The amount of education and professional licensing a typical advisor has is amazing. Most have a bachelor’s degree, and some have an MBA or other master’s degree. Add to that the professional licensing required of an advisor: Series 63, Series 7, and additional state licensing for life and other insurance policies. In addition, designations such as a CFP or CFA may help advisors stand out in a crowded, competitive market. But once you have attained that impressive education to work in the financial services world, how do you help people?
If helping individuals were a matter of having extensive information and sharing it with those who are less informed, advisors would be in a great position to help Americans. After all, their education, licenses, designations, and passion should engage people in pursuing financial success. However, even though there are over 144,000 financial advisors in America, [1] only 17% of Americans engage a financial advisor, [2] and 75% “are winging it when it comes to their financial future.” [3]
So why are Americans not engaging financial advisors more readily?
While this question is simple, the answer is complex. A CNBC poll [4] found that, with all of the information available online, many people want to plan their financial future themselves. The poll talks about the experience being important, but states, “The most important thing to look for in a financial advisor is someone you can have a conversation with and [who] listens to you.”
That quote is worth contemplating: With all your education, those who know a lot less about financial planning want you to listen to them more than they want to hear from you as you educate them about retirement planning. This often comes as a shock to many advisors. When you have so much to offer, why are people not hungrier to learn from you, given that it is, after all, really important to their financial future?
Back in my first two years of high school, I attended a boarding school in South Africa—an experience I am grateful for. The classes were always tough and school discipline was higher than what I would experience during the last two years of my high school education in America. One of my required classes was biology, which, at the time, I had very little interest in. The teacher, who had his doctorate, was more than passionate about the subject. His presentations were packed with details about biology and how living things work, but he overwhelmed me with terminology and specifics. After two years of biology classes with him, I didn’t recover my interest in biology until well into my adult years.
I fear that many financial advisors approach their clients similarly to how my biology teacher approached his students—with a lot of information, but without engaging and listening to them while sharing what they know.
In some of my recent podcast interviews, I have found a common thread between two advisors working with very different audiences. About a month after the COVID-19 stay-and-home restrictions began, I interviewed Eric Stevens, who is working with teachers. I also interviewed Ann Vanderslice, who works with federal employees whose retirement plan is very complex and who are concerned about safety. Both spoke about the success they are having with interactive retirement planning.
Here is what Eric Stevens said when I asked him about the difference TRAK’s interactivity has made in his work:
“Before [we started using TRAK], we would get their information, we would compile it, and then we would meet with them one on one with the PDF file, and we [would] kind of go through it—and it was working. But it wasn’t working the way that it should be working.
And since we’ve been able to go online and be able to have these one-on-one meetings, I can share my screen and I can… go through scenarios. Different scenarios of, ‘Okay, if it’s 403(b) at $200, what does this look like? [If] it’s 403b at $500 a month, what does this look like?’
And a lot of times, I like to play this game. I say, ‘How low [on your retirement age] can we go?’ And I’ll take a teacher, and she says she wants to retire at 65. I’ll just start clicking the age of retirement down so we can find a gap. How low can we go? Sometimes we’ll get to 57. I’m like, ‘You’re fully funded.’ And it’s all about bringing that peace to them, of like, ‘Absolutely. Continue to teach after 58 if you want. But you’re not teaching because you have to after that age.’
And so to be able to have that interactive piece has really made a difference in showing people how this software works and then how we can apply it to their specific situation and their specific retirement needs.”
In response to the pandemic, Eric has been forced to move to online meetings with his clients—but at the same time, his success has dramatically increased. In both the podcast interview and in a subsequent phone call, he shared with me the increased success he is having with interactive online meetings.
I asked Ann Vanderslice about the difference between handing clients a static report and interacting with them about their results. Here is her response:
“Well, it is interesting. About two years ago, I think now, we put a little twist in the presentation of that report. So, up to that point, we would have the reports all ready. We‘d have a first meeting, we‘d gather all the data, we‘d have to come back in a week or two, and we would have all the reports…printed out in a really nice folder and then we kind of present[ed] to them from the report. About two years ago, we put a flat screen in all of our offices…
And now, when they come in, we have the Gap Analysis Report on the screen and we walk through… the details. We show them the assumptions we make and then we say, ‘[Is there] anything we should change?‘ So right there, on the fly, they feel like they’re engaged with it, and they get an understanding of it, I think, that they wouldn’t get just from looking at the report. So it’s very interactive with them. They’re saying, ‘What happens if we do this?,’ ‘What if…,’ you know, so they can see how powerful the software is on that screen. And then, when we have everything down: ‘Okay? This is a plan. Do you like this?‘”
Notice the key question Ann asks after showing clients the assumptions underlying their retirement plan: “Is there anything we should change?” This promotes ownership and requires they be engaged in their retirement planning. They are no longer passive participants. This strategy ensures you are starting with what they understand about their retirement planning—not with where you might think they are.
Asking a client, “Is there anything we should change about this illustration?” gets the client engaged about retirement planning in a meaningful way. Clients begin to own the analysis, and you find out what their specific concerns are. They cannot be passive. The question is brilliant because it gives them ownership and responsibility while at the same time asking them how they would tweak the assumptions. The advisor is really handing the client the keys to the car and telling them to drive. For Ann and Eric (and many other advisors who have shared their experience with me), getting the client to drive provides meaningful engagement.
America has a wonderfully educated workforce of financial advisors who are well prepared to help clients with their retirement. But, as it turns out, clients do not want their knowledge. (I believe clients are glad their advisors are educated—they just do not want to become mini-advisors). They want to be put in the driver’s seat, and they want their advisors to listen. Fortunately, that listening can grow your business not only with your current clients but also through the referrals they make after they leave your office.
