#FA Success Ep 385: Unblocking Clients That Won’t Implement With A Journey Of Financial Health, With Danielle Howard

Resources Featured In This Episode:

• Danielle Howard
• Wealth By Design
• #FASuccess Ep 015: Why Life Planning Is Simply Financial Planning Done Right, With George Kinder
• Finding Your Own Money Story To Better Communicate With Clients
• How Do You Nudge Clients Towards Their Financial Planning Goals?
• The Soul of Money by Lynne Twist
• The 7 Stages of Money Maturity by George Kinder
• Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones by James Clear
• Kinder Institute
• Money Quotient
• Klontz Consulting – Dr Ted Klontz
• Dr Brad Klontz
• Thinking, Fast and Slow by Daniel Kahneman
• MoneyGuidePro
• Wealth Studios
• Mitch Anthony
• Advisys

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Full Transcript:

Michael: Welcome, Danielle Howard, to the "Financial Advisor Success" Podcast.

Danielle: Thank you for having me, Michael.

Michael: I really appreciate you joining us today. And I'm looking forward to a conversation, at least I say from my end, how I feel like financial planning starts to evolve for us as we go through our careers. When I started, at least, maybe this is me over-projecting, but I was very into the numbers. I studied the things on the books, and I loved my software, and my spreadsheets, and running the numbers, you tell me your goal and I'm going to analyze the heck out of this and make you an awesome financial plan that has all the right recommendations that optimize your path to achieve this goal. And then I kind of found this phenomenon, I guess for me it was probably 7 or 8 years in my career because I learned these things slowly, that I suddenly started to notice, after I got a few years in, my client's goals turned out not to be the goals that they had actually said were goals originally. They said they were goals, and then we got to them, and then they started changing their minds and said they wanted to do different things. I'm like, "Well, if you'd told me that this was the real plan, I would've made you a different plan originally."

And then I realized, well, maybe I need to actually be asking some of these questions a little differently. Nobody told me in financial planning classes, "When you ask the clients what their goals are and they tell you their goals, those might actually be wrong, and you have to dig into that further." And I felt like I had no tools in the toolbox about how to have those conversations and how to explore that part of the planning process. And I know that you have built much of your practice around going very deeply into this, probably far better than I ever did, and figured out how to do it. And so, I'm excited to talk about what that financial planning process looks like for you and how it's evolved over the years.

The Influences That Led To Danielle’s Life Planning Approach [4:50]

Danielle: Well, I'm excited to share it with you. I think that I started out maybe not as numbers-focused because I was on the product side 30 years ago where every "financial plan" led to a product, primarily insurance sales. And there's nothing wrong with a good insurance product, but there seemed to me to be needing something behind it, something more, and starting to ask those questions about the why, "Why are we doing this money thing?"

Michael: So, did you start out in the insurance side of the industry? Was that your initial entry path into this world?

Danielle: That was my introduction. My former husband was in the insurance world, very successful in it. And I was supporting him in the marketing area and trying to bring folks in the door. And as we would meet with people and the industry was shifting more into “Ooh, you can do a financial plan.” And I was introduced to new concepts from some innovators in the industry way back when. It just kept impressing upon me that there's got to be more to this. And like you said, it was like, okay, it's about the goals. Well, you tell us what your goal is and we'll give you the set path in getting there. And as this industry is showing, that just because you launch from the launchpad towards the moon, that destination is always going to be shifting. And it's how we help clients deal with life that's important, how do we help them create healthy financial lives that include goals?

Michael: So, I'm fascinated by some of this early, early journey for you. Can you share with us a little bit more, just, where did you start? How did this get going for you before you got to the point that you met some people who introduced some new concepts and changed your path?

Danielle: I read the book by Lynne Twist, "The Soul of Money," and was also involved in some Christian financial conversations with Larry Burkett and the folks at the time. And it just got me thinking that this thing called money, it's just a tool, and it's a tool that we use as a flow of our intention. It's a tool to help us understand and support us in accomplishing what's important in our lives. And so, whether it's how we earn it, how we bring it into our lives, how we give and share it, how we invest it, how we nurture and grow it, how we spend it, there's something that needs to be questioned about all of that. And if we can help clients to understand who they are in those areas and show them how they might want to show up a little bit differently, they're more likely to accomplish their goals.

But if we don't help clients understand who they are around their money and what a healthy financial life is really about, those goals are probably going to be less impactful for them, less fulfilling for them.

Michael: So, you're taking all this in while working in a practice that's primarily selling insurance?

Danielle: Yeah. We started to shift to what it would mean to do comprehensive financial planning for a fee way back when. It was like, "Okay, I'll charge $200 for a financial plan." And that just felt like, "How can I really ask somebody to do that? It's a big step."

Michael: So, where are we timewise? How far back is this?

Danielle: Yeah. This was about 2000. Oh my goodness. That was a long time ago.

Michael: So, what happened next? What did you do when you wanted to start going down this road and reading Lynne Twist and feeling this urge to explore further?

Danielle: George Kinder, "The 7 Stages of Money Maturity," all of those way-back-when. We decided to go independent, so to leave the insurance track and move into the independent space and start looking at what...charging for a plan and looking at what it would look like to do AUM, and really shifting from that product model to more the process. And it's been evolving ever since. My former husband then decided to pursue his next life dream and teaching school. And so, I was able to shift past pretty easily because we were able to say, "All right. We no longer sell product." I moved to a hybrid model and went through a couple broker-dealers way back when. We did have product available. I carried forward his policies and some of the trails that followed with that to get me up and going.

It had a little basis. I made this trajectory change, but it was like a 10%, 15%, 20%, and then completely in a different direction as I started creating our processes to look at what true financial life planning was about.

Michael: And was that the goal and vision at this point to create a life-planning offering? Because At this point, George Kinder is out there talking about life planning. Was that the vision and goal for you?

Danielle: For me, it was. We had looked at, okay, you can continue on the insurance track, you can continue on the sales area, and I'm going to head off in this other way. And I'd actually done the Money Quotient training back in, I think, 2000, or it was shortly thereafter, to say, "All right, what kind of processes are out there? Because I am doing this all on my own. I'm trying to create the wheel." And at that point, you were creating your own wheel. What kind of questions do you ask people? How do we dig deeper into all of this? And so, with some of the folks out there that were starting to put these processes together, again, I found additional family members to start exploring, "Okay, what part of this can I take from them? And how do I imbue my own voice into all of this?"

