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How Great Advisors Deliver Bad News with Honesty and Empathy · Root Ready

• 0:00
  SPEAKER_00: Hi everyone, welcome back to another episode of the Root Ready Podcast.
• 0:03
  SPEAKER_00: I'm your host, James Cannole.
• 0:04
  SPEAKER_00: Today we're talking about how do you deliver news when that news isn't great to a client.
• 0:09
  SPEAKER_00: Maybe the client had built-up expectations about what's possible, when they could retire, how much they could spend.
• 0:14
  SPEAKER_00: And you, as their advisor, have to be the one to share they're not on track for that.
• 0:18
  SPEAKER_00: That's not actually the case.
• 0:20
  SPEAKER_00: How do you deliver that in the most empathetic way possible, but also in the most honest way possible, in a way that is constructive to the overall relationship?
• 0:27
  SPEAKER_00: So that is the topic of today's episode.
• 0:29
  SPEAKER_00: This question comes from Chelsea.
• 0:30
  SPEAKER_00: Chelsea says the following She says, Hi James, longtime listener and first-time question submitter.
• 0:35
  SPEAKER_00: Thank you for the question, Chelsea.
• 0:36
  SPEAKER_00: I'm a big fan of the podcast.
• 0:37
  SPEAKER_00: I've implemented so many of the strategies you've shared, and they've really helped me show up as a better advisor for my clients.
• 0:42
  SPEAKER_00: My question is about those really tough plan delivery conversations when a plan reveals that a client is significantly off track to meet their goals and is likely to run out of money early in retirement.
• 0:52
  SPEAKER_00: I'm thinking of situations where the shortfall isn't easily fixed, and the solution requires major lifestyle changes that are emotionally difficult to accept.
• 1:00
  SPEAKER_00: What's the most effective way to approach that conversation with empathy and honesty without overwhelming or discouraging them?
• 1:05
  SPEAKER_00: I'd love to hear your thoughts on how to frame the message in a way that balances honesty, hope, and practical next steps.
• 1:11
  SPEAKER_00: How do we help clients process that disappointment and move toward action so that they feel supported and empowered and not defeated?
• 1:17
  SPEAKER_00: All right.
• 1:18
  SPEAKER_00: Well, Chelsea, thank you for that question.
• 1:19
  SPEAKER_00: And I think for those of you who are listening, my guess is you too have had something similar, have had a similar experience.
• 1:25
  SPEAKER_00: And right off the bat, the first thing that shows is you care.
• 1:28
  SPEAKER_00: An advisor that does not care would not care how this is perceived.
• 1:31
  SPEAKER_00: Their view or their value is that they simply provide information.
• 1:34
  SPEAKER_00: They provide recommendations, client, it's up to you as to what you do with that.
• 1:38
  SPEAKER_00: But what we all know is that actual trust, that connection, that rapport that you have built with your client is just as important as the message you are delivering.
• 1:48
  SPEAKER_00: So the fact that you're asking what this is showing is this is something that all advisors should be thinking about, that the message we deliver, yes, it is important.
• 1:55
  SPEAKER_00: What do we say in those situations?
• 1:57
  SPEAKER_00: But the messenger is equally important.
• 2:00
  SPEAKER_00: You are the messenger.
• 2:01
  SPEAKER_00: How do you deliver that?
• 2:02
  SPEAKER_00: How do you do it in a way that is honest and that does not mask the truth or disguise the truth, but is also done in a very kind and empathetic way in a way that the client is going to be able to receive that and take action on it?
• 2:13
  SPEAKER_00: So here's where my mind goes first with that.
• 2:16
  SPEAKER_00: Whenever this would happen with the client, I would think to myself, what would a doctor do in this situation?
• 2:20
  SPEAKER_00: What does a doctor do when they have to deliver a diagnosis that has a life-altering and potentially even life-ending impact to the client?
• 2:28
  SPEAKER_00: Now, the good news is none of this advice that we're delivering is going to be life-ending, but it could be life-altering.
• 2:34
  SPEAKER_00: This could be something that changes the lifestyle, at least the expected lifestyle that our clients had.
• 2:39
  SPEAKER_00: So the doctor analogy is something that I'm going to use as an analogy as we go through this.
• 2:42
  SPEAKER_00: But the first thing is I think the first most important thing to realize is this is normal.
• 2:47
  SPEAKER_00: I remember as a younger advisor and being in these situations, having to tell someone, this doesn't really work.
• 2:53
  SPEAKER_00: And I don't even have that many levers to pull to get it to work.
• 2:56
  SPEAKER_00: Maybe you waited way too long to start saving, or your expectations of what you want retirement to look like are way too grand given the resources that you have.
• 3:05
  SPEAKER_00: And it's not someone that's got a long time period until they want to retire and we can start pulling some levers and make things happen.
• 3:10
  SPEAKER_00: You're in that situation where maybe they're already there.
• 3:12
  SPEAKER_00: They're on the doorstep of retirement.
• 3:14
  SPEAKER_00: They're already in retirement, maybe well into retirement even.
• 3:17
  SPEAKER_00: How do you deliver advice where there's not an easy solution or an easy fix?
