Executive Summary
For many financial advisors, keeping an open line of communication with clients is a key component of building trust, understanding the client’s values, and developing a meaningful plan to help them reach their financial goals. However, despite efforts to ensure all clients understand the ‘big picture’ of their comprehensive plans, some clients may be tempted by other financial professionals offering attractive investment returns and promising better portfolio performance. And when a client decides to pursue a relationship with a new financial professional for better returns, it can leave the advisor wondering what went wrong and how to prevent other clients from being lured away.
In our 114th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss ways for financial advisors to talk to clients tempted by promises of higher returns from other financial professionals, how they can ensure that all clients stay focused on the goals their financial plans were created to help them achieve, and why it’s so important to remind clients of their actual value.
As a starting point, it can be insightful for advisors to understand the underlying motives behind a client’s decision to end their relationship when they say they want to pursue better performance results. As while it’s possible the client was always truly more interested in investment performance than in identifying and planning for financial goals (and that they weren’t really a good fit for the advisor in the first place), there are often deeper reasons that go beyond dissatisfaction with portfolio performance (e.g., pressure from family members, an attractive 'deal' offered by an investment management firm, etc.) that shift the client’s focus from their original financial plan, compelling them to pursue the guarantee of more money.
Having a meeting to discuss these reasons can allow advisors to help clients refocus on their goals and priorities, reminding them that their portfolios were designed with those goals in mind while minimizing unnecessary risks that could otherwise jeopardize them in the long run. Advisors can even use these conversations to identify whether there are gaps in how they communicate with clients around how investment strategies are designed and chosen, how portfolios are monitored and managed on an ongoing basis, or how the client’s allocation is designed to align with the client’s values and goals.
For clients who feel confident about terminating the relationship, the conversation doesn’t need to focus on convincing them to stay. However, it may still be helpful for the client to reevaluate their motives and priorities (even possibly ending out with them changing their mind as they realize they were already in a good place with their advisor keeping them on track to attain their financial goals). But if the client is still convinced they can do better with a different advisor at the end of the conversation, it may be best to let them go.
Ultimately, the key point is that advisors provide tremendous value to clients by keeping them focused on what’s most important to them, even when they may be tempted to chase better returns elsewhere that sound too good to be true. And while it may be a rare occurrence for a client to decide to leave because of investment performance results, having a good communication strategy in place ahead of time can help the advisor remind their client of the value of ‘real’ financial planning and talk them off the ledge from making an emotionally driven (and potentially irrational) decision that they may later regret!
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
- Kitces & Carl Ep 18: Talking Clients Off The Ledge From ‘Scary’ Markets
- Kitces & Carl Ep 25: The Overconfident Conversation And Walking Clients Back From The Greed Ledge
- Kitces & Carl Ep 42: Overcoming Objections By Asking More Questions To Truly Understand A Client’s Needs
- Matthew Jarvis
Kitces & Carl Podcast Transcript
Carl: Michael Kitces, what are you doing here?
Michael: Well, I was just hanging out in this Zoom room seeing if anybody would stroll through to chat and you showed up. So, I was like, "Cool. I could just chat in this random impromptu conversation."
Carl: Exactly! Exactly. It'd be like a little random, spontaneous meeting, serendipitous meeting at a coffee shop. And you know what? Because, as we do, we're not going to talk about the weather or how are the Lakers going to make the playoffs, or what we're going to talk... And by the time you listen to this, it will already be obvious. We know this was recorded before we knew whether the Lakers were... Well, actually, they just made the playoffs last night. But we're not going to talk about basketball. We're going to talk about the siren song of investment performance because that's what we do.
Why Communication With Clients About Investment Results Is Important [01:03]
Michael: Well, actually, ironically, that's usually not what I do because I hate talking about performance, but that's probably actually part of the point of the conversation today. I like talking about financial planning, Carl, not like that investment performance-y stuff because I can't really guarantee that and I don't control the market, so I sort of try to downplay that part of the conversation and value proposition.
Carl: Yeah. It's so dismissive and so beneath us...
Michael: You want investment results?
Carl: ...to speak of such things.
Michael: You get what you get and you don't get upset.
