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Frame It Right: A Simple Shift That Changes Client Behavior · Root Ready

• 0:00
  Speaker 1: Welcome back to another episode of the Root Ready podcast.
• 0:02
  Speaker 1: I'm your host, james Canole.
• 0:03
  Speaker 1: As advisors, one of the more frustrating things sometimes can be how do we help clients make a decision we know is right for them, but they're really struggling to make it?
• 0:13
  Speaker 1: And sometimes the reason they're struggling to make it is because of the way we're framing the decision, because of the way we're framing the trade-offs or because of the way that we're framing the overall landscape in which they're making this decision.
• 0:23
  Speaker 1: So in today's episode we're gonna talk about how can you help your clients make better decisions, those areas where you've been struggling.
• 0:29
  Speaker 1: What's the different way you can frame what you're talking about to help your clients make better decisions to live better lives?
• 0:36
  Speaker 1: A recent book I think a lot of us have probably heard of it or read it is called the Five Types of Wealth.
• 0:40
  Speaker 1: It types of wealth.
• 0:41
  Speaker 1: It's by Sahil Bloom, and in this book he talks about the five types of wealth, and I'm actually going to borrow the principles that he talks about here, because I think there's such a direct correlation between the way he speaks about these different five types of wealth and the way we, as advisors, can speak to our clients or frame decisions to our clients.
• 0:57
  Speaker 1: But before doing so, let's start with an example.
• 0:59
  Speaker 1: How many of you have ever worked with a client and this client got to the point that they were financially able to retire, but they couldn't bring themselves to do so.
• 1:10
  Speaker 1: You knew they wanted to do it, they told you they wanted to do it, but every single time it came time to make the decision to retire, they kept working.
• 1:14
  Speaker 1: The reason for that?
• 1:15
  Speaker 1: It was very difficult for them to pull themselves away.
• 1:18
  Speaker 1: They're at the end of their career, which means they maybe have a very high paying job.
• 1:21
  Speaker 1: They're at the top of their earnings potential.
• 1:23
  Speaker 1: They're walking away from a big bonus, maybe they're walking away from more stock vesting.
• 1:27
  Speaker 1: They're walking away from maxing out their 401k again, paying into social security again, driving up their social security benefit, and they really struggle to make that decision.
• 1:36
  Speaker 1: The reason they're struggling to make that decision is when they're looking at wealth and really you as their wealth advisor, their financial advisor, they're looking at through one narrow lens, and that lens is the financial side.
• 1:48
  Speaker 1: Now, that may seem like the only lens.
• 1:50
  Speaker 1: We are financial advisors.
• 1:51
  Speaker 1: We're talking about wealth.
• 1:52
  Speaker 1: That's dollars and cents.
• 1:53
  Speaker 1: Well, not necessarily.
• 1:55
  Speaker 1: That shouldn't be the only lens, but when this client looks at their portfolio, when they look at their financial plan maybe you're using eMoney or RightCapital or MoneyGuide Pro, whatever it is every additional year they work, their scorecard improves.
• 2:09
  Speaker 1: They're saying if this is my wealth scorecard, well, why would I walk away?
• 2:13
  Speaker 1: That one less year of working might cost me hundreds of thousands of dollars, maybe millions of dollars over the course of my lifetime.
• 2:19
  Speaker 1: Why wouldn't I work 12 more months, max out my 401k, get one more bonus, let more stock vest, do whatever that takes.
• 2:27
  Speaker 1: Well, that's because, again, they are narrowly defining wealth and what our job is as advisors is to help them properly define what that should look like.
• 2:35
  Speaker 1: So, going back to the book, the five types of wealth, in this book, bloom defines different types of wealth.
• 2:40
  Speaker 1: Financial wealth is one type of wealth that he defines, but the others are time wealth, physical wealth, mental wealth and social wealth.
• 2:49
  Speaker 1: So here's a way that you can help clients make difficult decisions when they can't pull themselves away from something because that thing is running up the only scorecard they know.