• 3:22
  SPEAKER_00: The first thing that we need to do is we need to understand this is part of the job.
• 3:26
  SPEAKER_00: It is amazingly fun to be able to deliver great news.
• 3:30
  SPEAKER_00: It's fantastic to be able to tell a client you can retire earlier than you thought, or you can afford that retirement that you didn't think was possible.
• 3:36
  SPEAKER_00: The harder part is these situations, but it is still part of the job.
• 3:41
  SPEAKER_00: And what I had to realize, I remember as a young advisor, is there's not a silver bullet.
• 3:45
  SPEAKER_00: I would agonize over is there something I can do?
• 3:47
  SPEAKER_00: Are there numbers that I can toggle?
• 3:49
  SPEAKER_00: Are there variables I can change to make this plan work?
• 3:52
  SPEAKER_00: And then at a certain point, I just had to let go of the fact that there wasn't in every situation.
• 3:56
  SPEAKER_00: So if the message can't change, the message being here's the variables that you can change to make this work, it's the messenger that I have to focus.
• 4:04
  SPEAKER_00: This it's me that I have to focus on of how can I be that empathetic solution-driven advisor to help guide the client through what might be a difficult situation.
• 4:12
  SPEAKER_00: And this may resonate with you listening, this may not, but for me, I had to realize that I had to care way more about the client's success than their perception of me.
• 4:22
  SPEAKER_00: If I got too hung up on how are they perceiving me, do they like me, do they think that I'm that person that can fix their problems, it became very me focused.
• 4:31
  SPEAKER_00: And the more it became me focused, the less good my advice was going to be.
• 4:35
  SPEAKER_00: But when it became a relentless focus or a hyper focus on their outcomes and their success, that's when you can actually deliver advice that's going to be meaningful and transformational.
• 4:46
  SPEAKER_00: So recognize this is normal, recognize this is part of the job, recognize there's no silver bullet.
• 4:51
  SPEAKER_00: But the more obsessed you can be with client outcomes, then you are even about their perception of you and wanting to be liked by them and wanting to deliver the good news to them, the better off we're gonna be.
• 5:02
  SPEAKER_00: So that's great.
• 5:02
  SPEAKER_00: That's more framing this of how do we think about this, but I have not talked about practical steps.
• 5:08
  SPEAKER_00: So let's now talk about practical things that you can start to do in the planning process to make the delivery of this news not just as easy as possible, but actually do it in a way where you start to build tremendous amount of respect and confidence with your client, where they start to view you as their trusted guide that yes, they are gonna give it to me.
• 5:24
  SPEAKER_00: Chelsea is gonna give it to me straight and do so in a kind and empathetic way.
• 5:28
  SPEAKER_00: And that actually deepens our relationship.
• 5:30
  SPEAKER_00: It doesn't drive us apart.
• 5:31
  SPEAKER_00: It makes me realize that she is exactly who I need in my corner at this point as I'm going through this.
• 5:36
  SPEAKER_00: So let's go through that framework.
• 5:38
  SPEAKER_00: Number one, the first thing that I like to do, and this is done before the actual plan delivery meeting, this for us at Root would be done in the kickoff meeting, is I like to hone in on which of their goals are most important to them.
• 5:48
  SPEAKER_00: Now, there could be a million goals, but I'm gonna talk about the top three, the top three goals that are in the client's control and that typically have the biggest impact on the plan.
• 5:57
  SPEAKER_00: Those are when they want to retire, how much they want to spend in retirement, and how much they're willing to save along the way, assuming, of course, they're still working.
• 6:05
  SPEAKER_00: Now, I know there's other variables, stock market returns, inflation.
• 6:09
  SPEAKER_00: Client has zero control over that.
• 6:11
  SPEAKER_00: Sure, they have control over their asset allocation and things like that.
• 6:13
  SPEAKER_00: I'm talking about purely the things that are fully within the client's control.
• 6:17
  SPEAKER_00: Those tend to be the three biggest variables that drive the outcome of their plan and specifically drive is this plan going to be successful or not?
• 6:25
  SPEAKER_00: So in the kickoff meeting, I'm trying to get very crystal clear on which of these are most important.
• 6:30
  SPEAKER_00: Is it when they want to retire?
• 6:31
  SPEAKER_00: They have a retirement date in mind and they are dead set on that, and that's the most important thing to them.
• 6:36
  SPEAKER_00: Is it lifestyle in retirement?
• 6:37
  SPEAKER_00: They have a crystal clear picture of what they want retirement lifestyle to look like, and that's the most important thing to them.
• 6:42
  SPEAKER_00: Is it lifestyle today?
• 6:43
  SPEAKER_00: So how much they spend today, which is directly going to tie into how much they can actually save for retirement today, once again, assuming they're not already retired.
• 6:52
  SPEAKER_00: So that's where I want to start.
• 6:53
  SPEAKER_00: And once I understand that, I'm gonna go deeper.
• 6:56
  SPEAKER_00: Okay, let's assume it's retirement age that's most important to them.
• 6:59
  SPEAKER_00: Why?
• 6:59
  SPEAKER_00: Is it because they're miserable in their current job?
• 7:02
  SPEAKER_00: Is it because they like their job, but the commute that they're going through is horrible and they want to get away from that?
