May 2024
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Silver Bullets
Throughout our lives, we encounter two types of people: the "yes" people and the "no" people. Sometimes, an individual may play both roles, being supportive in one area while challenging us in another. It's comforting to surround ourselves with "yes" people because they affirm our existing beliefs. However, true growth comes from interacting with "no" people.
"Yes" people provide no pushback, requiring us neither to change our behaviour nor to rethink our assumptions. In contrast, the most significant learning often comes from "no" people. Looking back, we may realise that the pivotal moments in our lives were shaped by those who challenged us. Initially, we might feel frustration or anger towards these individuals because deep down, we know they’re right, even though we would prefer the easier path. But remember, nothing worthwhile happens on Easy Street.
As financial advisers, we predominantly need to be "no" people. This means minimal pandering and providing tough financial love. We tell it like it is—unvarnished. Of course, we remain empathetic and, most importantly, act as strategic thinking partners. Our clients often try to avoid making decisions that benefit their future selves, but we are here to change that.
One of our roles is to take bullets from our clients. A key example is encouraging them to increase their contributions annually to a point of slight discomfort. This healthy level of discontent is the price we pay to be a "no" person in their lives. We help them invest more regularly than they might have planned, build an investment portfolio tilted more towards global equities, and discourage them from hoarding cash.
Consider this thought experiment with two clients, Robin and Morgan.
Robin didn't believe in paying a financial adviser and never valued coaches in general. Without anyone pushing him, he was overly kind to his present self at the expense of his future self. He invested too conservatively, kept too much in cash, and frequently bought and sold hot funds based on what he read in the news.
Morgan, on the other hand, worked with a recommended adviser named Andy. Despite occasionally feeling frustrated with Andy for challenging her, Morgan couldn’t wriggle out of making decisions that would sabotage her future success. Andy started working with Morgan when she was 45, and she hoped to retire at 65. Thanks to Andy's guidance, she was able to retire at 62 with a healthy financial safety net.
Robin, however, struggled to build sufficient wealth to retire on his own terms.
Fast forward to Morgan’s early retirement. At a dinner party, she shares her success story, explaining how she managed her expenses, spent less than she earned, and invested the difference in global equities while keeping minimal cash on hand. When asked if she had worked with a financial adviser, Morgan replies, "Yes, I did. His name is Andy. He didn’t really do much, just nagged me over the years." Despite the bullets Andy took over 20 years, Morgan gives minimal credit, yet she enjoys a fabulous financial position where her money will outlast her.
As financial advisers, we take bullets from our clients, helping them achieve financial stability while often receiving little recognition. Behavioural coaching is a crucial aspect of our role, often overlooked by financial commentators who focus solely on fees. Robin paid zero fees and ended up broke. Morgan paid 20 years’ worth of fees and retired as a rockstar.
The more bullets we take, the more impact we have. As behavioural advisers, we are in the bullet-taking business. Our clients’ current selves are hardwired to make poor decisions for their future selves—until we intervene. Onwards to more silver bullets!
📰 Articles & Blogs
Joe Duran: These 4 pillars are the ‘SOUL’ of organic growth [3 minutes]. The four essential pillars of organic growth in the independent wealth management industry.
5 Questions Using Risk Assessment Data To Uncover Clients' True Concerns [15 minutes]. Key questions to foster stronger bonds with clients.
Is the 4% Rule Too Safe? [4 minutes]. Explore a more realistic approach in this thought-provoking article.
The Art of Storytelling in a World of Information Overload [7 minutes]. How to captivate your audience and stand out from the crowd.
10 Factors To Determine If Your Potential Niche Is Viable [34 minutes]. The key to becoming a coveted go-to expert for those who want to specialise.
The Role of Emotions in Financial Marketing [3 minutes]. When and when not to appeal to emotion in marketing.
🎧 Podcasts
TRAP 45 - TRAP Live! [86 minutes]. The TRAP episode recorded on 9th May 2024 in front of 140 adoring TRAPists.
The 5 Pillars of The Ultimate Intro Meeting [33 minutes]. The single most expensive or the single most profitable activity that you'll ever engage in.
📚 Book Recommendations
The Algebra of Wealth: A Simple Formula for Success by Scott Galloway. How to find and follow your talent, what small steps you can take now that pay big returns later, and how to develop better financial habits.
👏 Encore
Three conditions you should have before saying Yes [3 minutes]
Money pervades everything [10 minutes]
How Much is a Memory Worth? [5 minutes]
The Fallacy of Passion [4 minutes]
Lazy Work, Good Work [4 minutes]
