Kitces & Carl Ep 74: Making Clients Care About Financial Planning By Finding Their (Truly) Critical Issues

***Editor's Note: Can't get enough of Kitces & Carl? Neither can we, which is why we've released it as a podcast as well! Check it out on all the usual podcast platforms, including Apple Podcasts (iTunes), Spotify, and Stitcher.

Show Notes

• Foundation for Financial Planning

Kitces & Carl Podcast Transcript

Michael: Good afternoon, Carl.

Carl: Greetings, Michael. How are you?

Michael: I'm doing well. I'm really excited to see that the artistically Sharpie-drawn blue sofa is now signed. It's signed.

Carl: It is signed.

Michael: You've got C.R. down there. It's a Carl Richards original now.

Carl: I'm going to add, it's outside, because I'm feeling the need to be outside now. That's grass.

Michael: Oh, art's got a little green going.

Carl: That's green grass.

Michael: We are escalating the value of this drawing. Someday this will be in a museum somewhere. If you take a picture of it, you could sell it as an NFT.

Carl: Let's auction this... Yeah, let's auction this off as an NFT with the proceeds to go to the whatever financial planning thing.

Michael: Foundation for Financial Planning.

Carl: Yeah. Exactly. Perfect. It's done.

Michael: All right. All right. So for all of those who are listening, if you want to see the picture of the blue couch Sharpie drawing go out as an NFT, I actually have no idea how to do that.

Carl: I do.

Michael: But if you want that to happen, we will make that happen. Apparently, Carl knows how to make that happen. He knows cooler people than I do.

Carl: It's not a problem, yeah.

Michael: So if you want to see the next stage of the blue couch getting digitized, now's the moment. Now's the moment. So tweet us.

Carl: I'm actually not...

Michael: So tweet us @behaviorgap and @MichaelKitces. Let us know.

Carl: I know some of you guys are digital natives and would love...I'm actually not joking, so if we get enough feedback on that. The easy way to do it, yeah, just email, go put it in the comments. You can go follow me on Foundation, Foundation whatever, slash behavior gap on Foundation. We would totally do that and then auction it off. That would be really fun.

Michael: Fantastic.

Carl: All right.

The Differentiation Between Financial Advisors And Other Service-based Providers [01:54]

Michael: So for our discussion today, I wanted to actually follow up on the conversation that, and it kind of queued up for us last episode, where we were talking about all these dynamics of clients kind of shoehorn us into a box sometimes. Particularly if we end out leading with a product or if you buy a firm from someone that had led with products, it's hard to reposition ourselves. And, Carl, you had this great discussion at the end about at the end of the day we have to live at this intersection of a need that clients have and a problem that we could solve. And if they don't have the problem and you can't solve it, and they don't know that you can solve it, if those things don't work together, just business ain't happening no matter how much you want it to. And I was struck because in the meantime we'd gotten this question in from an advisor that I've heard before, I'm sure you have as well. Where he said consumers pay professionals for expertise to solve problems. We hire plumbers, and electricians, and mechanics, and doctors, and lawyers, and accountants. Yet, as this person had put it, many people seem to refuse or they ignore or they don't understand the critical issues that financial advisors can solve. Why? Which to me sort of speaks to something about that intersection that you'd set up between people having the problem and knowing that we can solve the problem, something's out of whack here. So what's out of whack? Why do plumbers, electricians, mechanics, doctors, lawyers, and attorneys have people call them and not a lot of people call us, at least for most of us and what we do? We got to prospect, we got to get out there, we got to make the business happen. They're not calling us the way that they seem to be calling everyone else. So as this person put it, they don't seem to get or ignore or refuse the critical issues that advisors solve. Where is the mismatch here? How do you think about this?

