Ep22 - Rethink: Rebirth of the Proactive Advisor – Featuring Philipp Hecker & Meg Lurtz

Bento Engine CEO Philipp Hecker and behavioral finance researcher Dr. Meg Lurtz join Adam and Derek to unpack why the timing of advice matters as much as the advice itself. Drawing on original research, they reveal how even well-advised, wealthy clients routinely miss milestone guidance on catch-up contributions, Medicare, and RMDs, exposing a hidden attrition and growth risk hiding in the middle and bottom of advisors' books. The conversation makes the case for using technology to proactively and consistently deliver advice across a client's entire lifetime rather than reactively at the top of the book.

• Why the timing of advice matters as much as the advice itself
• Original research on missed milestone guidance for advised clients
• The attrition and revenue risk in the middle and bottom of the book
• Using technology to scale proactive, personalized advice
• Shifting from selling products to advice-led client relationships
• Serving clients consistently across their full financial lifetime

Full timestamped transcript.

[00:00:05] H. Adam Holt: Welcome to Rethink the Financial Advisor Podcast. My name is Adam Holt.

[00:00:11] Derek Notman: And this is Derek Notman. We are your hosts, both veteran advisors and fintech CEOs who challenge the status quo, question everything, and have fun doing it. Hear honest commentary on the challenges facing advisors today. And be part of a community where we can all rethink the profession.

Now on to our episode.

[00:00:34] H. Adam Holt: Derek, does the timing of advice matter?

[00:00:38] Derek Notman: Hey, Adam. I, I think so. I really actually think it does. If you think about our lives, right, and just all the milestones that we go through, a lot of them are, like, time and, and age related, right? Mm-hmm. So, like, you don't give retirement advice like, "Hey, here's how you're gonna retire when you're 14 years old," right?

It's not really relevant. Um, so yeah, I, I think the timing of advice really matters a ton, and I think it's something as advisors that we can do to further drive value in our whole leading with advice mantra that we talk about. Yeah, so I th- I think it, yeah, I think it does. What do you think?

[00:01:21] H. Adam Holt: Well, I think it's a great question.

And of course, as financial advisors, we're constantly doing analysis based upon future cashflow. We're thinking about investment over the long term, so we do think about when I need this money, uh, liquidity, uh, short-term, mid-term, long-term, retirement versus college funding. Uh, you know, these, these kinds of questions are very top of mind for almost all financial advisors.

But one of the things that, that is dir- certainly interesting is the timeliness of advice and why it matters more in certain moments of one's, we'll call it life journey, right? We think about it typically as, oh, I'm about to retire, and all of a sudden advice becomes more urgent. Or, uh, gosh, I'm at the end of my life and I'm, a couple of my friends are passing, I, I really need to focus on estate planning.

Or kids are about to go to college in a couple of years, all of a sudden I'm really tense or anxious about education funding. So I don't know about you, but I found that a lot of clients came to us just before these events, and so timing really did matter because it inspired them to take action. Is that something you experienced?

[00:02:24] Derek Notman: 100%. It- 'cause that's, in another word, you could call that a pain point, right? They come to us when they have these pain points and like, "Oh, crap, my kid's going to school in two years. Uh, what's a 529 plan?" You know? Yeah. Like, and so I think these things happen, and then they come to us like that. But just imagine, Adam, if as advisors, we were proactive with the timing of our advice.

[00:02:47] H. Adam Holt: Hmm. But what do you mean by that, though?

[00:02:50] Derek Notman: Well, we know when different things happen. We know when your, your children can legally get a job. We know when you can apply for different types of benefits. We know when you can take money out of a retirement account. We know how long it takes to do XYZ.

[00:03:05] H. Adam Holt: Mm-hmm.

[00:03:05] Derek Notman: So what if we were proactively guiding our clients, and even potential clients, with these- Information points, right?

So instead of them coming to us like, "Oh crap, I haven't done this," they're like, "Oh, thank you for telling me I should do this."

[00:03:22] H. Adam Holt: Now, that seems kinda obvious though. Don- I mean, don't you think that financial professionals are telling their clients at, let's say, the annual review, "Oh, it looks like RMDs are requiring them."

Those are re- required minimum distributions. Or perhaps there's a, a certain tax deadline that they need to meet for catch-up contributions, right? Do- don't you think that advisors are telling their clients, or are they missing it?

[00:03:43] Derek Notman: I think some are, and I'm, I don't think anyone's purposely not telling. Um, but let's f- let's, let's face it, if you've got 50, 100, 500 clients that you're managing either solo as a, or as a team, that's a lot of people and that's a lot of events that you have to remind.

And if you don't have a great way to manage that and proactively do it and try to automate it, that's a massive task. It is. Massive. And I think at the end of the day, if we're choosing between that and just getting review meetings scheduled and talking about it at the moment- Eh, you know, there's only so much time in the day.