• 7:06
  SPEAKER_00: Is it because some other reason they're just not doing work that's meaningful to them or work that they enjoy doing?
• 7:10
  SPEAKER_00: Really understand the why of that.
• 7:13
  SPEAKER_00: Is it retirement lifestyle?
• 7:14
  SPEAKER_00: Great.
• 7:15
  SPEAKER_00: Dive deeper.
• 7:16
  SPEAKER_00: What is it about the lifestyle?
• 7:17
  SPEAKER_00: Is it about the travel you want to do?
• 7:19
  SPEAKER_00: Is it simply about the time that you're able to spend with kids or with friends?
• 7:22
  SPEAKER_00: Is it about something entirely different?
• 7:25
  SPEAKER_00: But really start to get a deeper sense of what's actually most important to them.
• 7:29
  SPEAKER_00: Now, this seems obvious, of course, but this is gonna tie into step number two in terms of practical implications or practical ways that you can go about delivering this, but it starts with understanding when a client comes to you, they're gonna give you all their goals, they're gonna give you all of your information.
• 7:43
  SPEAKER_00: If we just input that into the financial planning software and come back to them and say, hey, this isn't gonna work.
• 7:47
  SPEAKER_00: You've you failed, your plans failed.
• 7:49
  SPEAKER_00: We don't have deeper context.
• 7:50
  SPEAKER_00: And to, of course, some plans are gonna fail, but what is it they're trying to prioritize?
• 7:54
  SPEAKER_00: There's a million variables here, which are the non-negotiables.
• 7:58
  SPEAKER_00: We don't want to have to sacrifice this, and which are the variables, which are the assumptions, which are the goals that maybe they're willing to give a little bit on.
• 8:05
  SPEAKER_00: Maybe they're willing to say, I can sacrifice in those areas, but here's the thing that's actually most important to me.
• 8:11
  SPEAKER_00: So having that knowledge of which of these variables or goals is most important gives you the proper context to then go into step number two.
• 8:18
  SPEAKER_00: And step number two is simply present everything as a trade-off, not as a fact.
• 8:23
  SPEAKER_00: So let's look at an example.
• 8:24
  SPEAKER_00: You have a client, his name is Joe, he wants to retire right now and he wants to spend$10,000 per month.
• 8:29
  SPEAKER_00: He's 60 years old and you look at this and you know it's not possible.
• 8:32
  SPEAKER_00: But here's what you don't do: you don't say, okay, Joe, here's your plan.
• 8:35
  SPEAKER_00: You're gonna run out of money at age 73, you only have a 7% probability of success, and then stop.
• 8:41
  SPEAKER_00: That is doing Joe no good.
• 8:44
  SPEAKER_00: That is presenting his plan, but it's just giving him information.
• 8:47
  SPEAKER_00: It would be as if a doctor came to you and said, you know what, you have high blood pressure, you're probably not gonna make it another five to 10 years, and then stopped.
• 8:55
  SPEAKER_00: You would say, okay, well, well, thank you for that information, thank you for that knowledge, but that's not what I'm paying you for.
• 9:01
  SPEAKER_00: That's not what I'm seeing you for.
• 9:02
  SPEAKER_00: I don't need you to give me information.
• 9:03
  SPEAKER_00: I need you to give me guidance about what's next.
• 9:06
  SPEAKER_00: And that's the same thing here.
• 9:07
  SPEAKER_00: So don't just present a plan and then stop.
• 9:10
  SPEAKER_00: Present this for a perspective.
• 9:12
  SPEAKER_00: Present this to show them the reality of where they are.
• 9:14
  SPEAKER_00: But going back to step number one, if you have a clear sense of Joe's picture, and is it his retirement age that he's most concerned about?
• 9:21
  SPEAKER_00: Is it his lifestyle in retirement that he's most concerned about?
• 9:24
  SPEAKER_00: You can start to go deeper and you can start to say, hey, Joe, here's what your plan looks like today.
• 9:29
  SPEAKER_00: But this isn't a black and white situation.
• 9:32
  SPEAKER_00: This is only potential outcome.
• 9:34
  SPEAKER_00: Retirement is all about trade-offs.
• 9:35
  SPEAKER_00: And my job as your advisor is to help you understand which of those trade-offs are going to be most impactful to allow you to do what's actually most important to you.
• 9:42
  SPEAKER_00: So if Joe, for example, was dead set on retiring at 60, and maybe he has his own reasons for that, Joe, let's see what will it take to get you to retire at 60.
• 9:50
  SPEAKER_00: I want you to be able to do this.
• 9:51
  SPEAKER_00: It's actually possible.
• 9:52
  SPEAKER_00: It's just not possible with a given level of spending that you want to be able to spend.
• 9:56
  SPEAKER_00: Here's what that would look like.
• 9:57
  SPEAKER_00: Here's how you could retire at 60, but here's the cap on what you might be able to spend.
• 10:01
  SPEAKER_00: And by the way, Joe, I know spending in retirement isn't your actual number one priority, but I did want to show, just for my sake and your sake, to say if you did want to be able to maintain that$10,000 per month of retirement lifestyle, how long might you need to work in order to make that happen?
