Kurt Dupuis:
Welcome to The Whole Truth, where two wholesalers help financial professionals build great practices and thrive in a rapidly changing industry. We'll bring you the stories and voices from those on the front lines of this change, and we'll have some fun along the way.
Steve Seid:
We're building a community of financial professionals who are growing, forward-thinking, and want to get better. Thanks for listening and contributing to the discussion.
Disclosure:
The views expressed herein are those of the participants and not those of Touchstone Investments. We are joined by Ben Alge, a Divisional Vice President of Touchstone Investments.
Steve Seid:
And welcome everybody to The Whole Truth in the Bay Area, California. I am Steve Seid.
Kurt Dupuis:
And if my internet keeps working, I will not be from some bunker or cave in Afghanistan, as the guys were previously joking. We'll see if this fiber optic internet's going to keep working.
Steve Seid:
And we have Ben on the show. Ben you're, I assume, coming in from Ohio, right?
Ben Alge:
Back in from Cincinnati. Thank you guys for having me on the show again. Great to be back.
Steve Seid:
You're the unofficial third member. You're the Artie Lang, if you will, of this show. I don't know if I'm Howard or Kurt's Robin, I don't know how that breaks out. But you're definitely the unofficial... Because this is number four, right?
Kurt Dupuis:
I'd love to explore that a little bit.
Steve Seid:
This is number four, right?
Ben Alge:
Yes.
Steve Seid:
I'd probably be Howard. I'm pretty neurotic. You might be the more rational one, Kurt, I don't know.
Kurt Dupuis:
And on color commentary, there we go. I like it. I'm excited about the Ben bump. We always get the Ben bump because he gets his mom to download the episodes he's in 100 times.
Ben Alge:
The entire family running on all systems. The kids love to listen to it. The big Whole Truth fan club here in the Alge household.
Kurt Dupuis:
Love it.
Steve Seid:
We don't hate on any listeners at all. They're supposed to be financial professionals, but if they're just the Alge family, I'm okay with that.
Ben Alge:
Maybe my kids will be financial professionals. If you ask my son…
Kurt Dupuis:
That’s right!
Ben
…what he wants to do when he grows up, he says, "I want to do what dad does." And you ask him what that means and he has no idea. But most people don't know what we do, so that's not that out of the ordinary.
Steve Seid:
That's right. But this is episode four now, right?
Ben Alge:
Yes. We did the “Challenger Sale” initially, the “Behavioral Finance” episode, and then co-hosted with Tommy Grout in your absence. The “Guys from SA-720”, John Choate and team. And so this is episode four, and excited to be back.
Steve Seid:
No, Kurt's right. We study these metrics not too often, but there is definitely an Alge bump. It's a real thing. It's a real phenomenon.
Ben Alge:
Well, I did hear though that my previous episode is no longer the most downloaded in…
Steve Seid:
That’s right.
Ben Alge:
…The Whole Truth history. So I figure if I just get on here enough, I can add up all the downloads and retain the crown.
Steve Seid:
You were upset that marketing pushed. Well, Liz Lenz is the number one downloaded and you were upset that marketing pushed that on social media but not yours. And that is the reason, right?
Ben Alge:
That's exactly what happened.
Kurt Dupuis:
Not bitter at all.
Ben Alge:
That's the power of digital. Not bitter at all. The power of digital marketing working against me. Swimming upstream.
Steve Seid:
I'm excited about this episode because we got a few great topics to touch with Ben. In segment one, we want to revisit a little bit of that conversation that you had with John Choate and the other two folks from SA-720, the Navy SEALs. Specifically around business development, because that was teased in terms of how they approach it and what they think about. And so I want to revisit what they tease, but also get a little bit deeper. Is that fair?
Ben Alge:
Sounds great.
Steve Seid:
Yeah, we'll do that segment one. And then segment two, the core of the show, is going to be about client reviews. And I want to say upfront, thank you to everyone who participated and gave us feedback on client reviews. The way we tackled this was Ben, Kurt, and I each talked to a bunch of financial professionals, you wouldn't call it statistically significant, probably a few dozen who we spoke to. But we got some really good feedback on client reviews and we're looking to share. And Ben's got a nice segment game called the facts, myths, and opportunities around client reviews. That is where we're headed. Let's start by jumping back into that Navy SEAL episode. They teased a different way to think about growing your business. You say there's two inescapable truths upfront before you even get into their content. Maybe let's start there.
Ben Alge:
Happy to. And so as the listeners know, we've done a lot of practice consulting work, over 4,000 teams we've worked with around the country, becoming more efficient, more scalable, but ultimately it typically ends up with growth. And in looking back over those engagements, we've studied these teams, the ones that have grown successfully and deliberately, not a client hit the lottery or you found a diamond in the rough, but actually have grown systematically over time. We found two common features amongst every one of those teams. The first was that the team itself had capacity and scalability within the practice to bring on more clients, and so weren't putting new clients on a chassis that couldn't support them. And that seems simple, but it's actually critically important. It really gets back to the heart of everything that we do in practice consulting around becoming more efficient, more scalable, having the right number of clients, the right service model, all those elements.
