Ep 5: 5. Rethink: Financial Advice a Luxury or Necessity?

Episode 5 of Rethink Financial Advice, co-hosted by Derek Notman, CFP® (Founder & CEO, Couplr AI) and H. Adam Holt, CFP® (Founder & CEO, Asset-Map). (44:02)

Episode 5 of Rethink Financial Advice, co-hosted by Derek Notman, CFP® (Founder & CEO, Couplr AI) and H. Adam Holt, CFP® (Founder & CEO, Asset-Map). Listen on Apple Podcasts, Spotify, YouTube, or Acast.

Episode Summary

Adam Holt and Derek Notman test a century-old idea against the advice business: that the luxuries of one generation become the necessities of the next. The line comes from economist Hazel Kyrk’s A Theory of Consumption, published in 1923, which listed bathtubs, toothbrushes, forks, matches, and window glass among former extravagances. The hosts apply the pattern to financial advice, arguing that what was once reserved for households wealthy enough to command a planner’s attention is being opened up by technology and access. The most useful stretch of the conversation is about simplicity as the actual luxury good. Clients with significant complexity pay for a one-page summary, while mass-market clients tend to receive page count instead. Holt argues clients want to know whether they are doing well and on track, not their position in a particular holding. Both hosts expect the next scarce luxury to be human attention.

What this episode covers

• Hazel Kyrk’s 1923 luxury-to-necessity framework, applied to financial advice
• Why access rather than cost is the variable that turns a luxury into a necessity
• Simplicity as the premium product, and why page count is a poor proxy for value
• The two questions clients actually ask, and what they imply for how results get reported
• Why the hosts expect human attention to become the scarce good as technology accelerates

Full Transcript

Machine-generated transcript of this episode.

Welcome to Rethink, the financial advisor podcast. My name is Adam Holt. And this is Derek Notman. We are your hosts, both veteran advisors and FinTech CEOs who challenge the status quo, question everything, and have fun doing it. Hear honest commentary on the challenges facing advisors today and be part of a community where we can all rethink the profession. Now on to our episode. Adam, is financial advice a luxury or a necessity for consumers? That’s such an interesting question. I wonder what our listeners are thinking about right now. Why would you be asking that question? Yeah, it’s thought provoking. I’m curious how you feel about this, because there’s been a shift.

We’ll get to that. But there’s been a shift over the last, I don’t know how many years now. I guess that’s speculative, but there’s certainly been a shift. So I unpack this for me a little bit. What are you thinking? Well, one of the things that brought up this topic recently was I was doing a thought leadership program for a larger company talking about how the changes in FinTech is affecting those in advice and sales and product delivery. This comment kept coming up, which was that the luxuries of one generation become the necessities of the next generation. That’s a phrase I know that you’ve heard before, but when we started discussing this before the podcast and did research around it, it was interesting to see how prolific this is.

I want to share this quote for those of you that are really curious about this. I want you to think about when was this written? Here’s the quote. It is now commonly said that the luxuries of one generation become the necessities of the next. What a list could be made of the essentials of today, which in the past were extravagances or selfish indulgences, fads, or simply display. From bathtubs to toothbrushes, automobiles, forks, matches, window glass, houses with chimneys, et cetera, et cetera. Can you guess how long ago this was written? A while. Before 2000, how does that sound? Before the internet, before the interwebs. This comes from Dr.

Hazel Kirk, Theory of Consumption in 1923. 100 years ago, he published this on research around obviously the fact that people were becoming used to bathtubs. A bathtub was a necessity. Previously, it was a luxury. Window glass was a luxury at one point. Now, I think most of our windows have glass in it. I can’t imagine a window without glass. Isn’t that kind of oxymoron? A house with a chimney. Some cultures, like the Japanese culture, use paper, right? That’s true. That’s true. But that’s a whole other conversation. Well, forks, I mean, there you go. There’s some areas that don’t still use forks, right? My household doesn’t really use forks.

But I guess they use their fingers, by the way, if you’re wondering. Do they use their fingers or do they use chopsticks? It’s just saving all the dishes that you have to do. That’s right. Because I’m always cleaning the kitchen. I had to bring that full circle again. Sorry. Thank you. Well, the reason we wanted to ask this question of everybody, and of course, debate this live with each other, is because financial advice itself can be asked this same exact question, right? When you think about this in our own generation, what are the things that you think about, Derek, that were maybe luxuries for your parents that are now necessities?

