Use a ‘Human-Centric’ Approach to Improve Your Bottom Line
Three initial advisor-provided client experiences can set in motion the “human-centric” aspect of financial planning.
It starts on the advisor’s website. But the “most connective is the client discovery meeting. That’s where the glue is made,” Preston Cherry, founder and president of Concurrent Financial Planning and head of the financial planning program and assistant professor of finance at the University of Wisconsin-Green Bay, tells ThinkAdvisor in an interview.
Applying financial psychology enables an advisor to introduce “the human side of money,” Cherry says.
What’s more, a human-centric approach can improve an advisor’s bottom line, he argues.
Cherry’s firm focuses on finding your “Life Money Balance,” a philosophy the certified financial planner has trademarked and features in the name of his podcast.
Cherry’s Green Bay-based practice, which he founded in 2018, targets the affluent Gen X segment and is in “pivotal growth” mode, with additions to his already comprehensive planning services, he says.
A past president of the Financial Therapy Association, Cherry is director of the Charles Schwab Foundation Center for Financial Wellness at UW-Green Bay.
His doctoral dissertation, written while attending Texas Tech University, was “Personality Traits and Financial Risks Among Older Americans.”
Cherry is now researching how personality traits influence the way people would deal with the prospect of outliving their money.
Such insight will help guide financial advisors to recommend investments that fit the client’s “financial pathways,” he says.
In the interview, Cherry identifies the “Big Five” personality traits and why one’s dominant trait typically shifts at about age 70.
He also discusses how to give clients what he terms “the country club experience” that leads to referrals.
Before stepping into financial planning, he was with mutual fund wholesaler Salient. Later, he rose to senior financial planner and co-portfolio manager at Wealth Management Corp.
ThinkAdvisor recently interviewed Cherry, who was speaking by phone from Green Bay.
A Carson coach specializing in how advisors can connect with their clients, he stresses the importance of learning clients’ “stories.”
“Some clients want to spend time investigating the past. Some want to investigate the present or the future, and some, a combination thereof,” he notes.
Here are highlights of our conversation:
THINKADVISOR: What’s your firm’s mantra?
PRESTON CHERRY: Let your life lead your money, not your money lead your life. Live aspirationally!
Why should advisors use financial psychology?
It allows you to introduce the human side of money — the emotionality of money: the ways people think, feel and behave about their money.
It’s about how they interact with their money based on their cultures, values and experiences.
Once we learn these pieces of information willingly from clients, they go into the financial plan to [help produce] better outcomes.
How does an advisor introduce the human-centric approach?
If you have a good website, you’re communicating it through the language you use: “We value your experiences. We want you to share your story.”
If what you say as soon as someone arrives at your website is human-centric, it’s laying the groundwork.
Then, when you have the get-to-know meeting, you ask compassionate questions. You’re not trying to know everything, but you’re setting the table for the type of relationship the client may be looking for and what to expect going forward.
What comes right after the get-to-know meeting?
The client discovery meeting. That’s the most connective meeting. It’s where the glue is made.
You get to ask not only quantitative questions but qualitative, human questions: “What are your values? How do you feel past, present and future?” You have them share their story.
So you communicate [the human-centric aspect] in those first three [encounters] — and ongoing all through the relationship.
What sorts of stories should the client tell?
They can be anecdotal, for example. Some clients want to spend time investigating their past; some want to investigate the present or the future or a combination thereof.
They may have experienced something in the past — like witnessing their parents having negative conversations about finances, where one spouse was the dominant one.
That could carry over to their own spousal relationship about money.
If there’s no communication about money, the advisor can offer a framework for it to happen in a trusting environment, where each spouse offers their perspective.
Can a human-centric approach improve the advisor’s bottom line?
If you help a client not only in a technical manner with your investing recommendations but also touch them in a human-centric manner, they’ll walk out the door and give you referrals. You won’t have to ask.
What I call the “country club experience” happens — at whatever client socioeconomic level — if you ask the right questions about their values, experiences, attitudes, perceptions and aspirations about how they want to live their life — all tied in with their money.
You’re conducting research on personality traits and financial-uncertainty risk. Please explain.
The “Big Five” personality traits are openness to new experiences, conscientiousness, extraversion, agreeableness and neuroticism.
If you have higher levels of conscientiousness, you have more awareness of when to address financial issues.
With neuroticism, you’re thinking a lot about yourself negatively, and that would mean that maybe you’re overspending or not using resources enough in thinking of [and sharing with] others.
These people may not want to protect for uncertainty. Also, they might lack self-confidence, which is another form of neuroticism. And you’re talking about self-destructive behavior embedded in that personal trait as well.
That doesn’t associate well with risk.
Does one trait characterize a person all through life?
One trait will be dominant in multiple situations.
But over time, that changes. The strongest trait can stick with you from your 30s to about age 70 and then start to shift a little as you age.
How so?
At 70, you have a lot more consistency and dependability, and your perceptions change.
You’re entering a stage of life that’s undiscovered [for you]. So you may not be open to new ideas as you were 30, 40, 50 years ago.