Carl: Exactly. Go talk to a stockbroker if you want investment results. Yeah. And that's exactly what I want to talk about because I get this is a regular occurrence. And I want to be really, really clear. The amazing professionals that listen to this podcast are going to have a tendency to be dismissive about this entire conversation because it's like, "My clients don't do that." Well, they do. Let's just be a little more humble. I'm speaking to myself here. I think this is a bigger challenge, and it's particularly a challenge for those of us who know that it doesn't matter. The wisdom you've gained about not wanting to talk about investment performance makes this a big challenge because I don't know if you've noticed, but everybody else is talking about it. Right? Culturally, you can't get away from it.
And so, the financial pornography network, there's probably 2 or 3 of them now, but the original one is still all day every day, right? Every newspaper, the radio on the way home from work, your friends, your neighbors, the stroll through the financial planning... There is no financial planning section, by the way, at Barnes & Noble, if there's even a Barnes & Noble anymore. It's more like financial advice, personal finance, investments. Guess what's the big section? The investment section. So, that's exactly what I want to talk about, the question I get often is, "Hey, I just lost a client to somebody who was pitching better investment performance." There's a million versions of this. The one I just got the other day was somebody said, "I just lost a client literally to a stockbroker," which I was, "Well, do they still exist?" "I lost one to a stockbroker because they were claiming investment performance, and I don't talk about that much, but the question," this is an email, "said, "I know my investment performance is better. Certainly, over any period of time that matters, I know my performance will be better because my process is better." And this is how I used to feel.
This is a long intro, but let me just set this up with a story. So, I had this client, his name was... We'll just call him Dr. Terry. And Dr. Terry, he was a radiologist. That's not his name, by the way, Dr. Terry. Dr. Terry was a radiologist and he loved to mountain bike a lot. So, that's how we got in touch. When I first asked him, "In an ideal world, how often would you hear from me?" He said, "In an ideal world, I'd never hear from you. But I'd only really hear from you when I need to hear from you." So, Terry, he was really, like, all the signs, everything he said was like, "I don't care. I'm not going to be distracted." And so, I gave him what he wanted. I didn't talk to him all that often. And I got transfer paperwork once in the old days, ACAT paperwork, you know? Is that still a thing?
Michael: Yeah. It's a little more electronic now, but, yes.
Carl: This thing arrived in the mail, I had to open it. And it was going out to a very focused investment place, which we won't talk about, but you could fly. Anyway. So, we won't talk about who the investment place is. I'm going to catch ya, and then with an "a" on the end. And I called Dr. Terry, I'm like, "You can't. What are you doing? You can't do this. I'm not going to let you do this." He lived two or three hours away, so I was like, "Look, is this a local problem? Because I can help you find somebody local, but you're not going there. Why are you going there?" He's like, "Well, because they have this big thing and they invest and they send lots of letters in the mail that are really big. And they talk about their investment performance, and you don't ever talk about that."
And I think it was specifically, they have more exposure to Asia right now, something like that. And Dr. Terry didn't even know what that meant. He just read that. And I was like, "You've got exposure to... What do you think?" And I ended up saving that relationship because I just told him, I'm like Terry, "I'm sorry, you can't. I won't let you move." And he was like, "Can you do that?" And I said, "No, I can't, but I'm not going to let you and your wife move because I know that will be bad decision." But my point here is, he was like, "Carl, you never told me. I don't even know about the investment process." And I was like, "Well, but you told me in the first meeting..."
Michael: You didn't want to.
Carl: "You didn't want to." And he was like, "Yeah, but we're not there yet." And I was like, "Oh, I kind of..." And I don't know that you ever...
Michael: From the client who said you were there.
Carl: Yeah, exactly.
Michael: Which means that you were there already.
Carl: This is when I decided to never believe people when they did... If they say they don't care about investment performance, to never believe them, because they actually probably are telling the truth that they don't care, but the whole world cares, and you can't get out of that. And so, I used to feel I could go toe to toe, because I came from the investment background. I could go toe to toe with anybody on how we invested money. There was no... Institutionally, I don't care where you put me. I was like, "I can go toe to toe with anybody." And the downside was, I know that it doesn't matter. You can build the best-performing portfolio on the planet if you don't behave well. And then if you even behave well, if it's not aligned with your values, you spent your whole life climbing a ladder to find out it was against the wrong wall, to paraphrase Cubby.
