Kitces & Carl Ep 45: (Re-)Structuring Client Review Meetings In Order To Focus On What Really Matters To Clients

***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

• #FASuccess Ep 015: Why Life Planning Is Simply Financial Planning Done Right With George Kinder
• Kitces & Carl Ep 42: Overcoming Objections By Asking More Questions To Truly Understand A Client’s Needs
• Kitces & Carl Ep 43: Discussing Financial Advice Fees And Value To Help Clients Better Understand The Benefits Of Financial Planning
• Kitces & Carl Ep 44: Communicating New Advice Fees When Transitioning Clients From A Commission-Based Business Model
• Dan Sullivan's Multiplier Mindset Blog: "If You Want People To Trust You, Ask Them This Question"
• Blair Enn's Win Without Pitching Blog: "Pricing Difficult-to-Quantify Forms of Value"
• Simon Sinek's "Start with Why: How Great Leaders Inspire Everyone to Take Action "
• Client Meeting Agenda Template
• Implementing Client Meeting Surges To Boost Advisor Productivity And Systematize Client Value

Kitces & Carl Podcast Transcript

Michael: Good morning, Carl.

Carl: Hello, Michael. Imagine finding you here, of all places.

Michael: We meet once again on the internet through Zoom.

Carl: Crazy, crazy.

Michael: This is the modern era, though. This is how human beings meet and connect in the new era.

Carl: We need to figure out some way to make that spontaneous, like just, "Oh, geez, look. Oh, wow."

Michael: "You surprised me walking in on this Zoom room that I scheduled with somebody I'm waiting for."

Carl: Exactly, exactly. So speaking of meetings, I think we're talking about some sort of meeting today, aren't we?

Michael: That was very smooth, Carl. I like that. I like that. Yes, meetings. So this is the question that that came in. We talked last episode about making this transition of what happens when you haven't really historically charged fees, you're mostly getting paid for implementation, you start charging for fees, the client's like "Whoa, whoa, what's going on?" We talked through the fee conversation. But I find that there's a secondary effect that happens when you're charging for advice and you're charging ongoing. There's what do you do upfront? The plan, the process of the plan, how do we validate our value for this plan that we produce? That kind of covers the first few months, the relationship.

Then there are the next 29.5 years after the first six-month process, we're supposed to be working with this client on an ongoing basis and doing planning stuff and meeting with them on a regular basis – for many advisors a few times a year. And I know one of the challenges that comes up for... Well, a lot of advice, they're transitioning into doing ongoing planning, and even some of us that have been doing it for a long time, it's just this: what do you talk about in those review meetings? We put an hour on the calendar, the client's coming in...at least pre-pandemic world, the client's coming in, we've got this hour-long meeting, we're supposed to talk about stuff because the industry says you're supposed to be with your clients on a regular basis. So, I've put the meeting on my calendar. What are we supposed to talk about to make this magical value thing appear? What do you do in ongoing client meetings? What are your talking points? How do you handle these?

Transitioning Client Review Meetings From Performance To Planning [03:30]

Carl: Yeah, it's such a good question because it's just so funny that it's such a bit like we've made this big thing and now we have to figure out how to solve it. So, I think the first step is to just step back and go, "Look, why are we doing this? How often are we meeting?" Clearly, meeting with clients is important. The question you should ask yourself is how often? And I don't know the answer, and I bet there isn't a blanket answer. I bet it has to do a lot with the client situation, the volatility of the world – I don't mean markets – specifically volatility of their lives, the volatility of the world, some combination of that, how often are you meeting? But let's just put all of that aside, which I would just suggest people to really question, and maybe we can talk about it in-depth another time. But let's assume you are having this, let's just call it an annual review. You're having an annual review. What do you talk about if you've shifted away? Because we were...at least if you came up through the investment industry, you were taught that the purpose of that review was to review investment performance.

Michael: And we print a statement, I bring the statement, I've got a nice report because I have software that I spend a lot of money on that makes very nice reports. We put a lot of focus into those performance reports that we talk about in the meetings.

Carl: For sure. We've got an economic summary which we pay for, and we've got a market commentary that somebody provides for us and we pay for that service. And we better get our money's worth. We've got all this stuff. And what's interesting to me is we need to remember nobody, nobody was born with the belief that they needed a quarterly performance statement and an annual performance review. Nobody. We taught them they should want that. As an industry, we were the ones that trained them they should want that...

Michael: Meaning for the ones that told clients like, "A good advisor reviews the statements with you on a quarterly basis and meets with you at least one or two times a year."