[00:04:17] H. Adam Holt: Yeah. It's hard to scale this one. I think our, typically our highest end clients tended to get that more concierge level- Totally ... because we knew that we had to deal with competition. They were a high component of our revenue stream, so we needed to make sure that they got all of that value. But I, I think it's true.

I think a lot of the, we'll call the rank and file or the archival clients, the ones that maybe have been with us for a while, couldn't, don't remain the A's and B's if, as we would tend to call it historically, they don't necessarily get the same guidance, uh, on an ongoing basis, and it's because it's been difficult to scale it.

Well, it's a great entree because we had a conversation to talk to a couple leaders. To- tell us, uh, you know, what was the thinking behind, uh, bringing in our, our guests in the rethink tank?

[00:04:56] Derek Notman: Well, these two are well-known. They've done a lot of actual research around this, and have also built, uh, a solution to automate and scale this issue.

And I'm sure, like, they're- we're gonna talk about their solution a little bit, but I think, like, the- they're solving this main pain point of the timing of advice in a way that's never been solved before. So we've got two folks on today. Philipp Hecker, he is the CEO of Bento Engine and a co-founder. Uh, awesome dude.

A Columbia University lecturer, former global head of strategy and business development at JP Morgan and Deutsche Bank, and he's also a first-generation immigrant from Germany, which is pretty cool. Uh, who's the other one, Adam? Why don't you introduce...

[00:05:42] H. Adam Holt: Well, absolutely. So Dr. Meg Lertz, you might know her from, uh, as she's also a senior research associate for kitces.com, and so we tend to see a lot of her material out there.

She's a PhD in personal financial planning from Kansas State U. And, and I think given the fact that she's been so focused on behavioral health... I'm sorry, behavioral finance, uh, around this as a board member at the Financial Psychology Institute, uh, within Europe. Also a lecturer at Columbia, which kind of goes back to the roots of how they know each other.

They've both been focusing on this interesting dynamic that you and I just brought up, which is the timing of advice and how you can be proactive. So this is a great opportunity for us to hear from them in our rethink tank, as you all know. It was a great way for us to speed interview us, uh, these individuals as to what they're thinking and what, what their unique perspective is and how we can, of course, use that.

So, so stay tuned for how we actually wrap this up at the end of this interview. You ready, Derek? Let's do it. All right.

[00:06:38] Derek Notman: So Meg, you have a very interesting background, academic, uh, consultative, done a lot of work in the

[00:06:44] H. Adam Holt: area of personal finance and even financial therapy. What's your perspective or opinion of the financial advice market today?

[00:06:52] Meg Lurtz: Well, I think our industry has come a long way, and I believe we're continuing to move forward. You know, more and more advisors are shifting away from selling products and towards the idea of, of leading with advice. And while I do believe a lot has been accomplished, we also have to recognize that there's still a, a lot to do.

There's a lot to-- that's still being left on the table. Um, for example, there's research from caring.com that was carried out by Edward Jones, Fidelity and Vanguard that shows that sixty-eight percent of Americans pass without a will. That's a lot. Sixty-four percent don't know what a five twenty-nine plan is.

As a mom, that's kind of scary. And then only ten-- you know, between ten and fifteen percent of those eligible to make catch-up contributions, um, upon turning age fifty, they're not... You know, very few people are doing that. So I think it's, you know, it's clear that as an industry, we can do better, and it's probably really even maybe more interesting or to, to particular to your readers or your-- to your listeners, being financial planners, um, this gap is not confined to just America at large.

Um, even wealthy advised clients are not getting all of the advice that they deserve. Myself, Philip, uh, together with another colleague, Doctor, Doctor Kathakota, we, uh, fielded some primary client research that focused on older Americans, so they were sixty-two and older. They were wealthy in that they were the top half of the income, and they were in advised relationships and, and that they had spoken with a live human advisor within the past six months.

And what we found, uh, in talking to them might surprise you, in that sixty percent of those clients are not getting advice on catch-up contributions upon turning age fifty. Sixty-three percent of advised clients are not getting advice on QCDs upon turning seventy and a half. And ninety-four percent of families report that they did not receive guidance on working papers or setting up a custodial IRA for their kids upon turning age fourteen.

So, you know, my view of the, of the US market today, you know, again, I, I believe we're moving forward, but there is so much room still for improvement.

[00:09:10] Derek Notman: Fascinating statistics, and I hope that we can link to some type of, of, uh, resource for folks that can actually get access to that. 'Cause I mean, that's-- it's almost mind-boggling that the percentages are so high.

[00:09:23] Meg Lurtz: Yeah. Yeah, we were pretty shocked. We didn't know what we were gonna find, but that was pretty startling.

It's

[00:09:28] Derek Notman: fascinating.

[00:09:30] Philipp Hecker: And we're happy to make the underlying research available in your show notes.

[00:09:35] Derek Notman: Brilliant. Thank you. Yeah, we'll, we'll connect in there for sure for everybody. For Adam and I, uh, I think we... We're, we're up to four and a half listeners now. Four point five. Four point five. Yeah. Um, Phil, question for you.

