Sunday Email: Getting Client to Take Action / Communication

Read time: ~ 4.30 minutes

Happy Sunday!

Every Sunday I offer strategies for the week ahead and a thought to fuel your action.

I recently finished the book Creativity, Inc. by Ed Catmull. It’s an inside story of building Pixar. For those looking for inspiration to ignite their creativity, this is a must-read. 

I’ve consistently been curious about ways to help people accept and thrive in change, especially when it comes to wealth management. Many of the objectives we put in place cause people to change habits, thinking patterns, or just delay gratification, all of which are changes to their everyday lives. 

Also, our industry is undergoing a great opportunity to evolve and deliver more value, services, and efficiencies. But it will require us all to change our mindsets a bit. 

With a desire to help all of us create more optimal environments for our clients to succeed and our firms to thrive, I believe that by helping better understand the components of resistance to change and ways to overcome them, we will all be better. 

Within the book Creativity, Inc. Ed Catmull had a quote that stood out: 

"I’ve said it before, but it bears repeating: Things change, constantly, as they should. And with change comes the need for adaptation, for fresh thinking, and, sometimes, for even a total reboot—of your project, your department, your division, or your company as a whole. In times of change, we need support—from our families and from our colleagues." (Ed Catmull and Amy Wallace, Creativity, Inc.)

What struck me here was the need for “support” in times of change, which is ultimately our greatest value to clients as they retire and navigate their financial journey. For us running firms, we need community. Hopefully, that is what you find here and within your own networks. Community allows us to feel supported and safe as we do new things. 

As I read this book, I came back to a post I wrote about a year ago, and I found value in reading it again. Change can seem overwhelming—it’s a lot. Thus, we need a strategy to break it down and gain traction to create habitual change. 

So, here is the post that inspired me recently, and I hope it inspires you. 

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In Charles Duhigg’s acclaimed book The Power of Habit, there’s a section that delves into the mundane yet essential act of brushing teeth. This simple habit isn't driven by our love for brushing but rather by the rewarding sensation of freshness we experience afterward. The payoff is instantaneous—a quick, tangible reward for a less-than-appealing action.

Habit formation revolves around a simple cycle: cue, routine, and reward. 

This loop, referred to as "The Habit Loop" in Duhigg’s narrative, becomes successful when the span between the cue and reward is minimized. Our innate desire for instant gratification propels us into solidifying routines once the reward is realized.

The challenge with financial planning lies in the vast gap between the cue and reward. 

Take a 30-year-old saving for retirement, for instance; the cue arrives when the paycheck is received, fostering a desired habit of saving in a 401k, but the reward (a comfortable retirement) is a distant 30 or more years away. 

Stacking wins is key to habit formation and adherence to a plan. Execute the act (brush your teeth), reap the reward (enjoy fresh breath), and you’re inclined to continue this pattern. However, identifying these win stacks in financial planning is elusive, often hindering our adherence to and complete execution of a financial blueprint.

Our aversion to change also has evolutionary and neurological roots. 

In prehistoric times, straying from known territories or experimenting with unfamiliar food could spell death; hence, we stuck to known areas and tested foods. Our brains are not naturally predisposed to learning new things as it drains energy. Given that the brain already consumes about 20% of our energy, the additional exertion of creating new neural pathways further escalates energy consumption, prompting us to revert to familiar, energy-conserving behaviors.

This inherent penchant for the status quo makes the rapid pace of change and innovation in contemporary times particularly daunting, especially for older generations. 

To transcend this barrier, we must outsmart our instincts, which begin by understanding our natural tendencies. It's not about confronting our inherent traits head-on but rather devising strategies to outwit them.

Logical appeals often fall flat. While the allure of a well-crafted financial plan may appeal to our rational selves, our brains, driven by ingrained instincts, often resist change. Hence, simplification is crucial.

In his bestselling book Atomic Habits, James Clear presents a potent tool – the 2-minute rule. The crux of this concept is to distill a large goal into the smallest possible action, an action that takes less than two minutes to complete. For instance, eschew the lofty ambition of running an hour every other day; instead, aim to put on your running shoes at a designated time. This simple act of starting is a gateway to forming enduring habits.

Initiating action can alleviate the paralysis often induced by grandiose goals. Establishing a cue that triggers a habit eventually leads to a rewarding outcome.

Setting monumental goals like retirement or a house down payment can be overwhelming in the realm of financial planning. The prolonged duration before reaping the rewards often undermines motivation. 

The solution? Fragment these long-term objectives into digestible, short-term actions.

Consider a couple saving for a house. The modest act of transferring $5 daily at 8 a.m. from one account to another could be their starting point. It’s a task requiring less than two minutes, yet over a month, a savings habit is fostered. While the savings amount will need to increase incrementally over time, the foundational habit of transferring money has been established.

Remember, financial planning essentially entails a current self-investment for a future payoff, an endeavor quite against our evolutionary grain. Our instinctual cravings for immediate gratification often thwart our best intentions for future security.

The discourse surrounding these instinctual behaviors isn't about right or wrong; it's about acknowledging reality and devising a strategic blueprint to help clients transcend these barriers.

The foundational framework for propelling our clients towards their financial goals commences with setting simple, attainable objectives governed by the 2-minute rule. This approach aligns our strategic financial planning with inherent human behavior, significantly enhancing the probability of attaining long-term financial objectives.

A Thought To Ponder This Week

I hate flight delays. 

Even more so when you are on the plane and just sit there. Mechanical issue or any other delay. 

The unknown of when we will leave and whether we will make it to our destination or connection on time is frustrating. 

The other day, I had the inevitable delay. The pilot came on speaker to let us know. 

Ugghh. 

Five minutes later, the pilot comes back on and reports what is going on. He doesn’t provide an estimate but says he will provide updates. 

Then, about 7 minutes later, another update. 

And then 10 minutes later, another update with a potential ETA. 

About 7 minutes later, the pilot exits the cockpit and takes the speaker before the passengers. 

He apologizes. 

His ETA was incorrect. 

The maintenance team was still working, but they would fix the issue, and we would leave. 

He apologized, thanked us, and said he would provide another update. 

About 20 minutes later, we got the green light. 

This was about an hour and 15 minute delay, yet I was at peace with it. 

Transparency and consistent communication are key to those who are not close to a situation. The pilot gets frequent updates. Some pilots provide updates, while others just assume the passengers are okay. 

I learned something from that pilot that day. 

When you think others know what is happening, communicate to them. When you are wrong, admit it. And finally, connect with your people by explaining tough situations in person. 

As we head into the week, this story provides us with so much to think about. But one of them is to think about what information you have thought about on a client that has yet to be communicated to them. Well, take this week to communicate it to them. 

The best is ahead!

-Matt