So, it's been a continuous...I tell people I am a cook, I like to cook. I'm not a baker where everything needs to be exactly measured, and you have to use the exact same formula. It's constantly, what does it need? It needs a little bit of this, it needs a dash of that, it needs a little bit more of this, we need to expand that. And that's what I love about this business, is that it's a continuous evolution and creative outlet for every advisor that feels called to doing this type of work to really get to know themselves, to understand their why of being in this business, and know that why is going to change over time. And because of that, their business model may change, it will continue to unfold or evolve, and you need to be okay with that constant evolution.

Michael: So, as you start preparing your first dish, as it were, can you take us back, what did the process look like when you started down this road? What was version 1.0 when you were like, "Okay, my husband's transitioning to teaching, I'm going in this life planning direction, I'm hanging my shingle with my hybrid broker-dealer, and I need to start doing a thing for my clients to get paid?" What was 1.0?

Danielle's Transition From Selling Insurance To Charging A Fee For Planning [13:52]

Danielle: 1.0 was deciding to charge for a plan. And that was really scary to be able to sit in front of a client and go, "All right, I'm going to charge you $500."

Michael: It's a fascinating thing when you have to say it out loud with words in front of another human being. I used to tell a lot of newer advisors when they were getting started, "Practice just actually saying your fee in front of other human beings." Start with your family and significant others. You're not even selling them, just right practice actually saying it, the words coming out of your mouth, and not doing what you just did, what we all do, "My fee is $500, unless you're not happy with that, and then I'll do it for $400, possibly $300." I can cut my fee in half before the client even objects.

Danielle: Exactly. Exactly. Or I'll do it for free because you're friend and family. I know, it's like you have to battle all of that. And especially, I don't know, this is something that maybe women, may resonate a little bit more with. And again, I don't want to completely put people in boxes, but I know women, we can sometimes have a harder time standing up for what we're worth, and calling it the way it is, and knowing our value, and saying, "These are the services that we provide. This is what we're going to look at. And this is what we charge for it." So, creating that scope of service, "What all are we going to look at?" "We're going to look at your tax return. We're going to look at your estate plans. We're not CPAs, we are not attorneys, but we will look at them to be able to come back and tell you, 'Wow, you haven't looked at your estate planning documents in 15 years, and your kids are up and out of the house, and want to make a few changes in this, that, and the other.” Or, “Let's have you sit down with an attorney and talk about how this trust is lined out."

So, making sure that we're just doing it in a comprehensive way, that we know what value we're bringing to the table, and it's more than just managing the investments or finding you the right insurance policy.

Michael: So, what did it take for you to find your fee-confidence, your say-it-out-loud, and be able to charge what you're worth?

Danielle: I'm still struggling. I still struggle with it. We have a base fee of $3,000, and when you're going to conferences, they're saying you're not charging enough. So, I still wrestle with it, and I think we probably always will. But we also feel we get fairly compensated. Could we charge a little bit more because the industry is getting that these days? Again, this is where everybody has to figure out what fits for themselves. And we start at $3,000. We go up to I think $8,000. And there have been definitely times on that $8,000 plan that it was like, "Oh my goodness, we should have charged more for this because it's quite a bit of work."

Michael: And what defines where someone falls in that $3,000 to $8,000 scope?

Danielle: The $3,000 is somebody coming in with really basic planning needs. It might be a couple just getting started in their life, they've both got good career tracks, they're making some money, they need to put an intentional spending plan together. They may need some basic estate planning. They may have a kid on the way. It's pretty basic. Or a pre-retiree that has 1 or 2 401(k)s or an IRA out there, but it's not overly complex. You start getting real estate involved and commercial properties or businesses and complex trust stuff and all the dynamics that more high-net-worth clients have and are bringing to the table, and you're going to be talking to their CPAs, and you're going to be talking to their attorneys. And then, again, $8,000 is not enough to probably cover the amount of time you're going to be spending on this.

Michael: So, when you were getting started with this, as I think you're figuring out how to start having these life-planning conversations and creating meetings or a process around it, where did you start? Were you just jump right in with George Kinder's 3 Questions and off it went? What did that planning process actually look like, that first life planning process look like?

Danielle: That was actually right on. In fact, I had to go through it ourselves. And that's how Mark at the time ended up going into teaching. We sat around a dinner table with some friends one night, and we went through George Kinder's 3 Questions, and we got to the end of it, and Mark had said, "I would regret not having taught school." And it's like, "Okay, we need to make some changes."

Michael: Wait, wait. So, your training for George Kinder was what made your ex-husband leave the business and go become a teacher?

Danielle: Yep.

Michael: All right. So, beware when you go down the learning path, it can hit close to home as well. By definition, that was the thing he wanted to do and make sure he didn't miss without regrets, so apparently a very positive change for him.

Danielle: Yeah. And I think that's something that's really important and what I really appreciated about the Money Quotient training too, was that you have to do your own work first. You have to look at your own life transitions. You have to look at what's important in life for you. And then, are you willing to walk before you talk. So, in our personal journey, it was like, "Oh my goodness, well, if you want to leave this business and pursue a teaching career, we have some pretty major life decisions to make." And I supported him in doing that. And it worked for both of us because I wanted to be in this business, and the way we were shifting out of the product side, it worked fine. But to take that… that was a big risk to say, "Okay, are we willing to do this work ourselves?"

Michael: So, you've mentioned Money Quotient a few times. Just for folks who aren't familiar, can you explain who Money Quotient is and what they do, how they fit into this?

Danielle: Yeah. Carol Anderson and Amy Mullen, they're a nonprofit, but they basically provide processes for financial advisors to walk their clients through the financial planning process. And they hit all the areas that a good CFP is, our ethics, and we adhere to the standards of true financial planning. I start with, there's 3 worksheets that they start with, a life transition survey, a financial satisfaction survey, and a simple financial statement. And what I appreciated about that was it gave us a tool to start conversations with clients. Before that, I was coming up with my own conversation starters, "Tell me about yourself. And what's important about money? And what was your earliest money memory?"