Give us some examples. I mean, I’m sure there’s a hundred. Yeah, totally. There’s so many, but cordless phones. Phones have been around for a while, but they were always corded, right? You had to have that 30-foot cord so you could go around the corner and so you could have a private conversation. Cordless phones, simple things like TV. Being able to go to a bookstore. You guys remember Blockbuster, right? Renting movies and bringing them home. You had to actually make sure you had returned your prior rental. Right. And if not, they wouldn’t rent you anything. And then you go there and the one movie you want to rent was not there.

So you had to wait until next week. And you had to rent Rambo again. I mean, not many times I had to rent Star Wars. I love Star Wars. I think it’s because I rented it 40 times. What else did you rent? That’s funny. Phones. I remember a phone, this might age me, where there was only one phone in the house. And you had to get off because dad was expecting someone random person to call them and it was going to get the beep, beep, beep, beep tone that said that someone was on the phone. What about internet access? Dial-up modems. Remember AOL online? But if you didn’t have second line for a modem and someone called, you got kicked off and had to go through the whole process again.

We used to make that scratching noise. Remember that? Yeah. Oh my gosh. But that was still somewhat of a luxury, especially if you had a second line to have the internet. And did you have call waiting growing up? Not initially. No, like, no, like, no. Call ID. No, you know, I really missed the days of no call or ID as a kid. I was one of those guys that liked to do prank phone calls, outbound prank calls, outbound. You can’t do that anymore. It’s just our kids, this whole generation is missing out on some real fun. Those were luxuries. We used to that when that was brand new, we were like, wow, that is so cool.

I mean, I get to know who’s calling. I could screen. Yes, I can actually not pick up when someone who I don’t want to talk to is calling me. Everyone had to be quiet when you got on the phone because, you know, they couldn’t hear anything over that receiver and the big right wrapped around and twisted in such a way where it was always jangled up. You know, remember that crazy twisty wire that you’re talking about? Never, it never went back the way it was supposed to never did. You could hang the phone like this, hang the phone. It would try to untwist until just the next time.

Somehow someone’s wrapping around, I don’t know, a pole when you’re not looking and the cord, I guess, I don’t know. But listen, if you’re listening to this and you’re thinking, yeah, I remember that moment. And maybe you saw your grandparents do with this. I don’t know. Why does that have any relevance to our podcast and financial and financial advice? It has a lot to do with it. It has a ton to do with it. It’s just, we’re just going to look at it through a different lens here. Yeah, for sure. The luxuries for the last 200 years are now necessities. Like window panes and no cords on your phone.

Can we ask the same question about our industry? So one of the things that we thought about as we said, think about this on your own. What are the luxuries in financial advice and financial delivery, financial services? What are those luxuries today? And who right now has been, who’s setting the standard? We think, because both Derek and I have worked with very high net worth clients. We’ll call ultra high net worth clients. They can actually, they demand and they expect the luxuries we’re going to share with you. So we’re going to list a few that we thought of before this program, which I think are really important because if you recognize that these were the luxuries, by the way, for the past 20, 30 years of our own practices, they are becoming the necessities of the next wave of consumers of financial advice.

Let’s talk about the first one. Financial advice, right? And not just silo, but all of the facts that a family has, business, personal and everything. I think forever it’s been like, well, that was really reserved to the wealthy. We have family offices, all that stuff for those that couldn’t afford that luxury. They were buying financial products and they were getting siloed. I don’t even know if advice is the right word. We’ve unpacked that in another episode, but yeah, like that was the luxury. Not anymore. And we’re going to get into why we talked about this before, but go ahead and list some of these other ones here.

Well, when I think about financial advice first, most of our ultra high net worth clients came to us for either two reasons. They either wanted someone to look over the entire big picture and give them legal tax, insurance, investment, structural decisions, bring ideas, try to fix what someone had done to them when they didn’t have means, unwind the products that they had bought. They were just not serving them. Or number two, they came with a very specific request. Like for example, we want to set up a trust with a hundred million dollars. Execute that at a high level and we’re willing to pay for that process.

