Executive Summary
When it comes to financial planning, it’s impossible to create (and then implement) a plan that will improve a client’s life and help them reach their goals if the advisor doesn’t have the data to analyze the situation and formulate recommendations in the first place. Yet even though having the requisite data is the most important piece of a client’s financial puzzle... every advisor at some point experiences the challenge that it’s not always the easiest task to gather a client’s pertinent financial data in the first place. From a client’s perspective, the process of collecting all the necessary facts and figures and then entering it all into a multi-page intake form isn’t anyone’s idea of a good time… and the irony is that the clients most in need of help may not be organized enough to gather their information to give it to the advisor, to begin with. Which in turn raises the question: are there any better ways that advisors can get the data they need to do the planning work they’ve been hired to do?
In our 47th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss a few of the reasons why getting data from new clients may sometimes prove to be such a challenge, how advisors might shift their thinking around data-gathering to overcome the challenge, and some simple strategies to help clients get more comfortable with the data-gathering process itself.
As a starting point, it’s important for financial advisors to take a step back and consider why they’re gathering a client’s financial data in the first place. As while data is a wholly necessary ingredient in every comprehensive financial plan, it’s also important to recognize that financial planning isn’t an event that happens once and is set in stone forever; instead, it’s a process, and initial meetings with new (or prospective clients) are more about building connections and helping them be more comfortable, than they are about getting (potentially too) bogged down in the minutia of account balances and interest rate assumptions. That’s not to say, though, that advisors shouldn’t be asking great questions to learn about a client’s current situation and what’s most important to them. In fact, those are the key ideas and details that can then be used to identify what blanks need to be filled in first!
Meanwhile, advisors can also find themselves in situations where new clients simply aren’t organized enough to collect the necessary statements and get stuck in a downward spiral of guilty feelings over not being able to give the advisor the data that’s being requested. But it’s those clients who most need the help of a financial advisor who can live up to the profession’s promise of “helping people get their financial house in order and focus on a plan for their future”. Which means in such instances, instead of having clients gather, organize, and deliver their own data, advisors may simply wish to have the client bring in their piles of unopened statements… and help them through the process of sorting it all out (with the bonus of helping them finally truly get organized!).
Finally, advisors can also leverage the latest iterations of financial planning software packages to make data gathering more interactive and engaging for the client to want to get through the process. By building out the initial iterations of a plan with clients, not only will the advisor give them a more genuine and tangible financial planning experience, but clients can often get excited about the process itself and begin to feel the motivation to make sure it’s as accurate as possible when they literally see their financial plan taking shape before their eyes… and in the process, end out wanting to actively pursue any missing information that was needed in the first place.
Ultimately, the key point is to recognize that financial planning is a process rather than an event, building long-term relationships is more about making connections than collecting as much data as possible at the early planning stages, and often clients don’t have or know where all of their data is. And by making it easier to get started by meeting clients where they are with the data they have, and focusing on just the most important data points (which will vary on a case-by-case basis) in an interactive setting, financial advisors can demonstrate, in real-time, the connection between the data and the benefit that financial planning will bring to a client’s life.
Authors:
***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
- Replacing The Data Gathering Meeting With A “Get Organized” Client Experience
- Reimagining Client Meetings With A More Client-Centric Financial Planning Process
- Mind-Mapping Your Way Through The Data Gathering Meeting
- #FASuccess Ep 058: Custom Designing Your Office For A Better Data Gathering Experience with David Armstrong
- MoneyGuidePro
Kitces & Carl Podcast Transcript
Michael: Greetings, Carl.
Carl: Well, hello, Michael. How are you?
Michael: I'm doing well. How are you?
Carl: I'm good. Yeah. Things are good here.
Michael: Fantastic. I'm excited about today's conversation and a theme that I think has been hitting you and me separately, lately, that I wanted to talk about today. Just that this whole challenge of, "We can't do planning until we get the data", right? I can't analyze your situation until you give me the data so I can number crunch it accordingly. Except, just getting information from clients is often really difficult. I think you said before that you were not a fan of intake forms, data gathering forms. I'm certainly not as much of a fan as I once was either, so I thought it would be interesting to talk today about this dynamic of how do you go about getting from clients all the data that you need to do the planning work when clients are not always the most cooperative in giving you all the data that you need in order to do the planning work? How do you tackle that, and is it really true that you so strongly dislike data gathering forms as a way to go about this?
