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The Power of Authority - Why We Follow Experts · The Perfect RIA

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Jamie Shilanski: Have you ever worked with a proposal that
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seems their mannerisms are kind of unprofessional, or their work
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product is unprofessional. And you think to yourself, how are
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they still in business? If I pulled this, I would not have
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any client ever hire me. Welcome back, TPR nation. This is Jamie
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Shilanski, in Worlds to Conquer, and I have to tell you, we work
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with an estate planning attorney who I adore, like she's so
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likable, she's so gosh, likable, but she can't return an email,
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she can't return a phone call, and it takes months, if not
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years, to get things done. I hear from clients all of the
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time how they cannot stand how unreliable and unresponsive this
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professional is and they ask me for alternatives. Do they have
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different people that they could work with, you know? And so
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we've got a list, you know, because we don't just
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exclusively recommend worse, but we've got our top this really,
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really likable attorney that cannot, for the life of her get
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anything done in a timely manner. But I will tell you
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this. I was on the phone with a very, very blunt client. I mean,
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she's fierce, you know, she's got an MBA. She has a certain
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level of expectations, and if we step out of line, if we are
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delivering, as a financial planning firm where she thinks
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we should be, she will let me know in no uncertain terms. She
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will not excuse it. She will not dismiss it. She's saying, Hey,
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I'm paying you a lot of money. I'm happy to do that, but I
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expect XYZ out of you. And I'm like, Yes, Ma'am, you got it, of
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course. And we snap to we do the things that we said we were
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going to do for the client, but we get this client on the phone
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with this attorney who hasn't done things in seven months. The
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client's an afib. She's got all of these different things
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happening in her life that she really wants to make these
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estate planning adjustments, because it's going to end up
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disinheriting a long lost child she didn't know existed. And so
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she wanted to go clearly, she's not the birth mom. She's not
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that. So she wanted to do this. And we're working with the
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estate plan attorney. We're just belaboring this point. We
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finally get a meeting on the table. We go through the phone
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call. The phone call takes 10 minutes. She's just doing
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amendment on existing trust. And then we wrap up the phone call,
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and I, I'm expecting on this phone call that this client is
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gonna light her up like a Christmas tree, that she's gonna
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be like, this is unexpectable. I will go to the Bar Association.
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You need to honor what you say, blah, blah, blah. But since
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laughter and birth and like, Oh, thank you so much. And we get
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off the phone, and the client calls me back immediately after,
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and is so like, Oh, I just, I just love her. She does such a
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great job. Blah, blah. And I'm like, are she freaking kidding
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me? This is the same person I have had to hound for six
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months. You know, in order to get these changes made, that by
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the way I drive, I'm not an attorney, but I wrote out exact
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instructions of what we wanted to have for the attorney to
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finalize, and the client was elated with her. And so this
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becomes this likability factor, that some people are more
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likable than other people, and when those likable people are
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also accompanied by certain credentials, such as attorney or
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CPA man, if clients don't just melt like butter. And so it
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makes you step back and say, All right, what are these people
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doing in order to be likable? And I think first we have to
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address the authority principle. And the authority principle is
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all the acronym soup and why it matters. When my son, he
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graduated high school at 16, and then he graduated from college
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with his Bachelor's at 21 and when he did those, no, he's 20
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when he graduated college. But anyhow, so when he did those,
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because he wanted to do it before 21st birthday, did those
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things. And he said, Okay, what do I need to do now? And I said,
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well, you need to go after different acronyms. You need to
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get some alphabet soup behind your name. Now that is not the
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the advice I would give most 30 and 40 year olds. Why? Because
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they have time. They have time and they have experience, and
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they normally have situations under their belt that they can
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rely and fall back upon. But 20 year olds don't you don't have
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enough time, you don't have enough experience, and therefore
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you need to go get some type of credentialing so that you can
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establish some level of authority. Now my caution to
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this is, if you go out and get too much credentialing, if you
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have too many things after your name, it will mean nothing to
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the client. It will mean absolutely nothing to the
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client, and it will do you disservice, because it looks
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like all you like to do is hang out and take tests, instead of
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actually putting the reps in and getting the work done and
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bringing on clients and developing plans. There's just,
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there's just, it's a seesaw, it's a teacher toddler, which I
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think are the same instruments on a playground, just different
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locations of where you're at. Maybe, I don't know, I didn't
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spend a lot of time in playgrounds. I was wherever
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there was a ball, basketball, football, field hockey. It
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didn't matter wherever I could go and there was some type of
