someone serve as an example can be priceless.