Michael: And so, they were giving you, I guess, alternative questions or conversation starters to use, just you didn't have to figure out for yourself which ones would get the conversation going?

Danielle: Right. And there's lots of folks out there that are walking alongside advisors to do this. And it's, again, we don't have to do this on our own. There are resources out there… a plethora of them. And finding one that fits and you resonate with, or that you can glean from, pull pieces out and make your own. My hope with some of the work that I've been doing is that I've put my own creative spirit into it, but whatever people want to take away from it and create their own, fantastic. Another person that I stole an idea from was the Klontzes, Dr. Ted and Dr. Brad, the Money Egg, and the Money Memories. And that's what got me started on thinking about, "Wow, having people talk about their early money memories and looking how those memories then opened up their mindsets around money, and then mindsets lead to behaviors, and that plays out over the long run in your financial life."

Michael: So, can you explain more what some of these tools and instruments are, Money Egg, Money Memories? What are these? How do they work?

Danielle: So, the Money Egg is circle on a piece of paper, you close your eyes and think, then you open your eyes. And with your non-dominant hand, you either draw pictures or write down phrases, and you just let your mind go back and think about early money memories. So, that can have a whole conversation in and of itself. What I did with it was, I've taken it a few steps further in creating what I call Financial Fingerprints to Footprints. And this is just, it's a framework that I created in order to walk along either my financial planning clients, and then we're also doing it in group formats. I'm doing it for nonprofit organizations, and in a workshop format. And it's a way for people to connect with early memories around money. Then I will have them, again, based on the work of Brad and Ted, write down with their non-dominant hand those early money memories.

Then they might share either as a group or as a couple what those memories are. Then we'll talk about what mindsets, what belief systems came out of those memories. And it might be, money is fun. It might be, money is bad. People can be raised in the same family and have entirely different belief systems around money. So, we then take that belief system and we question it. Is it serving you? Is it not serving you? Do you want to possibly look at something different? And then we go through what would you to step into? So, we're moving from, this is my money memory. Because of that memory, this is my belief system about money. And then my behavior might follow that. So, for example, if I had the early money memory of, I bought my first bicycle with the money I earned from babysitting. So, my mindset around it was, I need to work in order to have money to buy the things that I want to have. And then my behaviors, I've always worked. I've always earned money to do the things I want to do.

Somebody else came up with a money memory of, my parents always argued. They were always arguing about money. And my belief system is, money is bad, it's ugly, it's nasty, I never want to deal with it. So, the behavior, it wrecked a relationship, it wreaked havoc on his family life because of how his past created his trajectory and how he handled money. So, then we ask ourselves the question, "What do we want to do with this? Do we want to question it? Do we want to peel it apart a little bit? Do you want to see where it sits in your body?" There's the whole somatic, we won't go in into that today, but the idea that, what do we want to do with this? Do we want to look at financial forgiveness? Are there people that we need to forgive? Do we want to forgive ourselves for making mistakes around money?

And then what do we want to do moving forward? What do we want to step forward with? What might be a new identity that we would like to try on, that we would like to consider or change, a financial affirmation, "I am financially healthy. I am a good saver. I am a wise investor. I am a generous giver. I am an intentional spender." So, creating this identity and helping people understand who they are with their money. In my work with goal setting and with helping people understand how they want to move forward, you have to have a positive identity. When you talked about the elephant and the rider, what I like to think about with the Financial Fingerprints to Footprints, it is widening the path for the elephant, you're going to folks what the elephant and the rider is now.

Michael: Oh, yeah. So, elephant and rider analogy is, if you look at how our brains operate there, there's kind of 2 systems that run in parallel. This comes from Daniel Kahneman's work, he calls them system one and system 2, but the analogy “System One” is like the elephant. It just moves where it's going to move, it does what it needs to get through its day and cover its essentials. And the other part of our brain, what Kahneman calls “System 2” is kind of the rider on top of the elephant. This is the logical, rational, lookout-in-the-world, and try-to-make-appropriate-decisions part of the brain. And if the elephant is calm and not emotionally aroused or stampeding or anything, and the rider is fresh, and well-rested, and ready to go, maybe the rider can kind of steer where the elephant is going to go.

And if the elephant is angry and stampeding, or the rider is exhausted from doing too much for the day already, then the elephant just goes on autopilot and does what it wants to do. And the interesting phenomenon around this is, the general view that a lot of us kind of take in the financial planning world is, "Well, if I'm going to help my clients, I'm trying to engage this little logical rider in the hopes that I can get the rider to steer the elephant to where we're trying to get it to go." We're trying to help clients overcome their irrational behaviors, which is a nice way of saying where the elephant goes when the rider's not steering. We're trying to engage the rider to get the elephant to go the right place. But the fascinating thing about both how this works with elephants and the meta-level analogy is, one of the things we discovered long ago in humanity in parts of the world where elephants stampeding through the village is an actual risk is that if you really want to make your village safe, the best thing you could do is you make a giant wide open path that goes to the left of your village, that goes around your village. And you make your entrance into the village a small opening in the brush that human beings can go through.

And so, if the elephant happens to be stomping through, it just follows the path, and it'll go completely clear of your village, and keep everyone safe, and do what you need it to do. You don't have to hunt the elephant or try to climb up on top of the elephant and steer the elephant, you just change the path in front of the elephant, then it goes where you wanted it to go anyways in a much safer, simpler manner. And so, in the psychology world, this has kind of led to all this body of research around, the technical label is choice architecture, how we frame and serve up choices to clients. Because it turns out how you put those choices in front of clients, kind of how you shape the path of the elephant really matters and steers them. This is why the retirement world got so excited about defaulting people into retirement plans with automatic enrollment because auto-enrollment was a version of, well, just change the path so if they are going to be their lazy elephant that just stomps along, they're going to stomp the right way right into participating in their 401(k) plan. So, that's the elephant and the rider and the path analogy.

Danielle: So, in my mind, helping people understand who they are with their money, their identity around their money is another way of looking at how do we clear the path for the elephant. Because if we can help people understand what their unique version of true wealth is, what their unique version of success is, what a healthy financial identity means to them, then they'll be more likely to follow suit with our recommendations. And this was all brought about with James Clear and "Atomic Habits." And he talks about that healthy change is identity, processes, and outcomes. And we, in the financial world, we've primarily focused on processes and outcomes, "What are your goals? Oh, you need to save this much at this rate of return for da, da, da, da, da, and you'll get to your goal."