• 10:15
  SPEAKER_00: And by the way, it's age 68.
• 10:17
  SPEAKER_00: So just for context, Joe, just for your own sense of understanding the entire picture, here's what that looks like.
• 10:23
  SPEAKER_00: And then by the way, in in-between plan, Joe, you just had$10,000 per month.
• 10:26
  SPEAKER_00: And when I dug deeper, um a lot of that was travel, a lot of that was some really cool stuff, but there was a couple thousand of that per month that seemed like you maybe would want to do it, but it wasn't something that you absolutely had to do.
• 10:38
  SPEAKER_00: And just because of that, I'm just making an assumption here.
• 10:40
  SPEAKER_00: I ran a plan to say, what if you only wanted to spend$8,000 per month?
• 10:43
  SPEAKER_00: You could actually do that by age 62.
• 10:46
  SPEAKER_00: So go on back to your conversation with Joe.
• 10:48
  SPEAKER_00: Now, what you've done is you have painted a picture for him and you've helped him to understand the trade-offs.
• 10:53
  SPEAKER_00: We can absolutely get you retired at 60.
• 10:56
  SPEAKER_00: It's just not gonna be anywhere near the lifestyle that you want to maintain at that point.
• 11:00
  SPEAKER_00: To maintain the lifestyle, it will be much longer.
• 11:02
  SPEAKER_00: And I don't think, based upon our previous conversation, that's something that you are uh willing to accept.
• 11:07
  SPEAKER_00: But I did at least want to show an in-between solution.
• 11:10
  SPEAKER_00: Something that wasn't based upon you, it's somewhat arbitrary, just my opinion based upon our conversation that I think we might at least want to consider.
• 11:17
  SPEAKER_00: So, what you've done here is you've presented trade-offs.
• 11:20
  SPEAKER_00: You haven't just given information and said, hey, Joe, your plan fails.
• 11:24
  SPEAKER_00: Uh come back to me when you've got a better situation.
• 11:26
  SPEAKER_00: What you're saying is, Joe, your plan as stands, as it stands, is not going to work.
• 11:31
  SPEAKER_00: But let me show you how we get it to work.
• 11:34
  SPEAKER_00: So what you're doing is you are shifting this from presenting information to presenting trade-offs.
• 11:40
  SPEAKER_00: And what you're doing is you're not just here to deliver a diagnosis.
• 11:44
  SPEAKER_00: You are here to present the prescription.
• 11:46
  SPEAKER_00: You are here to deliver the advice that will help them get to where they want to be.
• 11:50
  SPEAKER_00: Now, sometimes as advisors, I think we think, I don't want to have to show them cutting their expenses.
• 11:54
  SPEAKER_00: I don't want to have to tell them that they have to work longer.
• 11:56
  SPEAKER_00: But let's go back to that doctor example.
• 11:58
  SPEAKER_00: If the doctor just said you have five to 10 years left to live based upon how high your blood pressure is, that's not great.
• 12:04
  SPEAKER_00: But if the doctor came to you and said, hey, James, you know what?
• 12:06
  SPEAKER_00: Um, we we've taken your vitals, we've looked at everything.
• 12:09
  SPEAKER_00: If you don't get things in order, you probably only have five to 10 years left of living.
• 12:12
  SPEAKER_00: And I know you and I know you love your family too much and life too much, and there's too much that you need to do.
• 12:17
  SPEAKER_00: That's not an acceptable outcome to me, nor does it an acceptable outcome to you.
• 12:20
  SPEAKER_00: But look, if we can uh cut out alcohol, if we can get you exercising, if we can get you eating healthy, here's what that's gonna do for you.
• 12:28
  SPEAKER_00: And I might not like that trade-off.
• 12:30
  SPEAKER_00: Maybe I don't want to exercise, maybe I don't want to eat healthy, but I sure as heck want to do that more than I want to only live for five to 10 more years.
• 12:37
  SPEAKER_00: So when we look at it objectively from how would a doctor deliver this advice, we'd say, of course the doctor would do that.
• 12:42
  SPEAKER_00: That is their job to do that.
• 12:43
  SPEAKER_00: What patient would be upset with them for doing so?
• 12:46
  SPEAKER_00: Sometimes, as advisors, especially when it's us delivering the advice, we focus too much on the us.
• 12:51
  SPEAKER_00: We focus too much on how is this gonna be perceived.
• 12:53
  SPEAKER_00: Are they gonna still like me?
• 12:54
  SPEAKER_00: Are they gonna still trust me, even if I'm delivering challenging news?
• 12:58
  SPEAKER_00: And the answer, just like the doctor in this example, is yes.
• 13:02
  SPEAKER_00: The more you make your focus solely on their success and what's in the best interest for them, the ironic thing is the more they're gonna like you because the more they're gonna trust you and see you as the guide, both when times are good as well as when times are bad.
• 13:15
  SPEAKER_00: And it's gonna develop a very, very deep level of trust that is hard to get to, frankly, when things are nothing but good.
• 13:22
  SPEAKER_00: So it's gonna actually help to deepen the relationship in a lot of ways.
• 13:25
  SPEAKER_00: So that's step number two is present this in terms of trade-offs, not in terms of final outcomes.