One of the uncertainties people have is outliving their money.
What are you investigating in your research?
Given your own unique personality traits, how, theoretically, would you go about handling outliving your money. This [knowledge] is meant to understand clients more deeply and give them better recommendations to help fit their financial pathways.
Why is the main focus of your practice affluent Gen X clients, ages 43-58?
I’m 44 myself and identify with that group very well. Also, the big transference of wealth in this country has to go through Gen X first, then the millennials [and so on]. But Gen X is next.
They’ll be experiencing many years of wealth accumulation, undergo pre-retirement and retirement, and have multigenerational issues to deal with.
They’re needing to maximize life now [and] optimize life later.
Is saving more the main point to impress upon Gen X?
You can’t [help] Gen X during their prime of life just by telling them to save for later because they’re coping with a lot now:
They may have older children who are about to leave the nest, boomerang children who are coming back to their parents’ home or children who are still living there till they’re 28 or 29.
Also, Gen X has parents who are getting older, and they may want to live near them to take care of them.
Further, they’re trying to save for retirement, which they don’t feel confident about. And they’re still paying off debt.
In view of today’s volatile market and uncertain economy, what types of human-centric conversations should advisors be having with clients who may feel anxious?
First, it’s great to affirm their feelings.
But uncertainty is certain. The best we can do is smooth out the uncertainty by preparing for it, so that it feels less intrusive and less interruptive when it happens.
So this is about setting expectations beforehand.
That way, advisors can tell clients: “We’ve put things in order and planned. Now we can revert to those conversations we had before: Remember we talked about these things and knew they would come?
“This is what we did to help in these situations.”
Pictured: Preston Cherry
Three initial advisor-provided client experiences can set in motion the “human-centric” aspect of financial planning.
It starts on the advisor’s website. But the “most connective is the client discovery meeting. That’s where the glue is made,” Preston Cherry, founder and president of Concurrent Financial Planning and head of the financial planning program and assistant professor of finance at the University of Wisconsin-Green Bay, tells ThinkAdvisor in an interview.
Applying financial psychology enables an advisor to introduce “the human side of money,” Cherry says.
What’s more, a human-centric approach can improve an advisor’s bottom line, he argues.
Cherry’s firm focuses on finding your “Life Money Balance,” a philosophy the certified financial planner has trademarked and features in the name of his podcast.
Cherry’s Green Bay-based practice, which he founded in 2018, targets the affluent Gen X segment and is in “pivotal growth” mode, with additions to his already comprehensive planning services, he says.
A past president of the Financial Therapy Association, Cherry is director of the Charles Schwab Foundation Center for Financial Wellness at UW-Green Bay.
His doctoral dissertation, written while attending Texas Tech University, was “Personality Traits and Financial Risks Among Older Americans.”
Cherry is now researching how personality traits influence the way people would deal with the prospect of outliving their money.
Such insight will help guide financial advisors to recommend investments that fit the client’s “financial pathways,” he says.
In the interview, Cherry identifies the “Big Five” personality traits and why one’s dominant trait typically shifts at about age 70.
He also discusses how to give clients what he terms “the country club experience” that leads to referrals.
Before stepping into financial planning, he was with mutual fund wholesaler Salient. Later, he rose to senior financial planner and co-portfolio manager at Wealth Management Corp.
ThinkAdvisor recently interviewed Cherry, who was speaking by phone from Green Bay.
A Carson coach specializing in how advisors can connect with their clients, he stresses the importance of learning clients’ “stories.”
“Some clients want to spend time investigating the past. Some want to investigate the present or the future, and some, a combination thereof,” he notes.
Here are highlights of our conversation:
THINKADVISOR: What’s your firm’s mantra?
PRESTON CHERRY: Let your life lead your money, not your money lead your life. Live aspirationally!
Why should advisors use financial psychology?
It allows you to introduce the human side of money — the emotionality of money: the ways people think, feel and behave about their money.
It’s about how they interact with their money based on their cultures, values and experiences.
Once we learn these pieces of information willingly from clients, they go into the financial plan to [help produce] better outcomes.
How does an advisor introduce the human-centric approach?
If you have a good website, you’re communicating it through the language you use: “We value your experiences. We want you to share your story.”
If what you say as soon as someone arrives at your website is human-centric, it’s laying the groundwork.
Then, when you have the get-to-know meeting, you ask compassionate questions. You’re not trying to know everything, but you’re setting the table for the type of relationship the client may be looking for and what to expect going forward.
What comes right after the get-to-know meeting?
The client discovery meeting. That’s the most connective meeting. It’s where the glue is made.
You get to ask not only quantitative questions but qualitative, human questions: “What are your values? How do you feel past, present and future?” You have them share their story.
So you communicate [the human-centric aspect] in those first three [encounters] — and ongoing all through the relationship.
What sorts of stories should the client tell?
They can be anecdotal, for example. Some clients want to spend time investigating their past; some want to investigate the present or the future or a combination thereof.
They may have experienced something in the past — like witnessing their parents having negative conversations about finances, where one spouse was the dominant one.
That could carry over to their own spousal relationship about money.