• 2:58
  Speaker 1: If I go back to that client that can't bring themselves to retire, even though they maybe don't even necessarily like their job, maybe it's actually draining them, it's stressing them out, but it's adding their portfolio balance.
• 3:09
  Speaker 1: The thing about money is very tangible.
• 3:12
  Speaker 1: You can see it.
• 3:13
  Speaker 1: I work one more year.
• 3:15
  Speaker 1: I see my projections go up.
• 3:16
  Speaker 1: I see my money Carlos score go up.
• 3:18
  Speaker 1: I see the ending wealth go up.
• 3:19
  Speaker 1: But what you don't see, what's invisible, is those other four types of wealth.
• 3:24
  Speaker 1: What's that doing to your time?
• 3:26
  Speaker 1: How can we, as advisors, frame time?
• 3:28
  Speaker 1: Wealth becomes increasingly more important the older you get, when you're 20, when you're 30, when you're 40,.
• 3:34
  Speaker 1: Hopefully, you have a lot of life left in front of you, but by the time that you're in your 60s or 70s, we don't know how much time we have left.
• 3:42
  Speaker 1: Really, none of us do, of course, at any age, but the older you get, how can we frame that to the client?
• 3:47
  Speaker 1: You might only have 20 years left, you might only have 30 years left.
• 3:50
  Speaker 1: Heck, you might only have two years left.
• 3:52
  Speaker 1: Is this helping you?
• 3:53
  Speaker 1: Is this building time wealth?
• 3:55
  Speaker 1: And time wealth defined as your ability to do what you want with your time, your ability to have full control over the time you have remaining?
• 4:02
  Speaker 1: What are you choosing to do with it?
• 4:04
  Speaker 1: Yes, maybe one more year of work is adding to your financial wealth.
• 4:08
  Speaker 1: But if you can imagine another scorecard with our time wealth, to what extent is it depleting that?
• 4:13
  Speaker 1: If you love work, if work is exactly what you want to do with your time and it's not interfering with your ability to do the other things you want to do with your time, by all means keep working things you want to do with your time.
• 4:24
  Speaker 1: By all means keep working.
• 4:24
  Speaker 1: But as you're framing this to a client, how do you help them understand that something that's good for one scorecard might be worse for another component of your scorecard?
• 4:30
  Speaker 1: Then this ties into the physical wealth or your health wealth of, even if you do have 30 years left, helping your client understand how many of those years are you going to be healthy?
• 4:39
  Speaker 1: There's all kinds of studies that start to show that chronic disease, chronic illness your body's starting to break down starts in your mid to late 60s.
• 4:48
  Speaker 1: So if you have a client that's 62, let's imagine they're already financially independent.
• 4:52
  Speaker 1: They don't love what they're doing for work.
• 4:54
  Speaker 1: They want to do other things, but they can't pull themselves away from it because work is so lucrative at this point.
• 5:02
  Speaker 1: Well, they are maximizing their financial scorecard, but they only might have a short time left with their physical wealth, their physical health.
• 5:08
  Speaker 1: How do you help to frame that to them?
• 5:10
  Speaker 1: Of once you've already reached financial independence, that scorecard can keep burning up forever.
• 5:15
  Speaker 1: What's the marginal benefit?
• 5:16
  Speaker 1: The marginal benefit gets smaller and smaller and smaller the more our net worth grows, but the marginal cost becomes bigger and bigger and bigger the more we put this off because there's only so much time that we have our full health.
• 5:29
  Speaker 1: So, once again, you as advisors, how do you properly frame that?
• 5:32
  Speaker 1: How do we properly frame that?
• 5:34
  Speaker 1: Don't just say retire, you're good, you're financially independent.
• 5:37
  Speaker 1: That's not helping them see the big picture.
• 5:39
  Speaker 1: Helping them see the big picture is saying, when we talk about wealth, finances is only one part of that.
• 5:45
  Speaker 1: So we've talked about time, we've talked about physical wealth, now let's talk about social wealth.