Uh, what is the missing opportunity or, or upcoming challenge that you think advisors are not addressing or, or aren't even aware that's coming?

[00:09:58] Philipp Hecker: Good question, Derek. Well, I would say those stats that Dr. Lorster shared are certainly sobering and should serve as a call to action for all of us. Today, many advisors have the promise of some sort of holistic or comprehensive advice as part of their value prop when they market themselves.

And many of you do advise at least your best clients on key age milestones such as Medicare, QCDs, or RMDs. But as we've just heard, not all of us are doing that important work for all of our clients. Now, let's reframe that advice gap into an opportunity. We would love for our audience to reflect about your very best client relationships.

When you think about those relationships at the top of your book, my hunch is that you're in frequent touch with them and serve them on many, if not all, the advice needs that they have. Now, reflect honestly, if you will, on some relationships in the middle and even at the bottom of your books. Probably, you do not engage with those clients as frequently or as meaningfully.

The middle and bottom of your book is probably underserved and represents not only a risk for attrition, but also a major untapped revenue growth opportunity. And by the way, it is not only beneficial to lead with advice when serving your clients, we can use it effectively when prospecting as well.

Think about it. From Meg, we have just learned how even advised clients are not always being advised. So perhaps when you have prospects in their late forties, ask them if their current advisor has discussed catch-up contributions with them. And if you have prospects in their late sixties that are philanthropically inclined, perhaps you be the one to introduce them to the power of QCDs.

Yes, leading with advice works in prospecting too.

[00:12:09] Derek Notman: Well, Philip, it really sounds like if this, this challenge is a, an opportunity in disguise maybe, right? So for advisors not leading with advice, not paying attention to this stuff, they've got major potential issues with their book of business. But if they just flip the mindset and start doing what you're saying, and Adam and I have talked about this tons of times, about leading with advice, all of a sudden now this challenge becomes a massive opportunity.

[00:12:36] Philipp Hecker: Exactly, Derek. In particular, if and when advisors use technology such as Asset-Map or Bento to give them leverage, to give them scale, and bring the great work that maybe they used to do manually for their very best clients. Using technology, they can bring more of that magic to more of their clients, benefiting those who matter most, clients and their outcomes, and by virtue of that, their business as well

[00:13:07] H. Adam Holt: You know, I can't help but think, and I think there's some really great comments here, most of us in advice know this to be true.

Everything that's been said, we kind of know in our gut. We know that we probably are taking care of some clients better than others, and the revenue model justifies it, right? Those that require and expect higher service, turnover is more expensive and the higher net worth. Um, as, as much as we've heard it, how do we actually take action on this?

I mean, so, so Meg, thinking about what has already been shared, what action steps would you make or would you recommend taking for us to rethink?

[00:13:40] Meg Lurtz: Yeah. I-- One thing, and people probably have heard this before, but being, you know, my background and interest in client psychology and relationships between clients and their advisors, you know, clients don't care how much you know until they know how much you care.

And so, you know, leading with that hyper-focused, personalized, impactful advice that, that is beyond investing, um, is the, is the way to show them that, is the way to showcase how much you really-- how much they really mean to you and how much you value your relationship with them. And, you know, and, and how do you do that?

In, in that sort of answer to your question, we leverage technology. Um, for those of you who are, who are familiar with my other boss, uh, Michael Kitces and the kitces.com blog, where I am a senior research associate, we've conducted research on the utilization of financial planning technology and also what makes up a comprehensive financial plan.

And we know two important things that relate to this discussion today. First, that financial planning technology, when we measured it, it didn't really make anybody faster. Um, instead, we believed or what we believe or what we see is that it made them better in the sense that the technology did allow them to do things-- or didn't really allow them to do things any quicker, even though they were doing it quicker, they would just re- they would reuse that time.

So they weren't breezing through a financial plan 'cause it was efficient. They were taking that extra saved time to go deeper or, you know, run another analysis or understand the plan from a different perspective. So they were building deeper, better plans. And so you might think, okay, well, what does that then matter to a comprehensive plan?

Like are, are we covering more topics? And in a certain way, we are, but in other ways, we're not. Um, in particular, we noticed that retirement or the, the planning is really happening on, uh, retirement planning and portfolios that kind of reign supreme, and that makes sense. We were just talking about like the AUM model and just the way that it's structured.

Um, the other place we saw the decumulation planning, so like retirement strategies, distribution strategies, this was outpacing accumulation planning. So whether that's saving for college or doing some budgeting, maybe doing the catch-up contributions, um- That was not at the same level. Covering those areas wasn't being covered as often.

And so from that you could say, you know, we're still not serving clients across their lifetime. Maybe that's related to when the client comes in, but certainly there's something going on here. And so I, I don't say this to be a Debbie Downer. Like, I, I love financial planners and the work that they do. Um, but much like Philip, you know, I, I, I see this as a huge opportunity, and now there are, there are newer technologies, um, in our marketplace specifically related to the FinTech map that we have at Kitces.