So, that's when I was always like, "That doesn't even matter. It doesn't even matter." And I would come across as dismissive. And then I realized that's not... The tone is more like, "That matters a ton." It's a huge driver in your success of meeting these goals. It's one of the major drivers. And it doesn't matter at all if we don't get this other stuff right. So, what I wanted to talk about today with that long-winded introduction, is, how do we handle those of us who are living more enlightened lives, that we know, oh, that little thing, investing, cute, that you care about that? We've also got to understand that, actually, not only is it important, I think we can all agree it's important. It's everywhere. So, with that, I'm just going to drop that in your lap. What do you think?
Understanding Why A Client Is Tempted By Offers Of Better Performance Results [08:22]
Michael: To me, there's sort of 2 different threads that come to mind here, one is just, literally, how should we navigate that conversation if the reality is like, "No, no, you really do need to bring the investment part up from time to time no matter how much you're otherwise focusing on super cool, awesome, really valuable financial planning?" If a part of what you're doing is managing the money, and particularly if the bulk of what you're billing is managing the money, at some point, you do still have to show up to that conversation. So, I think, hey, just there's some acknowledgments to that. And I don't know, maybe you have some words, or language, or suggestions about how best to have that conversation.
I guess there's 3 things in my mind. One is just having that conversation. The second, I think, is asking the question, is the truth this just wasn't a good fit client? Is the reality you do investment management plus financial planning, you do financial planning on an AUM model, they gave you the AUM, they humored your financial planning thing, and it wasn't actually what they valued, it wasn't actually what they cared about, they chased investment shiny objects, and you were an investment shiny object, and now someone else is an investment shiny object, and off they go? I don't want to go too quickly to the, "Well, then, clearly, they're not the right fit because they're just performance chasing."
I do think we actually have to own a little bit. Did we have the right conversations? Did we set the right expectations? Did we continue to re-anchor the expectations so that when they had a good year or two, they didn't then expect to get that every year because we didn't keep having the conversation? You realize there's going to be a future year that's terrible and not the past two that we had and if you're not continuous to re-saying that. So, I do think there is some onus on us, but to be fair, I do think there can be a point where you either recognize maybe this really just was a performance-chasing client. So, on the one hand, that means maybe they just really weren't a good fit. On the other hand, then my question is, "Well, what is your marketing and sales process that this person ended out a client in the first place?" because you did all that financial planning work, and they fired you as performance chasing a year or two later, so you probably lost money on this relationship. Should you have changed something in your sales and marketing process to not bring them in the first place?
But the third piece of this, granted, if the moment of this discovery is literally, they have fired you and the money just ACAT-ed out to the new stockbroker, or it may be a little bit too late to win it back, but sometimes at least we get some shot at this conversation. Right? The client calls and says like, "I'm really not happy with my investment performance. I think I'm leaving." And you're like, "We lost money last year, but we beat the benchmark last year. Why are you leaving?" "Because, well, someone else said they can get me 14%. It's really low risk." And I'm, "All right. Let's slow down a moment."
When we get a crack of those conversations, the part that I will own, I wasn't good at this when I still sat in more of these conversations. My gut impulse was always some version of, "Let me tell you why. What you're being pitched is either total BS, or completely overpromised, or..." It's like fighting gloves are on. Let me obliterate this opposing investment pitch that's coming at you. And when I actually look back at some scenarios where clients were lost over these conversations, what I remember were things like Eric, at the end of the day, fired us because it was shortly after Christmas and his brother-in-law was mouthing off about all the amazing returns that he got at the family holiday party.
And the whole thing was basically just he felt insecure in front of his brother-in-law because we didn't make him as much money as his brother-in-law. It had nothing to do with investment performance. It had nothing, actually, to do with us and our relationship. It was a freaking family dynamics thing of a chip on his shoulder that Eric had about his brother-in-law that ended up manifesting as, "My brother-in-law apparently is making better returns than I am, and so I have to do something to change that because I can't let my brother-in-law one up me."