• 13:32
  SPEAKER_00: The third thing that I would do actually starts before plan delivery, and that's setting proper expectations in the kickoff meeting.
• 13:37
  SPEAKER_00: Sometimes if a client comes to me and I could tell they have so much money compared to how much they want to spend, I know without a shadow of a doubt that if I present their plan, it's gonna show them dying with millions and millions of dollars.
• 13:49
  SPEAKER_00: So in that kickoff meeting, I'm gonna start to think ahead and think through how do I ask questions today that will allow the income meeting, the plan presentation meeting, to be so much more effective.
• 13:59
  SPEAKER_00: So when a client says, Yeah, I want to retire and I want to spend$5,000 per month, I'm gonna say, great,$5,000 per month.
• 14:04
  SPEAKER_00: That's that's what it takes to uh meet your needs.
• 14:07
  SPEAKER_00: But let's live a little, dream a little.
• 14:09
  SPEAKER_00: Give me what you would want retirement to look like if money was absolutely no issue.
• 14:13
  SPEAKER_00: And so I'm just starting to plant seeds and starting to help them think through things of what could our planned presentation look like, knowing how much money they have.
• 14:21
  SPEAKER_00: Now, this is kind of the opposite situation that we're talking about here.
• 14:24
  SPEAKER_00: If I'm talking to Joe again and Joe's telling me how much he wants to spend, and I'm doing some just back of the napkin math inside of my head saying, man, that is way too high of a withdrawal rate.
• 14:33
  SPEAKER_00: That's way too much you want to spend relative to your portfolio.
• 14:36
  SPEAKER_00: I'm not gonna be asking Joe to dream a little bit and what else might you want to spend, and what else might you want to do in retirement?
• 14:41
  SPEAKER_00: That's guiding him down the wrong path.
• 14:43
  SPEAKER_00: Instead, I'm asking, I'm starting to frame, I'm starting to plant seeds of Joe.
• 14:46
  SPEAKER_00: This is awesome.
• 14:47
  SPEAKER_00: Sounds like you have a really great retirement that you want to uh live.
• 14:50
  SPEAKER_00: And I'm excited to help you get there.
• 14:52
  SPEAKER_00: Do you mind if I ask you a couple questions here just to understand more about your priorities?
• 14:55
  SPEAKER_00: And Joe, of course, is gonna say yes.
• 14:57
  SPEAKER_00: And I'll say, okay, let's just assume for a second.
• 14:58
  SPEAKER_00: I haven't run the projections, I don't know the numbers, but I just like to really explore trade-offs because it helps me see how you think about things.
• 15:04
  SPEAKER_00: So I'm gonna ask some questions that are very binary, not because this is actually what's gonna happen, because it helps me understand where you're coming from.
• 15:12
  SPEAKER_00: It helps me understand how you think through these things.
• 15:14
  SPEAKER_00: Let's assume, Joe, you don't have a plan that makes it.
• 15:17
  SPEAKER_00: We run the projections, and for whatever reason, this fails.
• 15:19
  SPEAKER_00: Um, if I had to come back to you with advice of would you rather work longer?
• 15:23
  SPEAKER_00: Uh, would you rather save more?
• 15:26
  SPEAKER_00: Would you rather spend less in retirement?
• 15:28
  SPEAKER_00: Would you rather downsize your home?
• 15:30
  SPEAKER_00: Would you rather, you know, you can start to fill in the blank once you know the details of the client situation, which of those would you be least willing to compromise on?
• 15:38
  SPEAKER_00: This kind of goes back to step number one is helping you to understand what they prioritize most, what they value most.
• 15:44
  SPEAKER_00: But you're doing so by starting to plant some seeds.
• 15:46
  SPEAKER_00: You're starting to help them walk through what would life look like as you go through this.
• 15:51
  SPEAKER_00: So as you do that in the kickoff meeting, the first meeting, you you simply wrap the meeting saying, Hey Joe, thank you so much for sharing all this.
• 15:57
  SPEAKER_00: Um, in the next meeting, I'm gonna come back to you with the actual projections running after taking a deep dive into your numbers.
• 16:02
  SPEAKER_00: And ahead of that meeting, just my number one job as your advisor is to tell you the truth at all times, tell you exactly what you need to hear.
• 16:08
  SPEAKER_00: And then number two, help identify solutions to help make this even better.
• 16:13
  SPEAKER_00: Whether that's shoring up gaps, whether that's taking advantage of opportunities, whatever the case might be, what you can count on for me is I'm gonna give you the full truth because I care about you and more than anything else, I want your long-term success to be my number one priority.
• 16:26
  SPEAKER_00: And not only am I going to tell you the truth, I'm gonna be giving you solutions.
• 16:30
  SPEAKER_00: So that's what you can count on in this next meeting for me.
• 16:33
  SPEAKER_00: So why is this helpful?
• 16:34
  SPEAKER_00: Well, in many ways, happiness is reality minus expectations.
• 16:38
  SPEAKER_00: If their expectations are sky high, well, even if reality is call it medium, happiness is gonna be bad because medium minus high is a negative number.
• 16:47
  SPEAKER_00: Versus if their expectations are medium and you deliver medium, you're right on track with what that might look like.
