← AICPA Personal Financial Planning (PFP)
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- [00:01]
A
I'm Carey Sinnott and this is your Personal Financial Planning podcast. CPA financial planners are trained to master complexity. Tax codes, projections, estate strategies, business exits. But sometimes the hardest challenge isn't technical. It's human. In a world where planning implementation happens best when our clients feel not just analyzed, but seen and heard understood. If you're ready to bring more meaning and connection to your technical brilliance, this podcast is for you. Welcome to the American Institute of CPAs Personal financial planning Podcast. I'm Kari Sinnett. As the leader of the PFS designation, the Financial Planning credential exclusively available to CPAs, my role is to keep you informed, educated and connected to a premier community of thought leaders delivering trusted financial planning. We explore the full range of planning topics and the current events shaping our profession. If you're an advisor, a CPA financial planner, or simply want an inside look at today's topic of making planning human, this podcast is for you. In this episode we explore how CPA financial planners, already trusted for their clarity and rigor, can can deepen their client relationships by leaning into story and simplicity and the courage to be human. We'll talk about how to ask better questions, use sketches to cut through the noise and bring purpose into every planning conversation. Today we're joined by Carl Richards, behavioral finance expert, best selling author of the Behavior Gap in his newest book, Your Money 101 Simple Sketches that Reimagine Wealth. Those sketches have made him famous, sketches that have sparked countless financial epiphanies. Carl spent his career helping advisors shift from being just smart technicians to becoming understanding guides. His simple drawings and storytelling approach have opened up conversations that numbers alone never could. Carl, welcome.
- [02:26]
B
Carrie. So excited and really actually honored to be here. So thanks for having this conversation.
- [02:32]
A
Our pleasure, Carl. CPA financial planners are known for their technical excellence, tax strategies, projections, the math of planning. But that technical strength can sometimes become a barrier to emotional connection. How can a CPA financial planner start to shift towards deeper conversations without feeling they're abandoning their analytical roots?
- [03:02]
B
Yeah, that's a really great place to start because I think it's important to emphasize that the technical aspect of the job of financial planning is incredibly important. Right? And this conversation requires us to hold two competing truths in our minds at the same time. The technical part is incredibly important and it doesn't really matter at all if we don't get the human piece right. And my favorite example of this was what? And I'll paraphrase what Stephen Covey said, that the last thing you'd want to do is spend Your whole career, your whole life, building a ladder, only to find out it was leaning against the wrong wall. And I think there's so much to unpack about the technical piece versus the more emotional or human piece. But I think if we first keep in mind, speaking broadly, your audience is not part of. I don't think of them as the financial services industry, but we're all in it. And speaking really broadly the industry, and I think especially the professionals in the industry, we're at risk of becoming sort of sellers of certainty, right? There's a sense because we're so technically competent, right? We have the best calculators and the biggest spreadsheets. There's a risk that we can fall prey to this kind of false sense of precision and forget that the end of the day we're dealing with complex adaptive systems, a whole bunch of them, actually. Humans are complex adaptive systems. Markets are complex adaptive systems. Banking's a complex, like the whole. We're dealing with a complex adaptive system of complex adaptive systems. And we have this really strong desire to make sense of it all because that's a human compulsion. And sometimes we fall prey to this sort of physics envy issue where we're like, there just has to be a law of gravity for how humans behave with their money. But there isn't. And so we need both the technical piece, which by the way, is becoming easier for people to get. I mean, it's incredibly important and it's table stakes at the same time, but we also need to help people get really clear about where they're going, right? What's this deeper sense of purpose? What's it all for? Because the last thing you'd want to do is build a ladder, climb the whole thing and find out it's leaning against the wrong wall.
- [05:37]
A
Right? So true. And I'm going to share a little bit of my past. 20 years ago, my 8 year old was sitting in the kitchen, I was talking with my wife, she had just made a sandwich for him and I told her, how do I help these people implement their financial plan? And it was my 8 year old who crystallized it for me because he said, you know what I mean? I didn't really like peanut butter that much until it was peanut butter and jelly. And it just blew my mind because let's pretend peanut butter is the technical jelly. That sweet part is the emotional, that connection. That's when I had my first financial epiphany of putting it together. Could help it go down, be so much sweeter and become a favorite. And you know, I appreciate you saying that. Cause you often talk about your sketches as these conversational grenades. Even they're simple drawings, but they interrupt the usual way we talk about money. And so Carl, can you walk us through one of your most impactful sketches? And since you mentioned certainty, maybe the certainty button and how a CPA planner might use it, that sketch to unlock a conversation that gets to a deeper client understanding of the value maybe of continuous planning rather than just, I don't know, drawing one line that extends 30 years into the future.
- [07:23]
B
Yeah, yeah. In fact, let me use that last sketch you just talked about because I think if we start to understand the interplay between technical skills and being a guide and realize this isn't just because it sounds fun or because I spent a lot of time in the mountains or because Utah is close to California and everybody in California is, you know, woo, woo. It's not. That California thing was a joke. Right. Like sometimes people say, oh, so California of you. It's because what we care about at the end of the day is the long term success of the client. And the client is going to measure that success by reaching a desired future state. It's progress towards their meaningful goals that matters to them, not outperformance of an index or the quality of your plan.
- [08:23]
A
I think you're so on target. It's not how many brilliant strategies you presented, but what brilliant strategy that you presented that was meaningful to them, helping them get to the goal. Am I understanding you right?