There's a section called Advice Engagement, and this is like Asset-Map, Bento, uh, Engine, and these, what they're doing is they're operationalizing a minimum standard of care across a lifetime. And so it's broader than the investments and decumulation, and they're doing it, the, the technology side of it is allowing then more advisors to, or all advisors to really apply and monitor these touches across the lifetime, you know, broadly across their firm and, and across their entire book of business.

And so I think, you know, it's always been hard. I've always looked at, um, some of the client segmentation in some ways as almost like a triage, and maybe we don't have to do that anymore. That, that may not be necessary in just the way that we can utilize technology, and I, I think that that's wonderful news.

[00:17:30] Derek Notman: Good. We're

[00:17:30] Philipp Hecker: taking breaks

[00:17:30] Derek Notman: here. Yeah. I, I- Go, Dirk ... I love that, and it, it almost feels like because we have technology that has made parts of what we do faster- Mm-hmm ... especially the data gathering piece- Mm-hmm ... right? That is, you point out now we can go deeper with more clients-

[00:17:49] Philipp Hecker: Mm-hmm, mm-hmm ...

[00:17:49] Derek Notman: provide more value, more advice, um, which leads to better outcomes like for, for people's lives.

[00:17:57] Philipp Hecker: Yeah.

[00:17:57] Derek Notman: I mean, n- not to get all wishy-washy, but that's kind of important, right? I mean, like, you know, we're using- Of course ... our money to do really good things.

[00:18:04] Meg Lurtz: I have told my students at more than one university, you know, if cancer doesn't get you, longevity will, and the person you're gonna wanna know- Mm-hmm

is a financial planner. So, you know, it's just- Love it. I love

[00:18:15] Derek Notman: it. Great thing ...

[00:18:16] Meg Lurtz: uh, it's incredibly important. Um, incredibly important.

[00:18:22] Derek Notman: Yeah, that's great. You got my-- we got the wheels spinning. All right. So Adam and I love controversy, so We

[00:18:30] H. Adam Holt: love, no, we love debate. You love controversy. I love debate.

[00:18:34] Derek Notman: I like stirring the pot a little bit.

Come on, it makes it interesting, right? I, I suspect that Philip with the grin that he's got right now is right-- this is right up his alley. So um, Philip, Meg, like is there anything that you think that, that our listeners need to hear? We do welcome controversy here, so you can say things that are a little bit on the fringe if you like.

Um, but like what should people be thinking about? What should-- what, what do you wanna say? What's on your mind?

[00:19:04] Philipp Hecker: Derek, great question. Let me throw not just one, but four nudges into your pot to stew about, you know, all of us to reflect and contemplate. Number one, a provocative question for you and our audience.

And that is, can you call yourself a fiduciary and not proactively advise your clients and their family members on upcoming age milestones that matter? You all be the judge. Number two, building on what Meg just shared, as our industry tries to evolve into a profession, we would like to raise the notion of a minimum standard of care.

Is it perhaps time that we all agree on what holistic or comprehensive actually mean and entail? Can we all agree on a basic set of advice elements that we render at a minimum? That would go a long way in terms of becoming more transparent, more accountable, and building trust with those who matter most, our clients.

Number three, whenever you can, quantify the value of your advice. When you advise on making catch-up contributions or utilizing QCDs or leveraging triple tax-advantaged HSAs, those are great opportunities to quantify and communicate in specific dollar terms the value that you create for your clients. You will literally earn your keep that way.

And last not least, nudge number four, connecting with the next gen. We all know the sobering statistics around how many G2s switch advisors when G1 passes, and we all bemoan those facts. Yet, as we've heard from Meg, only six percent of clients say that we connected with them when their kids turned fourteen around working papers.

So, many advisors seem to be missing out on golden opportunities to connect early and constructively with the next gen. Let's engage the next gen at key age milestones that matter to them. For example, age fourteen or explaining estate planning basics and the importance of a healthcare directive when they reach the age of majority.

Leading with advice can and should apply to the whole client family

[00:21:44] Derek Notman: Well, I don't think you can get much more specific than those great four bullet points

[00:21:48] H. Adam Holt: That was great. Drop the mic.

[00:21:48] Derek Notman: Drop the mic, yep. Right. I, I have to say, like, I, I love all of them, but that first one definitely- Yeah ... um, I mean, Adam, you and I have de- you know, debated this before.

Mm-hmm. Um, I, I like that one and, um, we'll have to get some, some, some more thought into that when we hash this out.

[00:22:04] H. Adam Holt: No, that was great. And I'm just paying attention to time 'cause we're over, but, uh, and I- Yeah ... we all have probably half-hour meets. This was excellent, so, um, I'm just... We're, we're gonna cut it there.

We're gonna kinda cut that drop the mic thing. Is there anything else either of

[00:22:17] Philipp Hecker: y'all- Just a little food for thought as you do your contemplation. Okay.

