Five Flavors of Financial Jell-O

Steve Gresham

Financial Advisor Magazine

January 2, 2020


One of the few effective television commercials for the financial advice industry is Charles Schwab’s piece featuring a baby boomer father and his millennial son. They’re having lunch and talking about how it’s time for the son to invest. He should, of course, talk with Dad’s “broker.” The son has questions, like what’s the cost and does the broker still get paid if Dad doesn’t make money? Dad’s line is the classic rationale, “The world doesn’t work that way.” His (smarter) son schools Dad. “The world’s changing.”

For an industry with so many smart people, I’m frequently baffled by our lack of simple clarity. It’s almost as though we intentionally make things complicated for our clients—and certainly for our associates. Do we think that adds mystery we can untangle for a fee? We often like to blame regulation, presuming that it’s a real excuse. Pause on that for a moment. Some government authority makes us do this thing this way and we haven’t figured out a way to make it easier for you or your advisor, but you should trust that we are really smart about investing your money. Wow.

There’s an old marketing saw that financial industry brochures all have the same 50 words, it’s just that they’re arranged differently. There are certain phrases most likely to stop a meeting cold if someone asks, “So what do we mean by that?”

If we insist on using language not found in the everyday lives of non-financial people, we have to spend time defining these words—in their words.

Here are some of the phrases I’m talking about.

Wealth Management
“Wealth” is relative. Some clients with $200 million act like they’re broke while others with $500,000 think they’re set for life. The most important aspect of being a wealth manager is defining success in the eyes of the client. In other words, to each client, what’s “wealth”—and how does the client define your role in managing it? At a minimum, we need more focus on net worth instead of just assets, and net income instead of just dividends and interest. Real life is a balance sheet and an income statement—the costs for health care and taxes matter a lot.

Can you provide leverage for limited savings by purchasing more death benefit, longevity protection or health care through insurance and annuity products? What about the home equity? Isn’t this all common sense?

Financial Wellness
At one end of the spectrum, “financial wellness” means a holistic approach to clients’ longevity that incorporates the impact of health and health care into their financial plans. But the phrase has been dragged down by some firms to describe a superficial financial plan—which is only a fraction of the holistic health and wealth scope. True wellness is the meaty challenge of successful longevity, planning and preparing for the inevitable life transitions of where you live, how you finance health care and how you get around. The preparation for this is woefully lacking among aging baby boomers, so watch wellness take a leading spot among considerations.

Artificial Intelligence
This one is more for the corporate managers out there. It is neither intuitive nor universally accepted that more data will make life better for a firm’s clients or its employees. An advisor should spend more time understanding the benefits—again, starting with the basics first: AI can help identify an advisor’s “next best call,” but someone has to make the call. And the data has to be used for good purposes that have an immediate impact on clients and improve advisors’ ease of doing business. AI can remind clients to take their required minimum distributions, update their retirement plan beneficiaries, populate forms and facilitate smoother transfers and money movement. Don’t wait for it to split the atom. And be very aware that any new procedures that replace human effort may be interpreted by some clients as your firm becoming less “personal,” when of course the best intended uses of AI are to make sure you are more thorough and consistent.

Worse, some employees may fear talk of AI and further automation because they hear “cost savings and head count reduction.” Be smart about AI and tech spend overall by focusing your attention on exactly what will be better, by when and by how much. And make sure everyone knows the positive impacts on them.

“New” is not always “better” to a lot of people. Not everyone upgrades their phone on the new software release date. This is an especially important concept for fintech firms pushing companies to try new stuff. And by the way, do you really use the stuff you already have? How do you know?

Your new priority should be to fix the basics first. Consider LPL’s recent upgrade of new account opening procedures that require 30 fewer entries and use prepopulated data fields. This makes the daily drudgery simpler and easier and you can watch the lift in employee satisfaction spill over into better client satisfaction. Now that’s innovation.

Customer Experience
This is the hottest of all our Jell-O labels—and has the widest range of meanings. Instead of debating all the possible needs and wants of myriad client types, I think it’s most important for advice firms to empower dedicated leaders to be client advocates and company watchdogs. With good hearing and teeth.

Your efforts at improving the customer experience should primarily aim to make things simpler, easier and more effective—for the clients and for the client-facing associates. Friction removal in a fast-changing industry is a never-ending task that is still not well supported by most organizations. I’m old enough to remember the U.S. manufacturing product quality wars, when T-shirt maker Hanes left a note in every package from Inspector 12, the quality assurance person. The advice industry could use an Inspector 12 in every firm. Do you have one?

The second critical design element for the client experience is to select a key “persona” everyone can understand: Focus on the person who is your ideal client and top client influencer. And build to suit her.

There’s real urgency for cleaning up our act. The bull market is sputtering, clients have spread their assets across multiple firms—and the client demographic is aging and worrying and consolidating. Take action by engaging proactively and making sure you haven’t fallen into the Jell-O. Smart phraseology without clarity is usually a slogan in search of a business plan.