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sport going on, preferably one in which you could be a little
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combative. I was down for you could keep your swings. I get
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motion sick. Anyway. Okay, so we go to this authority principle,
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and if you've got the right number of acronyms after your
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name, just a couple couple of acronyms is all you need,
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especially if you're in your early 20s. What is this? The
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authority principle says that principles of influence, people
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tend to follow and trust the opinions of perceived
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authorities. So think attorneys, CPAs, law enforcement agencies,
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FBI members, anyone in a uniform, and especially if you
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have a badge, your spouse will listen to every day of the week
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over you, as long as you've been married more than a year, the
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first year you get a free pass, because I think you can do no
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wrong after that, anyone, any stranger in a uniform is going
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to know way more than you do. So we have these perceived
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authority principles, and it sends to us these signals that
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this person is trustworthy because they have taken an oath,
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they have passed an examination, and they have privilege of
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knowing something that we don't know, or we are restricted from
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being able to do I've met really smart people, myself included,
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that could probably draft most of their estate planning
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documents. They could probably read somebody else's and write
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down all of their own wishes and things. But here's what we don't
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know, myself included. We don't know the proper legal forms. We
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don't know the indentation. We don't know what a needs to be
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capitalized, what doesn't need to be capitalized when we say
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and or when we say us, what commas matter, and why do they
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matter? All of those things that have been picked apart so that
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we can make attorneys into attorneys. When I am working
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with CPAs, a lot of times I look at things and I say, Hey, this
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is what I want to do in concept. Tell me how it works or doesn't
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work. And then I get feedback from that CPA. And that feedback
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from the CPA says, hey, you know what? Actually the tax code says
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this. Now, once I understand what tax code that they're
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referring to specifically, I can go grab that code and I can now
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start looking for some type of letter of interpretation, some
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type of ruling, a private memorandum that happened in the
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IRS that may validate or potentially invalidate want to
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do what I want to accomplish, but I always start with CPA or
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that attorney. I'm giving them the trusted authority that comes
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with the level of schooling that they have done. Now I'm hoping
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that the students are recidiving those sometimes, and the
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professional on the phone, I don't always think so, but I'm
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hoping that those are also recipient when I'm offering
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advice, that's the authority principle and finance,
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especially in today's age, there are a lot of really savvy
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clients out there. We make this great big production that we
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know more about finances than most clients, because that's
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what we do every single day. And if you are mechanic every single
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day, you're going to know more about mechanics than I am. This
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is what our chosen profession is about. And we choose people in
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these lines to point out not the things we know, the things that
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we thought we knew, but maybe aren't so. And so we need them
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to be able to tell us, hey, you can't do that because of x or
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you didn't consider Y. This is a potential pitfall. I want to
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make you aware of it, and I want to make sure that we are coming
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up with a plan to avoid that. That's that authority. We want
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to relay that to somebody else, in fact, so much so that
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whenever we look at like civil negligence, we're almost always
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holding the professional to the higher standard. In fact, I'm
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pretty sure before this just got overruled. Wasn't there
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something called like the chevron law that said that
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liability and negligence lies on the person who had the most
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knowledge and expertise in that field? This is something of that
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nature, and we look to those professionals to be the ones to
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give us the advice. And we say that. We say those words exactly
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we say, but you are the professional. Hired a
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professional. Think about our home repairs, our carpentry, our
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projects around the house. I hired a plumber. I am not a
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plumber. I understand that water comes from the ground and it
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needs to go through my faucet and it needs back out through a
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pipe. That is it. That is all I understand. And so when we hire
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someone, we're hiring them as a professional to recommend. Do
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it? Do you replace all the copper with pecs? I don't know
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what I need in order to make a decision. We we transfer that
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responsibility, we transfer that to the professional, and that
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transfership of accepting them as the professional is really
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about establishment of trust. I don't know something, and I'm
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trusting that you have more acute knowledge on this subject
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than I do, and will recommend and give me the best advice. And
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why do we need that from professionals? Because as human
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beings, we don't like risk and we don't like uncertainty. We
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don't I mean, I'm not talking about your spontaneous road trip
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where you get in the car with your spouse, you flip a coin,
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heads, Carolina, tails, California. Is that the right
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song? Okay? Who? Come on. 90s. Country fans. Help me out here.