Carl: Yeah, yeah. And even more specifically, meets with you at least once a year and talks in-depth about performance. So, we taught them that they... So we've got this behavior, this performance-centered behavior that we all kind of complain about like, "I also wanted to talk about something about performance, don't they know it's about planning?" Well, we're the ones that created that behavior. So, we first need to just accept and own that. So that's all a prelude to, like, what do you actually do? So, my belief is this has got to start upstream, like switching on a dime, and we can talk about transitioning, which we've talked a little bit about transitioning people from performance, even commission or certain types of payment to ongoing advice fees.

But shifting somebody who's used to – you've been working with somebody for a decade, and every year they've come in and had a performance review. For them to show up one day, and you ask them to sit on the couch and put their feet up. It's going to be, "Today, you're going to cry." So, how do we do that? Let's start there. That, I think to transition clients to an ideal annual review, let's start broadly, the review should be what do clients want? What they want is progress towards their goals. However, they define their goals, they want progress towards their goals. Their goals, not yours. Not your business goals, they don't care if you paid for a market report or fancy software. They just want progress towards their goals. That's what they want. And so, we should be reporting on progress towards their goals.

It's true that a client can have... You could have a string – hypothetically – you could have a string of quarters or years where you never beat a benchmark. And yet, the client still met all their goals. And conversely, you could beat a benchmark every year, hypothetically, and never meet a client's goals. And I'm sure...

Michael: That's because the markets just didn't deliver enough in the aggregate for them to get to where they were trying to go.

Carl: Or they didn't save enough, or you had no plan, or you never defined the goals. So you've got a really fast car, but we have no idea where it's going. So, I'm sure most clients would trade one for the other. Like I'd rather hit my goals.

So, what does a review meeting look like? First, we're going to make some assumptions that you've done all the groundwork, and then let's circle back at the end of this conversation to how to transition there. So an ideal client meeting, an ideal annual review meeting, I think of it as like a “State Of The Plan”. I used to call it that, this is our annual “State Of The Plan” meeting.

And so, what would you review? I just immediately go to what's on my one-page plan? And that's my executive summary of the 200-page plan that you all do. And on that, at least for me, in my head, the top of it is a statement of financial purpose. So, the client's statement of financial purpose is maybe we're pointing back to x values, George Kinder's three questions, any of that sort of stuff, something that's a little deeper than goals. Simon Sinek's work around ‘why’, so mine would say time with my family mainly outside and serving in the community. It's like my statement of financial purpose.

So what are we doing with that? Well, sorry, let's cover the agenda, we're reviewing the statement of financial purpose, then we're reviewing these things that flow out of it called goals. You've got a list of five or six goals, and we're reviewing progress towards those.

And then the last piece is we're talking about do we need...how have we aligned your use of capital with those things? In other words, let's talk about how the portfolio matches or doesn't match, needs to be rebalanced to give us the highest likelihood of hitting those goals. So far, we haven't said anything about performance yet. That's just like allocation aligned with goals. So, that's kind of the agenda to me. And the key to this is something that we are not very good at. As humans, we're not very good at it. And I think as analytical problem-solving folks, we're maybe specifically not very good at it. And that is – it's the second question, the follow-up questions. If you're worried about like, "Well, how am I going to spend 45 minutes reviewing that?" It's a lot of open-ended questions. Go ahead.

Michael: Now I feel like I'm coming back to the point that you made earlier of, I get it if. If I've been going down this road and my clients all have statements of financial purpose... But Carl, my clients don't have a statement of financial purpose, and, as you said, when we've been meeting for 10 years and this is the 11th year and they come in, how do I start adjusting this and spinning this? Because, frankly, it gets a little awkward from my end like, "Hey, I know we've been meeting for 10 years, but I don't really feel like I know you. So can I ask you some relatively basic financial questions? I have to admit I don't really actually know about all of my clients."

How To Help Clients Develop A Statement Of Financial Purpose [11:22]

Carl: This is borderline malpractice that I haven't even asked you about these things in 10 years. I'm just kidding.

Michael: Or like, "I don't remember, I didn't take the best notes back then and we just haven't talked about it much because we were in this portfolio review routine, and now it feels weird to do this different routine and change up this conversation." It feels rude to me, it feels rude to my client.

Carl: So, we always treat this like the plan is worthless without the ongoing process of planning. And so, we put a stake in the ground, "When we first met, we read it last year on this purpose, like you told me, Carl, that time with your family mainly outside and serving in the community is the most important thing when it comes to money. Is that still true?" Now, if you get a yes, it's easy to go, "Okay, good. Check." But it's also... I think this is one area where I was pointing to like, we're not very good at the follow-up question. It's really good here to just go, "I'm glad to hear that. Tell me a bit more. Have you learned anything new about why is that important to you? In an ideal world, what would that look like? Oh, that's interesting, tell me more."