Can You Collect Data From Clients And Help Them Become More Organized In The Process? [02:14]
Carl: I think I have a t-shirt. That's how strongly I dislike them. Some sort of t-shirt that says, "I don't believe in data." Yes, that is true. I think the important – to me, the important place to start is why are we gathering it in the first place? And you already touched on it, right? You've got to have the data to do a plan. I just think when...okay, that's a well-intentioned reason, right? But, when we realize the – I don't want to spend a lot of time on this – but it sort of gets back to my fundamental belief about financial planning being a process rather than an event, and that real financial planning is about being less wrong over time more than trying to be right today. I think we should let go of this false sense of precision that – sometimes we're so anxious to be right. In the first meeting, we've got to gather every single thing, and we've got to have...I want to know down to the dollar – maybe even to the penny – the balances in these accounts. I think if we loosen up on that a bit and realize, first of all, these are guesses in the first place, and I can probably get pretty darn close in terms of deciding on our ongoing engagement together. The very first time I met you, I'm going to pepper you with all these questions. What if I let go of that a little bit and I say, "Okay, the goal of the first meeting is to mutually decide if we want to work together, anyway." I can probably do that with some ballpark guesses. I think it'd be okay, right? Maybe I can only save one decimal point on my Monte Carlo.
Michael: Does that just mean you want to send them a form to do more detailed information after you do the first meeting because we're going to take a broad slice first, but then we get more precise? Don't send the paperwork before the first meeting, send it after the first meeting.
Carl: Look, it's certainly easier to ask somebody for more details as you get to know them a little bit better than it is to pepper them with questions in the beginning. Maybe I'll just give you my view of it, and then we can dissect it and say...my thinking is before our first meeting, I send an email to a client or tell them over the phone, but preferably just an email that says, "Hey, I'm excited to chat with you on Thursday. Because I know how busy you are..." I have always thought it's our job to serve the client – this will get us back to intake forms too – it's our job to serve the client. It's not necessarily their job to do our job, and I know there are some smart people who disagree with that and think that it's a mutual thing, and I agree with that. But generally, it's...I try to state, "When you come on Thursday, I know how busy you are. To make the best use of your time, it may be...it would actually be really helpful if you review your financial situation before you come. Some of the things you may want to review include this, this, and this. If you have a balance sheet, that'd be a great place to start." I used to say, "Please bring all those things." And some people do that with great success. And surprise, clients do it, which is always sort of surprising, I can't believe they did that. But, I noticed they would, even when they brought it, they would walk in like it was in a locked briefcase that they were going to keep from me, so there was this feeling of, "I've got my hand on my wallet, you're not going to get it". And my whole goal the first meeting was to lower that sense. Relax a little bit. I'm not going to try and pitch you anything. I want to give you a graceful experience. I want you to think, "Wow, that was amazing. I was comfortable talking about money for the first time." That's where that email comes in, "To make the best use of our time, maybe you want to review these before you come in case it comes..." The last line of that email is, "In case it comes up in our meeting. Thanks, see you on Thursday. Carl."
Then, when they come in, instead of sitting them down in the foyer and handing them a seven-page intake form – how many of you have filled those out? Remember the last time you went to the dentist, and they did that to you? They do that every time you go to a new dentist or doctor. Do you like it?
Michael: No.
Carl: No one likes it.
Michael: It's horrible. Pull out the clipboard. I'm like, "Oh good Lord."
Carl: No one likes it.
Michael: Do I have to?
Carl: No one likes it. Now, I understand the information's important, but is it important right now? Is that level of detail important right now? Is putting – so I always thought to bring it – first let's have a conversation. Let's decide if we even like each other. We're going to ask – we've reviewed these things, we're going to ask some really good questions. We're going to try to uncover...in the course of that conversation, I'm going to have in my mind, "What are the blank blanks on that intake form that I really need to do a first slice of a plan?" Just a basic one-page, "Hey, we're going to do a ballpark, this will be fun." I have them in my mind. I know as soon as they leave I'm going to have to fill that form out in order to put it in the computer program, right? In my mind, I'm saying, "Okay, let's talk about values, goals. Hey, where are you today? Let's review...do you have a balance sheet? What do you owe?" I'm asking those questions.
Michael: Do you literally, will you keep a version of your data form yourself in this meeting and start filling it in and scribbling notes, asking them questions and trying to fill in some of the blanks yourself?
Carl: I don't think there's anything wrong with that. I knew – we all know after doing, whatever, 100 of these – you already know what you need. But, I wouldn't take...I think having the intake form in front of you is not a deal-breaker, right? But, and maybe you even have a few sections highlighted that are kind of like, "I really need to remember those". But I wouldn't structure the meeting like, "Okay, how many things do you have? Okay..." I would have a normal discovery conversation that feels conversational and graceful and lovely. All those words that we would never use about a normal first meeting. Somebody's feeling listened to and if something comes up, like, "Oh, the balance of the mortgage is this," instead of writing it on a notepad, could you write it in the intake form? Sure. But, I would just try to structure the conversation because part of the conversation is going to be what do you own and what do you owe.