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Alright? So we don't like that level of, you know, we might
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have impulsive spontaneity, where we want to do something
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adventurous and shake it up. We might decide beef over chicken
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for dinner, and kind of shake that up in our world. But we
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don't otherwise like uncertainty, because if we did,
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then we would take the approach that very few clients have. But
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every occasion, I end up seeing one that when we go through
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their estate planning, you know, they'll get their advanced
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medical directives done, they'll get their durable power of
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attorney. But when it comes to the will and the estate they're
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like, Nah, I'm dead. I don't care. I'm not going to try to
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exercise some ridiculous level of control I don't have because
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I'm dead, it's no longer my problem. It's no longer my
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stuff. Other people can handle it. And all my time, I think
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I've only had three encounters, and two of them were female.
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That really stuck out in my mind. They're like, No, I'm dead
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and gone. I'm not getting attached to this life. You know,
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I don't care how these things end up. But for most of our
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clients, that's not the case. They really do care what happens
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to their estate. They don't want to see most of their earnings go
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to the IRS. They don't want to see the kids squander them. They
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want to provide education for their grandchildren and
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opportunities maybe they didn't have. They want to make sure
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their spouse is taken care of, especially if we're in a
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situation where you have a husband and a wife, and maybe
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the husband has the pension and the health care and everything
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like that, and the wife has, you know, something less significant
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than those benefits that the husband wants to make sure the
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wife is now being taken care of. And vice versa. Women are great
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about this. Women want to make sure that, hey, I'm not leaving
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you in a bad spot. I want to make sure you have access to
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everything. Women are great about tidying up their lives and
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thinking about when they're not here, making sure others are
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provided for. And so when we have this transfer to this
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professional. We want to be safeguarded. We want to know
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that those levels of uncertainty are being addressed and taken
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care of as best we can. And so this is why it's so paramount
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that we constantly revisit the estate planning conversation. We
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run our beneficiary report every couple of years, just because if
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anything in your life has changed. Maybe the kids have now
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matured, and you're assessing their financial maturity a
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little bit more than when they were little. Maybe the person
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that you were going to leave as your primary representative, as
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your trustee of your state, as your financial guardian of your
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assets, has come into different situations. Maybe they've got
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diagnosed with cancer, maybe you know they've got a complicated
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life that it no longer makes it appropriate to appoint them. We
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start our hands from a certain level of uncertainty that
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they're always going to be concerned about. We seek
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reassurance and validation from somebody else. Are we doing this
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correctly? How are we doing compared to other people? Have I
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addressed everything else, and this is one of the Paramount
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conversations inappropriate to record, but I wish we could that
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we have with widow or widowers, because regardless of how the
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decedent financially left, the widow or widower, we're going to
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have a really positive conversation out of it. We're
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going to address the hard topics. If you've been
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financially hosed by by the person you were married to and
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just hasn't done a good job taking care of you, there's no
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real avoidance of that. But guess what, if you're the
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spouse, you already know that our job is not or point out or
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make an exaggeration of the situation that you're in ours,
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is to find the positives, and then we say, okay, great, you
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know what we but we're going to make some lifestyle changes. And
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you know what your decedent spouse, or whatever their name
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is, Bob, wanted to make sure that you were confident that you
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could make those decisions. And we're going to try to find some
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way to make the person who is left behind not feel as if they
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were grossly neglected in the planning code everything, but
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we're going to find a great way to set them up to not feel that.