Carl: Yeah, this is going to be so fun because there's so much here. I love the plumber, let's just stick with the plumber. I don't wake up in the morning thinking I have a plumbing problem, until I do. And when I do, I call a plumber. I've tried a couple of times to get under there and my wife is like, "No, please, no. That will cause more problems." I don't have a mechanic problem on my car. I don't wake up in the morning, I don't spend any time thinking about I've got a mechanic problem. I've got a mechanical problem with my car, until I do. And then when I do, the first thing, I don't even open the hood. I've tried that. I open it, I've never found the sign that says "reconnect this." It just doesn't work. So I call a mechanic. So I think we have the same challenge here and we can talk. So either, it's two problems. What we talked about in the last episode, and I'm going to use language here I'm not comfortable with, but the analogy works so well let's just talk about it this way for a minute, please. We'll break it down a bit. Two things have to happen. Somebody has to know they're sick and they have to believe that you're the doctor.

Michael: And believe you've got a cure.

Carl: Yeah. If they know they're sick, and I don't like this language at all, and I think we'll actually get to talk about this, we can say problem, there's no language I like about this unless we talk about it some more. So let's just stick with sick. If they know they're sick and they don't believe you're the doctor, they're not going to call you. They don't even know you exist, they're not going to call you. So that's one problem. The second problem is if they know that you have lots of solutions, people don't care about your solutions until they know they have a problem. So those things have to happen. And what normally, let me just give a little context for this because we have so many places to go, what normally we conclude from that discussion, and you can see this in the industry speaking broadly, and it drives me nuts, is we normally could conclude from that discussion, that reality, is that what we need to do in our marketing and education is educate people on how sick they are. So we need to tell them that they have a plumbing problem.

How To Create Awareness Of Which Specific Issues Advisors Solve [6:34]

Michael: Which I think is the context this person, they don't understand the critical issues I solve, for which I think at least the implications is, so I helped them understand their critical issues that I solve, right? Dot, dot, dot...

Carl: Yeah, and that would be, I think, that's what the conclusion, I think, the broad industry, speaking large, the traditional financial services industry, that's been the approach we've traditionally taken. So a little bit like kind of throwing a client, throwing the public in a pit, and then looking down and saying, "Hey, I'm the only one with a rope." Now, I've just never felt like that's a good way to start a relationship. I don't think people like being treated that way. And I also don't think I like treating people that way. And so, I think the better way, and we can talk about ways to accelerate this, which I know you're going to want to get to, the better way to do this is let the plumbing problem happen on its own. Life will present the problem. I get ready to go on my first trip outside of the country, my wife and I together, with kids. We're not taking our kids, we're leaving our kids. I remember that. I remember thinking, "Oh, my gosh, we have no custodial work done." I remember realizing that, "Wow. We better get some life insurance." Well, nobody needed to inform me that I had a problem, life informed me. How many times have clients walked in and said, "I don't know what to do with this portfolio. I just inherited this money. I just sold this business." Those things happen on their own. I think it's much better. There's no magic words to say, I don't think. Except when those things happened, the plumbing problem happens, I want to think of you. And the only way I know to accelerate both of those, is to specialize. Is to be really clear about the problems you solve and for whom. So that's my context. Where do you want to go with that?

Michael: Yeah, I like where you brought that, which is sort of this specializing. To me, it just comes down to the fact that I think we have sort of two related issues. One, the truth is a lot of the stuff we offer really isn't actually that critical of an issue.

Carl: Wait, wait, wait. Back up. So you're saying a lot of the stuff we do really isn't that critical?

Michael: Yeah. In a world where I see more and more firms, "We deliver comprehensive plans. We have the best expertise and the most comprehensive plans, and we're more expert-er than everybody else. We do a lot of more deeper, more deeper, more deeper." But from the clients, "I don't know what you solve. I don't know what you do. I don't know what I get out of that." And so, we tried to evolve that way a little bit further, like, I bring you peace of mind. I have a lot of stress right now in a lot of different ways. Like, monitorship is not even financial. I am not going to go to you and have peace of mind because I've also got marital issues, and my kids are sick, and my job is rocky. Because all this other stuff is like, "Thank you so much for sorting out my portfolio and getting me back on track for retirement." I have a lot of other stuff in my life. You are not getting me moments of Zen off of this. It sort of reminds me of a plumber that says, "We don't fix toilets. We bring you housing peace of mind."