Michael: What happens when they don't know? Because some don't actually know their own details. That's often one of the reasons why they're coming to us to work through getting their financial life in order.
Carl: First, I would say, guess. Then, I would say – at the end of the meeting, I'm going to say, "Look, my team's going to go off and do some work here to put together a really basic – we call it a one-page plan – that'll give us something to talk about in the next meeting." Obviously, as you know, anything that...we can say "garbage in, garbage out". "The more accurate we can be about these...so when you're at home, if you want to just take a quick glance and send me over a ballpark figure on those things, let me know." I find that to be – and especially in the second meeting then, I can say, "Look, here's what we heard last meeting. Did we get all this right?" I found people voluntarily say, "Oh no, no, hey..." Or even when they got home from the first meeting, "Hey, you know what? We forgot about that $2 million over at Morgan Stanley." They didn't forget about it, they just didn't want to tell you. Now, we understand the reason for them wanting to tell you is they want the picture to be as accurate as possible, right? That's my view of it. I think the alternative, and particularly – let's talk about this because I think you have something to say about this – and especially the section of the intake form when you're sitting in the foyer that says, "What are your goals?"
Michael: All right, we'll come back to goals in a moment. I've got a whole other issue about this "what are your goals". But, I will admit – so I look at this and just the evolution of my own career. Early on, I was like, "I'm going to do me an awesome financial plan. I can run circles around this financial planning software. The only thing that is limiting my ability to do one awesome financial plan is the quality of the data-gathering forms. For the love of all that's holy, client, please just fill out every stinking detail so I can get all the numbers in there, I can make an awesome financial plan for you." I was so focused on, "Need my data, need all my data, need all my data upfront". The only thing that screwed up the productivity of my day was when the client didn't give a complete data gathering form because I couldn't finish the plan. Then I'd follow up with them. Then, there was all this back and forth, and it slowed me down, and it made the process less efficient for me trying to get through the planning process. It made me really focused on, "I need the data gathering form up front with all the information." I do know advisors that will go so far as like, "You know what? There are only two types of clients out there. People who fill out their data-gathering forms for me up front, and those who aren't serious enough about planning to work with me."
How Accurate Does Your Client Data Initially Need To Be? [11:41]
Carl: And those who aren't...right, exactly.
Michael: And they take a really hard line on it. I will admit, it certainly does make the process a whole lot more efficient when they just give you everything up front. Now, certainly, I think the challenge for me, and I think for a lot of advisors, is if you take that level of a hard-line approach, you may end up turning away a non-trivial number of people. I just found over time, it was more nuanced than I appreciated. It was initially. And I remember the transition point for me was a client I was working with a bunch of years ago, we'll call him Bill, in appropriateness for his actual client anonymity. Bill wanted to work with us. Bill said he was very excited to work with us, so awesome. Sent him the data-gathering form. Back then, it was fillable PDF form because we were so proud we got off of handwritten. Send the fillable PDF. It's so much easier to fill out. Bill says he's excited to do planning. Awesome. Here's the form. A week goes by. No form. Check in with Bill: "What's the status?" "I'm working on it." A week goes by again. No form. Check in with Bill again: "Bill, what's going on?" "I'm getting to it. I'll let you know soon." Another two weeks go by. We're now a month out. No completed form. At this point it's like, "Okay, I'm afraid we're losing Bill as a client. This isn't working out." Bill at one point just said, "I don't have...I've got some of it but not all of it. Can we just get started?" I think probably out of exasperation, "Fine. Send me what you've got. Come on in. We'll get started."
What we got back was a pretty skeletal form with a bunch of stuff – a bunch of important information missing. He had a value for his house, but he didn't have a mortgage amount filled in. About $400,000 or something. I'm like, "You've had this for a month, and you couldn't get more specific than this yet? We ended up going into a meeting anyway and just starting to try to delve into this in person, which I didn't like to do because I want all my data up front. What became clear in all of about four minutes since the meeting with Bill, is that Bill was so not organized. He literally didn't know, and he was absolutely humiliated that he didn't know. It became crystal...he was so uncomfortable and awkward because he couldn't give us this information, but his situation was so problematic that he was willing to go through the process anyway and put himself through that. It gave me this stark realization of there are a lot of people who just are not actually organized enough to be able to fill out the data-gathering form. It struck me as ironic that, I think for a lot of us, we sell this proposition like, "I'll get your financial life in order. We'll help you get your financial house in order. We'll help you get more organized so that you can focus on a plan for your future." I had this stark realization of, "Oh my gosh, actually the way we've been doing it with clients like Bill is: here's how we're going to get your financial life in order. I'm going to make you get your financial life in order by filling out your data-gathering form, and then I'll give you a bunch of advice afterward." I wasn't actually helping him get his life organized at all. I was making him do it, and he didn't know how to do that because that was the problem in the first place. He didn't know what was going on with his financial situation. And giving the data-gathering form and requiring to fill it out up front just amplified the actual problem that he had in the first place, which is...
