Tuesday Email: Personalization vs. Purpose

Happy Tuesday!

Every Tuesday I'd like to offer strategies for the week ahead and a thought to fuel your action.

It is very annoying.

And we’ve all been there.

That moment we finally have a second and want to just sit and do nothing. We want to consume some think-less show or movie.

So, we scroll through Netflix.

Again. And scrolling more.

Thirty minutes in, we've browsed through every one of the "personalized" recommendations.

We’ve watched the previews. Nothing feels right. We give up and rewatch The Office for the third time.

Americans, on average, spend 110 hours per year just deciding what to watch.

That's five full days. And despite Netflix's algorithmic sophistication (80% of views are driven by recommendations), 85% of us eventually give up and rewatch old shows.

Netflix knows what we watched.

It knows when we watched.

It knows how long we watched.

But it doesn't know why. It can't see that we're rewatching The Office because we just had a brutal day at work and need comfort food for our brain. It doesn't know we're not looking for "content similar to what we've watched." We're looking for a specific emotional state.

The reality is, our CRMs do the exact same thing.

We have all of the data on all of our clients.

We know who likes golf, when they want to retire, what their retirement target net worth is. We have the data. And that is key, because data is foundational. There's no doubt about it.

The question, though, is do we know the why behind 65 or the reason golf is such a passion or the meaning they have tied to that $3 million number?

That's the gap between personalization and purpose.

Think about Amazon Prime for a second. We all use it. And to some extent we are likely addicted to it. But are we loyal to Amazon?

Prime members spend twice as much as non-members. That sounds like loyalty.

But it's not emotional connection. It's friction removal.

We spend more because it's convenient, not because we love Amazon. If a competitor offered the same speed and selection at a lower price, we'd switch tomorrow.

Patagonia is different though.

They have created a following that believes in their brand not because of the simplicity or the convenience. They are deeply tied to the purpose of what Patagonia is about.

Through different programs and a purpose driven culture that lives in the DNA of the entire company, people act as advocates. They pay a premium for the product.

And they are emotionally loyal.

Emotionally loyal clients drive more revenue, but it’s stickier. They stay with the company because competitors may cut them on prices, but they have no purpose.

Purpose creates loyalty, deep, meaningful and emotionally connected loyalty.

There is this concept known as the Dunning-Kruger Effect. Simply put, it means that people that have less true knowledge on something actually have more confidence about knowing about that topic. It’s a little backwards, but it happens.

And I think, me included, we fall into this trap with our clients.

We have our CRMs full of data on all of our clients. And some of us have more data, then others.

And we believe that because we have the data that we know the meaning behind the data. And thus we have a deep understanding of our clients.

Yet, many of us struggle to recall that information and also tie the content to the context and meaning.

It’s not a fallacy, it’s a human challenge.

But it’s one that we can overcome with intention by not stopping at having the data. And taking that next step to understand the meaning behind the data.

It’s also funny because by taking the data only, we tend to take the content from our clients at face value. Not a problem.

But many preferences and responses are mimetic. Meaning that people choose what they see others choosing because as a society we are wired for social comparison.

For instance, when a client says they want $5 million in assets before they retire, they are likely expression something they heard a friend say they had or was their goal.

And the way we better understand our client is by asking them “what is important about $5 million in retirement assets to you?”

This spurs conversation and deeper understanding and connection.

We can ask our clients what they like to do. And maybe it is golf.

And with this information we can then put it into our CRM and start sending them articles about popular courses. And send them a gift card to the PGA Superstore for their birthday.

That’s fantastic and personalized.

But what if we asked why golf is important to them? And maybe we uncover because they see the golf course as a place to connect with their kids because that is where they used to connect with their own father.

Maybe that now changes how we think about planning. And we are working to plan towards family connection experiences on the golf course as opposed to just being about the sport.

The sport of golf becomes known more than hobby. It’s a emotional connection outlet.

That’s fantastic and purposeful.

I recently concluded my latest national study on AI in wealth management. We asked 1,000 affluent Americans (those with over $100,000 in investable assetes) what they want when AI handles the routine work. The top three priorities were clear: personalized guidance, identifying opportunities and risks, and overall financial review.

These are tasks that require us to be human. And to connect deeply with our clients.

The data was strong across wealth spectrums and demographics. Both from clients we all likely serve today and will likely serve in the future.

But looking at our current client segment, baby boomers, they said they want personalized advice that adapts as their life changes.

Clients are comfortable with their advisor using AI.

But they want more connection if we do.

AI and humans create such a symbiotic and powerful relationship. AI handles the pattern recognition and the advisor handles making meaning of that data. The advisor is applying what the data means for the client’s purpose and why.

Our CRMs are a decision engine for facts, but our advisors are the stewardship engines for meaning.

I’ve become a fan of this process called The True Wealth process. I believe that it gives us a roadmap to move from personalization to purpose.

And it’s broken down into five E’s or five stages: Explore, Engage, Envision, Enlighten and Empower.

The idea is that we must gather the data first, that is the foundation. Then we use that data to engage in conversation and go deeper with active listening. Once we have a deep understanding we connect the dots to help the client envision what they are actually wanting based on what they are saying. And then we show them how their financial plan will help them reach that vision. Finally, we empower them by connecting their plan to their vision to spur action.

It’s powerful and it’s meaningful. And it’s done over time, not in one sitting.

I will close with a revelation.

I'm a data hoarder.

I've spent years building systems to capture everything. Notes, research, conversations, insights. I've always believed that having the data was the answer.

But as I started to build with AI and started to try and figure out how to get more out of the data I had, I realized I must answer some tough questions.

And it was uncomfortable because I realized the data alone didn't make anything easier or better.

I had all this information, but I didn’t understand the meaning behind all of it.

So I asked myself those hard questions:

Why does this data matter? What's the purpose of collecting it? How should it inform what I build?

Data is a foundation. It is the starting line, not the finish line.

And I think the same is true for how we work with clients.

We need the data. We absolutely do.

But just having their information doesn't mean we understand what matters to them. If we don't ask the deeper questions, if we don't build exploration into the relationship, we're personalizing at them, not understanding them.

And that's the shift we need to make. Personalization is having the data. Purpose is having the understanding of why.

The FutureProof Advisor goes deeper.

The best is ahead!

-Matt