But those have to be in place before growth could take place. Once that's there, the other commonality was they had a deliberate and defined repeatable process that they follow. There is a process and workflow they followed to ensure that they were continuously filling that pipeline, but then also tracking where they're falling short and trying to improve the process throughout.
Steve Seid:
If I can, I want to comment on each of those things, because I totally agree with each of those sentiments. The first one about capacity, you'd think, well, of course we can take on new clients. Of course we can. But that's not the state of the industry. The state of the industry is FAs with too many households, too many investments, not enough scalability. Often, not having the right infrastructure. How many teams have you seen now that are struggling to get support staff? This is not a new problem. We had the episode on Supernova, that book was written, what, in the 90s? It really is something that don't breeze by and say, of course we can take on new clients. Now really think about that infrastructure, because that's important. And then on the second one, I am stunned of how few teams have any process around business development. It's almost the vast minority that have a process. These are the activities, these are the measurables, these are the outcomes. I don't see it that often.
Kurt Dupuis:
Well, to be fair, that's also why we have the practice consulting angle, right?
Ben Alge:
Yeah. Question that we like to ask on the process side is, are you growing by chance or by process? Are you hoping somebody comes in the door and brings in assets, or are you driving that? And that could be a lot of different things. There's a lot of teams that grow strictly by referrals, and that's fantastic. But you can have a process around referrals and ensuring that you're referrable, and what you ask your clients to do and how you can be referred. And so it doesn't need to be the same process, doesn't need to be our process, but a process does seem to be a common trait amongst those that have grown successfully.
Steve Seid:
Yeah, absolutely. Okay, so with those inescapable truths, now let's talk a little bit about the SA-720 team's views on growth, what you've taken away. What are some of the key points? First of all, why are Navy SEALs having an opinion on this that's relevant to our industry? What's the connection there? And what are some of your key takeaways, Ben?
Ben Alge:
The genesis of this is actually pretty interesting, because the folks at SA-720, they do a lot of work in our industry consulting, bringing the Navy SEAL spin, the intelligence community spin to financial services problems. If we all agree that the Navy SEALs are one of the highest functioning teams in the world, what principles can we take from that and apply to ourselves? And so when it comes to acquisition, think about what the intelligence community has to do as far as identifying and bringing in assets, resources, spies overseas. You can't just put out a note in the local paper and say, "Hey, spies needed. Please sign up here." There has to be a process to identify these folks and bring them in. That process for that group is the acronym SADRHT. They've worked that a little bit to make it more friendly to what we do, and the process they use is now called SABRE, Spot, Assess, Befriend, Recruit, Engage. But it's a process that advisors can follow that fills that funnel and allows you to track their progress.
Kurt Dupuis:
The best application that I've seen is when you have weekly team meetings, you look at this prospect list and you see where in that SABRE process different people are. It moves linearly from left to right, “S” to the “E”, and you can identify where people are and then discuss next steps on each prospect. Which is about the most robust system I've seen anybody in this business use.
Ben Alge:
And whether you use our process with SABRE, or one that you built yourself, people think about having an acquisition pipeline, this process. And the first thought that comes to mind is, well, when the next prospective client comes in and wants to talk to us, we're going to track their progress. And that's great, you should absolutely do that, and start day one. But the more actionable utilization today is to take that tool and then look at everyone who you've tried to recruit over the last 18 months that's been unsuccessful. Load them in and say, where do we fall short? Because just to say we didn't land that client doesn't do a lot to help the team get better in the future. To say we didn't land that client because they fell short in this step of the process, then allows you to work with either that team member or the team as a whole to say this is how we're going to get better.
Steve Seid:
Walk us through those acronyms again, if you would, and what they're used for.
Ben Alge:
Sure. The acronym that the folks at SA-720 come up with is SABRE, S-A-B-R-E. S is for Spot, how do you fill the funnel as far as individuals coming in for the acquisition pipeline. That could be referrals, it could be seminars and centers of influence, all those things. The A is for Assess, how you determine if the folks you brought in are going to be good fits. What are their motivations? Why would they be a good fit for your team? B stands for Befriend, make them a social relationship. Because let's be honest, there's certain individuals that just from a personality perspective, regardless of asset level, you may not want in your practice.
The R is for Recruit, that's changing from a friendship into a business relationship, which is where we see a lot of teams struggle with that conversation. How do I go from just getting drinks with someone to actually talking about managing their money? And then the last step is Engage, it's implementing the service model that you've promised that you're doing across the business. And ensuring that once someone comes into the practice, they stay. Because you've all heard the statistics around how much more cost-efficient it is to maintain a current client than it's to go get a new one.
Steve Seid:
There's one other one around assess that we use, or they use MINE. Could you spend a minute there?
Ben Alge:
Yes. And so within assess we're trying to identify, as I mentioned, motivations. And so the acronym MINE is what's used. Now, on the Navy SEAL side, it's MICE. But four key motivations for individuals. One is Money. Are the clients motivated by returns, fees? Hey, my returns are better than the person on the street, my fees are lower. The second, I, is Ideology. Think about things like ESG investing or values-based investing, if that's their key motivation. The N is for Niche. Is the individual motivated by working with others like themselves? I want to work with an advisor who knows that people who work in my industry or in my business, whatever that may be. And then the last E, is Ego. Is it because you're a Baron's top 100 advisor? Is it because you have a certain name on the wall when they walk in? Is it about your credentials? Is that the key motivator for the prospective client? And so, MINE is that acronym there when we go through the assessment phase.