That was the actual issue, in which case, debating the shiny investment pitch that was going at him was not in any way, shape, or form going to solve it because as long as he felt inadequate to his brother-in-law, if it wasn't that, it was going to be something else because I was solving the wrong problem. The question was what was the social dynamic that was making them want to chase the investment returns? I remember another one like, "Ted, we lost at the end of the day because the kids wanted to get a trip to Disneyland and do the fancy Disneyland trip and they realized they couldn't afford it," and so the way that Ted wanted to make that up was, "Well, I'm feeling a bad father..." This is my paraphrasing in retrospect, but like, "I feel like am a bad father because I can't do the Disneyland trip that my wife and my kids want to do. And so we must need to find a financial advisor who can get us better investment returns so that we can do it."
Carl: Wow.
Michael: Right? It was ultimately like, "I'm having these family dynamics issues because... I'm having these conversations about what we can afford and not afford with my family. That was not really a conversation I was ready to have with my kids, so I need a place to vent that, and the place I'm venting that is you're not getting me good enough investment returns, so I'm going to go find another financial advisor." And just, I feel like it has to be acknowledged like, yes, sometimes just it's really about the money and the performance returns, but sometimes it's not. And I think at least recognizing or taking moments to say like, "Hey, is there something that's driving this conversation?" Particularly if it's a client that hasn't necessarily been pushing the investment conversation all along and just suddenly, out of the clear blue sky, is like, "You're not giving good enough investment returns. I'm shopping for another advisor?" What prompted this? Before you go to war on like, "Oh, and the other thing is it's complete BS." But before we get there. And I'm gloves-on to tear that down like, "Where did this conversation come from?
Carl: Yeah, I love that. And I love especially how you went into your nice, empathetic, Kitces voice when you, "What? Where did this come from? What sparked it?" You went right into that empathetic voice.
Michael: Well, yes. With hindsight...
Carl: Away from the fighting voice. You noticed?
Michael: In the moment, I’m like gloves on! Let me demolish this opposing person's investment pitch that I know is BS.
Carl: Yeah. But I didn't know you had a...
Michael: I can only say this with retrospect. I can only say this looking back. I didn't navigate this well at the time. I think for us advisors, it's that fight or flight mode thing that kicks in, clients transferring out or they're telling you that you're getting fired. I have to fight. I have to defend. The gloves are on. I'm ready to come out swinging to defend this business or win this business back. Obviously, not swinging at the clients. If I'm coming out swinging, I'm swinging at the broker that they're going to. I'm swinging at this investment pitch that I don't think is a legit pitch. And the client got lost.
How To Communicate With Clients When They Have Doubts About The Relationship [16:31]
Carl: Yeah. No, for sure. Let's just break this down real quick. So, number one, how do we have this conversation? How do we drop in hints often enough so people know we're paying attention? That was my biggest problem, was the swing to behavioral finance and now even deeper, sort of this idea of values, and meaning, and purpose. Sometimes we forget. Investment performance is incredibly important, but it's table stakes in our minds. We're like, "Of course, that's just check, that's done." But the clients don't know that. And so, I think that's where...
Michael: But you got their life's savings. Let's be honest, it is higher stakes than that for them.
Carl: Yeah, completely. And they're hearing that it's super high stakes from everybody else. So, it's fair. This is important to them, and they think this is the number one job. And so, yeah, how do you drop in? And I love the idea of just systematically, whether it's once a month. This is kind of where I'm hesitant to mention it because everybody's going to email and ask for it. But the 17-point wealth management audit, which I don't know if it was 17 points, make up your own points, but a bunch of them were investment-related. Did we rebalance? Did we check what the managers were doing? Is anything broken there? There was things that we did on a routine basis to make sure that we were on top of it. We weren't surprised. So, it wasn't trading in any way, it was just... And so, we did that every single month. Well, the client should know that. So, just find a professional way to make sure they know that you're doing that work. If you attend a conference call, if you go to a conference, a dimensional conference to learn about, make sure they know that you're still doing that, you're aware that something crazy is going on in Asia. Well, that's not a great example. But just make sure they're aware. That was number one.
Michael: Yeah. I'll give a shout-out even for Matthew Jarvis, Micah Shilanski over at Perfect RIA that just...they frame this as the dishwasher rule that telling clients that you did a thing that they were expecting you to do even if it didn't produce any outcome or activity, you still get credit, but you have to claim credit, like, "Hey, I just want to let you know we were reviewing your portfolio this month and made no changes and did nothing because we think you're on a great track right where you are."