[00:22:19] H. Adam Holt: Yeah.

[00:22:20] Philipp Hecker: When you look at things like the fiduciary oath and well-intentioned, you know, things, they oftentimes have a mindset of I promise not to, I promise not to.

They protect against the downside. Maybe it's time to define fiduciary not just in terms of downside protection, but upside realization. I commit to making you aware of all the tax advantage vehicles out there at your dis- disposal. Do you know what I mean? Bring upside orientation into the definition of fiduciary as opposed to just protecting against the bad stuff

[00:22:56] H. Adam Holt: Now that was a lot of really interesting stuff, Derek, don't you think?

[00:23:01] Derek Notman: I loved it. Yeah,

[00:23:02] H. Adam Holt: tons of thought-provoking

[00:23:03] Derek Notman: points brought up.

[00:23:05] H. Adam Holt: Um- So give it to me. What, what really was standing out for you from that whole interview? 'Cause now we gotta... There's so much there. I know that advisors are thinking, "Gosh, that was so deep." We, we actually have already thought this out for you, so-

[00:23:16] Derek Notman: Yeah

what's your first takeaway? Oh, we've got some great takeaways. Yeah. Go for it. And, you know, I'm gonna preface mine by saying this. Like, one of the things I started to realize during this interview in, in particular is that as advisors, we are responsible for a ton for our clients' lives. Think about all of the different milestones and transitions and things we help our clients do.

Like, we're, like, I've had clients cly- you know, cry, you know? You know, like, I mean, all of these different things, they come to us. So as a side, if you're ever wondering your value as an advice and if, are you worth the fees you're charging, darn it all you are if you're doing a good job, 'cause we do so much for our clients.

And I also, uh, realize that, like, it seems overwhelming. Like, man, you're telling me I gotta do this, I gotta do that. Like, like, you know, I've only been in business two years. I can barely spell insurance. Like, what am I- how am I supposed to do all this? The good thing is, is you'll get there, and there's a ton of tech out there to help automate a lot of this stuff, so don't let it get overwhelmed.

You know, fellow advisors, I know this can be tough, but there's a lot of support out there. There's a lot of tech to help you do this. Okay, now I'll give you my takeaways.

[00:24:25] H. Adam Holt: Okay.

[00:24:27] Derek Notman: After another tangent, or no? I'll just, I'll just keep going.

[00:24:30] H. Adam Holt: No,

[00:24:30] Derek Notman: one more tangent. One more tangent. Um, so I, I think one of the big ones for me out of, if I r- really distilled down what they're telling us here, is that the timing, the timing of advice is just as important as leading with it, that same advice, okay?

We have to make sure we are helping our clients with different age-related milestones that happen in their lives proactively. Be proactive.

[00:24:56] Meg Lurtz: Mm-hmm.

[00:24:56] Derek Notman: Uh, second, show clients you care before you show how smart you are. But once you do, and then you have to give them this amazing experience where they really see the value of your advice and so forth.

And, well, how do you show them you care? Just be you. Show that you understand them. Do that through your marketing efforts. All the stuff we've talked about with digital marketing, like, that's your opportunity to show you care, and then show them how awesome you are with the tech that you're using and how s- so smart you are Um, and then just to wrap all that up, use tech, use amazing processes to do all the other things I just told you to do, right?

It's all there. It exists. So those are my big takeaways. There's a ton more there. Like, we have to definitely link to the notes in this one for folks. There's a ton of resources here.

[00:25:39] H. Adam Holt: Yeah. It's really true. I, you know, I love the, the comments that they were making around, uh, you know, how do you call yourself a fiduciary and not be proactive?

I, I thought that was really interesting that they said that because, you know, we really haven't seen a true fiduciary el- uh, standard of care, and I've got some thoughts about it. Um, and I, I thought, you know, Phil's last four bullets really made a lot of sense, right? Uh, minimum standard of care, quantify the value advice whenever you can, connect with next generation so that you're showing that you've got longevity, you're thinking ahead.

And I think that's one of the bigger challenges for financial advisors. Customers are asking us to think ahead for them, think about the questions they haven't thought to ask. You're supposed to know what questions to ask. Uh, and I think that's really the, the whole point. I did like what Meg was talking about with advice engagement.

Of course, Asset-Map is, is kind of rooted in this whole idea of how do we deliver advice at scale regardless of complexity, and I'm really excited to see that Kitsis finally, uh, came together and put a category around this kind of obscure am- amoeba that many of us use, uh, to try to engage with our clients around what really matters to them as opposed to just always running an analysis, uh-

[00:26:46] Derek Notman: You know, real quick on that.

Yeah. Total tangent. Go on. But, like, props to you guys in Asset-Map because you guys actually helped define a new category Like that's a, that's really hard to do, but you guys fricking did it and that's awesome. So I'm just, you know, props. You know, virtual high five, my brother.

[00:27:01] H. Adam Holt: Virtual high five. There you go.