Carl: For what he needed help…
Michael: He wasn't organized enough to have all this stuff together. It shifted my view a lot to say, "You know what? Sometimes, that first meeting, maybe let's help them get organized." I've written something about this on the blog a ways back of an approach we did with one client, where again, similar situation or very unorganized, "I'll tell you what. We normally would start the planning process this way, but I know gathering the information is a little tough for you because your life is very scattered right now. Tell you what. Just come on in to our office. Bring all the boxes. Wherever that box is that you throw the envelopes in that you never get to and never open, bring those unopened. Totally fine. And we will go through them in the office with you together. I'll tell you what you can keep, I'll tell you what you can trash," because people always get really anxious about that. We got a filing box from Staples and some hanging folders, and we organized and sorted it for them. When they left at the end of the day, we literally made them more organized because we sorted all of their financial stuff and made it organized for them. As we went, grabbed the most recent version of every statement and ran down the hallway and scanned a copy so that we had all of the information. But, rather than ask them to fill out the form or get the information, because this is a client that we knew wasn't organized enough to do it, we turned the whole process around and said, "I'm going to make this your get organized meeting, and we'll help you with it. As we go, I'll grab some of the information I need and we'll scan it."
Carl: Sure, we'll get it. Two things – super important. One, let's pretend like...first of all, people who have a hard rule about getting organized – filling out my client intake form or you're not going to be a client. Amen, there are a million ways to do this business. That sounds great, if it works for you it's great. My thought on this is let's pretend like this – we'll just keep using Bill – let's pretend like Bill did give you exactly accurate information all on the intake form, you ran the plan. What happens a week later? Once a month later, the plans changed. Why is it changed? Because the values have changed. Why are we so...
Michael: That's why we have account aggregation, Carl.
Carl: Why are we so caught up in the...there's a date on which it's called the first meeting, and at that first meeting I have to have exactly accurate information. We know that's wrong. We know the financial...the only thing we know for sure about the financial plan you prepare in that meeting is that it's wrong. We just don't know what direction it's going because next week you...plus remember, you had to make all these assumptions you're wrong about. Standard deviation correlations at returns, tax rates, date of death. All of these assumptions that go into this. I am simply saying...I think if we lower that pressure, it has the side benefit of saying, "Just come in, take a look at this stuff. If you have a box like that..." because I think that's a beautiful story. Let me tell you mine. We had a lady named Martha that came in after her husband passed away. She brought a banker's box. She was in a – as often is the case with couples – often there's one member of the couple that took care of the money, and in her case, it was her husband. Her husband passed away. She brings in a banker's box. I was like, "What am I to do with this?" Then, I realized, this is the greatest gift I could ever give her, is go through, shred all the stuff that didn't matter because half of it was just people trying to pitch her stuff on annuities or whatever, and put it in a three-ring binder, organized by accounts. When she came back, it went from a banker's box to a beautiful three-ring binder. You literally, physically, organize them. That's a separate idea that I think is amazing, but generally, I think this intake form is, "What do we need to get us started on the path of the process of planning?" It's not an event that has to be perfect in one day, because it's impossible. We all have this false sense of precision and this idea that we can sell certainty. It's a myth. What do we need to do to get on the process of helping these people make better decisions about their money? How can we lower the pressure? That's my view of it.
How Can You Make The Data-Gathering Process More Client-Centric? [20:31]
Michael: Yeah. I'm certainly a plan of lowering the pressure. I think I'm still – I certainly agree with you. Planning is a process. Numbers just mathematically do shift and change over time. We still need some anchor point of, "What the heck are we projecting, analyzing, looking at?" I still do feel some motivation. I've got to get to some numbers that are reasonably concrete and accurate here. Yes, they're not so precise in the out years, but that doesn't mean I want to make them less precise by not getting accurate data up front in what we're doing. But, it has certainly shifted my attitude and style around it of saying, "Look..." First of all, recognizing not all clients are going to be organized in the first place, and that that should be okay, and that helping them get organized actually could be the greatest gift to the whole planning process in and of itself, just actually getting them there. Recognizing that that can be a blocking point for data-gathering but actually a value add in the data-gathering process, getting them organized.
