Grow Retire Ready Clients

James Brewer | Envision Wealth

November 14, 2019 Season 1 Episode 5
Grow Retire Ready Clients
James Brewer | Envision Wealth
Chapters
00:00:00
Introduction
00:03:36
Engaging people in the financial planning conversation
00:06:30
Moving client's to retirement readiness
00:09:33
Academics vs implementation
00:13:16
Inside the client meeting
00:15:38
Using the Paycheck Calculator vs more complex tools
00:19:51
Engaging clients with the Gap Analysis Calculator
00:23:05
Advantage of using TRAK
Grow Retire Ready Clients
James Brewer | Envision Wealth
Nov 14, 2019 Season 1 Episode 5
RetireReady Solutions
Show Notes Transcript Chapter Markers

James Brewer, CDFA, AIF, CFSLA, CFP® is the founder of Envision Wealth Planning and is regularly featured in the media for his financial expertise and support of socially responsible investing. In this episode he explores the ways he engages his clients, giving helpful examples and a glimpse into how he uses RetireReady Solutions to educate and prepare people to retie ready. 

Edward Dressel:
0:04
Welcome everyone to another podcast by RetireReady Solutions. We are pleased to have James Brewer here today with us. He's out of the Chicago area. And James, thanks for joining us today.
James Brewer:
0:16
Well, thanks for having me.
Edward Dressel:
0:18
Tell everybody a little bit about your business.
James Brewer:
0:21
Well, let's see. I've been an advisor since, oh, I think 2006 or so. I've been through the broker dealer world and decided last year to start my own RIA. I am a certified financial planner. I've actually taught some classes for the College for Financial Planning, blessed to be a contributor to Forbes.com and I look forward to showing people why subscription-based financial advice should bring in more people than the industry has been able to cater to in the past.
Edward Dressel:
1:07
So there's a lot there. You're an active person. I've seen some of your Forbes articles. Congratulations on that. Tell me a little bit about your company. Are you a solo or do you have a team you work with?
James Brewer:
1:18
Today I have one other advisor. I'm looking to bring on other advisors. My intent has always been to partner with other advisors, yet I also met a lot of people who would rather work for someone than necessarily be a partner. My mentality is that we are trying to help educate people and advise them on sometimes everyday things from emergency funds and how are we going to find the money for that? How are we going to retire comfortably and find funds to actually be able to fund that? Which is one of the reasons that I had been interested in, sought out, and became a customer of RetireReady Solutions.
Edward Dressel:
2:05
Why did you choose financial planning.
James Brewer:
2:07
Financial planning is typically something that really isn't taught. When I first came into the business, many so-called financial advisors really use that term for what they really wanted to do, which was help people invest their money. And your listeners probably know that there are a couple of schools of thought there. One that tends to look more at stocks and bonds, mutual funds, and then the world that tends to look more at portfolios. The challenge with the majority of Americans is that they've really never had any holistic, comprehensive financial planning and they tend to perceive things as kind of next problem up. But often in solving for one problem, they create other problems. They don't understand things like compounding. So, to me, rather than just try to help people with their investments--where I still believe that there's a limited number of those people in the world--there are to me more people who actually need help to get themselves situated on the right path with college planning and retirement planning and the smart way to buy a house. And how do they pay out their college student loan debts and how do they help their children not actually get in to student loan debt? So all those problems to me are larger than simply helping people invest.
Edward Dressel:
3:37
How do you engage your clients in the financial planning conversation? How do you get them? I mean, most people go, "I really don't want to talk about financial planning." There's a bunch of cartoons in the industry that make negative comments about what we do, including those made by the industry that they kind of laugh at ourselves. What do you do to help people get ready to say, "Hey, this is going to be a meaningful conversation."
James Brewer:
4:02
Maybe it's because I've become blind to some of those cartoons. I tend to really hear some things someone might be talking about--buying a house or complaining about student loan debt or something that they're discussing--and find ways to enter that conversation with people who haven't necessarily knocked on my door to come and become a client. Thanks to Google and my understanding of search engine optimization. I, prior to this Forbes.com opportunity, had been writing a lot of blog articles in an effort to have people who might be searching out what I do to actually, you know, knock on my door and try to learn more. I get a decent number of people, let's say per month, who want to learn more about what it is that I've said on a particular topic. Some of the people actually do believe that somehow financial planning is supposed to be free because in a way we've taught people quote unquote, "we give away planning" but then you productize the advice, meaning we sell you a product and that's how we get compensated. I know some people who sell insurance so they'll do social security seminars in an effort to sell an insurance product. To me rather than say, if I can make the client what they need in terms of social security, then why do I necessarily need to convince them that a path to that is buying an insurance policy? What if you find someone who really doesn't need an insurance policy? So I just find different ways to, you know, when I'm having conversation with people to find little ways to explain things like student loan debt. So knowing that so many people are touched by that or they know someone, it's not so challenging to bring that up. I've also had the opportunity to speak to a couple of colleges here in the Chicago area to their students. And to help them begin to understand that there is something more besides, "I picked my healthcare benefits and I'm getting the match or I should be saving to get the match." There's just much larger conversations. But I use those as opportunities to expand the conversation.
