Financial Planning

A Deeper Dive into Client Engagement

Bill Hortz, Founder of the Institute for Innovation Development, recently interviewed Alyssa Yocom, CPWA®, CFP® and Wealth Manager at Schultz Financial Group (SFG) about SFG’s approach to wealth management:

Hortz: Can you share with us the thinking behind developing your Four Capitals of Wealth approach with your clients?

Yocom: By working closely with our clients, we have seen how a client’s investments, or financial capital, impacts all areas of a client’s life including their health, psychological state, and intellectual pursuits. Financial matters are really a web of connections to all the other areas of clients’ lives. Financial matters can inform your estate planning decisions, tax strategy, retirement lifestyle, and even your view of yourself and the world around you.

We commonly say, “What good is your wealth if you don’t have the health to enjoy it or the peace of mind knowing that it is working for you in the right way?” And we understand that each client’s goals for their physical, psychological, and intellectual well-being will be unique. We aim to help clients work toward whatever goals are most important to them, such as taking care of the next generation or fulfilling charitable desires. Another way of looking at this was brought to my attention when I attended a behavioral finance keynote at a conference that was talking about budgeting. It was discussed how you cannot just tell a client to cut golf, for example, out of their budget because they won’t reach financial independence in retirement. Golf is not just an expense on a spreadsheet. Golf is their psychological connection to friends, their physical excuse to get out and exercise. This important perspective helps us think of financial matters in a different way.

We want to ensure that our clients are living fulfilled lives. First and foremost, clients hire us as financial wealth managers, but we believe that wealth only becomes impactful when it supports clients in these other areas: when it supports them to live a healthy, active lifestyle; if it gives them peace of mind that things are being taken care of the right way; when it means they can pursue being intellectually fulfilled. Looking at and acknowledging the whole client who we are serving is really how we think about these Four Capitals.

Hortz: How did you build your advisory business model to help support clients in developing their Four Capitals of Financial Matters, Intellectual Engagement, Physical Well-Being, and Psychological Space?

Yocom: Our financial services are the most important part of our business, but we also weave in discussions about the Four Capitals very early in the discovery and client relationship-building process. In addition to talking about the Four Capitals with prospects, our data gathering questionnaire addresses all four areas and asks clients to set goals within each capital. What do they want to do with their physical well-being, intellectual engagement, and psychological space? As we start putting together a Four Capitals Plan for a client, we integrate their goals in each of the capitals. The Plan not only provides financial projections, but it also connects clients with resources, including apps and other tools to help achieve their goals. Another way to look at it is that every financial advisor asks you about your living expenses, right? But when we get those living expenses, we don’t just take that spreadsheet of expenses and enter them into our financial planning software. We study it and let’s say we notice that they listed a miscellaneous membership fee. That leads us to ask, for example: What is that? Tell us more about it. Are they a member of a travel club or running club? We start to learn these client characteristics that can be used to better tailor our advice, recommendations, and the resources that we can provide.

Hortz: What other structural elements did you have to build into your practice to support your Four Capitals model?

Yocom: Technology opened a door for us to be able to implement the Four Capitals in a more formal manner. To increase engagement and more efficiently communicate with our clients, we are launching a client portal where clients can share their goals and progress updates, and we can directly link a resource to them. The portal does not replace periodic phone calls or human interaction from our team, but it is another medium to give clients access to information.

We are also building a knowledge database of resources that we have vetted and used over time. We spend a fair amount of time identifying potential resources and vetting them because we know that there is no “one size fits all” solution. Our whole team contributes to this process so that any one team member can leverage the database to serve client needs. The other structural piece we have built out is our human capital. We developed an internal culture document that has our internal values, and it describes our team. We look to hire people that live the Four Capitals in their own lives, that understand their importance, and are applying them. As an example, we have Nicole Ninteau on staff who has a PhD in Biochemical and Molecular Nutrition and Exercise Physiology, and a Master’s in Public Health. So, if someone wants to improve their physical well-being, we have an internal staff resource who can work with them.