Kurt Dupuis:
The takeaway, is if you don't have a prospecting process or a target acquisition process, I think we've got a really thoughtful way to go about it. If you don't have a system, reach out to us at The Whole Truth at Touchstone Funds, we'd be happy to help with that. We're going to transition now to our conversation about client reviews. And right off the bat I'm going to have a bone to pick. But stick with us, we'll be right back.
Steve Seid:
And welcome back. We are going to get into our discussion around client reviews. We do want to add one thing related to segment one. That process around business development, as we mentioned, was developed by the SA-720 folks, John Choate and his team there. And so, yes, we can help you with it. But also, if you want to engage with the team over there itself, we are happy to facilitate that conversation as well. We want to make sure that those guys get the credit that they deserve for helping us with this process. With that out of the way, what are we going to do here, Ben? You've got facts, myths and opportunities that we're going to go through here. How do you want to approach this?
Ben Alge:
Yeah. I found identifying those three categories is a great way to look at processes that are in place that are not new. Everybody's doing client reviews, this isn't some new concept, we've got to come up with ideas for what it could be or might be. But when you're observing 4,000 people doing something, what are the facts? What are the best teams doing? What can we copy? What are the myths that people think are happening, or doing that they shouldn't be doing? And then, where are the opportunities? Where's the green space that nobody's doing this, or very few are, that we can implement a little more broadly?
Steve Seid:
Good deal. Start with some facts. You want to start there?
Ben Alge:
Happy to. One fact I've come across on the annual, or even semi-annual review, is that it's the most important touch point that we have with our clients each year. And that needs to be reflected in the experience itself. White glove, multiple generations included. Even for clients who already love you, that you don't feel like you need to roll out the red carpet again because they're not going anywhere. This engagement is the cornerstone for referrals. It's the cornerstone for deepening the relationship, bringing in new assets. It really is the most important touchpoint, and so treat it as such for every client you have.
Kurt Dupuis:
Yeah. My fact is, this is an exercise in EQ and not IQ. One of the biggest complaints I hear from financial professionals is, I want to get away from just talking about the returns for the last quarter or the last year. The problem with that is it's been set up so much that that's what people want to talk about. That's what they expect to go sit down with their FA and discuss. But I think the more that we can add behavioral elements, open-ended questions, I might go on a couple rants about financial planning and how that could be integral to that and flip the script.
Which leads me to my big bone to pick. And I would like to submit to the court, what if we didn't even call these client reviews and we just called them strategy sessions? We're going to talk about what has happened, but we're here in this moment in time, and how can we use this moment in time to talk about future opportunity? It just seems to me even the language might need a twist here. Because if we don't want to keep looking in the rearview mirror, then we should change how we talk about it, we should change how we describe it. What do you all think about that?
Steve Seid:
I think it's great. I want to comment on what both of you said. What was the point that Ben was making about this being important, besides your prep on their account? How do you greet them? What happens when they come to the office? The entire experience around client reviews is critically important. And Kurt's point on even rebranding it I think is a beautiful one. Because just changing the language from, oh, this is just a review to, no, this is a strategy session. That terminology implies something different. Me as a client, I'm going to come to that meeting with a different approach when I hear strategy session. At least I would, and I assume others would as well.
Ben Alge:
It's a good point. And I look through what I receive as far as sample agendas from teams and what they do in these sessions, and everything I look at is more important than the actual investment returns.
Kurt Dupuis:
Yes.
Ben Alge:
And it's more important to clients, it's more important going forward. You think about changes in family dynamics, reviewing of the financial plan, the year in review, changes that the practice or new resources they’re bringing on, and then you have investment view and overlook. Everything before that trumps that investment review. And if you look at the studies, very rarely are clients leaving advisors because of the investment returns themselves. There's something else pushing that.
Kurt Dupuis:
I think about the best way to even start this conversation. Client comes in, there's pleasantries, there's small talk. But one of my favorite questions to ask to get the conversation going would just be, what's on your mind today?
Steve Seid:
Yeah, that came up a few different times. I have some things all over this list on what's a fact versus an opportunity. We'll probably get into some of my opportunities here. But when I was surveying so many of them, A, reflected precisely what you just said Kurt. That I want to talk less than the client, the more the client opens up, all that stuff. But how they facilitate it, there's a few different ways that they did that. One, someone who used the agenda, which we'll get to agendas, because I definitely will get there. But they leave a blank agenda item up front. They've got items 2, 3, 4, defined, but specifically put a blank agenda item.
Kurt Dupuis:
Visually it's right there.
Steve Seid:
Visually it's there. This is you. Other people have defined very specific open-ended questions. Some people came across broad like, what's on your mind? But some people had very specific open-ended questions that they take people through on different topics. You want me to get into a couple of my facts? I probably have longer lists. I got 17 bullets on each, I'm going to try to keep it to three.