And it's not that I don't get wonderful peace of mind if my toilet is broken and flooding, and I call a plumber and they fix it. I am totally chill and relaxed when they come and fix my problem, because I was totally freaking out when it was happening. I do get to peace of mind as an end state maybe around my housing distress. But you don't bring housing peace of mind, you just literally fix broken toilets. And that's awesome, that's what I need from my plumber. And we don't want to sell that we fix the thing, like we're trying to sell the housing peace of mind, and then we can't figure out why no one wants to buy it.

Carl: You certainly didn't call for housing peace of mind. You didn't call because you have a great investment policy committee. You didn't call because you have a lighthouse on the front of your website. You didn't call because I can simplify your life. You didn't call because we help you live a life of dignity. Those are things we learn after.

Michael: Yeah. And not that they're bad outcomes, but I think that the piece that we miss and kind of getting to this person, this advisor's question, is I don't think we do a good job of actually defining the issues that are truly critical in the client's mind in the first place. I mean, it really is the stuff that keeps you up at night, stuff that wakes you up at night, stuff that won't let you fall back asleep because you woke up and you're too stressed. That's the kind of stuff that people get off their duff and go see someone about, go see an advisor about. What is it when you get down to those critical issues? And we may find the answer to that critical issue by going through the financial planning process, but that person's not up at 3 a.m. unable to fall back asleep because they don't have a comprehensive financial plan.

Carl: Right.

Asking Clients To Define Their Critical Issues To Discern Specialized Services Offered [12:10]

Michael: It's something else. And so to me, just, as this person set it up, people, and I'm putting words in their mouth a little, he said people refuse and don't understand the critical issues that advisors solve. I feel like we have to own this a little. I don't think we understand and articulate very well sometimes the critical issues that we solve. Or just when I think about, again I'm going to pick on peace of mind a little just because there was a meme for a while in our industry where that was the hot thing to try to market and say. We don't give people, like, we don't sell peace of mind. I may help you fix your financial disorganization. I help people fix broken portfolios. I help people fix when their money is completely misaligned to what's actually important to them. When you do those things and you solve them, you may feel a lot of peace of mind. You may get to a much better place. I don't sell peace of mind. I help people fix broken portfolios or broken financial disorganization or something else that's broken. And just thinking about what's the broken thing that you fix, you won't come out with a lot of, "We offer comprehensive financial planning." The planning might be the process to do the fix, but it's not the fix.

Carl: We could go on. I love the question. Here's something you should steal and use. I love to ask myself the question, "I'm not sure people wake up in the morning thinking they have a financial peace of mind problem." Do they? Ask that question among your marketing team. Do people? No. Nobody wakes up in the morning. We think about that constantly. Do people wake up in the morning thinking they need a behavior gap sketch on their wall? I don't think so. Maybe they realize that they have a challenge communicating a specific topic. Oh, turns out we have a solution for that problem, it's called a sketch on your wall. But they don't wake up thinking, "My art really needs to be different in here." And if they do, they didn't think of me. So I'm just giving you an example of how we think about that. So I wouldn't think about...I would think what's, and remember no one cares, the simplest way to solve this problem is to be really clear about the problems you solve. No one cares about your solutions, because the next step could be to market a solution. No one really cares about your solutions. They care about their problems. And once they understand, the easiest way to figure that out is to start talking. And I love this, whoever wrote in this question, bless your heart. Because it feels a little bit like we're picking on you. We're not. We're using your question to pick on the whole industry because we all do this, and Michael and I do, we all do it. It's really, really hard. What's hard is we're not even sure. So if you can get really clear, and I think it goes back to niche and specialization and we can go there if we want, but we've covered it ad nauseam before, is get really clear about the problem you're solving in their words.