Edward Dressel:
6:31
How do you move them towards retirement readiness?
James Brewer:
6:34
Well, there are a few avenues there. So you know, it's just common for let's say maybe I'll take two sets of people. You've got the older sets and you've got the younger set. So you know, I used to be the young 20 something, 30 something and thought that retirement was something that you think down the road. But when you can try to help people understand that the drips of smaller amounts compounded. So I remembered somewhere in either eighth grade or ninth grade that there was an extra assignment that you could do and the extra questions at the end of the math book that actually was a practical application of compounding. Yet that's not how most people actually view that. Most people see, "Well, I saved a dollar and I don't expect the dollar to compound or become two or four dollars down the road." So trying to help people understand that aspect, when often their mind is more thinking about buying a house or "How do I overcome student loan debt?" It's interesting that people believe in "I need to go to college to make more money," but in their calculation, few people are saying, "What's the return on investment of this debt that I'm going to have when it's over?" So, showing people that you can plan for multiple things, especially when they're young and that even a smaller amount compounded can be a lot bigger deal. Usually as people age, they naturally start to think about their retirement-- some of the people are overwhelmed because they've gotten themselves encumbered with car payments, private school, college education, or a mortgage or a house that they kind of went all in on. So, you know, there I am able to typically have a conversation and just say, "You know, let's not be overwhelmed by this." In some cases you may have a lot more coming from social security than you realized to at least begin to calm them down and then start to talk about some of the other fundamentals and creating a plan that says, when are you gonna pay off the mortgage? When are you gonna pay off this? And potentially there's some other things that they could do. But, you know, for a lot of people it becomes so emotionally charged as they age. It's less emotionally charged when they're younger that you just have to feel people out where they are in terms of their emotion and then, you know, provide I believe both a caring voice and some numbers that show them that we can find a path, that they can find a comfortable retirement. It may not be the one of their dreams, but at least it's something that's comfortable.
Edward Dressel:
9:33
And I get what you're saying, but there's a world of difference between the academic side and the practical side, the implementation. And a lot of the tools, the solutions out there, kind of scare people away. It's intimidating by all of the analysis that's provided to them. What do you do to engage those individuals?
James Brewer:
9:50
I guess this to me is where we are psychologists and artists or craftspeople. So in any given situation, I think that some of the people who have been financial planners and sometimes I have conversation even with my advisor who happens to be a PhD in finance, that I have to say, well, you know, we need language that the everyday person can relate to. We need analogies that they can understand. I stumbled upon using the analogy of architecture and home building that you know, typically you don't have a group of your friends go out into a blank field and somebody dumps a bunch of stuff from Home Depot and you try to build a house. Typically there's going to be some thinking as we go through that process, a sketch of some sort in architecture design and then we bring the right craftsmen to go and build that. That works with a lot of people to help them understand kind of the elements of what planning might look like. I've also find that sometimes, like a doctor, the person's really emotional and they want an immediate fix to something. And I'm like, "Well even if you go to the doctor, it would be considered malpractice if they immediately gave you a pill or opened your body and started doing surgery if you complained of a headache. Typically they're going to ask you some questions. They're going to do some tests. You're not going to expect that there won't be a bill that they say, "There's nothing I can do for you" or "You're just really stressed out" and we need to go, "Well, geez, I'm not going to pay you for that." Well no, you actually know you're going to pay the doctor for that, but at least you know that it's not something that is physical inside of your body. So, finding analogies before you just bring out the sometimes 170 page financial planning reports or actually understanding what are the key elements that you are needing to get across to the client or prospect. I spend probably more time in preparation for my own meeting than I actually spend time with the client in the meeting. I've learned over time, they don't want me to I guess spit out all the information that my academic side wants to tell them all about. They want to say or hear, "Hey, I can help you." I remember I actually had some medical procedures many years ago and ended up needing to seek a third opinion. And I remember during one of the procedures, the doctor saying, Mr. Brewer, I think I can help you. And I remembered how that changed my mentality and gave me peace to hearing that "I could help you." I'm never going to be that specialist doctor. But knowing that I found someone who understood that I needed some calming words. So too often we forget the calming words in trying to actually dump the plan. So I think we have to just be wiser in helping people feel calm and setting their mind straight so they can hear what the answer is.