Ben Alge:
Just trampling all over my structure.
Steve Seid:
Yeah. Okay, we were supposed to come with one fact, I might have come with three. Okay, that's fine. The first thing that I think is a fact is not only are these important in terms of the relationship, but these are critical in terms of documenting the relationship. Not only should that be a robust conversation, but you should have notes that you take that document the conversation itself. So that can be in your CRM, et cetera. But also, that becomes a really good thing to follow up on. Hey client, we met at this time. Here's what we discussed. You said this, we decided on this. That keeps everyone on the same page. And oh, by the way, everything is documented. And that is really, really important.
Kurt Dupuis:
Any good coaching, consulting interaction, you document, you write down, you talk about what you discussed, and there's next steps.
Steve Seid:
Yeah, use your CRM, use your financial planning software. Even if it's tedious, just do it because in the adverse situation where you get some client complaint, you're going to be really, really glad that you had that in place. One more thing I want to comment on, which, Kurt, you had mentioned before. What I was struck by when I was reading feedback from the people that responded is how different the emphasis on investments were. I'd say maybe it's a third where investments really were the central piece of their client reviews. Let's talk about the markets, what's going on in the economy. Let's talk about your portfolio, let's talk about how it behaved, let's talk about changes. It's not that was ignored in other places, but it wasn't always central. I was just surprised the degree to which there was variability in the role of investments in these client reviews.
Kurt Dupuis:
I guess I see that as if you're a hammer, everything's a nail approach. If you're not doing much planning and all you are is making recommendations for investments, then that's your tool bag. That's what you go to. If you're doing other things, there's other levers to pull, there's other ways to demonstrate value.
Ben Alge:
I come from an investments background, so that stuff speaks to me. But for most people not like us, that isn't the primary focus. And it's also a live by the sword, die by the sword thing. Investments come in and out of favor, and there's going to be times when you're not performing. And if you are the best advisor in the world and if you bet 60% against the benchmark, that's really good. So 40% of these engagements are going to be talking about negatives. It reminds me, we do impact reports and we do team consulting, and we always show the movement in assets and movement in revenue. And we've been doing these for a decade. Well for the first eight years of that we looked really smart, because assets went up because the markets went up. But you get into periods of volatility and then you say, well what value are you really adding if the investments are down?
And so we brought in things like the value of efficiency, the reduction in risk and things associated. The value of your practice given it's more advice-based versus brokerage to say, yes, your assets might move up and down, but here's the value you unlock just by going through this process. I think the same thing applies for a client review. Here's what we did to move you closer to your financial plans. Here's what we did to secure your future retirement. Here's the resources we added around Medicare, social security, whatever it may be. Those things are value-add, regardless of up or down market. And bringing them into this conversation is only going to be beneficial.
Steve Seid:
We're going to transition to number two, which should be interesting. What are some myths? And Ben, maybe you could kick us off there.
Ben Alge:
The myths are always more fun. The facts, people are doing it right, so let's tell what's going wrong.
Steve Seid:
Are we about to have a Festivus?
Ben Alge:
That's right. That's right. Let's air those grievances. My key myth here is the view that every client review is unique. And that might sound counterintuitive, because we're always taught that everybody's needs are different. Every client is unique, it's a unique person. And the content within the conversation might be unique, but the structure, the agenda, all that should be uniform across every client. And the counterintuitive piece here is that the uniformity doesn't degrade the client experience, it actually enhances it. And you can become an expert at doing one thing really, really well, as opposed to trying to recreate this 300 times over for every household, the client's going to get a better experience out of it.
And so the agenda that you put together, make it fluid enough that you can have conversations about different family needs, but family needs an agenda item. Investment review. Somebody might be a 60/40 versus 70/30, and you talk about that. But the fact that the investment review's going to be at this part of the meeting should be consistent across every engagement. What's interesting in doing the research for this, is when I asked advisors about this they were split about 50/50 about whether or not it's the snowflake model where everybody's unique and get their own deal, or systematize. When I asked the associates and the CSAs, they said almost universally it's all snowflakes.
Kurt Dupuis:
Oh yeah.
Ben Alge:
And advisors might think it's systematized, but they're the ones putting this stuff together, they're the ones getting these in the books, and that everybody has a one-off that's unique to them.
Steve Seid:
I do want to delineate something there, because I agree but. The financial professionals that have the service models that tend to get me excited have multiple meeting types. Let's say I'm going to see client A three times this year. One might be about a standard client review that you just described, Ben.
Kurt Dupuis:
Strategy session.
Steve Seid:
One might be about a strategy session. Good call, Kurt. One might be about planning, others may be about tax and beneficiaries. It's taking them through a process throughout the year. Now you can standardize that process, but I think there's some benefit to making these meetings a little bit different just for the client. Because if I'm a client and every three months I go in and it's the same thing, I'm like, do we have to do this every three months? Whereas, I think if you do a couple different meeting types over the year, that seems more robust to me.