Same thing with goals. Look, a lot of our clients, we as humans, we set goals and then we make progress towards them, and then they may change a little bit. How are you feeling about this idea of taking that annual trip to California? Or whatever. Obviously, even as I said that out loud, I didn't pick that example on purpose. But if you're having that conversation right now, things have changed. You got something to talk about, "Oh, geez, well, tell me what you'd like to do instead. What have you learned from this recent experience that might provide insight into the goals that you have?"

Things change every single year like this. So, we're just goals. We're learning to ask more questions. What we want to do, the way I think of it, mentally, is at the end of this meeting, we want to hit save on something. And what we're hitting save on is like – this is what we think we're doing for the next 12 months. If we meet 12 months from now – that's another, you can ask an adapted version of Dan Sullivan's question. "Hey, just as we wrap up today, Michael, if we're meeting 12 months from now, what do you feel like needs to happen in the next 12 months in order for this year to feel successful? Anything we haven't covered yet?"

So we're trying to hit something save – it's in Blair Enns's words, it's the "desired future state". And so, we've got to be really clear that we're doing the plan again. With all the base work we've already done, we're hitting revise. This is the part I think we screw up in our industry. We think the plan was done. And most of the people listening to this don't, they're all the good folks. But most of us think the plan was done. Here we're saying this is a living, breathing document because you're a living, breathing human. So that's what it looks like. Does that make sense? Do we need to go any deeper there?

Michael: I think it makes sense. You mentioned a few times around following this agenda of stuff; do you literally make an agenda? Are you an agenda fan for these kinds of meetings, for ongoing client meetings?

Using An Agenda To Structure Client Meetings [14:58]

Carl: Yeah, I'm a fan of having an agenda that you can slide across the table to a client and go, "Let me walk you through where we're headed today." I think there's a thing, it's a principle that we work on pretty hard in the work I do around signposting. Because remember, what we're trying to do is give people permission. Even though the relationship is developed at this point, we're trying to give them permission to relax. We're talking about money, it's serious, it's in your office. It's all these things, there are computers and reports, and we really just want people to feel like they can relax and have a chat.

And so, the idea of signposting where we're headed, so they know what's coming, there are no tricks. And so, I think an agenda can serve as a useful document simply as a map. It doesn't have to be detailed, it's just like "Here's where we're going to go. We'll spend a few minutes talking about this. I wanted to cover this. I wanted to cover this. Is there anything you have on your mind that I should add? I love that." And then you'd literally write it in, and you say, "You know what, it turns out, I had already planned on covering that in section three. Is it okay if we...? Yeah, okay, perfect." "You know what, I hadn't thought of that. Let's talk about that now." That's how I would use an agenda.

Michael: Yeah, agendas have been a strange evolution for me. I feel like I'm someone that, early on as an advisor, I resisted structure. Just, like, let me do my thing, let me have my conversations.

Carl: I'm a creative artist, man, back off.

Michael: Schedule my meetings when we schedule them and talk the talk. And as the years have gone by, I find it ironic – I guess at least ironic to me – I find more comfort and impact in creating structure. And so, agendas, in this regard, I am a really big fan of. And for me, the agenda is basically four things. It's checking in since we last met. Is anything going on? Has anything changed in your life? Is there anything that's come up we should be talking about? If we're in ongoing planning, you are supposed to be getting your insurance updated since the last meeting. I just wanted to check in. Did that get taken care of? Part one is basically the check-in.

Part two is, as I put news and updates, just new stuff we want to share, it could be things going on with the firm, it could be something in the newsy news we want to acknowledge, whatever, just current events or current firm events talking points are.

Number three is always some planning item. Ideally, something that we do systematically like hey, heading into Q4, the systematic planning check-in is always is there; anything we need to be doing for end-of-year tax planning? In the summer, we used to rotate. It was either an insurance check-in or an estate planning check-in, we'd alternate them in alternating years, so we always had the conversation once every other year. So, something that systematizes and have the same set of conversations with all the clients. I know some people listening to us literally do meeting surges like it's one focused conversation, but some systematic planning check-in.

And then the fourth area is let's check in on your portfolio and how it's doing. And so, we'd have this kind of check-in news and updates of a planning topic and the portfolio check-in. And often, you never get to the fourth one, which is the... You've talked enough about the other three, that by the time you get to the fourth, there isn't necessarily anything to talk about.