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Because, by the way, I mean, think about it, there's nothing
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you can do. There's nothing you can do to go back and change
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things post mortem. It's what's done is done, the situation
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you're in is what you're in that should have been protected and
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safeguarded from long before you got to wherever you are. It
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wasn't for whatever reason. Now we have to move on with life.
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Now we have to find the positive. Now we have to make
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the lifestyle changes. One of the hardest conversations we
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ever have with a client is talking to widower, and say you
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don't have enough, you need to find a job, you need to move
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into the kids. You need to you need to do X, Y and Z. That's a
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difficult conversation, and we try very, very hard to handle it
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with grace and to not make them now resentful of the person who
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has since passed, but it's difficult now, the reason that
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we go through these hard conversations, especially when
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both parties are alive, is so that now we can provide
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emotional relief. Have you ever been at the signing of finishing
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out everyone's estate planning, once they make all the wills and
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the trust and they've got all their documents in order, and
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they make guidance signature, and they get this beautiful copy
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and a lot binder of all their stuff. The emotional relief can
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be like a tidal wave coming across that conference room.
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People are like, I'm so glad that is done. I've been, you
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know, really worried and concerned about that for X
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amount of time. Thank you guys so much, and it's just this
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massive weight that gets lifted off of their shoulders now at
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Shilanski and Associates our RIA up in Anchorage, Alaska, most of
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the time, we are with the clients and the attorney working
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hand in hand to get their estates set up. Now, the reason
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that we do this is because ultimately, the client is going
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to come to us with questions anyways. So we want to
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understand how all the mechanics of what their choices are work,
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and we want to make sure we have a copy. We want to make sure
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that we're updating beneficiary designations. We want to make
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sure that in crisis, when the client contacts us, we can help
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facilitate getting any documents to any professional that we
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needed to because we've already prepared them that we want to be
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their 911, and their 411, if they have an emergency, call us
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if they have a question. Call us. But we're also doing we're
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also stitching ourselves into the fabric of the client's life.
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And so when we get involved in the estate planning, when we're
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going through building the trust, when we're hearing about
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the kids and the daughter in law or the son in law, and we're
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learning about those mechanics, I have a really good friend.
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She's got MS, and I want to make sure I provide for her a little
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bit, because her husband loved her in quite a bind. We're
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learning all of these nuances, and the client is literally
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taking us like a piece of thread and stitching us into their
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lives. And so we get this level of intimacy that the client
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knows they can contact us at any time, and we are already aware
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of the situation, and of course, we're taking exceptionally
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detailed notes to make sure we have really memorialized
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everything that happened. And that connection, that trust that
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they're putting in us and correlating between the attorney
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and us is just you can't buy it, you can't buy it, you must earn
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it. You must absolutely earn it, and it allows clients to feel
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more and more confident in their choice to continue to keep you
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as their financial advisor, because every single quarter
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that a client pays your fees, guess what? They're evaluating
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whether or not, they're keeping you as their financial advisor.
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When you incorporate all of these elements into the
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authority principle, you're going to find yourselves
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developing more and more meaningful relationships now, as
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likability factor of it, that's a whole other lesson. Maybe
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we'll get to it sometime on this podcast, this has been an
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episode of worlds to conquer. I am Jamie Shilanski. Go find
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people who share your values and change the world.