Ben Alge:
You are absolutely right. And when I talk about systematizing the strategy sessions, as Kurt has so eloquently put it now, say that's once or twice a year that you're doing those. I want the agenda for those strategy sessions consistent across every client, I don't want…
Kurt Dupuis:
Correct:
Ben Alge:
…strategy sessions every month. But whatever that is that you are doing for your client, make that uniform across the client experience. And so different types of meetings, agreed. Plan those out for the next 12 months, give your CSA some foresight to when they're scheduling those things. But when you have a type of meeting that every client is going to receive, make sure there's uniformity so that there's consistency in terms of client experience.
Kurt Dupuis:
Well, let me get into my myth.
Steve Seid:
Yeah.
Kurt Dupuis:
Because I just realized I told you guys I didn't have one, but now here we are.
Steve Seid:
No homework Kurt, is that what we should start calling you? The-
Kurt Dupuis:
I've got notes.
Steve Seid:
He's holding up a list for our podcast listeners. Go ahead.
Kurt Dupuis:
The myth would be, we talk about supernova and that structure a lot, like four meetings a year, two in person, as a standard starting point for how to stagger these things. I think the myth is clients want to talk to their financial professional that much. And so right-sizing the number of strategy sessions and the type of strategy sessions is... Maybe that's the opportunity I'm bleeding over. But the myth is that clients want to hear from you as much as you think they do.
Steve Seid:
100% agree with what you just said. And I've talked to people about it. Okay, I want to touch my clients, but these A clients don't want to hear from me as much. Well, okay, you can design a process that touches maybe some clients less of the As than others, so you can delineate between As. But I challenge people also that don't just say, okay, well they don't want to hear from me, so we need to do less. That may be less in person.
Kurt Dupuis:
Correct.
Steve Seid:
But you better find ways to touch them in other ways that are useful to them, it may not be the in-person session.
Ben Alge:
And I'd suggest it's always better to have them opt out for less, than it is to assume they don't want it. And so you put together a service model that you would put up there to any prospect that you came across and offer that to your A clients. If they self-select and say, I don't need to talk to you that much, that's an easier conversation I think from a referral perspective. When they talk to their friends, how often do you hear from my financial advisor? Well, they offer to contact me every month, but for me it's just twice a year. As opposed to I only hear from them twice a year.
Steve Seid:
That's right. I'll throw a myth in here. And again, smaller sample size. You guys email us, tell me if I'm wrong. But it was not clear to me from the results that I received from the survey on this that people were spending less time with lower tier clients in these sessions. But it seemed to me that the meetings for the As looked very similar to the meetings from the Ds, from a time perspective. That surprised me. Because to me, I would probably want to spend half a day with my As, if I could. If they wanted to. And a pretty streamlined for Ds. I didn't see that in the results. Did you guys get any sense of that?
Ben Alge:
No, I didn't hear a discrepancy about that. And we've got data upon data around the inefficiency of bottom ends of practices. But the universal truth is you can't afford to spend enough time with the top end, and there isn't a small enough amount of time you can afford to spend at the bottom end, just given you know what they're paying you for an hour of your time.
Kurt Dupuis:
This is a great segue to another mini rant I wanted to go on. And both of these are teased from a podcast I listened to called The Perfect RIA, it's two financial professionals talking about their business. And they seem dogmatic about efficiency and systems, and all this stuff. It's probably why I relate to it. One guy wrote a book called, this is no sponsor, but it's called Delivering Massive Value. His point is, if you're delivering value in these interactions, whatever system you pick is going to be a good one. Whether that's 6/4/2, whatever the number of touches is, however frequently you opt in, opt out. If you're delivering value, people are going to want to spend time with you. That's point number one.
And I guess how you demonstrate it, because I've also heard examples of people physically building a calculator or putting in Excel, we just saved you this much in taxes. Or from this retirement strategy and optimizing for different retirement accounts, we optimized this much. And physically demonstrating the value that they're adding. The second part is this idea of surge strategy sessions, where you cluster them up and that's your only focus for several periods of time throughout the year. Call it a spring and a fall. So you get through tax season, you surge. Then surge in the fall before RMD1 and other conversations you're having towards the end of the year.
Steve Seid:
Oh, totally. I've heard that for sure. You can manage your year however you want. And if you want to spend the first quarter getting through the majority of your annual reviews, that seems rational to me. I don't see any issue with that at all.
Ben Alge:
And I think a lot of that's done by just force of habit or necessity, where people want to hear about the returns at quarter end or whatever it may be. We have to keep planning out 12 months in advance for all contacts. And what that allows you to do is your A clients, you're going to want to talk to those high search periods. But your Bs and Cs, those are ones to adjust. And we talk about revenue per market hour and how much your time is worth, but all hours aren't created equally either. Your hour of work during tax season is a lot more valuable to you than it is in the middle of July. And so shuffle some of those B and C clients into less busy times of your year, it doesn't have to be quite as surgy as it may be today.
Steve Seid:
Surgy, yeah, yeah.
Kurt Dupuis:
I like surgy.
Steve Seid:
Yeah, that's a good word. The key with these service models in my mind is that you actually stick to them. Because the moment that you start, oh, I didn't get it done. I didn't finish what I was intended to do for this particular month, then it starts to break and you're at square one. So design it in a way where you could execute it most effectively, and then have a backup plan as well.