Edward Dressel:
13:17
So James, I like this. Tell me what a meeting looks like. How do you implement this with your clients when you're meeting with them?
James Brewer:
13:25
Well, depending upon the client, they may say something like, "How do I go about implementing this?" Or "Is this going to affect my current lifestyle?" That's one place where I like to use the Paycheck Calculator. It actually helps people understand that for most people, especially those who are W2, their world comes out of what they do and their workplace. So sometimes they don't understand, well the 3% match, if you do it from a traditional perspective, isn't going to cost you dollar for dollar? It may be 3% doesn't mean much to them. But you know, if it's let's say $3,000 divided by 24 paychecks, then they can go, "Oh, now I see how it works." And I said, "Yeah, then look, you get the employer match that now kicks in." For some people they still might say, "Well, you know, I see that I need to really save six or 10% but I can't do that right now even, you know, I just, I just can't see doing it." So then you could also discuss, "Well, I understand that. In fact it probably makes a lot of sense to actually save or pay off your student loan debt or whatever the encumbrances are, but you know, in three to five years when that's done, the savings number will change. It won't be the same thing today." We know a lot of people will anchor on a certain number they'll be stuck. So then to give them some idea of, well, what is it gonna look like in the future? And, then I usually give them some comfort and say, "But don't be so alarmed because ideally in the future, your income based upon getting some raises will have increased and now you would've freed the cashflow from that encumbrance, but just know that when the money comes, it won't be free cash to go and do other things because we want you to be on track for retirement, then we need to use those funds for that period of time."
Edward Dressel:
15:39
Now, the paychecks are a very uncommon tool in the industry. Most financial planners don't work with it. What difference do you see using a paycheck versus a much more complex tool?
James Brewer:
15:51
Again, I try to take the approach of meet the clients where they're at. So earlier this year, I had an opportunity to speak to an industry group later and I learned from them that one of the most enlightening things I gave them was the Paycheck Calculator. It just kind of seems to blow people away. Most people don't even understand how they're taxed. So when you start to help them relate to something that they either look at their pay stub or they're looking at something that they can relate to. Once we get really into some of the planning tools, those aren't something that most people relate to on an ongoing basis. So I think for a lot of people that blurs things. Some people just want you to tell them, "Hey, tell me the savings number and I'll figure out how to make it happen." But when you actually know that there are some people who, for example, get a $2,400 refund and to show them, well instead of the $2,400 refund, we could take the entire thing that 2,400 ends up getting you 2,400. if they're not saving. So rather than going to Best Buy or whatever it is you're going to do with the $2,400 or have in the past. You could actually, you know, double that number for your retirement and what a difference is that going to make for your future. So sometimes out of the questions and me understanding what the client's personal challenges are, then I try to look for the appropriate tool that actually highlights what their opportunity to correct their trajectory is. And just some other people that I met that were kind of graduating pharmacists from this one class, many of which had really worked, a "real job". And others just saw what their net was. They all said that I taught them more about taxes in like 10 minutes than they had ever understood in the past. So I was hoping that they would be able to make some better decisions once they got into their workplace plan and they all said, wow, I didn't understand this is how it works.
Edward Dressel:
18:15
And I find what you say a little bit stunning in that you're working with some sophisticated, intelligent people, but you're keeping it easy to understand with the paycheck tool. It's not like it's just blue collar people who haven't gone to college. You're finding some success with the paycheck tool across the spectrum. Is that, is that what I hear you saying?
James Brewer:
18:33
Yes. Well I think what's interesting is that we tend to have had in this industry an assumption of education and sophistication. So while someone might be a pediatrician or pharmacist, I even had a conversation with an engineer who actually teaches at a college and most of those people, they spend their waking hours thinking and getting better at their craft. What we do, is a craft. If we can find analogies that help them relate to the topic, that's great, but more specifically we are, at least I believe, should be craftspeople in our own so they should never have our level of sophistication in what we do. I just think that we've got to forget the assumption and that often they actually appreciate the fact that we are educating them and in some ways, again keeping it somewhat high level, but they do appreciate working with someone who does spend the time being a craftsperson and something that's gonna really make a difference in their life.
Edward Dressel:
19:52
You use the paycheck tool and there's not a whole lot of software out there that has that. And we love that. I hear great stories just like you told us about that. What other solutions do you find in our tool set that you go, "This is a good solution for engaging my clients"?