• 16:54
  SPEAKER_00: So the more you can start to frame, the more you can start to set expectations both about your job as their advisor and that job being to tell the truth and nothing but the truth, but doing so in a kind and empathetic way and with solutions to go along with it, the better off you're gonna be.
• 17:08
  SPEAKER_00: And the more you can start to plant seeds that, hey, maybe this isn't possible.
• 17:11
  SPEAKER_00: Let's at least start to think through what might be the backup plan if this doesn't happen.
• 17:16
  SPEAKER_00: Then the final step is step number four, which is actual delivery.
• 17:19
  SPEAKER_00: Uh but before I do so, real quick, if you're listening to this on the podcast, we have this on a YouTube channel now.
• 17:24
  SPEAKER_00: Check out the Root Ready YouTube channel.
• 17:26
  SPEAKER_00: I'm also now on Instagram and TikTok, James at root, if you want to follow and connect there and connect with me on LinkedIn if we're not already connected, just James Canol.
• 17:35
  SPEAKER_00: So make sure we're connected as you're listening, want to make sure that we're staying in touch wherever you are online.
• 17:40
  SPEAKER_00: But let's now go back to delivery.
• 17:42
  SPEAKER_00: Okay, so this is all sounds good, but what we haven't talked about yet is the most important piece, which is the delivery piece.
• 17:48
  SPEAKER_00: As I was preparing for this and as I was thinking through this, of how do you deliver this, I actually looked up and did some research on how are doctors trained to deliver bad news.
• 17:55
  SPEAKER_00: And again, we're not doctors in the sense that we're not telling someone they have cancer and only have a few months to live.
• 18:00
  SPEAKER_00: That is a very, very, very difficult thing to have to do.
• 18:03
  SPEAKER_00: We still, though, have to do things that are difficult, which to Chelsea's point is deliver news that is very different from expectations.
• 18:10
  SPEAKER_00: And going back to the formula of happiness is reality minus expectations, the higher those expectations are and lower the reality, the less happy that individual is going to be.
• 18:20
  SPEAKER_00: So, how do we think through that?
• 18:22
  SPEAKER_00: Well, here's the steps that a doctor goes through, and I'm going to relate this back to us as advisors.
• 18:27
  SPEAKER_00: Step number one, I'm just reading off a list that did from research here, is they are taught to prepare, review facts, and choose a private setting.
• 18:34
  SPEAKER_00: So, what's the application?
• 18:35
  SPEAKER_00: Review the facts, review the client's entire situation.
• 18:39
  SPEAKER_00: You probably have a private setting if you're meeting with them and see they're in a conference room, it's on Zoom, you're not in a big patient lobby.
• 18:45
  SPEAKER_00: So that part's probably not applicable to us here as advisors simply because by default you're already in a private spot.
• 18:50
  SPEAKER_00: But prepare, review all the information.
• 18:52
  SPEAKER_00: Don't just go into this saying, Joe, your plan's not going to work and have zero context for well, what will work?
• 18:58
  SPEAKER_00: What could you do?
• 18:59
  SPEAKER_00: Run the numbers, run some scenarios, be very prepared with what you think he might ask, what she might ask, so that you could deliver follow-up guidance.
• 19:07
  SPEAKER_00: So going back to that for delivery, the first thing to do is prepare, review facts, and choose a private setting.
• 19:13
  SPEAKER_00: The second thing that came about in my research is ask what the patient understands and wants to know.
• 19:19
  SPEAKER_00: Now we wouldn't call our client a patient, but again, this is a doctor analogy.
• 19:23
  SPEAKER_00: How does this apply to us as advisors?
• 19:25
  SPEAKER_00: Well, we start by understanding, and this should happen more in the kickoff meeting.
• 19:28
  SPEAKER_00: Walk me through what you think your retirement is going to look like.
• 19:30
  SPEAKER_00: You know, it's a lot easier to deliver advice that is less than ideal to someone who says, you know what, I know I'm undersaved.
• 19:35
  SPEAKER_00: I know I'm underprepared.
• 19:37
  SPEAKER_00: I know this probably isn't quite possible than it is to that client that comes in saying, Man, I'm so excited for my trip.
• 19:42
  SPEAKER_00: I already have it booked.
• 19:43
  SPEAKER_00: My retirement date is this.
• 19:44
  SPEAKER_00: Here's what my lifestyle is going to be.
• 19:46
  SPEAKER_00: That person already has sky high expectations.
• 19:48
  SPEAKER_00: That's a much more difficult thing to be able to navigate.
• 19:51
  SPEAKER_00: So asking what they understand, what they think they already know, what you're trying to get at is are their goals very loosely held?
• 19:58
  SPEAKER_00: Meaning this is my goal, but I Recognize it's not necessarily in perfect alignment with reality, or are they very closely held or tightly held?
• 20:05
  SPEAKER_00: If this is my goal and this is all I've ever dreamed of, and I'm not going to deviate from it.
• 20:10
  SPEAKER_00: That's a very important thing to understand before going into the delivery of what the news might be for the client.
• 20:16
  SPEAKER_00: The third step that doctors do is they give a warning shot and then deliver the news in plain language.