Kurt Dupuis:
We've covered facts, we've covered some myths. Let's move over to opportunities, which is sort of its own Costanza. Let's end with the good stuff. Where should people be thinking about this and spending time and effort in refining the process?
Ben Alge:
Yeah. And so this will come as no surprise to those of you that either know me or have listened to the previous podcast I've been on, it's the appeal to the behavioral side. I thought I was going to be a behavioral economist back in the day until I realized that there's about seven of those jobs out there and I need to actually make some money. But depending on what study you read, the behavioral element that financial advisors bring to their clients adds anywhere from a one to 4% to returns every year. Basically, by protecting clients from themselves, you're generating one to 4%, which covers the cost of basically any advisory fee you're charging.
And this is just left by the wayside. And it goes back to, Steve, a point you made back in the fact section about documentation. When that client comes in and asks you about those meme stocks and why you're not invested in them, talk them off the cliff, document. And 12 months later go back and point to why you didn't do that, what happened in the interim. And so be able to provide perspective, keep them from hurting themselves in terms of buying high and selling low, as we are naturally inclined to do.
Steve Seid:
Yeah, and you said something really important there, which is to revisit that. Because I'll hear financial professionals say, "Well, I can't keep telling my clients about just the long-term as a reason they're underperforming." If you don't revisit that, then that just becomes an excuse too. So you should say like, "Hey, remember, we decided not to sell here. Here's why we didn't." And then look at what has happened since then. This is why we do what we do. I think the revisiting part that you just mentioned to me is the key element of it.
Ben Alge:
And if you haven't listened to that podcast episode, we talked the behavioral side, I encourage you to go back. There are little elements that are universal to all of us, and it's by our very nature we want to behave in certain ways. And it goes back to just evolution, that time and time again they’re going to come up when things like bank collapses. There's fear involved in that, but this isn't the first time a bank has collapsed. And so what can we see historically that's going to calm people's nerves? It's human nature when panic arises to want to sell and move to cash, and typically it's the worst time to be doing it. And so revisiting those elements and protecting clients from themselves, and then reminding them of what you did is a real opportunity that I rarely see on an agenda, “Behavioral Finance” in one of these strategy sessions.
Kurt Dupuis:
Episode 21, if you're interested.
Ben Alge:
Thank you, Kurt.
Steve Seid:
I think that's right. And I'll just make one comment. A lot of clients and most advisors would say, okay, over long-term you don't want to make short-term, irrational decisions. But man, as we sit here in March of 2023, and we are still in the mix of a volatile market, it surprises me how people are in these periods become so negative, so bearish. I don't know if you guys see that when you're out there, but I'm telling you I see it so much. And this is the same people that would say, well, when the market went down, what do you do? So it's just amazing how emotion just takes over completely, even if you're educated.
Ben Alge:
Exactly. Couldn't agree more.
Steve Seid:
I've got a top five list. I got five bullets here. Sorry about that in advance. The first was agendas. Did you guys get any feedback on agendas? Were people using them consistently? Did they comment on that at all?
Kurt Dupuis:
Yeah, I had a couple people send me their agenda and their flow. And there's something I still want to cover with that too. Yeah.
Steve Seid:
Did you get a sense that it was 50% minority, majority? Did you get a sense of…
Kurt Dupuis:
Utilization?
Steve Seid:
Yeah, of agenda in general?
Kurt Dupuis:
No, it's highly agendaed. I feel like there's some going to be some sample bias in here. Because the people that listened to the podcast and then responded…
Steve Seid:
Probably, yeah.
Kurt Dupuis:
…are going to... They want to know what other people are doing, but they already probably have a pretty good system.
Steve Seid:
Ben, did you get a sense of that?
Ben Alge:
Yeah. Sample bias, talking to bigger, more complex teams, most of those had agendas. Yeah, so I'd say more than not.
Steve Seid:
For me it was about half, which surprised me. Now some people are saying, well, I have an informal agenda. I guess what I would say is, and the opportunity is if you're not using an agenda, I think you should. And it's time management, but I also think it makes your process look better, come across better. And there was also this great quote that I got from one of our good friends and listeners, Kat. "Once I implemented agendas, I was able to make it more complex in less time." In other words, I got through more things, but I also saved myself time doing it. And I think that's what agendas do.
Ben Alge:
And just to piggyback on that, Steve. And not only do I see teams use agendas, but some of the best, they send out the agenda before the meeting.
Steve Seid:
That's good too.
Ben Alge:
So get it out to a client a week before and say, "Is there anything on here that I'm missing?"
Steve Seid:
Yeah.
Ben Alge:
Very few will come back and add anything, but it'll feel customized because they've had some time to see it.
Steve Seid:
Love that idea. Love that. Yeah. What should we add to the agenda? That's great. Opportunity number two, this I heard yesterday, and I don't even know if it has to do with client reviews. But it came up and I'm just going to plug it in.
Kurt Dupuis:
Strategy sessions.
Steve Seid:
Strategy sessions. Very good, Kurt. Thank you. I will get that next time, I promise. Clients that actually left you, this lady I was listening to, she's Baron's top 100 type person. And so she was there to talk about things that she does. And she will still, in her service model, if she's doing birthday cards for example, continue to send birthday cards to clients that actually left her or that she didn't get.