Big clap, yeah. That was our high five. Thank you, man. I, I r- appreciate it. I- we didn't know what we were creating when we did it. We were just saying, "There's a problem here and I, I just don't know where everything is. Let's put it all on one page, um, so that we can actually give them contextual advice." I, you know, my takeaways for the, for the whole event, um, was a reminder to all of you financial professionals that, that remember your clients are hiring you because they don't have the confidence to make those decisions on their own, right?

They could DIY, do it themselves. Uh, but the reality is that they- they're looking for you to be an advocate for them, and I, and I think of it very much like a child and a parent relationship, right? We gotta act like we're the parent, okay? Here's, I put out your socks. I put out your sweater. It's gonna be cold later.

I know what's coming. So I, I'm thoughtful to that. And the, the same thing is true with these major events. Like, uh, they mentioned the working papers. I mean, that might be a throwback to the European. That's what my grandfather used to say. "Did you get your working papers that worked here?" I'm like, "No, Grandpa, I don't, I don't need working papers in the United States."

But that, that's fine, but what he's really talking about is obviously children having the ability to actually, uh, earn income and then change the tax rate by not being in the parents' tax returns and l- and being thoughtful around, uh, you know, funding a Roth IRA early on in life. Think about how powerful that is once you have earned income.

So there's some really im- important aspects that are, we'll call them, uh, proactive in the sense that there's, there's 10, 20, 30 year longevity behind these decisions. We just gotta be smart enough to recognize that you gotta fund them early as opposed to waiting till the time where all of a sudden, "Oh no, the kids are going to college.

We need to fund a 529." That's not the time to fund the 529, okay? So the, the key is we need should be bringing these up as soon as possible. Number two, I thought about this a- and I wanna, I wanna kind of tell your cl- I think we should be telling our clients, "This is our plan of action for the next two, three, four years."

In other words, when we hit these milestones, I'm gonna reach out before the milestone is hit, okay? And I, I think because he mentioned it before, something like 6% of advisors are talking to their existing clients. That makes no sense, but I know it's true because we've taken over so much business from clients who complain they haven't heard from their advisor in years.

They know they're collecting fees. They don't know what they're paying for. Um, and you just don't wanna be in this situation. So tell your prospects too, people who are prospective clients, how you're actually gonna handle these problems. It'll give them a good feel for your attitude proactively. And the last comment I wanna leave you is, is the following: if you believe there should be a fiduciary standard of care, and it hasn't been created yet, it's time for you to write your own.

Jerry Maguire was a great movie. It kind of talked to us about, uh- How? No, it wasn't a great movie? Derek doesn't like it.

[00:29:36] Derek Notman: Terrible.

[00:29:37] H. Adam Holt: Okay, fine. Maybe it wasn't a great movie, but what I remembered from the movie was ... Why was it a bad movie? You know, like, I, I was surprised to hear

[00:29:47] Derek Notman: that. That's another podcast.

That's

[00:29:48] H. Adam Holt: another podcast. This is ... Is that a tangent? Wait. He's giving everybody ... He's giving me- Aw ... the big thumbs down on the movie. This is like Siskel and Ebert. I'm like, "This is a great movie." You're like, "No, it's horrible." Well, here's what matters about that silly comment, right? The Jerry Maguire paper was that he, he stayed up all night and he basically wrote this, "This is how clients should be treated."

And I think that has a lot of merit here. Nothing stops you as a financial professional if you run your firm or are influential in your firm of saying, "This is the standard of care we're gonna provide our clients. Here's what you can expect from us," and publish it. Don't hide behind it. Publish it. Put it out front and say, "This is what our standard is, and we actually d- do this.

Other advisors don't do it. It's what differentiates us." It's a great opportunity for you to create your own Jerry Maguire, I'm gonna say it again- ... your Jerry Maguire, uh, client standard of care. So that's, that's my takeaway. Seems like it's got controversy behind it. There's your controversy, Derek.

[00:30:42] Derek Notman: There it is.

There it is. I love it. Yeah. No, thanks, man. That's all great stuff. And for those of you who are wondering, like, I don't know how much we actually even said it, but Bento Engine- Mm-hmm ... the software, it solves this problem for you guys, advisors. So if you don't know, go check them out. Yeah. All right? Okay. It's true.

[00:30:56] H. Adam Holt: Absolutely.

[00:30:57] Derek Notman: There's your, there's your plug. Um, so one of the things that we've been hearing a lot, Adam, we're gonna transition out here, folks, a little bit, or a lot, is advisors really want to hear about mistakes that more seasoned advisors have made or stories that they have. I even ran a poll on LinkedIn on this, hundreds of votes, and those are the two main things.

Tell me mistakes you made and what you learned, and tell me stories from the early days of an advisor and what you learned. So, uh, we're gonna share a couple more just so you guys can get to know who the heck we are here. Um, Adam, I'd love to hear what you, you know, what you wanna share today.