And that leads to shame and guilt because people come back to you and go, "Well, I didn't do it, but I really should." Or they run into you in the grocery store and they go, "Yeah, I've been meaning to call you because I really know I should really come in and see you." But getting that identity component in place. So, James Clear talks about if you have that identity, and then you have the processes, and you have the outcomes, people are going to be more likely to change their habits. And we have missed that opportunity to walk alongside our clients in creating those healthy financial identities. I think we need to get creative in this industry on how we're talking to clients, how we're helping them explore their identities, and whether they want to change them or not. Because we can't force anybody to save so much per month for so long at this rate of return.

Identifying Clients' Money Identities [34:58]

Michael: So, I'm still trying to visualize what are financial identities in this framework that I'm trying to get them to then change their processes and outcomes. Can you share a little bit more of, what does that mean, or how does that, I guess, show up in not-healthy ways in our traditional planning world? What are the not-good identities?

Danielle: Yeah. So, I think for what I've experienced in doing this in different workshops and conversations that I've overheard, or stories that people have shared with me, there's plenty of positive ones. And the positive ones around earning, giving, building, growing, saving, spending, great, we want to build on those, what's working, how do we want to continue that trajectory? But I would say the majority of people out there, we have financial issues along with other issues. So, some of the stories that I've heard, one gal shared a memory that her mom would always be putting money into a little jar in a can and put it up on the shelf in the cabinet in the kitchen. And this is our “someday money”, this is our someday money. So, she remembered her mom, she remembered her mom saving dollars and taking them to bank and saving. And then she remembered that her parents were tragically killed in a car accident. And the message she got out of that was, live life now, you don't know what's going to happen.

So, when she participated in this workshop, she was deeply in debt. She had no savings because she just pretty much lived for the moment. And so, in questioning that, to ask her, how is that...because if something's working for somebody, I can't sit there and say, "Well, you really need to save for this elusive line called retirement," that is a whole another topic of what our financial industry has done. I'm not going to change her way if she thinks this is a great way to live. But she wasn't, she didn't being in debt, and she didn't the fact that she didn't have anything saved. And in talking to her about, "Well, what might need to happen for you to look at trying on a different identity?” Trying on “I am a good saver, I have a healthy financial life,” what would that look like? And “What would be some baby steps for you to start testing that water?"

She thought, "Well, I might need to start hanging out with different people because I go out with people and we just go out to eat all the time." "Wow, changing your friend group, that's a really big step. That's going to be really scary. What else might need to happen?" "Well, I might need to sign up for my 401(k) auto deposit, and that might mean I have less." So there are things that she saw, and it was going to be a lot of hard work. But what would be a baby step for her to move in that direction and to try on that new identity of, "I am a good saver," and good saving means she's going to pay down the debt. "All right. Well, would you be willing to come up with a debt-reduction strategy? And what would do on ... " Kind of walking her through what her options were and trying on little bits and pieces. So, that was one situation. Again, this was in a workshop, so she was not a client of mine.

But hearing stories like that and then knowing that in my work with my clients, we will do that as part of our journey of financial health. So, this Fingerprints to Footprints is an hour-and-a-half long session that I do with our clients that enter into what we now call...it's a yearlong engagement of “A Journey of Financial Health.”

Michael: So, that really helps of trying to visualise to me where the identity layers create problems. I get it. Someone had to watch saving behavior coupled with the tragic events where those people never got to use their savings, and to say, "Well, I don't want to have that happen to me. I don't want that to be my life." So, off this person goes in a live-the-moment, you-only-live-once kind of spending behavior, and then get into all the problems that often comes from that. It resonates to me as well in the context of, when you start with something that's that deep and personally traumatic, I would imagine basically every possible bit of advice of, "Well, you should probably spend less and save more," is not going to make any possible dent in this person's behavior. Just saying, "Well, don't how to open a 401(k) plan? You should save more," finger wagging. "Start here." That advice has no prayer given the prior life experiences that that person has had.

Danielle: Right. And it can be a lot. Again, what I've seen is just the stories, they're heart-wrenching, they're heart-endearing. There's so much out there. It can be everything from how people earn a living. "I remember my first job was this, and, I remember a conversation. My first job was working for this accountant and stapling tax returns during tax season, and I was working with another high school student, and we were just stapling tax returns. And I was having a conversation with this other person that we were from different high schools, and this guy yelled at us that we were talking too much, and he just told us to work." And that had an impression on this person, and it changed... "I would never go into that line of business because everybody who was in that line of business is mean and just money-grubbing." It was like, "Well, is that true? Is it always true? Was there a time that might not be true?"

So, being able to pose questions and just kind of explore it with people, and, would you be willing to try on something else around that? If you're wanting to get into a new career path but you're so set against an industry that would possibly avail yourself of making more money, you might be shooting yourself in the foot over the long run. So, again, there's this fine line in our industry, it's like, well, we're not psychologists and we're not supposed to figure everybody's mental health out. But to me, it was a way to at least open the door, have additional conversations with clients to get them to think about who they are with money, and what it would mean to possibly do it a little bit differently. And I know Ted Klontz talks about when you look at a belief system and you talk about changing it, it's like going to a foreign country. Again, are you going to have to speak a new language? Are you going to have to learn a new language? Are you going to dress differently, and talk differently, and hang out with different people? Your whole life can change sometimes if you want to head down a different path.

Why Clients' Money Identities Are Hard To Change [43:33]

Michael: So, now take us back again to how do we start getting clients to change some of these deep-seated identities that are so driving their behavior because of sometimes fairly dramatic or traumatic experiences that put them there? How do we get them to change?

Danielle: Well, that is the question. I don't know that we do get them to change. If they want to change, if they're uncomfortable enough, they may want to change. I honestly, I've gotten to a point in life where I'm not going to change anybody. I have a hard enough time changing myself. But if I can create an awareness, if I can help them look in a mirror and see how their belief systems lead them to certain behaviors, and that behavior is something they either want to build on, and I am a cheerleader, and helping them create agency when they have wins, like, "Yeah, let's build on those wins." Or if they see something that's not working for them, “I may want to try something different on,” yes, the majority of clients that financial advisors are engaged with, have been doing enough things right, that they're usually headed in the right direction.