So they either came with very specific knowledge of what they wanted to execute. And the reason is because they have other professionals that are guiding them with their guidance. And now they want us to execute at a level of preeminence that we’re used to given we work with their peers. But if it wasn’t a specific execution, like here’s X number of dollars invest in this strategy, they didn’t know what they wanted. It was always advice first. So in some measure, the high net worth are starting with advice and context to what they’re trying to do, create, influence, contribute, et cetera, et cetera. So what’s very clear about high net worth is that they’re getting professional guidance first.

And it starts with understanding the households. Now this is of course really critical today. We know suitability best interest is driving this. We need to get the facts. We need to understand what’s going first, but it begs the question if advice first product second was the luxury, it will also eventually become the necessity. And this is part and parcel to what we’ve talked about in the past, right? It really is. And you and I talked about this previously offline, but I think it warrants being discussed here. Why has it become a necessity now? Like what has happened that’s made it a necessity? And I would argue that it’s access to information.

Like right. Well, think about like before the internet, if I needed help with something, I had to go like get a book or I had to get a referral to some professional or try to research this stuff on my own. And so it was difficult. It was disjointed. And all of a sudden we have this thing we have called Google. And I have a question about a trust or a product or whatever. I can sit on my couch and now I can get access to this information. I may not be able to implement it, right? But at least I know I’m an informed consumer much more than I ever was in the past.

So now this information that was reserved for the high net worth, it was a luxury to have access to this information. Now all of a sudden has been democratized to everybody. And if we have access for everybody, now it really does become a necessity. And I think it should be. That’s true. And at what cost is that information? Well, I think to the, yeah, that’s an interesting question to the consumer. It’s, I don’t know if there’s any cost. I think it’s a benefit, but I think to the advisors that recognize this access, it could be a massive cost to them as a going concern for their business.

Oh, that’s interesting. That’s interesting how you heard that. Because what I was, what I loved about what you said is you use the word access several times. And this is no different than any, let’s tie it back to our original theme, right? A luxury by definition means that it’s exclusive. It’s high cost or some barrier to getting it. And therefore only a certain number of people can get to it either by invitation or by paying for it. You only know about certain things because you’ve been invited. You’re in the loop. And that means that you can keep a luxury exclusive for some period of time, as long as the cost point is high.

But eventually if that luxury becomes, there’s an awareness of it, people aspire for it. They want it, they desire it. It becomes coveted. This fads that the prior quote that we used indicated, it starts with a fad. Now all of a sudden people want it. Now all of a sudden there’s manufacturers that will provide it at a lower price point so that it makes it more accessible. When you think about information today, accessible is literally zero cost. So information is accessible. One might also argue there’s too much information now to weed through it. Maybe we need people to help actually just choose which information to read or listen to a read.

But I think this is important. Wealthy individuals always had access to information, products, services, because they could meet the minimums. They had exclusive professionals they could get to. That is becoming democratized. And I think you’re probably right. The biggest influence that has just become access and availability. It’s one of the things that’s democratizing virtually everything. But how is that going to affect advice? So if we’re delivering financial advice and products that serve that advice, access to information is becoming untethered. There’s so much more information out there. We can’t rely upon that as a differentiator that we have more information than somebody else. That doesn’t serve my point.

We can’t. Now someone like whether it’s aligning my values with my investments or coordinating tax and legal and all these other things, things that used to be reserved for the luxury, the high net worth. Now, all of a sudden, I can find that stuff out pretty quickly online by myself to a point at least where I can be somewhat educated when I’m having a conversation with potential advisor. So yeah, it’s been this major shift. People still desire the simplicity that we’re able to get. And I think that’s one of the luxuries that also that these high net worth individuals really enjoyed. But now it’s there for everybody.

It’s true. Well, that’s a great segue because we do know that a lot of our wealthier clients had a coordinated team of professionals. They have the attorney and the accountant. Maybe they have an entire firm. They have a family office. You mentioned that. Talk about what has been the luxury that is now going to be creating at least maybe influence and necessity. This is still an expensive proposition, but what did you see in your high net worth clients and how they put together their teams that supported their financial visions or their venting goals? They wanted subject matter experts in a variety of ways. They wanted a coordinated effort.