• 5:50
  Speaker 1: Your connections, the meaningful connections that you have, is going to be one of the biggest contributors to your overall wellbeing in retirement, really in your life.
• 5:59
  Speaker 1: So how do we make sure that we're prioritizing relationships, the right relationships?
• 6:03
  Speaker 1: This is relationships in our family, relationships with our friends, relationships with the type of people that inspire us, that encourage us, that make us more of who we want to be.
• 6:12
  Speaker 1: In large part, it's going to be the quality of our relationships that determine the quality of our lives.
• 6:17
  Speaker 1: So if I go back to that client that's struggling to retire, I need to say, yes, you're maximizing your financial wealth.
• 6:23
  Speaker 1: Are you simultaneously maximizing your social wealth?
• 6:27
  Speaker 1: And again, no-transcript to not be able to prioritize our relationships.
• 6:35
  Speaker 1: If work is preventing us from being able to invest and pour into those relationships, what is the cost of that?
• 6:41
  Speaker 1: I don't care what your Monte Carlo simulation is doing.
• 6:44
  Speaker 1: I don't care how many more hundreds of thousands or millions of dollars you have at the end of the day in your financial plan.
• 6:49
  Speaker 1: If we just optimize that one part of your wealth and everything else suffers, I have failed you as your financial advisor, and this needs to be the messaging that we are giving to our clients.
• 6:59
  Speaker 1: It's not our job to make decisions for them.
• 7:01
  Speaker 1: They're grownups, they're adults, they're going to do what they want.
• 7:04
  Speaker 1: They're going to do the things that they know are right for them.
• 7:06
  Speaker 1: It is our job to properly frame these things, because it's that framing that makes all the difference.
• 7:12
  Speaker 1: When all they see is one scorecard which we are guilty of this because all we're doing is showing this financial projection why wouldn't I become obsessed with trying to increase that scorecard.
• 7:22
  Speaker 1: If that's all there is, why wouldn't I increase that?
• 7:24
  Speaker 1: That's not all there is.
• 7:25
  Speaker 1: The problem is these other types of wealth are not as immediately visible as is the financial wealth.
• 7:30
  Speaker 1: And then, finally, the last type of wealth that this book talks about is mental wealth.
• 7:35
  Speaker 1: This could be defined as our sense of purpose, our sense of meaning.
• 7:38
  Speaker 1: That can encompass a whole bunch of different things, but what are we doing to pursue that?
• 7:43
  Speaker 1: So, when we, as advisors, can frame this properly, helping a client to understand yes, we want to optimize your financial wealth.
• 7:50
  Speaker 1: In fact, the reason you're working with me is because we need to do the things to optimize the financial side of what you're doing, but that's all you ever do.
• 7:57
  Speaker 1: You.
• 7:57
  Speaker 1: You're gonna be leaving things on the table.
• 7:58
  Speaker 1: You're not gonna have the meaningful life that you want to have.
• 8:01
  Speaker 1: You're not gonna have that sense of purpose, of adventure, of enjoyment that you could have if you maximize these other things.
• 8:07
  Speaker 1: Now, I'm not saying you need to be a life coach.
• 8:09
  Speaker 1: You don't need to go out and help people understand how to develop better relationships, how to take care of their health, how to make sure they're investing in their friendships, how to make sure they have purpose.
• 8:17
  Speaker 1: These are just things that you need to help them be aware of.
• 8:20
  Speaker 1: We have an incredibly unique position as financial advisors.
• 8:23
  Speaker 1: In fact, I remember a bit earlier in my career I was always confused why does every financial advisor think they're a life coach?
• 8:28
  Speaker 1: Do they automatically think, or do we just attract the type of people that are naturally good at finance or naturally good at maybe living their own lives on these terms?
• 8:36
  Speaker 1: And I don't think that's it.