• 20:21
  SPEAKER_00: So the warning shot, tell people, you know, I'm going to deliver some of these projections here.
• 20:25
  SPEAKER_00: And by the way, some of these probably aren't going to align exactly with what you're hoping for.
• 20:28
  SPEAKER_00: And I just want to tell you that ahead of time.
• 20:30
  SPEAKER_00: Now, the good news is there's solutions, there's trade-offs.
• 20:33
  SPEAKER_00: And my job as your advisor is to come to you with that.
• 20:35
  SPEAKER_00: But by setting the stage here, giving a little bit of a warning, giving a little bit of a, hey, I just want to make sure we're level setting here.
• 20:41
  SPEAKER_00: Some of this isn't going to be maybe what you're hoping for.
• 20:44
  SPEAKER_00: But my job as your advisor isn't to give you what you hope for, to give you exactly what you need to create the best chance of meeting your long-term needs.
• 20:51
  SPEAKER_00: Then from there, when the time is right, maybe this is after going through the cash flow page, maybe this is after going through the Monte Carlo score, whatever the case might be, whenever you feel it's most appropriate, tell them in very plain language, Joe, as it stands today, you will not have success.
• 21:04
  SPEAKER_00: I would not feel comfortable as your advisor letting you retire under these assumptions.
• 21:09
  SPEAKER_00: So I want to make that very clear.
• 21:10
  SPEAKER_00: Now, Joe, also as it stands today, I think there are solutions.
• 21:14
  SPEAKER_00: And there's some things that I want to explore, but I do want to make it very clear that your retirement, as we're projecting it here, I would not feel comfortable as your advisor giving it my blessing, giving you the recommendation to move ahead as things stand.
• 21:28
  SPEAKER_00: So what you've done is you've told them, both by warning ahead of time, kind of planting that seed, this is what I'm gonna see, this is what we're gonna review, but also telling them very plainly.
• 21:37
  SPEAKER_00: You need to tell them plainly that so there's no shadow of a doubt that this is not possible.
• 21:41
  SPEAKER_00: Here is my message, and not only is this my message, but I'm gonna give you some things that I think will be more helpful as we navigate through this.
• 21:48
  SPEAKER_00: The fourth thing that doctors are trained to do is pause, let emotions land, acknowledge, and then validate them.
• 21:55
  SPEAKER_00: Now, this is different again.
• 21:56
  SPEAKER_00: Telling someone they have cancer and only have a few months less to live is very different than telling someone your current financial strategy doesn't quite work, but here are some options to make it work.
• 22:06
  SPEAKER_00: Nonetheless, it is important that you don't just keep talking.
• 22:10
  SPEAKER_00: Sometimes this is an uncomfortable conversation.
• 22:13
  SPEAKER_00: I know my tendency, I know a lot of our tendencies, when things are uncomfortable, we just keep talking.
• 22:17
  SPEAKER_00: Because silence, that dead space, that's what feels uncomfortable.
• 22:20
  SPEAKER_00: That what's that's what feels difficult to navigate.
• 22:23
  SPEAKER_00: But that is the thing that's most necessary.
• 22:26
  SPEAKER_00: So don't be afraid to pause.
• 22:27
  SPEAKER_00: Don't pause right after you say, hey, Joe, this isn't gonna work.
• 22:30
  SPEAKER_00: It's a horrible place to pause.
• 22:32
  SPEAKER_00: He has no con, he is, well, what what does work?
• 22:34
  SPEAKER_00: Where you should pause is, hey, Joe, this isn't going to work.
• 22:37
  SPEAKER_00: Here are some solutions that I think might work for you, might be trade-offs that I think you might be willing to take.
• 22:43
  SPEAKER_00: Do you mind sharing with me what you're feeling right now and giving these trade-offs what you think resonates most with you?
• 22:49
  SPEAKER_00: Then pause.
• 22:50
  SPEAKER_00: So give them something to respond to.
• 22:53
  SPEAKER_00: Don't necessarily just stop talking after delivery of the news they might not want to hear.
• 22:57
  SPEAKER_00: And then name it.
• 22:58
  SPEAKER_00: Don't be afraid to say, Joe, I can tell by your reaction.
• 23:01
  SPEAKER_00: I was assuming this would be the case.
• 23:03
  SPEAKER_00: I've tried your plan so many different times.
• 23:04
  SPEAKER_00: Say, what can we do?
• 23:05
  SPEAKER_00: There's not a silver bullet, unfortunately, but that doesn't make this news any less difficult to swallow.
• 23:10
  SPEAKER_00: And I can tell from your reaction here that that's disappointing.
• 23:12
  SPEAKER_00: And you know what, Joe?
• 23:13
  SPEAKER_00: It makes a lot of sense to feel that way.
• 23:16
  SPEAKER_00: Make sure you're not shying away.
• 23:18
  SPEAKER_00: Don't try to be the person that's trying to put a positive spin on this.
• 23:21
  SPEAKER_00: Hey, Joe, at least you can spend this much.
• 23:23
  SPEAKER_00: Hey, Joe, at least you can retire.
• 23:25
  SPEAKER_00: Hey, Joe, at least you may.
• 23:26
  SPEAKER_00: That's not what they want to hear.