People all working on the same page at the same time, but they didn’t want it to be like, there’s a lot of work that we do as a coordinated effort as a team of advisors. There’s a ton of moving parts and complicated things, but the clients, they don’t want to know how the sausage is made. Right? Tell me this is what I want. Keep it simple for me. Don’t give me hundreds of pages and stuff. I just want to know that what I need is getting done. I would argue that regardless of net worth, people want that experience and now just more people have access to it.

Yeah. Well, you just said something that triggered for me. I believe that high net worth clients, when they start working with a professional who’s worked with their peers, they actually have less edict. In other words, they expect that the advisor already knows what’s in their best interest. It’s an unspoken thing. You are going to be empowered with a significant number of resources of mine, and I’m going to pay you accordingly, to act and make best interest decisions for me, literally delegating that authority. It’s funny, the wealthier the clients that we had, the more power they were willing to delegate to experts. I think it’s because they said, well, I’m making a decision to work with you as a person and your process and my 10 checks and balances, so don’t worry, you’re not going to mess up because I’ve got three people looking over your shoulder.

Exactly. You’ve already worked with my peers, so you already know the scrutiny I’m going to give you. That level of care was actually easier than providing it to someone where you’re managing the money they’ve saved over 40 years and it’s all they got. It’s an interesting dichotomy, but it’s proving out that the luxury of having a professional works in your best interest is becoming the necessity for mass market. Don’t we have regulations now that are being imposed? We always act in their best interests. I guess there were some people that took advantage of people that didn’t have the expertise and or experience and literacy in order to take or make those decisions and that’s where we have to protect the consumer now, but it is becoming a necessity.

We have to lead with this concept that we’re always acting in best interest and we’re willing to have the transparency of a team of professionals, whether I build them or I’m inheriting yours, that can look at our and say, yes, it’s good. It’s bulletproof and these are good decisions. Think about how that’s going to change going forward. That luxury is becoming pretty much an expectation or will in the future. How about this? This has really been big these days. You know that, and I’m sure you’ve experienced this, wealthiest clients had an alignment early on that their investments supported their values. I remember in the early days, we could put together programs that excluded certain pain stocks or stocks that had sins we associated them with.

How has this changed in the business today? Well, we’re still doing it, but I think there’s been this upward trend of more of it now because again, access. People are being educated about it, but they’re also having more control. We’ve seen this massive, not only democratization, but also it’s part of fee compression, but also just like greater choices in the market. Where now if I’ve only got $5,000 in an IRA, I just opened up, I can still direct how I want my money to perform in a line with my values where before I had to have a million bucks or 10 million or whatever, and it just wasn’t possible.

So that also has shifted. It’s awareness now too. The masses have awareness of what only the high net worth individuals had awareness of 10, 20, 30 years ago. But it’s really, it’s opened up, obviously this market and what we typically call the ESG market, which I believe if I get this right, this is either ethics or environments, social and governance. Yeah. Yeah. I’ve heard it in both of those ways. So if I’m saying it wrong, I remember 20 years ago when a client, there was one mutual fund that enabled a, we’ll call it an alignment of values. And now there’s hundreds, right? So there’s micromanagers, there’s big managers that can really focus on value-based investing.

This was table stakes for wealthy individuals because they had control over the companies they invested in directly, either private or public. But it’s interesting to see how this become a very quick necessity and how there’s so much demand for values-based investing, even at the sacrifice of performance, because people want their capital, their social capital effectively to be invested in a line. So this is, if you’re not ahead of this one, we have to be talking about this to consumers because that luxury is already becoming a necessity or on that path. It’s more than a fad already. So we have to be in front of this one.

I know for me, most of my clients that were high net worth, they focused less on performance and mostly on structure because it was the legal and the tax implications of their life that caused the biggest pain points, right? Tax was their biggest expense. And of course, protecting their assets from, we call them creditors and predators, inabilities and disabilities, right? These were their biggest weapons, or I’m sorry, enemies, because when you’ve collected a certain amount of assets, now people want to take it away from you, whether they perceive it’s the government or they perceive it’s some lawsuit or they just structured their assets wrong and a divorce happened.