Kurt Dupuis:
Oh!
Steve Seid:
Prospects that didn't come in the pipeline, that didn't convert. And then clients that have left for one reason or another. They may have, “Hey, I think this is the right direction to go”. But then they have some experience that doesn't live up to it and “Oh, this person's still in front of me, still doing their thing”.
Kurt Dupuis:
Oh, wow. That’s good.
Steve Seid:
So this isn't a client review, I shoved this in this episode, but that was an idea that I thought was worth passing along.
Kurt Dupuis:
That's beautiful. Remember when we had that conversation about the perspective of abundance, or coming from a place of abundance versus scarcity? And that's how I approach wholesaling. Is I'm not super pushy because I just, you're going to be a client at some point, it just may not be today that. But that is very much in that same vein. I've never heard that. That's good.
Steve Seid:
See, I blow your mind every once in a while, Kurt. But I stole it, so it's not like I'm blowing your mind. That's all I do is steal the ideas.
Ben Alge:
All good. Ideas are stolen.
Steve Seid:
I'm not sure I have ever had an original idea, I'm going to be honest with you. But, anyway.
Ben Alge:
They've all been done.
Steve Seid:
Opportunity number three that I had was, I think we touched on this a little bit, but to spend some time going through the things that were actually accomplished, or the things that you actually did on behalf of a client. Because we assume-
Kurt Dupuis:
That's a good one.
Steve Seid:
... that the client knows everything that we've done with them, but they don't. Let's just refresh the things that we did this year. So we did A, B, C, D, here's where we want to go next. Man, it's hard to be one of these people that wonder about the value after you see those robust lists.
Ben Alge:
It's amazing how many teams we talked to that are uncomfortable with the fee they charge, and worrying they charge too much. When you list out all the things a financial advisor does today and compare it to 30 years ago, buy and sell stocks, to what it is today. Try to put a dollar amount by each one of those if you did those separately, it'll make you feel a lot better about what you're charging your clients.
Steve Seid:
100%. And there's some things that you actually have to share and specifically discuss with the client. Dax, who's been on our show from The Network, he's been on a couple different times. They have an annual policy meeting thing that they actually have to discuss with their client. Because if you are a fiduciary, it requires things that you have to review. But this is something that I think everyone should be doing. I said it was top five, it's top four. I'm going to leave it there because the last one we covered, just about having a repeatable process and a template. For example, one of our listeners, Kevin, creates a really thought-out template that he reviews with his team prior, and then uses that same template in a particular meeting. So that just gets back to process.
Ben Alge:
Steve, I'll add a fifth for you. Because what came to mind, just mentioning fees. One of the teams I worked with, as a part of the strategy session that they do, they make a point to say, "Please keep in mind, as part of the fee that we charge, we include a similar session to this for any friends or family that are interested in going through it." And so they make that seem…
Steve Seid:
Good call.
Ben Alge:
…as though it's part of the fee. That you're paying for this, so you if you've got friends or family we don't advise or have questions, bring them in, we'll do a full review for them. Now, generally the benefit there is, what a great resource. But then it becomes an additional benefit that you're providing in these sessions and not necessarily asking them for referrals.
Steve Seid:
That's a great way to think about it.
Kurt Dupuis:
I like that. It's not free, it's included.
Ben Alge:
That's right, included in your fee.
Steve Seid:
I like that a lot. All right. Well, I hope you enjoyed our discussion on facts missed and opportunities. If we messed something up, if you disagree, if you'd like to add, shoot us a note, thewholetruth@touchstonefunds.com. Or you have Kurt or I's email address, or Ben, shoot us a note and tell us what we missed and what you would add. I'd love to continue this discussion. And with that, we are going to transition to our Costanza Corner. This is The Whole Truth, stick with us.
Kurt Dupuis:
And welcome back to the Costanza Corner, where we like to end the show on a high note. Steve was just seen rubbing his hands together with enthusiasm, so I think we're in for a treat.
Steve Seid:
It should be noted for the record that we asked Ben if there was anything positive in his life that he wanted to use in this positive segment.
Kurt Dupuis:
Just throw it out there.
Steve Seid:
And he couldn't come up with one positive thing. I don't know what to say about that.
Ben Alge:
When everything in your life is going well, it's hard to pick out…
Steve Seid:
It’s hard
Ben Alge:
…just one area of positivity, so I’ll let you…
Steve Seid:
They're all winners.
Kurt Dupuis:
That's right. Pick winners and losers.
Ben Alge:
Couldn't be a luckier guy. Great job, great family. What more could you ask for?
Steve Seid:
That's exactly right. And to be fair, this has nothing to do with me, my Costanza Corner. And sounds like a lot of the Costanza Corners that we do, which is usually something around animals…
Kurt Dupuis:
Science.
Steve Seid:
…or science. This is not an animal one. Have you guys heard about, we'll start from the negative part, because usually the positive is solving it. You guys hear about these forever chemicals that are created? Things that are created in industrial processes are just things that we do that just don't go away and end up in water streams and stuff like that. You familiar with those?