Michael: But it's why my favorite question still with any and every prospect is just, "What brought you to this meeting today? Why are we meeting? There's a lot of days in the year and you've been on this earth a long time. You picked today as the day to meet me and tackle something that made you come to a financial advisor office. So what brought you to this meeting today?" Because what people describe is the problem. You know what I mean by it? My doctor asked me, "Why did you come in?" "My elbow hurts." We get to the answer really quickly when the doctor asks what brought you to the office today. We have the same opportunity and if you do that systematically, ideally you start hearing patterns. Even if you're not sure what you're known for and what you're solving, ask to find out. You can even do this. You go through your review meetings over the next six months, everyone that comes in, just say like, "Hey, I'm just wondering. When you started working with us a couple of years ago," I think you really ask this two ways because it gets the two parts, "Why did you decide that was the time you need an advisor? And why did you end up choosing us?" Which gets directly into the, "What was the problem and why did you believe we had the cure?"

Carl: Yeah, and I think from, even if you're wondering, like this question is around marketing to me. So decide, really, you probably don't know who your work is for and why. And until we, and we don't do that because we're scared to put ourselves, as Seth Godin says, put ourselves on the hook for standing for something. And so the easy way to do that would be to decide there's this population of people I want to help, and then go understand their problem. And as you as you do that research to understand their problem, do that work in public. I had a conversation today with an entrepreneur who recently sold their business and they use this word. I did this. Entrepreneurs with successful exits over $10 million. We went and interviewed a bunch. I kept hearing the same word over and over and over, a different version of the same word, but it was about this idea of the over-the-wall portfolio. I just want to keep playing this game. Because most of us in our industry, we go, I heard this, I went and interviewed 10 entrepreneurs, successful exits, in the first three I'd already heard it. And I was like done. I mean, I went and did the rest of the interviews, but I was already done.

Let me use a better example. Dentists, we interviewed about 20 dentists and wrote a white paper. In the first three, I knew that we were going to call the white paper "Unchained From The Chair." Because every one of them said, "I feel unchained from the Chair if I don't go to work." Well, their biggest problem was their number one asset was the present value of their future earnings. And no matter what their wife said, the present value of that asset was declining no matter what their spouse said. So now I can say things like, "Do you feel chained to the chair?" If I know who it's for and I can do that work in public, I can say on LinkedIn, "I just had a great conversation with an entrepreneur with a successful exit and they told me about the desire to continue to be an entrepreneur while never seeing the foreclosure notice on the door again." If I'm an entrepreneur with a successful exit, everyone I've interviewed, they would recognize that language. And now, now that intersection is happening more often because the signals clear. And so it's the reason people aren't, I love what you said about owning it, if the reason people don't understand the critical issues we solve is because that's us. We haven't told them. And we don't want to tell them about issues, we want to tell them about, "Hey, we hear you. We understand the problem. Here's the words you need."

Clarifying Specialized Services To Enhance Client Interaction [19:24]

Michael: I mean, I've never met someone who actually didn't understand a critical issue that was impacting them. Because if it's that critical, they're super aware. Now they may not all know all the reasons and causes and solutions, that's why we seek out experts. But when it's broken and it hurts, we know. And frankly, almost by definition, if somehow it's that bad and we don't know, it's literally not critical. It's not critical once it hurts so much that we are actually feel, like, we are acutely aware of the problem and feel motivated to do something about it. And so problems that people refuse or ignore and don't understand, it means they're not critical. Not that they're not important, we got a long list of things that are important but not urgent that we never get around to. But the critical stuff that makes someone actually want to hire a financial advisor and pay us all this money to do all this stuff that we do, something actually has to be critical. And so if you're not sure what those critical triggers are for your clients, ask them what they were.

Carl: Ask them what they were.

Michael: And as you said, and look for the patterns. Either the Patterns, if there's a certain way that you're showing up consistently that you may not have even realize. And if you don't even see a pattern, then pick the client you want to work with more of and do more of that trigger. Because, apparently, that was a good client, worked out well for you. So solve that problem and find more people who have that problem.

Carl: Ask them what they were and then share what you learn in public. Repeat over and over and over and you're going to increase. You're just trying to do the intersection of the problem and the solution at scale. And the more you do it, the more likely it is to start happening. And I think the counter, sort of counterfactual of this problem, you and I can both point to plenty of advisors who literally have people waiting for their services. And almost every...I can't think of an exception. There are advisors who are incredibly clear about what the problem is and who they solve it for.