I don’t know. The point is, is that we tended to focus more on that aspect than we did the actual performance. And I think that this is one of those areas where financial professionals need to really be leading as following the customer guidance and do work in this. Have you been exposed to the legal and the tax as an important aspect of the financial advice? Yeah. It’s funny in the conversations that I have with my high net worth clients, like they want to know how their money’s doing, but it’s like, eh, how’s my 1099 going to look this year? What happens if that comes around the corner tomorrow?

You know, stuff like that. Cause like these folks, they made the money, right? So they don’t need the returns that someone who is putting money in a 401k away every month for 30 years needs. So it’s a different mindset. So yeah, so there’s this more coordinated attack or effort that has to happen, but what’s so cool just over this whole theme of this podcast episode is that now that that is not reserved for the rich anymore, anybody can do this with the access to the information and advice that used to only be reserved for a few. It’s true. And I think to kind of round out this list, you know, the things that we came up with that are high net worth clients that were perceived luxuries because they could afford them included simplicity.

I mean, I know we have a couple of clients that are on the Forbes list in our practice, right? It was always fun to see that their investment advisor showed up with three people in these beautiful suits with a fantastic gold bound book that nobody had time to look at head down to the holdings. And it was, I may say gold bound. It was a massive volume to go through any statement they wanted from the 15 different trust accounts. And, you know, for us, we showed up with our single page asset map and said, here’s, here’s all your stuff. They love that, right? They were like, okay, move this box over here, draw this.

They draw line. Honey, here’s where everything is. Okay, great. The point about that is it not to say whether asset map is something that is a requirement of wealthy people. What it really did kind of show is that the executive summary of just bubble this down to one or two pages, you can afford to pay for that when you have a significant amount of money. Whereas I think the mass market that has been held back from them because we want to deliver value in the number of pages we print. And that’s not necessarily helping them because a wealthy individuals got so much complexity, they’re paying for simplicity.

I think the market now is basically has no attention left to read these massive reports. And so simplicity is really forefront these days. It is going to be a necessity for us to simplify our that communicates how somebody is doing financially from a wellness perspective. Okay. What clients want to know is, am I doing okay? Am I on track? They’re not asking, you know, what’s their holding position in government bonds? And, you know, what I don’t, I can’t even think about it, right? They’re asking for, am I okay? Can you communicate that and what actions I should be taking or be thinking about? 100%. And everyone’s thinking that.

And to your point, like the high net worth individuals have been thinking that and asking for that a long time, the tools were in place to do it for them. Now the tools are in place for everybody. It’s true. So if you don’t offer it, what happens, Adam? Good question. If you don’t offer it, I’m sure there’s 10 other people that are available that have done good marketing or awareness technically that that will solve this problem, probably for cheaper. And that’s a really good point because, you know, interestingly enough, wealthy individuals tended to pay or the ultra net worth tended to pay marginally less per dollar managed because they had volume.

And so I think we still see a significant amount of compression in revenue. It was a luxury to be able to charge one, one and a quarter, 2% for assets management. The necessity going forward will be, you need be seriously cost competitive or list out what you’re providing for your AAM charges. If you’re doing asset management or if you’re doing insurance placement, what am I going to get as a result of doing this business with you versus choosing the commodity next door that’s doing the same index approach or active management or whatever process you believe is differentiating yourself. That’s an excellent point. You have to show that value because of the, we’ve talked about this before, the products and services have somewhat been commoditized at this point, if not completely.

But another piece that’s so important is access to the right advisor. Yeah, at the end of the day, if I have a hundred million or a hundred dollars and then point in fact, because as you listeners hopefully know, Adam and I are still actively practicing as advisors as well is that I had a new client meeting yesterday, never met him before. And we didn’t talk about money a whole lot. We talked about like life and do we like each other and do we have similar values and like, does he like my style and vice versa? Because if we didn’t connect on that level, well, it doesn’t matter what my offering is and my value add because we’re never going to get to it.