Kurt Dupuis:
... like half-life of a billion years?
Steve Seid:
Yeah. They just don't go away, and then they measure the water and it's like, oh my God, we're drinking this stuff?
Ben Alge:
I think I have a few of those that are floating on the Ohio River now next to my house after that train crash. Yeah.
Kurt Dupuis:
Oh, yeah.
Steve Seid:
That clean looking river is even more dirty, is that what you're going to say to me?
Ben Alge:
The mighty Ohio.
Steve Seid:
I kid, I had my wedding on that river. I love that river.
Okay. All right. There's been a lot of talk recently about so-called forever chemicals and how society can use new technologies to remove these old toxins from the water and soils of the world. And so the positive note is we've got a solution from the University of British Columbia, can both filter out and destroy these forever chemicals, purifying water resources cheaply and effectively. I won't go into the details, but the way they've described this is they've essentially created a Brita that's a thousand times better than a Brita. That they can put in streams and that can filter this stuff out.
Kurt Dupuis:
Alge, I'm getting you one of those for your house.
Ben Alge:
Please.
Kurt Dupuis:
You can filter Ohio River water.
Steve Seid:
Yeah. Now that I realize that Ben's downstream, he needs one of those.
Ben Alge:
We're downstream from, what was it, East Palestine? We are downstream for sure.
Steve Seid:
Wow.
Kurt Dupuis:
Wait, can we talk about this? You had your wedding on the Ohio River? I did too.
Steve Seid:
I did, yeah. I had a small wedding. I had just a boat. Ben was there. Ben was at that wedding.
Ben Alge:
I was there.
Steve Seid:
And, yeah, we just got a boat on the Ohio River and I think it was small, was 50, 60 people. And sailed around for a little bit and drank way too much, and had a great day with my bride, who may or may not have gotten frustrated with me towards the end of it for spending too much time at the bar with friends. But it was a great time, I thought. What did you think of that? Did you have fun at that wedding, Ben? I think you did.
Ben Alge:
I had an awesome time.
Kurt Dupuis:
And is this your 10, or last year was your 10?
Steve Seid:
This is 10, thank you for remembering. Yeah, in June, this will be 10 years with Becky. She's tolerated me for that long, and we are doing a big trip that I am pretty darn excited about. Which, we are headed to Tahiti, to the South Pacific, a few of those islands. And we're going to play around. But most importantly, this is going to be the first time we're dropping MJ off at the in-laws. She's never been away from us.
Kurt Dupuis:
Oh. That’s a big deal.
Steve Seid:
A lot of folks that live around parents, we don't have it. My folks are three and a half hours away. Becky's are in Ohio. We don't have that. So she's really never been away from us, and now we're getting her out to Ohio and she's going to be with grandma and grandpa for 10 days. That's… ya know…interesting
Kurt Dupuis:
That's going to be interesting.
Ben Alge:
Takes about a day or two to disconnect from it, and then it gets real easy to be away. Two favorite things in the world are being with my kids and not being with my kids. And that’s about it.
Steve Seid:
Is that right?
Ben Alge:
That's right.
Steve Seid:
How did your kids... I can ask you guys this. When your kids were away from you guys for longer periods for the first time, did any of them handle it poorly, or did they end up being…
Ben Alge:
Loved it.
Steve Seid:
They loved it? It was an exciting adventure. Really?
Ben Alge:
Yeah. They're always with grandma and grandpa, and grandma and grandpa don't say no.
Steve Seid:
Okay. What about you, Kurt? Same experience?
Kurt Dupuis:
Yeah, I think my wife and I were both affected way more than the kids. Because there's this flow where you enjoy the freedom, and then you're like, oh dang, I actually miss the little bugger now. But I want to get back to this real quick. I want to share, in your positive ending here. I got married in Pittsburgh on the Monongahela technically. Right when the three rivers come together in Pittsburgh, which start the Ohio, so technically got married on the... I definitely proposed on the Ohio River, but up in Pittsburgh. And we're also 10 years this year in September.
Steve Seid:
Look at that, there's magic in that river! It's not just all these chemicals.
Ben Alge:
It's not chemicals and bodies, there's actual magic.
Steve Seid:
There’s magic. That's a good place as any to stop. There is magic in the Ohio River. Thanks everyone for listening. We'll see you next time.
Kurt Dupuis:
See you all. You can find The Whole Truth and subscribe for free on Apple Podcast, Spotify, or your favorite podcast app. We'd love it if you took the time to rate and review the show on Apple Podcast. It helps others find the show. And for more episodes of The Whole Truth, go to www.touchstoneinvestments.com/thewholetruth. That's touchstoneinvestments.com/thewholetruth. All one word.
John Choate serves as an independent presenter for Touchstone.
1RMD is an acronym for Required Minimum Distribution.
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Please note that this content was created as of the specific date indicated, and reflects views as of that date. It will be kept solely for historical purposes, and opinions may change without notice in reacting to shifting economic, market, business, and other conditions. Touchstone Funds are distributed by Touchstone Securities Incorporated, a registered broker dealer and member FINRA and SIPC.
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