James Brewer:
20:07
Well, what drew me to the software in the first place was the Gap Analysis. I find I'm using, the Quick Gap Analysis tool. So you know, for a client--to actually show them here are the dynamics of your life. So if you're actually using the tool versus the printout--often it's difficult to explain to people what are the differences in the levers that you can control. It's common that people like the idea of, "Well, can't I just get more return?" Well, you know, I said 10% return on a dollar is a dollar 10, but 10% return on $1,000 is $1,100. So, you know, showing them dynamically, you can use the levers to show them, "Look at the difference that savings makes." In comparison to what the difference in getting more return and "Oh yeah--by the way, as you try to go up the return ladder, you have more volatility in terms of what your account balance looks like--" which few people like to see an accounts balance that's going up and down. If you're saving, the savings, as long as you continue to work shouldn't be volatile, especially again if you're a W2 worker, so I find that in a lot of people's case, we need to educate them. I still feel that some of the education is in helping to deal with their behaviors and emotions around money. You could also show them, "Hey, by the way, we could decrease the distribution percentages, but I don't really think you want to live on less money." "Oh no, no, I don't want to live on less money!" And I think that, you know, any time you go, okay, I see where I need to go, but I can't get there today because often some of their emotion and not wanting to believe what you're showing them is because I can't snap my finger and potentially go from a 3% savings rate to a 10% savings rate. So I think showing cost of waiting, the cost of waiting not as in you're necessarily not taking action, it's just giving us an idea of well down the road, once we tackle these other issues, then we're just kind of have to save a bit more. But don't be panicked, I'm just telling you up front. So we're planning for that for the future. I found that using it that way--as both kind of an education tool and then a future planning tool--tends to get people to be more on my side of the understanding of the change that they need to make and be committed to that change.
Edward Dressel:
23:06
Our Quick Gap Tool tends to be a little bit lighter than other financial planning software, especially some of the higher end stuff. What advantage do you see in that when you're working in sitting down with a client?
James Brewer:
23:16
Coming from a long time ago when we would love to put in these big thick binders, all the pages that we could generate and people would be totally confused. When you generate all that paper you tend to want to show them all the things. Being able to really isolate the keys to someone and their change. I think that, you know, you're not losing with the less full featured quick gap analysis. Just a lot of people, especially those who are somewhat early in their career, maybe even mid-career people and just giving them an idea of, "How's this all supposed to work?" I recently wrote an article even on IRAs and Roth IRAs. Most people don't really understand the Roth versus the traditional IRA . Few people actually understand taxes. We like to sometimes make it really complex and wonder why people typically don't implement those things that come out of the big binders. I am a fan of people coming up with what I use the phrase "money action plan". Feel free to use that--"money action plan". The acronym comes out to map. So if we can move people to action, then we as practitioners are doing the real job to me that that planning should be all about in the first place.
Edward Dressel:
24:51
And I've heard those thick binders, they stick on the shelf versus getting people to implement. Do you find having something a little bit simpler and easier to understand creates better action?
James Brewer:
25:02
Yes, I have people tell me this is the first time I've ever understood this. I feel sorry for the poor person who, you know, most of what they get is either what friends and family says or if they had been fortunate enough to be at the enrollment meeting for the retirement plan. But typically it's, "Hey, save money." Savings is good. Save as much as you want. You know, rather than actually saying, well how does this all work? You mean that small amount of money? I think some of the reports that you can again, breakdown if you choose to use that report and show them, "Well this is how compounding works and it gives you like the year by year growth." Some people are in disbelief when you say, "Well, there's no way that that amount of that small amount of money per paycheck is ever going to amount to a difference in my life." For that person, there's a report that goes and shows that. So, you know, as I say, often pushback is either behavioral or something that's kind of a fundamental education. When you can show them it's the fundamental education, "Oh, I really never did or understood that problem." Again, it was eighth or ninth grade math that said for extra credit, do this compounding thing then now you actually show them how it works. Then if they don't want to implement, then you know, it's more of a behavioral. So now you get to go treat the behavior--what's really going on with you. But if it was simply one of education, now you have a simple report to actually show them the parts that they really have more control over, which is typically how much they're going to save versus how they're going to get better investment returns.
Edward Dressel:
26:52
Well, James, I appreciate you taking the time today. I appreciate your commitment to behavioral finance and your education there and keeping it simple. Seems to have helped your clients. Any closing comments from you?
James Brewer:
27:05
No. I just encourage people to consider how effective you have been or want to be regarding helping your clients actually, you know, be on track and not as a pun to be on TRAK, but to actually implement the advice. And I think that the tools that RetireReady offers goes a long way for the majority of people and helping them understand the actions that they can control, that they should be taking so they can retire ready.
Edward Dressel:
27:39
Well, I appreciate you taking the time today. I wish you the best and thank you for the interview. You have a great day.
Introduction
Engaging people in the financial planning conversation
Moving client's to retirement readiness
Academics vs implementation
Inside the client meeting
Using the Paycheck Calculator vs more complex tools
Engaging clients with the Gap Analysis Calculator
Advantage of using TRAK
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