That’s a great point. And I know that that’s been true on our list is high net worth clients always expected significant access, human access. They want a relationship. Yes. They expect communication. They actually expect proactive communication. You’re supposed to be calling them. They don’t call you. You call them to tell them what’s up and what decisions need to make. Oh, and what you decided to do. There’s a difference between, I think this mass technified audience of I’ve got 200 clients and I sent them out an email that was good enough or a newsletter and they got their automated statement. And if they want, they can log on to their portal and they want to self-service.

That’s fine. That sounds kind of like a stop and shop. I don’t know. That doesn’t speak to me in terms of, we’ll call it human value. The luxury there is, and that might actually wind up given the fact that nobody has any time anymore. The luxury that maybe still costs money is having a human connection. So if you’re planning on charging a significant amount, or at least keeping your cost of doing business with you high, you best be providing some serious human value, not just tech because tech is, and although it is, as you said last time, it’s table stakes. The value that we can still charge is going to be in the human experience.

No question. I mean, these people share all very, very personal parts of their lives that are not financial, right? And if we can’t connect on those levels and empathize and build trust on those levels, then my tech and whatever else they have just doesn’t matter. Cool. Well, we should talk about this. I mean, because briefly, you’re working on a project to try to address this kind of, how do you connect a consumer to the right kinds of advisors? What’s the preview on that and where you’re taking it? Yeah, this is a fun project. There’s a beta prototype out in the market space right now that we are offering.

So if you’re curious and you want to learn more, send me a message. But really, we’re rethinking, all right? That’s what I love about this podcast. We’ve completely rethought the whole connection process between consumer and advisor from both sides of that equation because the existing solutions at this point forgot one key element, the human element. And we just got finished talking about how important that is. So stay tuned for that. We’ll get to that later. You can always send me a message if you want more. But yeah, I mean, that’s the missing piece and we’re trying to fix it. Yeah. Well, it’s great. You’re taking the initiative to address a problem.

That’s what we do, right? We just talk about it. We fix it. We do it. That’s great. So let’s talk about some takeaways on this. What can you, as an advisor, decide, research, delegate, or do that we might offer you some guidance or mentorship around these concepts of luxury and necessity? Derek, do you want to take it away? Yeah. I’ve got a couple of thoughts on this. I think we have to bring more focus onto the relationship aspects. This is kind of a nice segue from the stuff we just unpacked is that there’s a humanity part of this relationship. When we have more access and now the value in that 200-page report is gone.

So show me other value by being a human being that you understand me. And we have to be better about that as an advisor community doing that through our marketing channels because that’s how we differentiate. That’s how we show our extra value. The tech stack’s important, but it isn’t the end all be like it used to be, but it is there to facilitate that human connection. That’s really important. You got to answer the why question. Like, why should a consumer work with you? And it’s not just because you offer AssetMap or some other great tool out there. There’s more to it than that. And then don’t commoditize yourself with the tech.

We have to be subject matter experts, but also relationship managers, experts, if you will, to win at this game, in my opinion. No, those are all, those are great takeaways. What are your thoughts? I know that you’re pretty passionate about this topic. So tell me a little bit more like what do you think some advisors could do take away from this so they could go do something? Well, I mean, if you do believe that the luxuries of the high net worth clients are becoming the necessities of the mass market clients, which is where a significant amount of the opportunity is, that emerging wealth, the boomer population that is going to transfer billions, trillions of dollars from retirement accounts, as well as a business interest to the next generation over the next 20 years.

My belief is that every financial engagement needs to lead with advice. It just makes good sense that we do full holistic fact-finding as fast as we can for every prospect and every client. And the reason is because it’s defensive as much as just good business process. In the next couple of years, the number of planning and planning light and speed planning tools direct to consumer that are coming available is going to be overwhelming. That’s just the next couple of years, which means clients are going to be able to run their own retirement plan. They’re going to be able to figure out whether they’re underinsured. They’re going to be able to know whether they need to put away money for education funding.

This kind of Excel-based run is a commodity, but it means that we need to add value by thinking holistically. And that means everyone needs advice, not just the product. Product is going to get commoditized even further. So it’ll just be robo-distribution as we talked about in a couple of podcasts. So my point is to you is if you’re not leading with advice for every client, not just your A’s and B’s, that’s a missed opportunity. Find a way to bring that into every single conversation, even if it’s fast. Number two, I think everyone needs to decide that they’re going to provide guidance unsolicited. That means the rebirth of what I call proactive advisor.