Carl: Being in a position...
Michael: It says almost no advisor ever because we're like, "We're handling it. We're helping." If at some point from time to time you don't reach out and remind them that you were doing that, they can forget because all they see is maybe no activity at least if you got a more passive style. And so if you don't remind them like, "Hey, I'm still looking, I'm still monitoring. I just want to let you know I thoroughly reviewed your portfolio and made the decision to do absolutely nothing because it's on track and a great place." The conversation matters, not necessarily literally every single month, but to claim that credit for yourself from time to time because, otherwise, you get no credit when there's no activity.
Carl: Look, I think it turns out that being in a position to tell somebody that there's nothing to do is a lot of hard work.
Michael: Yeah.
Carl: Right? That's the irony of it. So, number one, finding ways to tell people. Number two, you talked about maybe it's just not a good fit. That's true. I was going to go the same place you went, which is let's not be too quick to go there. I think, first, let's own this and say, "What is it about what I did that generated this result? Even on that 1%, figure out what it is about my actions that contributed to this result?" And it could have been, "Oh, shoot, you're right. I've been a little dismissive." I can see how that would come across as, "I think it's unimportant, so, therefore, I must not be good at it." Right? So, get that cleared up. But I want to spend the bulk of the time on number three, which is, how do we have this conversation when it happens? So, my favorite phrase for this, and I was even at the point where if there was still a chance of stopping an ACAT, stopping a transfer, I was having this conversation.
Michael: Okay.
Carl: And the conversation was all these...
Michael: So, conversation. Because I sucked at this, I just went to the war. It's the other investment pitch. So, I'm here for personal therapy, but everybody else can listen in as well.
Carl: To me, I think you're right to point out performance is never the thing. There's always a thing behind the thing, right? I heard about it, I felt embarrassed, my brother-in-law, Disneyland. There are a million things. But the performance is the way it's manifesting. And that's reasonable. And by the way, just one more plug for us accepting responsibility, we as...not us as a profession, but us as an industry that we belong to, we created this problem. Do you know what I mean? It's really funny that we're all like, "They're so silly, those people behaving that way." We're the ones that built this. I know you didn't build the financial pornography network, but nobody was born thinking they needed a quarterly performance report. We taught them that they needed it. And so now we can't dissolve ourselves of any responsibility. So, I think just realizing like, hey, performance coming up is completely reasonable. And by the way, it's also very important as a long-term driver of success. So, my favorite phrase, these conversations, I wrote it down on the card just so I wouldn't forget, is professional courtesy. I loved saying this, like, "Hey, Dr. Terry..."
Michael: Professional courtesy. Okay.
Carl: "Hey, Dr. Terry, I got this ACAT transfer paperwork. And, look, I want you to know I'm going to make this as smooth a process as possible for you. It's no problem. But before we do..."
Michael: But. Okay. I was going to say, "There's a but coming." Right? Okay.
Carl: Or and. But this is probably a but. "But before we do, and I'm going to make this as smooth as possible. I'm going to do everything I can to make sure a new advisor has everything they need. It's not a problem. High fives when we see each other. Everything is fine. There's no problems here. But I have to tell you, I'm a bit confused because this doesn't match the conversations we've been having. And so I'm wondering, out of just a... Could I request a professional courtesy? Or out of professional courtesy, could we have one more conversation in person before this goes through? Would you mind if we just sit on this paperwork until we can have a conversation? I'm totally flexible. I'll come up tomorrow and just talk through because I'm asking..."
Michael: And that's your angle, like the professional courtesy of allowing me one more conversation, ideally, in person if that's your thing in your model before this goes through.
Carl: Yeah. And so this would be the same thing if you got a hint., "I'm unhappy I'm actually hiring new... I just want to give you a heads-up. You're going to see transfer paperwork." You get hit with that email. It's the same conversation to me. It's like, "Hey, thanks for giving me the heads up. That means a lot to me. And I'm going to make this as smooth as possible. Look, my thing I care most about is you and your success. So, if that means you're better somewhere else, we will make that happen. And I have to admit, I'm a little confused here because this doesn't match with everything I heard." And this is the next thing I think is really important. Own responsibility to this confusion. So, I would say, "I must have misunderstood something along the way. I must have missed something."