If they can afford to hire us, if they're working with us, they've usually gotten to a place of "financial success" in their lives. But there's always going to be slight trajectory shifts. So, how are we talking to your adult children about money? Do you have parents in your life that you are going to have some financial implications of walking alongside them in the aging process? So, there's always going to be these opportunities to walk alongside clients in a way that requires us to ask good questions and to dig deeper, and to find ways to lift them up and encourage them to have a healthy financial identity.

Michael: Well, now it strikes me, or it helps connect the dots for me to what you were saying earlier, that part of this is simply talking about what are some of those memories that are sticking out in your mind, which probably means they were particularly formative experiences. How is that showing up in your life today? Which helps people articulate what some of these belief sets may have turned into. And what I'm kind of realizing is sort of the key question around it that, I forget exactly how you would worded it, but I think something to the effect of this, is that working for you right now? Because if it is, my client of the time who didn't want to buy anything international, she had a very sizable portfolio, like, "Buy U.S. starting in the 1950s." Still worked out quite well for her.

So, very much to that vein, I didn't have the language to ask the question then, but I'm quite confident that if I said, "Is that working for you?" She would say, "Have you seen my portfolio?" So, it was good to finally understand why she was so adamantly against it, but I can also now see that in retrospect. And she would've had no interest in changing that behavior, which means anything, even trying would've just been wasted effort.

Danielle: So, then, what do you do with that? In alignment with her goals, if she's on path to accomplish her goals, then maybe you're sitting okay, maybe we might need to do some more loss or gain harvesting along the way to make sure you stay on track for this. So, there's always a hundred different ways to get to the same place. Then people don't change many times because something is working for them in that uncomfortable situation. There's a reason why people stay stuck. So, something's working for them or something's not working for them, to just have the conversations and get them to a place where either they want to change or not. And it's not our job to get them to change.

Danielle's Year-Long Client Onboarding Process [48:31]

Michael: So, now take us back. You said in the context of your firm, this is now culminated into, it is a year-long journey of financial health process. So, can you walk us through that planning process? If I say, "Danielle, this sounds great. I definitely need this help because I got a few things that I know are not working for me. So, I want to sign up and become a client." Can you just walk us through the process? How does this work? What happens when and where in this year-long process for you?

Danielle: What I found wasn't working was you create this financial plan… you'd give them their financial plan, you'd walk them through the plan, you'd tell them, okay, here's the things you need to do, and you'd close the plan, and they'd walk out the door and put it on a shelf and never look at it again.

And so, I was like, "Why aren't people taking the advice?" So, my attempt to get to help guide people and to get them to either take advice or to take steps towards forward movement, was to say, "All right. We're going to walk alongside you a little bit longer.” We're going to put this process, this journey of financial health. We are going to get all of your data. We are going to use some of our own proprietary tools and some of the tools we have from Money Quotient from my years and years and years of getting ideas from all these amazing people that are out there. And we're going to put together a really good plan.

We use MoneyGuidePro, Wealth Studios, we use a lot of the great software that's out there. And we're going to meet with you initially, get to know you, explain our process, decide if it's a fit for you with what you've shared with us so far, about what your assets look like, what you've got for us to work with. We'll come up with a scope of service, what we're going to be doing. And then we'll enter into the financial planning engagement. You have up to a year to complete this because we know everybody's busy, but we also want to commit to you that you will have our attention.

So, we're only going to take on a certain number of clients because this process is something you will have our full attention. So, then we've got the nice portals where we securely upload all of their data, we send them a data gatherer that again, depending on the scope of service, we get all of the bits and pieces and the additional questionnaires, and we get to know them. We get to know their money history, we get to know their...

Michael: So, share with us more what tools, what things are you using at this point? As you said, you're the cook that has iterated. So, I'm sure you've been through a lot of the tools over time. So, what's actually in the process now? What am I getting asked to do or fill out as I've gotten through our initial fit meeting, like I'm getting ready for, I guess, the first planning meeting?

Danielle: Some of the tools we use are from Money Quotient, what are you looking forward to during retirement? What are you concerned about? Tell us who is impacted by your financial decisions. Again, they have some questionnaires that we utilize that are more extensive than that, but that's some of the things that are on the questionnaires. And then we have a data gatherer that we created. It's just asking for all the basics, the Social Security, all of your 401(k)s, your insurance policies, all the data gatherers that are out there. That's just our version of that. And then we have the secure portals for everybody to be able to upload that. My office goddess, Molly, will get that all put into MoneyGuidePro.

We'll go over all of the data, kind of pick everything apart. If I need to get insurance illustrations, we'll go back and forth with the client a little bit, getting more data, fine-tuning of that data, more clarification, etc. Then we'll sit down with them, with the MoneyGuidePro software, and have a Zoom meeting and start talking about what are the goals, the numbers behind those goals, because a lot of people, again, they don't know, "We just want to retire at age 65 and go sit on a beach with a cocktail in our hand." "Yeah. That's what you think, but that's not really what you want."

Michael: So, I want to make sure I understand this flow. So, you are getting mostly the quantitative data, the numbers data stuff that they're sending in after they've agreed to become a client. But before the first planning meeting, you're loading all the underlying data into MoneyGuide. But we haven't had any questions about goals that we're shooting for yet. It's like you're getting the input data but there's no goals projections yet, because the goals conversation comes in the next meeting.

Danielle: Right. We've played with it back and forth where they could go actually go into the software themselves and upload their own goals, and people go, "We don't know. We don't know." I mean, the one you get is just what they've been told they think they want. There might be, "Oh, there's a boat or there's a house in Phoenix." It's so interesting that you wrap this back around from the very beginning to the very beginning of our conversation. People think they have goals, but when it comes down to it, it's...yeah. So, it's a deeper conversation.

Michael: So, what do you do or ask in that meeting to try to get to the actual goals, the goaly goals, not the, "This seems like it's supposed to be the goals?"