We need to reach out to clients and say, hey, I’ve been thinking about this. What are we going to do about long-term care? Is that a plan? Do we have a plan tackier? Let’s unpack that together and spend 15 minutes. People don’t need full hours to get together. You can meet with somebody for 15, 20 minutes and start a conversation and research it in the backend and then follow up via email today. We can be doing a lot of things at the same time. So I think we need to get into this habit of providing human advice unsolicited. And I think the way to do it is also to compete, make the luxuries standards for your customer, right?

Decide that with technology and with that extra time savings, you can start to deliver more humanity. You might choose to actually simplify your client base and cut your client base. We’ve all talked about, and Derek and I personally have chosen to do this. We had a lot of clients that helped us get to where we were and then realized that, wow, we can’t handle it. We can’t deliver the level of service we want to for the lifestyle we want to have. We need to make hard decisions. That means either growing your firm and bringing in the next generation and delegating or choosing to say, I’m going to be very specific about my criteria.

But either way, this is going to be in many ways, both a land grab of opportunity for people that want advice and are willing to pay for it, as well as a hyper competitive environment for the high net worth clients that can now demand the next level of luxury beyond what we’re used to. That’s what’s about. What’s the next luxury then? If all this has just become necessity, it’s going to be more humanity. No, it’s going to be more humanity because the tech is going to keep moving. Tech is going to keep accelerating faster than our humanity. So what will be the antique value of a human’s relationship will be even more valuable than ever before.

Because 90% of my day is tech, but 10% is really intimate. So that will be the most valuable piece in my opinion. Now, this is just my opinion. Of course, I’m right, but that’s my opinion. I’ll second your right there. I think that’s good. But I think this is probably the most powerful point there is, you know, it’s interesting. The advisors that standardize or necessitize, if that’s a word, luxuries will be faster to growing at this party than the others. That’s it. You’re right. See, we always gave the best moment like what we just realized. We have to talk it out. Isn’t that funny about this?

I hope you’ve stuck with us this long because if you just heard that moment, replay it, that was it. That was it. It was organic, not scripted, and Adam’s awesome. You’re awesome for agreeing with me. That means you agree. See, brother, that’s how it works. That was our series on your actions, hopefully. So hopefully you wrote those down or remembered them. We’re going to delegate them. Let’s talk about our community question in the last five minutes of our podcast here. Yeah, I’m going to ask this to you, Adam. I think this came in to both of us from Phil in Colorado. So I want you to answer this for us here, Adam.

Dear Adam and Derek, I’ve been working with many clients who over the years share that they have a tax professional or other family member in the business that they work with already. Sometimes they have years of a relationship already built up. I don’t always agree with their other professionals’ advice or management. How do you communicate in a way that is not off-putting to other relationships but helps show that you are looking out for them? Well, thanks, Phil, for doing that, for taking the time to write that. And remember, you can do that by just writing in LinkedIn to us or emailing us or figure it out.

Send us a note. The reason we chose this question because it’s interesting. It was different, first of all, than the other questions. And we’ll get to the other ones for those of you that did submit. Thank you. The interesting thing about this, and it relates to this luxury and necessity question, if in fact we’re moving towards a place where financial advisors in general or professionals are part of or responsible for team of professionals, my belief about this in my practice has always been, I take charge early. The key to this, and here’s why, I believe that most clients of financial advice are asking for a confident leader, at least a more confident and competent leader than they are themselves with respect to making financial decisions.

So they’re not looking for someone who’s not going to make me feel bad. They’re looking for someone who’s going to tell them straight, be empathetic and deliver and help them guide them towards a better place than we found them. And the reason why that’s relevant to this question is because we do know that lots of individuals have other, maybe well-meaning or other professionals that they’ve adopted over the years. I got my uncle’s financial advisor because I didn’t know where else to go, but never calls me. I haven’t talked to my other broker in 50 years. But I have a personal relationship so it’s awkward. I don’t know if I want to fire them because I’m going to see them at Thanksgiving, but can you give me advice in the context?