And I remember we talked about this in some episode forever ago, which was anytime there's an objection, rather than pulling out your overcoming objection skills, pull out your listening skills. If I hear an objection, I don't say, "How do I overcome it?" I say...In my head, I have a warning light that flashes when I hear an objection and the warning light says, "You missed something, brother." And so I would say like, "I'm confused. It doesn't match with what I thought I had heard, and so I must have misunderstood something along the way. In fact, Michael, I'm pretty sure I probably missed something. So, could we just spend 60 minutes? My goal is not to talk you out of leaving. My goal is to understand where you are and what you want to accomplish. Just make sure I heard it right. And we might get to the point where, I missed something, we fix it, and you decide to stay. We might get to the point where it's the best thing for you to move. And if it is, high fives, and I'm going to help you along the way. Would that be okay?"
And then in that meeting, I would go right back to statement of financial purpose, goals, like, "Here's what I thought I heard. You want to have freedom and flexibility and time so that you can think about having a family, Julie, because you're so busy right now in your ER job. And, Steve, you really want to slow down at work so that you can golf a little bit more and support Julie in her goals. Did I get any of that wrong?" "No, no, no, no, that's right." "Okay. So, goals, what does that look for you to be able to slow down to think about having a family?" Okay. So, I have written down, "You have to have a conversation with your partners. You'd want to be on track with retirement. We just reviewed those goals. Is there anything there that I got wrong and missed? Anything there?"
Okay. In order to make that happen, what makes that happen is the investment process. There's a couple things that make it happen. "We're saving this much. We're doing this. We're doing these things. And we wanted the portfolio to match those goals and values. And as far as I have it, the portfolio does match the goals and values. Did I not explain that well? Do you feel like the portfolio matches the goals and values?" "I have no idea. We just wanted exposure to Asia." "Oh, my fault. I should have told you. This world, this index fund here that we have, XUS, has got 30% exposure to it. I didn't realize that you cared at that level." And believe me, I'm excited when clients care at this level because this is my favorite part of it. This is one of my favorite parts of the job. And I think I can go toe-to-toe with anybody. And that's why I was confused.
And then it's like now we've got permission, I think, to compare proposed portfolio by somebody else. And you don't even know the exact portfolio, but this proposed solution. And I think the walking them through the alignment, the portfolio is aligned, your use of capital, real financial planning, aligning your use of capital with what's important to you. Once we've demonstrated we understand what's important to you, I think at that point, it's very, very rare that any of your "competitors," those will be like, "Wait, John doesn't know any of that. We didn't even mention to John that we want to..." And then at that point, I'm like, "Look, again, if you think that's best, but is there anything here... I could see a tweak, I missed something here, I could tweak that or that.
Or, "I'm going to be honest with you, Steve and Julie. If you were to come to me as a new client, knowing what I know now, and even after this conversation, I wouldn't do anything different than what we're doing right now. And if you feel the same, I'm totally fine with just pretending this never happened and I'll disregard the transfer paperwork and you can tell them that you're going to stay. But if you feel differently, I totally get that this wouldn't be a good fit because I can't think of anything I'd do differently right now, other than probably maybe share a little bit..." I'm really hesitant to use the word educate you. Right? I'm hesitant to use that word.
Michael: That's a little belittling. You're leaving because you're uneducated.
Carl: For sure. I would be more along the lines of, "Steve and Julie, knowing what I know now, even after this conversation, I wouldn't do anything different here, except maybe be a little bit better with my communication. And for that, I apologize. I should have been a little better. In fact, we've implemented some things you may have noticed, or, in fact, this is going to cause us to look at this really in detail to make sure you know we're on top of the investment stuff because, to be honest, Steve and Julie, we can go toe to toe with anybody. We think that is table stakes because this stuff matters so much. Sometimes that can come across as if we don't care. And for that, I apologize, and we'll do a better job." That's how I would handle that conversation.
Michael: Interesting. All right.
Carl: Interesting.
Michael: I'm just processing and learning like, yeah, okay. That would have been helpful at certain points in the past. Okay.