And the piece we would add to that, getting to your comment was, I really became a fan of always sending the agenda in advance, a couple of business days in advance, so they can see it and always ask the question, is there anything on your mind that we should add? Almost exactly the same way as you say in the meeting like, is there anything else we should be adding to the agenda that you want to cover? And if they do, that always goes to number one. It bumps everything else down for us.

Because by definition, it's top of mind for them. So frankly, anything else I talk about, they're not really going to be listening because they're going to be focused on whatever was their top agenda item, anyway. And when the meeting starts, we would try to always start by saying things like, "So here's the agenda that we'd sent you earlier. I just want to check in again, before we get started, is there anything else that's come up that we should add to the agenda before we dive in?" So they can say like, "Oh, yeah, yesterday I got bad news about this and we've got to deal with it now." "Okay, then let's focus on that. Let's have that conversation." And just creating that structure, like checking in since the last meeting, news and updates, a planning topic and a portfolio review, and putting that review forth, and giving the chance to talk about the other stuff and the chance to add items before the meeting and chance to add items at the top of the meeting, it's amazing how often you don't actually get to the portfolio performance review.

And we would still have the thing printed. So if we didn't get to, "Hey, we were talking about so much good stuff that we didn't even get to the portfolio stuff. So I did print out a copy of the performance report. Here it is, take a look. Let me know if you've got any questions you want to follow up." And the handful of clients that always liked to ask a lot of investment questions would always follow up, and no one else ever did.

Carl: Yeah, I think that's important for us to remember. I think sometimes when we have this really big planning focus, we can come across as maybe even discounting the importance of performance. And I think you've got to be a rock star there. I always felt like I'd go toe-to-toe with anybody about how we invested money. You've got to feel really good about the investment process that you follow and that it's totally defensible. So I think still, I'm always prepared like, "Hey, wait, the portfolio has been really bad this year. Let's dive in, my friend." We're prepared and ready for it. It's not that we're hiding it, it's just that I found people don't care that much.

Michael: Well, to me, it boils down to three questions we're ultimately trying to answer and address in the meeting from the client's end. Just number one is always, “Am I okay?”
Am I okay? Are we okay? Is everything okay? That's just the first thing that we're always trying to get answered.

Three Client-Perspective Questions To Address During Review Meetings  [22:07]

Carl: Let me just make sure people understand that “Am I okay?” is not... It often shows its head as is the portfolio okay. But it's not actually the real question, the question really is "Am I okay?" And so, always understand that it may be raised as investment performance. But it's actually – we've talked about this in other episodes – that's where these questions come in. Oh, I get it. You're really worried about that. And now I can understand why you're worried, let's dive in. So keep going, but I just wanted to make sure people understood.

Michael: So, yeah. Number one is, “Am I okay?” Number two is, “Am I making progress?” They're sort of the opposite sides of the same coin. “Am I okay?” is sort of the, "allay my fears, allay my worries, resolve the negative". There tends to be a negative spin to, “Am I okay?” The other side to me is usually some kind of, “Am I making progress as well?” That's forward-looking, that's aspirational. First of all, I want to know that everything is not bad, and horrible, and ending. Second, I want to actually make sure I'm getting somewhere on this journey. And then I find there is a number three to me that just I think we all feel sitting in that seat as the advisor, I think the third question from the client that always lingers there is something to the effect of, “And why, again, am I paying you?” What...

Carl: Wait, wait, do you think clients actually think that, or do you think we're worried that clients actually think that?

Michael: I think it's some of each. I think it's some of each, I think we all feel it's ever-present. If you're charging fees, there's always that like, "Have I done enough for them? And have I earned my fee? And are they going to be happy with it?" But I think it's implicitly there for the clients as well. It's part of why I think we end up having the portfolio conversations, which are really a blend of, “Am I progressing towards my goals?” and, “Are you adding any value in this relationship?” Because if you're not and I'm progressing towards my goals because the market's going up, I can go buy some index funds or hire any other advisor. I don't need you to ride a bull market, I need you for something else that you do in this relationship in addition to that, whether that's adding more performance or doing something else – great planning conversation – something else meaningful of value. But I think that's the third piece that's always present. You're going to disagree?

How To Use Review Meetings To Demonstrate Value For Clients [24:52]

Carl: Yeah, I – in the strongest terms with a giant hug, completely – I think from my... I only had one client ever say that. I can remember who it is. I remember their names. I can tell you their names right now. And I only had one client ever... Now, I think what we're doing – I think we are underestimating. I'm assuming here. I'm assuming, talking to this group, that you're doing all these things. You've literally taken people's worries off their plates. You've answered questions like: beneficiary designations, insurance… “Is my family going to be okay if I die? Is there anything I need to be worried about what I'm hearing out of that crazy squawk box? Anything that I hear about on the financial pornography network, anything I read in the news, any of that stuff – I literally don't need to worry about it. Because if it was a concern, Michael would have called me.”