And so unfortunately, as financial advisors, we’re often put in a situation where we have to actually navigate this kind of emotional relationship with maybe disappointing somebody or giving them other guidance. And one of the ways that I’ve always done that, and I use my process to basically ask a question, which was if somebody had recommended guidance on a product or a strategy that I didn’t understand or I really seriously wanted to question, I would ask the client, what is the strategy about this? What is that strategy? What did that annuity intend to do? Why do we have it? And I would ask a significant number of times, what is the purpose so I can work and coordinate with it?

Because I have to make other decisions if that is a legacy vehicle, a golden, what did they call it? A sacred cow. I can’t move that. And I would get enough clarity so that the client could tell me with legitimacy why it made sense. And oftentimes, they recognize they can’t tell you why they have it. And therefore, they have to either agree that they’re making a decision that doesn’t serve them and it’s now without the open. They can’t just keep it kind of private to their own. They had to now own it and then tell me that that’s an okay situation. I have to work in their best interest.

That means I have to point out when I think they’re doing something that doesn’t serve them. I’m curious if you’ve dealt with this before. I have, but I think I like your style and way of doing it. You’re helping lead, lead again, right? I love the word, right? Your client down that path fill if you do this, where they can come to their own conclusions like, hey, maybe I shouldn’t have this. Maybe I shouldn’t have done it this way. Maybe Uncle Bob didn’t really know what he was doing. And it still might be an uncomfortable separation. But then even Adam and me who’ve done this before is like, now you ask Uncle Bob to come in and start part of these planning conversations, right?

And then Uncle Bob figures out pretty quickly, man, I’m kind of out of my league here. I’m still going to come to Thanksgiving, but I think that, you know, Phil, you’ll be better served over here with Adam or whatever. And if you have it happen organically like this, now you’re not the bad guy anymore. You were just opening up communication channels and really at the end of the day, we work for our client’s best interest. So let’s figure that out, right? I love that you brought this up because that’s the next saving grace that I would have said, which is for Phil, is invite them.

If they’re really that important to this household, which is now your client, then invite them to be part of the discussion. Now, seriously, you could clearly, if it’s on your turf, you can play the leading role, right? You set the agenda, but you create space for other people to tell us why and to validate it in a place of respect so that you’re clearly not making them look bad because that is going to backfire on you, right? There’s a reason there’s enough business, as you’ve always said, for us all to play. And it doesn’t have to be an all or nothing unless that’s your strategy.

I don’t know, maybe. But the point is that it’s better to coordinate these professionals. And it really started us thinking about what we want to talk about next. And this is an important time, I think, for all of us because there’s so much changing drastically. In previous podcasts, we’ve recommended that you need to know who you are. You’ve got to know your identity going forward, what your firm’s going to be about, what are you going to do, what are you not going to do, how are you going to market that? How are you going to let people know what your why is, why you exist, and what value you provide?

How are you going to do that, right? We’ve challenged many of you to ask this question. I think we’re going to spend the next program talking about this concept of who’s in charge, rethinking whether we are CFOs for our clients or whether we are CEOs. Think about that. Yeah. I want to jump in right now, but I’m going to hold my tongue for the next one because this is a great topic. Well, I hope that for those of you that are going to join us next time, and we hope that all of you do and are subscribed to the podcast, there’s lots of fun analogies already.

We’ve already started thinking it out about this. It’s really going to be about leadership and the role that we need to have in leading with confidence and, of course, leading with advice. I think that this will be fun to talk about next time. It’s a great parlay. Thank you, Phil. We’ll be sending you a t-shirt with Rethink on it. For those of you that do want to get connected with us, please make the opportunity to LinkedIn, connect with both Derek and myself, and, of course, start the communication so we can make this about lifting the whole community. Derek, any parting words for you? No, I think you said it really well.

I know we’ve gone over time here a little bit, and we don’t want to keep you from cleaning your kitchen. Thank you. It’s time to clean the kitchen. We’ll get back to it. But no, this has been a great topic. I hope our listeners really got some things out of this, and I hope you’re rethinking things. This is part of this. We want to spur you on to like, huh, never looked at it that way, but I like it. Yeah, so anyways, send us questions, connect with us, and just have an awesome day. All right, brother. Have a good one. Good as always. You too, buddy.

Bye. See you at the next one. The content has been made available for informational and educational purposes only.