Carl: Yeah. It's one of my favorite conversations because I grew up in the investment side of the business and I really felt like that was always my goal to be really, really good at that stuff. And then it's really interesting to get to a spot where you're... And for years, I ran into this problem. When I discovered that it mattered deeply, but it mattered not at all if we don't get the other stuff right, I came across as dismissive. And I think that's where Terry, my experience with Dr. Terry probably came from, was during that dismissive phase, like, "Well, you don't even care. That means..." But that's the opposite. So, it's an and. It's super important. And it doesn't matter at all if we don't get the other stuff right. It's capturing the and, and that tension there, I think is really, really beautiful. So, that's hard-earned experience just because I lost clients and hair based on learning it.
How To Perform Consistent Check-ins With Clients And Demonstrate Value [30:25]
Michael: So, as you think about it going forward, just, I'm curious about this before we wrap up. So, as you reflect on this now, does this mean, "No, no, no, we really do need to keep sending the quarterly performance reports angle because we have to keep putting that in front of them," or is this more about, "No, no, no, we just need to send them the periodic email that says, "I'm thinking about you and I was actually looking at your portfolio and we didn't do anything, but I was looking and claiming credit that way," Or is it just making sure we always do hold 5 minutes at the end of every client meeting, but it's on the agenda, just investment check-ins so I can acknowledge we've been doing stuff, even the stuff we've been doing is looking and doing nothing because I want to put that conversation there?" When it's not the client you're saving Dr. Terry, it's like, how would you have managed Dr. Terry knowing what you know now to have fended that off? Where would you have put some of that investment conversation, or commentary, or statements, or other stuff into the process?
Carl: Yeah. It's a really good question. And the other thing that's important to realize is, I've heard Bill saying, like, "Don't scar on the first cut." Dr. Terry was an outlier. Most of my clients, we used to tell them, "You're going through the financial pornography detox program, and in about 6 to 18 months, you're going to realize most of the stuff you actually think is important isn't really. And when we get there, that'll be awesome." And so, I can hear advisors saying like, "I never get calls that." And you're probably right. But every once in a while, they come up and they're pretty dramatic and they feel a thing. And so, I would just keep doing whatever you're doing and just realize that if there's a chance that you're coming across... I just think the important part of this conversation, hopefully, we've given you a tool for the conversation when it does happen.
Dr. Terry comes, there's some tools there. That's great. But to me, the more important part is just be careful to not come across as so enlightened that you're dismissive about an incredibly important driver. It's actually important. Forget what the financial pornography network is saying. Investment performance is actually important for many of our clients to reach their goals. And I'm not talking about 10%. I'm talking about 5% or 4%. Investment performance is a driver along with savings and your goals and how long you live and all those levers that we can pull.
So, I think the important piece here is not necessarily like, "Is it wrong to send a quarterly performance report?" No, not at all. Maybe you don't need to. I stopped sending one. I just changed whatever that form is, the ADP form, and said, "Investment performance reports available on demand anytime you want one."
And nobody cared that we changed that, which was a shock to me. I was so surprised. I thought it was key pillar of my value. Nobody cared. But if you send one, it's no problem, right? Do you save a little bit of time? I would make sure in every meeting whatever we call it like looking-forward meeting, future meeting, performance meeting, performance reporting meeting, review meeting, that there's some piece on like, "Hey, by the way, do you have any questions about this?" And I would use stronger language there like, "We really care about this. We know what we're doing."
Michael: Okay.
Carl: "Do you have any questions? Would you like to spend 4 hours and we'll review it in depth?" And that last one's a little facetious. And then the last bit would just be like, yeah, if you can find this idea of making sure people know that being in a position to tell them that there's nothing to do is actually hard work. So, you can find ways to systematically drop that in so that they know like, "We looked at this. We looked at this. We're on it." And that to me could just be a systematic monthly email, it could be a quarterly thing that you send out that like, "Hey, by the way, we're on this." And I do still feel it's... I don't know if it's the last item in the agenda or the first. I don't really know that it matters. I just know that let's not be this accidentally dismissive about something that is not only important, they're being told it's important by everybody else.
Michael: Awesome. Well, thank you, Carl.
Carl: Cheers, Michael. Super fun.
Michael: Likewise. Thank you.
Carl: Bye.
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