From there, I have become a fan of...I guess, a version of what you're framing, which is let's get some initial numbers into planning software. Now, we can actually just throw it up on the screen and use MoneyGuidePro's intake process. They're all building one out. We can do it live with the clients on the spot. And yes, they often don't know numbers on the spot, so we have to peg some in that are rough. But, I think there's a really cool effect that happens with clients where if you start plugging in the rough numbers into the planning software live, and they start seeing the numbers up on the screen, I'm pointing to the whiteboard behind me as though that's a screen that we would all be viewing. When they start seeing the numbers coming up on the screen, I think this human thing starts kicking in of, "But wait, wait, that's not right."
Carl: For sure.
Michael: I think actually it's not 500, it's like, 520. Because they want the other 20,000 in credit because the number gets a little bit higher. They start feeling this motivation when they see their plan begin to take shape on the screen to say, "I want more accurate numbers because I want credit for all my stuff. I want all my things up there." It starts pulling the data out of them because it's not just, "Hey, fill out this form because I want you to fill out this form." It's, "Your plan is taking shape in front of you. This is literally your financial future. If you want it to be right, you might want to try to make the numbers more accurate with me." Then, suddenly people want to volunteer information, they want to get it more information. I've seen people, "I'm going to log into my account on my phone. Let me get the balance really fast." And they want to start putting numbers in because they're actually experiencing the planning process and seeing the plan take shape. It's one of the reasons why I become such a fan of having the planning be more collaborative in the conference room on the big screen. Because it's one thing to ask for the data, it's another to show them how the data's getting used in the plan and saying, "Wouldn't it be cool if we had more accurate numbers? Want to help us with that?"
Carl: Totally. I completely agree, and I just want to be on the record because I know I'm going to get emails about this. We want accurate data, of course. I'm not saying purposefully... I'm just saying it's okay to start the process. It's okay to start the process wherever you are, you can do...and I know this for sure because I get an inordinate amount of email from the public because of the other work I do. They tell me they don't like intake forms. They tell me, which we'll have to save for another episode, they don't like being asked what their goals are. One of the reasons they say they don't want to meet with a financial planner, I've had people say this to me: "I don't want to meet with a financial planner, they're going to ask me what my utility bills are going to be 17.5 years from now." I am simply saying, yes, as accurate as we can, but let's not that get in the way of starting. I think what you just demonstrated perfectly is making the connection between why I want the data and the benefit it's going to be in your life. Because you can see it, and I have seen that exact same thing. People like, "No, no, no. Sorry, that number is a little different. Oh, you know what? We forgot about this account over at Morgan Stanley. Let me tell you about that." That does happen. That's just – it's not that we're opposed to intake forms. I think humans are opposed to intake forms. I would love intake forms to go away. I would love for there to be a natural conversation that pulled out all the data. It's your job to ask the questions to be able to fill out the intake form is my view. Just because I think that's a more human way. But, I think we've now clarified, it's so beautiful if we can just get started, and then people see the connection between the intake form and the benefit to them.
Michael: Awesome.
Carl: Amazing.
Michael: Thank you, Carl.
Michael: My pleasure, Michael. Thank you.
Really appreciated this podcast. Very timely for me as I’m trying to make my financial planning process more efficient since I’m now using a paraplanner. I’m an Emoney user and have been for about 10 years. One of the things I struggle with is getting the clients expenses accurately measured. I used to give the client a piece of paper (excel printout) to fill in their expenses on. After a while I found this not efficient because I would then have to type them into the Emoney living expense worksheet and possibly ad them up in front of the client. Now I ask clients to fill in their expenses on an excel file, save it and upload it to their shared box folder. This is better as the data can be changed by the client or us, is easier to add up but we have still have to type them into Emoneys living expense worksheet. Now I realize that you don’t have to use Emoneys expense worksheet and you can just type a number in for the clients expenses before and after retirement. However, I’m just very accustomed to doing this. I was curious how you both approach this part of the planning process? Maybe it could be another podcast. My planning is done on a flat fee basis and I hear about other people offering cash flow planning/budgeting advice ala carte and always wondered what that entailed. Maybe you could talk about this too. One other thought I have is moving this expense excel file to Google Sheets as we would be able to see real time changes the clients make and vice versa. Not sure it’s necessary but wondering if you or anyone else has tried this? Thank you!