Danielle: Well, this again, is where some of the qualitative questioning comes in. And again, whether it is from Money Quotient or from the plethora of resources out there, it's organic, it's intuitive. It's the back to the chef standing over a stove, it's like, "Well, that question leads to this question, and then let's unpack that a little bit. And tell me the why." Here's an example, "So, you want a boat? Well, tell me why you want a boat." "Well, because when I was growing up, we always spent our summers on a lake on a boat." "So, is what you want a boat or is what you want to be able to create family memories?" "Oh, well, maybe I really just...because the boat was really a pain, it was a lot of maintenance and it was always broken. So, maybe I want to create family memories."

"Well, what would be the family memories that are important to you?" "Well, maybe spending time at the cabin we already own but we never have time to go." So, it just starts pulling apart and you get to an entirely different place with these conversations. And sometimes there might be a physical goal that we need to set a number to. And other times it's just a lifestyle that we need to figure out how do we want to create a sustainable income stream to have you accomplish that?

Michael: So, it sounds like much of this stems from, "Tell me your goal." And then I give you a goal, and then you say, "Why?"

Danielle: Sometimes.

Michael: And then you have like, "What are your goals?" "I want a boat." "Why do you want a boat?" And here we go.

Danielle: Yeah. Again, every single client is a little bit different, but the goals that people never talk about is, "Oh, I'm going to get divorced." Or, "Somebody important to me is going to die." Or, "I may need to spend the last 4 years of my life in a long-term care facility that Medicare doesn't pay for." So, how do we help prepare people for, Mitch Anthony calls them life quakes? How do we help people prepare for life? Goals are great and yes, I want to send... If you want to send your kids to college or whatever form of education is out there in 3 years, because it's all changing so fast, that's fantastic. Let's create a trajectory that you're saving something for your future education because education is important to you and your family.

And it might but not be, we used to have the software, okay, this is this college and it's going to cost this, and you need to save this, this, and this in order to send your kid to that school. What percentage do you want to pay for? And here's how you need to go. So, it might be just expanding the goals and creating a little softness around them to where they're not hard and fast, but they're based on your values, what's important to you and your family, and how do we get you on that trajectory knowing that your destination is probably going to change based on “life happens”.

Michael: So, this second meeting, or I guess first once they've said they want to move forward is, is this goals exploration process, "Tell me your goal. Okay, now tell me really why you've got that goal," until you get down to what I'm presuming is just a more concrete, deeper underlying level of goals. And now we're feeling these are probably really the “goal goals” and not just the first stated goal that wasn't really a serious goal?

Danielle: Yeah. And there's going to be the replacement vehicle. I mean, there's some pretty easy ones that as people look down the road, what you need to do, it just needs to be incorporated into. You have to have some good savings in order to be able to do that. So, yes, there are going to be quantitative goals and they're going to have qualitative aspects to them. And so, we'll crunch the numbers, we'll look at all the tools they have, we'll help clients understand what type of tools. The big one is cash-value life insurance, "Well, you bought this 20 years ago, let's take a look at this and look at how it's still serving you, what you might want to change about it. And how do you want to utilize this tool to move you towards what's important to you?"

So, we'll come up with some advice based on a lot of things, whether it's, "Let's talk with your attorney and get that estate plan updated that you haven't looked at in 20 years." Or, "Let's consolidate these 401(k)s and put them into something that reflects where you're at in life right now." Or, "Let's look at putting together an intentional spending plan where you know where your money is going instead of asking where it went. So, here's the advice. We know that you're not going to take this advice unless you decide it's important to you. So, why don't you decide which one of these would be your priority over the next one month? How would you like to line this up? 2 months?"

And this is where the accountability piece that you talk about comes in. So, they've got a, "Here's the advice." But it's based on, "Why is this advice important to you? How does it reflect your values?" And then, "When do you want to have this done by?" And so, we've got a year to at least head you in this direction, and then we'll talk. Because at this point they may or may not be assets under management. We may not want to manage their assets.

Michael: So, you talked earlier about $3,000 to $8,000 planning fees. So, you're a planning fee, and you also do assets under management, but it's separate because this process is an active year-long process. You get a planning fee to do this journey of financial health planning process and then if they decide to implement with you ongoing, then that's a separate AUM fee for those services when they get there?

Danielle: Right. And then we have service models based on the complexity and how much advice is warranted from year to year. And this, again just helps people to say, "Yeah, that one's been bugging me. I know I need to get that estate planning done." "All right. Well, next time you come talk to us, we’ll get it done.”

Michael: So, are we still in the second meeting here as we're...?

Danielle: No, no, no.

Michael: So, sequences. So, meeting number 2, we're getting the goals, and then we're drilling deeper on the goals. So, I guess, what's the end of that meeting? When are you done with that meeting and then what comes next in the process?

Danielle: Each of our planning meetings are going to be about an hour and a half. Some of them are in person, some of them are by Zoom. But once we gather everything, then we have it, it's called a work meeting. And this is going back and forth on the goals. This is kind of setting the quantitative side. Then there's time in between us and the plan delivery. So, the plan delivery, we still...people are actually not wanting the hard binder anymore, it's like, "Just send it all over, we'll put it all in a nice e-file." And that's fantastic. So, then we will do the plan delivery and we will go over what is all included in that, "Here's the advice. Here is what we...based on all of the work sessions. And here's the roadmap that's going to take you down that journey."

We use Advisys educational stuff. So, if we're recommending that they do a charitable remainder trust or we're recommending especially more complex planning. I love Advisys backroom technician.

Michael: So, like pre-printed pages that are explainers of what the offering is?

Danielle: Yeah. Very user-client-facing friendly. If we're suggesting a SEP over a SIMPLE, why are we suggesting this? How do these tools work? What's the difference between cash value life insurance policy and a term policy? So, if we're recommending something, this is going to help and it's very personalized. So, we're able to give them some education. So, we will do the plan delivery and then, "Here, take this home, go marinate, talk about it. Look through this, come back, we'll do a follow-up and implementation. This is where the what, why, how, who, when, what are you stepping into, what do you want to move forward with?"

The fifth meeting is the financial fingerprints to footprints. So, that's my process of helping people understand their mindsets and belief systems, because we felt that sometimes people get stuck they'll say, "Yeah. I want to do this, but why am I not able to follow through with it?"