The Four Capitals are never going to be evenly weighted at 25% each in a perfect balance, rather these things ebb and flow and we want to nurture each of those areas. As we find the things that each client is interested in or that is pressing in their lives right now, we endeavor to provide them with the appropriate tailored resource. This would directly translate to helping our clients lead fulfilled lives. Helping them is in our nature.

Hortz: A resource you created for your clients is maintaining a firm library and offering complimentary copies. Can you discuss your thoughts behind this labor-intensive effort and how you choose the books for the library?

Yocom: We have made a conscious effort to regularly communicate about the Four Capitals approach to wealth management. We mention it in our newsletters, blogs, and our other communications. When we originally put the firm library together, we had topical books on our shelves in our conference room. If something came up during a client meeting, we offered a book to the client, but then the pandemic hit, and our library went virtual. It has become very easy to deliver books as resources to clients, no matter where they are.

To grow our library regularly and consistently, we leverage our SFG book club. We meet a couple times a year and everyone in the firm reads one non-fiction book and shares a review on what it is about. We add books to the library that we think are appropriate for clients. That’s how we have built the library over time.

Another great benefit to this “labor-intensive effort”, as you say, is that our internal book club is really fun as you get to know your other team members and what interests them. It’s always interesting to see the books team members bring to the table. This is a great way to learn about each other, what strengths each team member has, and how to apply those strengths into actualizing the Four Capitals. It’s well worth the time. It ties back to our team culture, a key component in living the Four Capitals.

Hortz: Can you give us some specific examples of books you chose to share with your clients in each of these areas and what they represent for your clients’ Four Capitals journey?

Yocom: There’s one book that covers all four capitals that I think speaks clearly to clients: Ikigai: The Japanese Secret to a Long and Happy Life by Héctor García and Francesc Miralles. This short book is about the people of Okinawa and the lifestyle that affords them to have great longevity. Takeaways include eating healthy (fish/plant based), exercising, staying intellectually engaged and stimulated, and developing psychological space through the Okinawan village community that does things together on a regular basis. And oddly enough, it also touches on financial matters as well since everyone in the village chips in money into a community fund so that the community can help anyone in a dire financial situation. The book also encourages everyone to find their Why? – why they get up every morning.

The book could be so wonderful for connecting with our clients because it acknowledges how there are all these important areas in our lives that need to be attended to, but also that they shift over time. It does a great job of explaining how intellectual engagement can be satisfied by your job and career early on; but when you retire, it can be a challenge to engage that piece of your brain, your life, and remain active and fulfilled. We try to bring those concepts to our clients as they go through these life transitions. Life is always shifting. 

Another book we’ve chosen to share with clients is Atomic Habits by James Clear, which distills how to achieve goals by breaking them down to small attainable habits. We took the concept of the book and created a series of blog articles on how to apply the strategies within Atomic Habits to actually achieve sustainable goals in each of their Four Capitals.

Hortz: What other ways do you work with your clients to support their Four Capitals?

Yocom: One way we seek to tie the other three capitals into Financial Matters is by understanding a client’s charitable goals. One example that comes to mind is where we learned about a family whose family member had cancer and was treated for a long time at a regional hospital. The family wanted to give the hospital a meaningful thank you, so they added a charitable gift to the hospital to their estate plan. For this family, the gift isn’t just an estate planning tool, rather it achieves a meaningful psychological goal of theirs to give back. We pair that psychological goal to give back with our wealth management clients to think through how do we gift charitably in a way that makes the most sense for this client? We also consider the ramifications of this testamentary gift to the entire family. For example, we could flip estate plans on their head by mixing inter-vivos and testamentary gifts from various sources and, as a result, the client’s family could pay fewer total taxes so more wealth would stay within the family. The same charitable goal would also be achieved. As advisors, we’re compelled to dig into the why behind all of things our clients tell us. It’s about the meaning and reasoning behind it and tying the Four Capitals all together to maximize solutions and benefits for the client.

As another example, we hosted a cyber defense webinar for clients which addresses Financial Matters, Intellectual Engagement, and Psychological Space. Our guest speaker was a cyber security expert who was an FBI Special Agent for over 20 years. We paid the speaker fee and offered the complimentary webinar to our clients and their family and friends as well as our business associates.