• 8:37
  Speaker 1: I just think that, because of the work that we do, because of the intimacy of our work, where people are talking to us about their money, about their goals, things that maybe they don't talk to a whole lot of people with it opens up, it invites us into this conversation, where it is a very vulnerable thing.
• 8:52
  Speaker 1: It is a thing where we have a say in how they are spending one of their most precious resources, which is, yes, money, but also their time, and so, to the greatest extent possible, how can we give them the guidance, share the wisdom, share the experiences so that they can then make the most informed decisions, make the best decisions, not just to maximize their Roth conversions, not just to maximize their portfolio performance, not just to make sure everything's protected, but so that it's optimized for a greater purpose, for the purpose of investing in the other types of wealth that they have.
• 9:26
  Speaker 1: So what can you, as an advisor, do to become better at this?
• 9:30
  Speaker 1: Number one, hopefully, subscribe to the show.
• 9:33
  Speaker 1: Subscribe to the show if you're enjoying it.
• 9:34
  Speaker 1: Also, by the way, leave a review on Apple Podcasts or Spotify if you're enjoying it.
• 9:38
  Speaker 1: But do the things that you can do to master some of these skills.
• 9:41
  Speaker 1: Hopefully, this show helps to give you some perspective on what some of those things are.
• 9:45
  Speaker 1: Other than that, make sure that you're a student of this.
• 9:48
  Speaker 1: Make sure that you're a student of this.
• 9:49
  Speaker 1: Read Carl Richards, read Morgan Housel, read the five types of wealth.
• 9:53
  Speaker 1: Read these types of things to become a student of this.
• 9:55
  Speaker 1: Brendan Fraser has a great podcast.
• 9:58
  Speaker 1: Listen to that.
• 9:58
  Speaker 1: There's things that you can do to absorb this but, most importantly, live it.
• 10:03
  Speaker 1: What are the five types of wealth for you?
• 10:05
  Speaker 1: What are the areas in your life you are continuing to reinvest in?
• 10:08
  Speaker 1: How can you lead this?
• 10:10
  Speaker 1: Well, I say this a lot on this podcast, but you are both the messenger and the message.
• 10:15
  Speaker 1: In a lot of ways, we're not just sending the message, but the messenger matters.
• 10:19
  Speaker 1: You matter.
• 10:20
  Speaker 1: You can have the perfect message to a client, but if you're not living it, it's not gonna be as impactful.
• 10:26
  Speaker 1: If you are living this, if you are doing these things, you're gonna be better positioned to help your client, and the messenger is gonna be equally important to the message in those scenarios.
• 10:36
  Speaker 1: So make sure that not only are you studying this, but put it into practice.
• 10:39
  Speaker 1: How can you live your life with intention so you, in turn, can help your clients do the same?
• 10:43
  Speaker 1: So, as we wrap today, just recognize that we have an incredibly sacred position in many of our clients' lives, whether they thought that was going to be a position we had, or whether even we thought that was going to be a position that we had in our lives before they became our clients.
• 10:55
  Speaker 1: Who knows doesn't matter, but by the nature of your work, you get to have these types of conversations.
• 11:01
  Speaker 1: So if you want to be the best you can be, understand how you can broaden your clients' horizons.
• 11:06
  Speaker 1: Understand how you can help them think through different things.
• 11:08
  Speaker 1: Understand how you can help them understand the other aspects that maybe they're not thinking about, so they can look back one day and say they lived an amazing life, in large part due to the perspective and the guidance that you gave them as their advisor.
• 11:21
  Speaker 1: So that's it for today's episode.
• 11:22
  Speaker 1: Once again, if you've not already done so, please leave a review on Apple Podcasts, on Spotify, if you're enjoying the show, please make sure to subscribe.
• 11:30
  Speaker 1: Share with other advisors.
• 11:31
  Speaker 1: I'm sure you have other advisor friends who are trying to be the best they can be.
• 11:34
  Speaker 1: Share this with them.
• 11:35
  Speaker 1: Thank you for listening.
• 11:36
  Speaker 1: I'll see you next time.