Michael: So, the questions that we were talking about earlier around money memories and how they've impacted our beliefs and now that's showing up behaviors and whether we want to do anything about that, so that's coming here in the 4th or 5th meeting for you now?

Danielle: Fifth meeting. Yep.

Michael: Okay. So, this isn't the lead-in of, like, we're starting with these questions out of the gate, this comes much later in the process for you?

Danielle: It's a deeper dive. I mean, we might touch on it surface-wise right at the beginning, but people when they come in for financial planning, they want, "You're going to look at my numbers and you're going to tell me what to do."

Michael: Yeah.

Danielle: Like, "Yes, and. Yes and you're going to get a little bit more."

Michael: Interesting. Because I'd been wondering a little bit as you were describing the process of just what clients come in and say like, "Hey, I would love to spend time with you getting into my deep, early money memories," and just how that works. So, I'm struck by this, that no, no, no, you start off with sort of the place that most people come to us with, which is she says like, "Here's my numbers. Tell me what to do." But then when it's time to start implementing and moving forward... So, I guess, help me understand how you set up this meeting. So, this is meeting number 5, because meeting number 4, you're going to set this up. So, talk to us a little bit more about what actually happens in meeting number 4 and how do you set them up for, "This is what's coming in meeting number 5?"

Danielle: We have it all laid out. When I meet with a prospect, we'll go through, "This is what you're going to experience with us, and this is the journey of financial health. It's on our website. And we will dig into this." I won't tell them exactly what it's about, but, "As we go through our time of working together, we're going to dig a little bit deeper. That's just because it's who we are and what we add value to our experience. And we think it will help you be successful in your financial life, in creating financial health." So, they will know right up front that we're going to get a little bit deeper, but they don't know the intricacies and the depth of it.

And then the final meeting is me cheering them on going, "Wow, this was fantastic that you got your estate planning documents put together. And wow, we decided to work with you on the AUM side and you consolidated these 401(k)s and we've asset allocated them. We've done all of this stuff, and this is what we're going to move forward with from year to year." And then from there, it moves into our different service levels depending on how complex…are we going to be meeting with your CPA every year? Are we going to be talking with your kids about helping you lend them money to buy a house? Or, what does it look moving forward?

Danielle's Service And Fee Models [1:09:22]

Michael: And so, how does that ongoing service levels and fee work with, I'm presuming by now, if they were transitioning assets, they've moved assets and they're an AUM client? Do you have like an AUM fee and a planning fee or minimums or tiers? How do you actually differentiate service levels if clients converge into an assets model?

Danielle: So, the financial planning comes first. I drew the line in the sand back in, probably about 2010, 2011. To me, the plan has to come first. And even though it isn't a plan set in stone, it's just, I can't know my client, I can't give good advice unless I have her do this planning process. So, the service level that we work with assets under management, I've got it. I live in the Rocky Mountains. I'm very focused on the outdoors. I love being outdoors. It's who I am. It's how I've done a lot of my branding. So, our 3 different service levels are Creek, River, and Ocean. And each of those service levels provides a little bit different...

Again, I'm the cook, I'm not the baker. So, I end up giving people probably more than usually fits into a service level just because that's who we are. But our Ocean clients are the complex ones. They're the ones that have 2 or 3 different trusts. They may have a charitable trust, they may have different revocable trusts or irrevocable trusts. They have different tools and they're complex. They're usually retired. They will have family members that we're bringing into conversations.

Michael: So, are these defined by asset minimums, like, you have to be a $2 million client to get Ocean? You can get River at $1 million?

Danielle: Not necessarily, but we do have, I don't want to say we have minimums for our River. We have some smaller clients, but there is a minimum fee to make it viable. And then at Ocean, there's a maximum fee, maximum of $60,000 because I don't feel that if I'm managing somebody's complex life and they've got $15 million, I'm probably not going to be providing them a whole lot more than the $5 million client. Again, I'm learning as we go with this. We're all just trying to figure it out and bring a level of service that fits for clients and is going to serve them in a way that's beneficial and meaningful.

Michael: And what's the minimum fee on River? how does that span?

Danielle: So, our River is going...well, our bottom level is Creek. We used to have another one below that, Stream. Then it was like, "Is a creek bigger than a stream or is a stream bigger than a creek? So, let's just combine them as a Creek." So, our minimum annual cost on that is $5,000. And I've got some older clients that I've got in, but any new client we're taking on, we have a minimum annual AUM [fee] of $5,000. And so, it's at 1.15%. So, it's a little less than $500,000. And there's always exceptions too, but for the most part, that's what we try to...because we want to feel that, again, we're bringing value and the amount of work that goes in behind the scenes on all of this is as we know, a lot more than any client will ever see.

What Danielle's Business Looks Like Today [1:13:55]

Michael: Right. So, what does the business look like now overall? How many clients do you serve? What's overall scope of the practice? I don't know if you measure by AUM or revenue. So, help us understand what the current state of affairs is.

Danielle: All right. This is where I wanted to talk about defining success because our industry is very AUM-focused and how many clients do you have? And what is your...? That's how much of our industry defines success. I love talking about success with some different metrics. Part of my definition for success is am I able to spend time with my family and doing the things I love and being here in the Roaring Fork Valley and being outdoors. And yes, I've created a lifestyle practice. And that has changed over different seasons. And this is something else that's really important about Wealth By Design is and about who I am, is there are seasons of life and success to me meant something different in my younger years than it does now.

So, where we are at, where are at about with assets under advisement and under investment, we've got about $35 million. We've got 35 families that we're working with and one profit-sharing plan that we're involved with. So, we're a smaller practice. It's my office goddess, Molly, primary client service guru. And she does everything paperwork. And I thank God for her every day.

Michael: Have you scaled the number of clients up and down as the practice evolved, as seasons have changed?

Danielle: Yeah. When I inherited the life insurance practice, when I absorbed that way back when Mark wanted to go teach school, we had a couple hundred clients and all with life insurance products and annuities and reaching out to everybody and say, "Okay, this is looking very different moving forward." I still get calls from clients who bought a life insurance policy from him 30 years ago. And I will still service that, but they're not part of my service model. I will still, if my name is on an old insurance policy, I will help you figure out what needs to do with it. But they do not get a call every year going, "It's time to review that insurance policy." And I've tried doing the, I don't like the term firing clients, but we scaled back quite a bit on the number of clients we've had over the years.