[00:31:35] H. Adam Holt: Well, you know, you know, it's, it's funny.

Sometimes we don't like talking about our failure moments, right? We, we've had- we've been blessed with a bunch of successes, and of course you, you don't get here because they were all perfect. Um, but I, I, I think in relationship to what Philip mentioned about having a standard of care, in the early days of my career, I had a client who had a very specific challenge.

She had a high cost basis. Uh, uh, actually it was, if I think about it, they were, uh, government bonds. Okay? I, I didn't really... Very low cost basis, excuse me. So high, high appreciation inside these bonds. And I was working with this mutual fund wholesaler at the time, and he convinced me that my strategy for this would've been to liquidate them completely and put them into this donor advise fund and, and that it was gonna work out and he was gonna get a commensurate tax deduction.

Uh, and he, he was just so technically smart and seasoned and in his 50s, and I honestly, I just, I think I just believed him and I wanted to believe him because I liked him. Uh, and I made a recommendation to the client, and the whole thing wound up working out not the way the wholesaler told me, and the client got $100,000 tax bill that was not offset.

And long story short, I actually did keep the client, which was amazing.

[00:32:48] Meg Lurtz: Wow.

[00:32:48] H. Adam Holt: Um, but, but it was not a fun conversation, and it was really, really, uh, an eye-opener. What was, what was the takeaway? Um, clients aren't looking for shortcuts on their advice. They're looking to us for good advice. Just because you have an outlet, you need to confirm this, you need to, you need to basically make sure that you're getting credible resources, okay?

If they need shortcuts, they'll go to Google. They can Google the answer- Yeah ... they can get 100 million answers as to how to not do something. But, but the point is that for a financial advisor, we've gotta make sure that we measure twice, cut once. And, and I think that that's the real- That was the takeaway for me, was like, "Oh my gosh, I gotta really worry about who I trust."

Even though this is a relationship business, on our end the buck stops with us. The relationship is looking to us to be advocates, so we've gotta be not only proactive, but we gotta actually be able to get to the right answers. So that was a mistake that I really learned from. How about you, Derek?

[00:33:40] Derek Notman: Great example.

I, I can just imagine getting that phone call from that client. That

[00:33:45] H. Adam Holt: was not a fun day.

[00:33:47] Derek Notman: Oh my gosh. Uh, well, thank you for sharing that. Um, so I have a story about early on, um, and, you know, I'll share what I learned from it. But so, um, for many years I had my life insurance license, so I sold a lot of life insurance.

[00:34:02] Meg Lurtz: Mm-hmm.

[00:34:03] Derek Notman: And, you know, we do that so when people pass away, we're there, right? You know, there's, there's- the family's protected and whatnot. Well, unfortunately, I've had I think it's, it's either four or five clients actually commit suicide. Uh, in my 16 years now in business. And I'll tell you, it's, it's a terrible experience doing a death claim situation just from natural causes or an accident, but a suicide's a whole nother level.

And so what happened in this situation is I remember sitting with these clients, married couple with kids, in their home at night, and we ended up, we were gonna replace a policy that they had at another institution that had... It had been sold by someone years ago, never serviced. It was the wrong policy, not enough insurance.

And as part of you know, when you're doing a 1035 and a replacement, you have to acknowledge that. Everyone has to sign off on it, make sure it's the right thing for the client. Underwriters l- everyone looks at it, right?

[00:34:57] Announcer: Mm-hmm.

[00:34:57] Derek Notman: So we did that, but I didn't have the forms. So instead of shortcutting it, I actually had the client turn on their computer, 'cause this was, like, way early in my career.

I wasn't bringing a laptop around. I didn't have a mobile hotspot. And we got online, and I printed off the specific forms that we needed to document all this and do it correctly.

[00:35:16] H. Adam Holt: Good.

[00:35:16] Derek Notman: And we did. Eight, uh, 20 months later- 20 ... client, client committed suicide, right? So within the two-year clause. Yeah. So I wasn't even able to deliver anything but the premiums.

And so the spouse, I'll never forget sitting there at that table having to have that conversation. It was the worst meeting of my life. Um, she ended up just walking away, and I, I ended up leaving. Well, she tried to sue the insurance company and me And the insurance company said, "Well, Derek, we need to see your files.

Show us that you document everything correctly. Show us that you didn't take any shortcuts, and we've got your back."

[00:35:53] H. Adam Holt: Mm.

[00:35:53] Derek Notman: Long story short, they dug through everything. They saw exactly what I did and how I did it correctly, and I didn't take shortcuts, and everything was fine. The company had my back. There were no issues.

And I mean, terrible experience for the family, right? Like, uh, absolutely awful. Uh, but, but the point here is, like, don't take shortcuts, please. Please don't do it. Don't- Mm ... don't, like, fake forms. Don't... Any of this junk out there, it's not worth it. Um, I know it's kind of a Debbie Downer thing to share, but this is a reality- Yeah

of a lot of us that are in this industry. This does happen. Um, so just learn from that, and please do what's in your client's best interests and document the heck out of it. Even if it requires more paperwork, having to drive out to get a signature, whatever it is, do it. So there you go. That's, that's a little bit of- Yeah

not a fun story, man. That was terrible. Like, that was- I know. I- ... an absolutely awful experience.