• 23:27
  SPEAKER_00: Don't be afraid to sit in this with your client.
• 23:29
  SPEAKER_00: Don't be afraid to say, you know what, this is disappointing.
• 23:32
  SPEAKER_00: It makes sense that you're feeling that way.
• 23:34
  SPEAKER_00: If I were in your shoes, I would also be feeling similarly to what you're feeling.
• 23:38
  SPEAKER_00: It's building that emotional connection.
• 23:39
  SPEAKER_00: It's building that trust that you're not just here to give information.
• 23:42
  SPEAKER_00: You're here to truly understand what's important to them and understand what's important to them.
• 23:46
  SPEAKER_00: It's both the things that they are most excited about, but also understand how they feel when things aren't going the way they'd hoped they'd go.
• 23:53
  SPEAKER_00: The next step what doctors are trained on is explain what happens next, offer options, and make a plan.
• 23:58
  SPEAKER_00: So going back to the conversation with Joe, Joe, this isn't a verdict.
• 24:01
  SPEAKER_00: This isn't black and white.
• 24:02
  SPEAKER_00: My job as your advisor isn't to say, here's two binary things that you have, the option of choosing between.
• 24:06
  SPEAKER_00: It's to say, based upon what you've expressed to me, we're not quite there.
• 24:10
  SPEAKER_00: But you know what?
• 24:10
  SPEAKER_00: I want you to think about.
• 24:11
  SPEAKER_00: We can have a conversation now.
• 24:13
  SPEAKER_00: We can give you this as some follow-up to think upon, and maybe we set next steps.
• 24:16
  SPEAKER_00: But here's some options I'd like to explore.
• 24:19
  SPEAKER_00: Is there anything else that comes to mind that you think might be a viable option?
• 24:22
  SPEAKER_00: Put the ball in their court.
• 24:24
  SPEAKER_00: Maybe they say, you know what, I never thought about this, but I think I'm actually going to downsize.
• 24:27
  SPEAKER_00: Or you know what?
• 24:28
  SPEAKER_00: That thing that I told you is really dead set on that vacation.
• 24:31
  SPEAKER_00: I just happened to come back from a vacation the day before and I thought it was awesome.
• 24:34
  SPEAKER_00: But in reality, I don't need to do as much of it as I initially shared I would with you.
• 24:38
  SPEAKER_00: So they might have some ideas.
• 24:40
  SPEAKER_00: They should have some ideas.
• 24:42
  SPEAKER_00: Don't feel like you're the only one that can write the prescription.
• 24:44
  SPEAKER_00: Ask for their input to see how do we make this plan yours?
• 24:48
  SPEAKER_00: I'm going to show you where things stand, but how do we make this plan a reflection of you and what you want to accomplish?
• 24:53
  SPEAKER_00: And then finally, what doctors are trying to do is check understanding, answer questions, and arrange follow-up and support.
• 24:59
  SPEAKER_00: So make sure you're on the same page.
• 25:00
  SPEAKER_00: Make sure they're fully understanding what you've delivered and set next steps.
• 25:05
  SPEAKER_00: Don't just leave it as, okay, Joe, well, here we are.
• 25:07
  SPEAKER_00: Uh good luck with whatever comes next.
• 25:09
  SPEAKER_00: Say, Joey, do you mind if we put another time on the calendar a week from now, two weeks from now?
• 25:13
  SPEAKER_00: Some of this, this is designed to be a living, breathing plan.
• 25:16
  SPEAKER_00: This is designed to be the roughed raft plan that we're creating for you right now.
• 25:19
  SPEAKER_00: I would love if you took a couple weeks just to think about it and let's revisit this.
• 25:23
  SPEAKER_00: Let's come back to this.
• 25:24
  SPEAKER_00: Let's not make this something that's set in stone.
• 25:26
  SPEAKER_00: Let's have some chance to think through this, to process this, and then really dial in what plan is going to work best for you.
• 25:32
  SPEAKER_00: So setting next steps is communicating to your client, you're not just delivering bad news and then escaping because you want to deal with the emotions that come from that.
• 25:39
  SPEAKER_00: You're delivering the news that maybe they don't want to hear, but you're committing to walking through it with them.
• 25:44
  SPEAKER_00: So that's the general framework that I would think through as you go through this.
• 25:47
  SPEAKER_00: Chelsea, thank you for the question.
• 25:49
  SPEAKER_00: Great question.
• 25:49
  SPEAKER_00: This is something that all of us as advisors are going to deal with in some way, very frequently across our advisory career.
• 25:56
  SPEAKER_00: And the way that you do it, again, the way that the messenger shows up is just as important as the message.
• 26:01
  SPEAKER_00: So thank you for the question.
• 26:03
  SPEAKER_00: Thank you to everyone who's watching.
• 26:04
  SPEAKER_00: If you're enjoying this, make sure that you subscribe to the show, whether that's on Spotify, Apple Podcasts, YouTube, leave a review if you're enjoying it on Apple Podcasts.
• 26:12
  SPEAKER_00: But thank you for listening.
• 26:14
  SPEAKER_00: Thank you for watching.
• 26:14
  SPEAKER_00: I'll see you all next time.