Hortz: Any other thoughts you can share on the importance of financial services professionals developing more engaging ways work with their clients? What did you learn from how you engage with your clients?

Yocom: We would not be in this business if we did not want to help people. I believe finding creative and unique means of connecting with clients to help them leads to a more fulfilling practice.

What we learned as advisors is that it is critical to just slow down and really spend time thinking through a client’s situation. By applying our full intellectual engagement and time to the task at hand, we hope to uncover important things that will deepen the relationship and become part of this client’s life and legacy.

I feel sometimes that the typical “client engagement” – come to our suite at a baseball stadium, tickets to a basketball game, invite to golf tournament, etc. – all are part of some client engagement strategy, but I don’t know how sincere it is. Is this just another opportunity to try to build a book of business versus investing time and money in providing resources that demonstrate I am genuinely interested in you as a person and working in your best interest?

If your goal as an advisor is to grow your business as rapidly as possible and place all clients in model solutions, quite frankly, I think at some point in the future you are going to be outpaced by a robo-advisor anyway, so just let the robot do it. But if you are in this for the relationship and doing what’s best in the individual’s interest and providing custom solutions beyond what a computer algorithm can do, we believe it’s critical to slow down, dig deep, and spend a lot of time getting to know a client before coming up with some model solution. It’s not one size fit all for any of this.

The old industry standard way of looking at Know Your Customer (KYC) has to be substantially upgraded. What we do to deepen our knowledge and relationship with our clients goes to show the kind of overhaul that the traditional KYC thinking needs to go to. You need to be a coach, a consultant, an advocate, a teacher, a friend.

Disclosures

Schultz Financial Group, Inc. (“SFG”) is a registered investment adviser with a primary business location in Reno, Nevada. Registration as an investment adviser is not an endorsement by securities regulators and does not imply that SFG has attained a certain level of skill, training, or ability. The Institute for Innovation Development (“IID”) is an educational and business catalyst for members determined to grow their businesses in a world of constant change, which is dedicated to educate, arm, support and motivate team member firms in making innovation best practices a vital cornerstone for their business growth. SFG and IID are not affiliated, meaning that neither entity controls the other entity, and they are not under common control. IID is not an SFG client, and nothing in this article is intended to be an “endorsement” of SFG by IID. Neither SFG nor IID compensated the other party for the publication of this article. However, SFG is a “member firm” of IID, which pays membership fees to participate in IID activities. Therefore, the recommendation by IID that an individual engage SFG presents a conflict of interest because it could be made based on IID’s interest in continuing its relationship with SFG and the collection of membership fees. IID drafted this article for the use of the other financial advisors. Not all services will be appropriate or necessary for all clients, and the potential value and benefit of the SFG’s services will vary based upon the client’s individual investment, financial, and tax circumstances. The effectiveness and potential success of a tax strategy, investment strategy, and financial plan depends on a variety of factors, including but not limited to the manner and timing of implementation, coordination with the client and the client’s other engaged professionals, and market conditions. This should not be construed as specific investment, financial planning or tax advice tailored to an individual reader. All expressions of opinion reflect the judgment of SFG as of the date of publication and are subject to change. This article does not constitute personalized advice from SFG or its affiliated investment professionals, or a solicitation to execute specific securities transactions. Readers should not use any of this content as the sole basis for any investment, financial planning, tax, legal or other decisions. Rather, SFG recommends that readers consult SFG and their other professional advisers (including their lawyers and accountants) and consider independent due diligence before implementing any of the options directly or indirectly referenced above. Past performance does not guarantee future results. All investment strategies have the potential for profit or loss, and different investments and types of investments involve varying degrees of risk. There can be no assurance that the future performance of any specific investment or investment strategy, including those undertaken or recommended by SFG, will be profitable or equal any historical performance level. Additional information about SFG, including its Form ADV Part 2A describing its services, fees, and applicable conflicts of interest and Form CRS is available upon request and at https://adviserinfo.sec.gov/firm/summary/108724.

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