Michael: Yeah, they all do something that's in some way a little different but not mainstream. Which means whoever it is that wants that thing, they fill up pretty quickly. Because at the end of the day, most of us can't take on more than two clients a month. More than two clients a month is usually stressful for most of us if you don't have a pretty sizable team. Some people one a month is stressful if you're doing a lot of planning work because it's really time intensive. So it doesn't even take that much to overwhelm us. A hundred and twenty million households in the U.S. and more than two a month is hard for most of us on our own. So almost anything quickly fills your pipeline.

Highlighting Critical Issues To Entice Clients To Engage In Financial Planning [22:17]

Carl: And I think this happens, which is why I don't even know where to start with people on marketing help if they don't have a specialized niche. Because I don't know where else, because if you have a specialized... We were in the Tetons this summer, Jackson Hole, and we had the water ski boat with us. And as we were coming into town, one of the tires on the trailer blew. And I've already demonstrated, my wife was like, there's not an option for me to try and fix that. So I called the only tow service that would answer the phone. And I said, "Could you come fix the tire?" And he said, "Do you want to know how much it costs?" I said, "Does it matter?" There's no one else to call. Like, please be fair to me. Of course it matters. I knew it was going to be $100 to $200, but it didn't really matter. If you're the one that solves the problem, I'm going to wait for you. And so I think the answer to this is get clear about what the problem is you solve and who it's for. The easiest way to do that is ask people and share what you learn, and then keep doing that over and over and over. And then, suddenly those critical issues... I also like the word relevant. Like, instead of, not instead of, but also with critical I like the word relevant. So it's a fun problem. The truth of the matter is it's our problem. The reason people don't recognize it is because we don't communicate. And we can solve that, that's what's so cool about it is we can solve that problem.

Michael: Maybe it will generate some social media disagreement for this. So if you want to disagree, throw it in the YouTube comments, come at us on Twitter, and LinkedIn, and all the various places. But I think the fundamental thing I would put forth is if it feels like your prospects don't care about the critical issues that you solve, you're probably not actually solving critical issues. And that you have to take a harder look at what are the issues that are actually really critical to them. Because if they cannot care or dismiss it that much, almost by definition, it's not critical. It could be important. I don't want to say there aren't things that we solve that people totally put their head in the sand about and ignore. Totally true. Seen it in life. Seen it with clients. I get it. I'm not saying that people are always super aware of everything that they need to do to improve their lives. But if you want to get to the business opportunities, like I think it's the right framing, your business opportunities are issues that are critical. That's when they know they're sick, they're motivated to find a solution. And if you can demonstrate you have the cure, you have a great opportunity to win the business. If the issue isn't that critical, they don't have the motivation. They're not bothering to seek something out. And so, are you really just solving the problems you want to solve? Or are you solving the things that are actually really critical to the people you're trying to serve? And if you're not sure what the critical things are, as you said, ask. Have the conversation with some of your existing clients.

Carl: And the only tweak I would add, and it's not a "but" it's an "and," is...actually it's an or, or maybe you are solving a critical issue and you're just not communicating it well. And I'm talking about prospecting mainly. Like marketing, you're just not communicating. You might be communicating the solution, the solution, the solution. Or as Michael pointed to earlier, you might be communicating the outcome of the solution, peace of mind, all those things, and nobody cares about your solutions and nobody cares about peace of mind. They care about their problems. So if you can just frame maybe you are solving a critical problem, maybe you're not. Many of us aren't, and we need to get better about, but maybe you are and you're talking about this stuff out here that nobody wakes up thinking about. They may be waking up thinking about, "I just sold a business. I don't know what to do with the money." And you're talking about financial peace of mind, and they're like, "Dude, I don't even know what that means." So I think that's the other place I would look is just how are you talking about it.

Michael: Awesome. Well, thank you, Carl.

Carl: Super fun, Michael. Thank you.

Michael: Absolutely.