Michael: So how did you move them on if you don't like firing them?

Danielle: Well, that's just the terminology? And it was hard because you want to, but if they're not into it, then again, you can't force a horse to drink. So, it would just be asking them to change the rep of record on their account. It would be asking an old broker-dealer. Some of my old broker-dealers just wanted to take on, they would just absorb it and...

Michael: Oh, like it's house accounts kind of thing?

Danielle: Yep. Just move it to a house account and you're good to go. So, over time, we've gone from probably upward of 200-plus households down to 35.

What Surprised Danielle The Most On Her Journey [1:18:11]

Michael: So, what surprised you the most on this journey of building an advisory business?

Danielle: Maybe how fun and creative it is, I enjoy that. I enjoy coming up with... I think I've been surprised at my resourcefulness, my creativity, maybe my fortitude, and sometimes my stubbornness. There's times when if I compare myself to the rest of the industry, I can get down on myself. you go to conferences and you sit in and you talk to people and you go, "Am I really successful at this? Is this really what it's supposed to be about?" But when I look at what's important to me and what I have created and that I get to speak with Michael Kitces and have a podcast, that's pretty darn cool. And so, defining success for yourself is so important. And not looking at that fear of missing out or that FOMO of what else is going on with everybody. We need to just keep our own head on straight and... Oh, actually, Ralph Waldo Emerson, can I read his idea of success?

Michael: Sure.

Danielle: So, "To laugh often and much, to win the respect of intelligent people and the affection of children, to earn the appreciation of honest critics, and to endure the betrayal of false friends. To appreciate beauty, to find the best in others, to leave the world a little bit better, whether by a healthy child, a garden patch, or a redeemed social condition. To know even one life has breathed easier because you have lived, this is to have succeeded."

The Low Point For Danielle On Her Journey [1:20:33]

Michael: So, what was the low point for you on this journey?

Danielle: Very, very, very, very, early on when I had just started supporting my husband in the insurance side of it, I got the news that my daughter's biological father had been killed in a motorcycle accident. And that was a pivotal point in saying, "Why am I in this business?" I made a lot of mistakes. I got a call from his attorney representing his estate. I thought he was going to do right by my daughter, who was due a lot of back child support. And I didn't get the proper advice. I didn't seek the proper advice. I thought this guy was going to represent her and that she was going to get some money out of the deal. And she didn't.

And I beat myself up a long time for not doing right by my daughter. And it's a big reason why I decided to pursue the career path with the planning and the digging deeper because I just felt that I did a big disservice to her and had to look at what it meant to let go of that and what it meant to learn from it and what it meant to move on, and how I could show up in the world better for having experienced that. So, that was a painful time. I know it doesn't really have to do with the business itself, but more of my “why” for being in this business.

The Advice Danielle Would Give Her Younger Self [1:22:38]

Michael: So, what do you know now about the business itself that you wish you could go back and tell you from 15, 20 years ago as you were transitioning in this direction?

Danielle: Just seek wisdom from others. Again, the beautiful thing with technology and what you're doing, Michael, is really just having the conversations with people about how they're doing it, what's working for them, what's not working for them, and everybody is so unique…25 years ago we didn't have this. So, just soak it all in, ask questions from other advisors that are out there on how they do it. And be willing to fail. I think that's something that I've always had a hard time with. One of my messages in general was, "If you can't do it right, don't do it." So, I've probably not scaled, I've probably not become a bigger business, and I'm okay with that because there's that fear of failure that's still pretty sitting pretty strongly in me.

And at the same time, I am so grateful every day that I have the beautiful business that I have, I have the amazing clients that I have. I get to work in an industry that allows me to do it the way I want to do it and supports me in that.

Danielle’s Advice For Newer Advisors [1:24:22]

Michael: So, what other advice would you give younger, newer advisors looking to come into the profession today?

Danielle: Well, if I may speak especially to women.

Michael: Yeah, please.

Danielle: I just think we have such a unique opportunity to show up in our integrity and authenticity. And if we're brave, step into a space that honestly has been dominated by male energy for quite some time. And we need it, there's a lot of good things about it. But I think bringing a softness to this industry and finding a fit that is unique to you in your life season. You may be a young female advisor, you may have a kiddo at home, you may be just kind of getting into the industry and don't have a real set career track yet. But there are all sorts of ways to define success in this business. And if you just make sure you know yourself and know that you are going to continuously be growing and continuously evolving in who you are and how you show up in this business, it's a fantastic career path.

What Success Means To Danielle [1:26:04]

Michael: So, as we come to the end, this is a podcast about success and one of themes we always talk about is just the word success means different things to different people and sometimes different things to us as we go through life, as you said, the seasons. So, you had shared a little bit earlier about what success looks like now. I appreciated the Ralph Waldo Emerson quote, but I guess help us understand, how has the definition of success changed for you over the seasons?

Danielle: Early on, it was more about the money, it was more about gathering assets or, very early on, selling product. And then shifting into success is really helping people feel like they're succeeding and creating a healthy financial trajectory, and making sure people felt like they had somebody as a thinking partner, as an advocate, or as a coach when life happens. I remember a client's husband passed away and she came up to me after his service and she said, "I need you more than ever." And to be able to walk alongside her over the past 12 years, and she's a giver, so I have to keep her from giving it all away, but guiding her along that path, and the smile on her face and the peace of mind, I hear from her kids, "Thanks so much for being there for mom and helping us to understand what's going on and all of this," that is huge.

And now it's also encouraging, it's encouraging other advisors. It's encouraging other people in this space that we've been able to walk for the past 28 years. And just being a cheerleader. Again, I appreciate all of those who have walked before me, and I hope to be one of those who can encourage somebody today through your vehicle to, again, live this industry as it continues to unfold. And it's changing, it's changing fast, and I'm excited to see that.

Michael: I am too. I am too. Well, thank you so much, Danielle, for joining us on the "Financial Advisor Success" Podcast.

Danielle: It's been a pleasure. Thank you so much, Michael.

Michael: Thank you.