On top of constructing a portfolio that gives them the highest – that is optimized to help them meet – give them the highest likelihood of meeting their goals, which by the way, they didn't even know what their goals were before they met with us. We clarified their goals. In my mind, if we're doing all that, we need to sit, positively, and be like, "I'm delivering so much freaking value, these people aren't even...they've never even thought of that." And if they do...

Michael: It's not a matter of whether you're delivering value, it's a matter of whether you're demonstrating it. We've had clients we did amazing work for, did a horrible job of showing all the work that we did on their behalf, and got fired after doing a giant project for them.

Carl: Yeah. And look, granted, totally granted. And I think you demonstrate that value by helping them understand all the things you've done. You're not thinking about the same things. The best way to do that, to me, is to set the stage in these annual reviews where you're like, "My goal today is to cover everything we can so that you literally don't need to think about this again until we meet again 12 months from now. And if something comes up, you obviously know I'm a phone call away, call me. I'm here. But we got it. We got it. In fact, we'll win."

You're trying to set up the idea that if I don't call you, if we don't talk, that's the best possible scenario. You're living your life. We got this covered. And I'm not saying you do that, I'm just saying you're trying to paint the picture that look, if we can literally take this worry from you, we've won. This is a relationship, we give you your life back."

Michael: To me, clients who feel they have no worries eventually wonder why they're paying someone when they feel they have no worries.

Carl: I respect your experience. And I don't doubt that you've had that experience. I've just had a different experience. And that experience is, once I can help them understand, they no longer have to think about money anymore. Then our value... I no longer have to say, "Hey, we did 7%, you could have got 6% somewhere else." You know that 1% fee you charge? Well, that's why I charge a 1% fee. I no longer have to worry about that.

Michael: Well, I wouldn't necessarily frame it that way. Again, to me, the reason why we've got an agenda – check-in from the last meeting, news and updates, planning topics, and portfolio review – is because I can take a news and update section and start working it in like, "Oh, by the way, and we did this rebalancing work for you, and we did this tax analysis for you. Here's a bunch of shadow work we've done since the last meeting that you don't see because you don't see all the stuff behind the scenes, but let me give you a quick part of the update meeting and let you know all the stuff that we've been doing in the interim." Because I know somewhere deep down, there's am I okay? Am I making progress? And what have you...

Carl: And what do you do all day?

Michael: Oh, no, not what you do. I don't even care what you do all day. What have you done for me lately?

Carl: That's what I mean. That's what I mean. And that's a fair point, we used to do something called the 17-point wealth management audit. We created it for exactly this reason. And we'll just put a pin in that for another call. But we created for this exact reason, which was, do you realize all the work that's going on behind the scenes that you never hear about? And the idea of blending it in, in a way where you don't go, "Look at all these things we do. Aren't we valuable?" You're just dropping breadcrumbs throughout the meeting.

Michael: And again, that's why I'm a fan of working it into an agenda structure, it's just there. "By the way, here's an update on stuff that's going on. Come and look, we did these things for you."

Carl: Totally. So I think we're saying the same thing. But I think once you start to understand that's the purpose of a review meeting, your fears around 60 minutes suddenly become, "Oh my gosh, how am I going to cover all this?"

Michael: And again, to me, that was always the win at the end of the day was the client review meeting where we got to the end and were like, "Oh, darn, we didn't even get to the portfolio stuff. Here's the piece of paper. Let me know if you want to follow up."

Carl: Yeah, yeah. And I think even that piece, too, I like the way you're phrasing it, portfolio rather than performance. Because I think there's plenty to talk about, even in the portfolio thing, that's all about how is it aligned? Is this portfolio still aligned with what you told us was important to you? And that doesn't have anything necessarily to do with performance. The performance is what it is at the given time we're meeting. So yeah, I love that.

Michael: I think the point you're like, if you don't want your review meetings to be so portfolio-based, make an agenda, place them on the agenda before the portfolio review, pick a topic that you can talk about with all the clients, give them the agenda and let them add a topic as well, and just see how often it turns out you don't even actually get to the portfolio review because you ended out in some of the planning conversations that you set up first.

Carl: Super fun, Michael. Thanks.

Michael: Thank you, Carl.

Carl: Bye.