[00:36:44] H. Adam Holt: That was an awful... I don't know why you didn't let me go last. Like, that was- ... brutal.

[00:36:48] Derek Notman: Ugh.

[00:36:48] H. Adam Holt: If anybody's still on this podcast- I

[00:36:50] Derek Notman: know. They're like, "Oh, I don't-"

[00:36:52] H. Adam Holt: They're thinking, "How many times did I..." Well, hopefully you didn't shortcut.

[00:36:55] Derek Notman: But the good news is, like, I did what I was supposed to do, right? You did. And, like, I, I was doing the right thing for my clients and myself and everything, and it turned out great, um, other than, you know, the family's not in a good place, but-

[00:37:05] H. Adam Holt: Yeah ...

[00:37:06] Derek Notman: that's a whole nother conversation, right? So anyways, just be prepared.

Do what's right for yourself, and keep listening to our episodes.

[00:37:14] H. Adam Holt: That's right. And make sure that you also tell people that there's a two-year contestability for most life insurance policies. Oh, yeah. That way you let them know. Oh, yeah.

[00:37:21] Derek Notman: Yeah.

[00:37:22] H. Adam Holt: We, we did have a situation, believe it or not. We only had one scenario like that, and I only tell you because you brought it up for me.

Now I'm thinking about it. We did have a, a, a couple, a 90-year-old couple that decided that their quality of life was not good anymore. Oh. And they took the road trip in the car and never opened the garage door, if you know what I mean.

[00:37:39] Derek Notman: Oh,

[00:37:39] H. Adam Holt: no. And they, and they, and their policies paid out a claim because they were seasoned.

So, uh, you know- There you go ... it just goes to show that, you know, there are scenarios like this where people make their own life planning, if you will. Um, and of course, all the paperwork was in order. So yeah, you're definitely right. Especially in that space, there's no room for error. None. Um, but I think it's a great, it's a great testament to also- Uh, making sure we're doing the right things for people

[00:38:03] Derek Notman: Always.

So- Always ...

[00:38:04] H. Adam Holt: any-

[00:38:04] Derek Notman: Well, let's let, let's end this on like a, a lighter note.

[00:38:08] H. Adam Holt: How are we gonna do that? You wanna talk about Jerry Maguire

[00:38:09] Derek Notman: again? Yeah, Jerry Maguire and how it's a terrible movie. Um,

[00:38:14] H. Adam Holt: I'm not sure why it's a terrible movie, though.

[00:38:16] Derek Notman: Um, you complete me. I mean, come on. Come on Like, does it ever get any more- What, you've never

[00:38:21] H. Adam Holt: said that?

[00:38:21] Derek Notman: cheese ball? Like, no, that, that's total cheese ball.

[00:38:23] H. Adam Holt: Come on. You don't tell your clients you complete me? What kind of proactive advisor are you?

[00:38:27] Derek Notman: If you are thinking of working with Adam right now, maybe reconsider if he pulls the Jerry Maguire line on you.

[00:38:33] H. Adam Holt: Wait, you had me at hello is also in that movie.

[00:38:39] Derek Notman: Oh, no. Come on. How many... We can make meme night. Show me the money. Come

[00:38:41] H. Adam Holt: on. I was like, show me the money. You're telling me a movie with at least three-

[00:38:45] Derek Notman: This is

[00:38:46] H. Adam Holt: terrible ... memorable quotes- ... but not a great movie? Okay. Oh, man. That's fine with me. All right. Well, hopefully you guys thought that was funny. Please do us a favor, make sure not only do you share this podcast with your friends, subscribe to the podcast, but forward it and ask your clients and your friends whether they think that's, that's true.

Was Jerry Maguire a good movie?

[00:39:06] Derek Notman: Yeah.

[00:39:06] H. Adam Holt: I wanna know. I want a poll on this one now.

[00:39:08] Derek Notman: Get a poll on it for sure. Oh, man. That's

[00:39:11] H. Adam Holt: great. Anyway, good stuff. Well, it was great spending time with you, and thank you of course to our friends at Bento and Philip and Meg. They did a great job, uh, on the fly and, uh, did a great interview, so thanks for your time and attention there.

Derek, as always, my friend, I will see you at the next time.

[00:39:24] Derek Notman: Sounds good, brother. W- we'll take care. See ya.

[00:39:33] Announcer: Thank you for listening to Rethink, the Financial Advisor Podcast with Holt and Notman. Be sure to subscribe now and join the ongoing conversation. The information covered and posted represents the views and opinions of the guest and does not necessarily represent the views or opinions of Asset-Map or Connectir.

The content has been made available to you by Asset-Map for informational and educational purposes only.