- [08:39]
B
Yeah, no, that's exactly right. I just want to make it clear, like sometimes these things are thought of as like the soft skills. I don't think there's anything soft about them. Right. I think they're actually going to be career survival skills soon. But even if there's not a threat of that, which we could talk about all day long, but even if there's not actually, let me tell you a stat and then we'll get to the sketch. There was a fascinating study in Russell and Prince's book years ago called the Private Client Attorney. And the population for the study was high net worth families who valued and were willing to pay for advice had paid and I can't remember what the number was, but it was a substantial amount for estate planning advice. So you can imagine these are very similar clients to who CPAs would work with. So the high net worth families valued were willing to pay for advice, had paid for an estate plan and didn't implement it. And we all know this. Like I've had my trust worked out and you look, nothing's titled in the trust, so they didn't implement it. And the question was why? And I can't remember the exact percentage, but it was the overwhelming. I think it was in the 90% of these people who didn't implement said the plan didn't reflect what we wanted. I think I first read that 15, maybe 20 years ago and it still haunts me a bit like if we ever have an advice adherence problem or if you wonder, like the question you asked, like, how can I get people to make this change? How can I be able to get people to do these things? We must not have nailed the problem that they're trying to solve. Because if we've nailed the problem, then there's all sorts of motivation. So let me just describe a sketch real quick that I think helps fit this. So this is sketches in the new book. It says down the bottom, current reality. The bottom left hand corner of the page says current reality. The upper right hand corner says goals. And we can have a whole dialogue about the use of the word goals. I like, I actually like to think of goals as guesses. And then there's what you would normally see current reality. Like where are you today? Where do you want to go? Right. And there would be a straight line drawn to that. And that straight line is important. We've talked about it. Please be the best line drawers on the planet. Like your technical skills matter. Like if I'm a mountain guide, I've guided people in the mountains. When I go into the mountains, I have a very detailed plan. I know what trail I'm going to go on. I've looked at the weather forecast hourly for days. I know exactly what we're going to do. Right, that's that straight line. But the sketch actually just shows a wavy line that if there was a straight line, it was the one. Wavy lines going above and below the line, almost like a roller coaster. But it's narrowing in the, the, the big waves are getting smaller and smaller. It's narrowing in. That's actually one of the most useful sketches for financial planners because you can essentially say look. And you can draw the, the line and say, look, I'm going to do this. Right. Just like a pilot would have a detailed flight plan, I'm going to do this. Would you fly with a pilot with no detail? Of course not. But I've asked hundreds of pilots at this point, how, for every flight do you prepare a detailed flight plan? And they all say yes. And then I ask them how often does the flight go exactly according to the plan. And every one of them has said never. So we need. What I'm trying to demonstrate here is that we need to get more comfortable with the idea that our models are wrong. And then let's learn to make them useful. Right? The only thing you know for sure about your financial plan is that it's wrong. You just don't know how or why yet. And so your real job isn't about being precisely correct today. Your job is to be a little less wrong each day with the client. And what are you narrowing in on? You're narrowing on their sense of purpose, their goal, not yours. Their sense of purpose, their goals. How you're narrowing in on a desired future state. How are you going to narrow in on the desired future state or sense of purpose if you've never talked about it, if you haven't even helped them define the desired future state? You and the client have no idea where you're going. And you're back to that survey where people say, I'm not implementing anything because it doesn't reflect what I want. So I'm trying to be more direct about these are not cute, fun skills. I think these are mission critical skills if we want to serve the client right. And if we serve the client, turns out we'll build a business for ourselves too, right? Those are both important.
- [13:07]
A
You know, every time we do the technical side really well, it infers competence, it infers certainty. But if we don't pair that with, by the way, we live in an uncertain world. By the way, these are variables we can't control. We're trying to plan for them. If we don't do both of those combined, I think we do a disservice to the client. And you know, Carl, many CPA financial planners work with high achieving clients who are driven by numbers, goals, optimization. But in getting to that idea of understanding your client, what have you learned about helping these clients to pause, reflect and define what enough really looks like and for us to then understand that so that we know what is important to our client?
- [14:11]
B
Let me just pick up on a word you used. It was optimize. And I think the important thing here is for us to start having a discussion about what we're optimizing for. Highly successful, driven, type A personality. This comes up a lot. People are like, my clients aren't into like, oh really? They want to win, right? Type A driven. I want to win. I'm busy. Professional. I want to win. I want to optimize. I want great performance. Okay, for what? What game Are you trying to win? What problem are you trying to solve? What thing are you trying to optimize for? And I think allowing people to get clear. And one place that shows up often is this question you asked around. Enough, right? When is enough? Listen. One of the most common conversations I'm having right now is with these masters of the universe. I do a lot of work in the startup and venture capital and private equity world. And when my work gets shared there, I often get these private side conversations. I live in Park City, Utah. A lot of these happen a lot here. Like, people will come to visit, they'll have read some of my work and they'll send me an email that almost looks like it. They're trying to keep it secret. Hey, could, could we meet? And we meet. We often used to meet at this really specific coffee shop, even the same table, because I was trying to embed the table with the emotional patina of these conversations. And they look around and these are the type of people you're talking about. Like, they've won, whatever that means. They look around and they show some proof of winning a balance sheet or an income statement. And then they look around again to make sure no one's listening. And they say, you know, this is 45 to 55 year olds. Typically, like, they say, what? Gosh, what was it all for? Like, is this what I did it for? And my wife doesn't know me, my husband doesn't know me, my spouse, I don't have a great relationship with my kids. Is this what it was all for? And so I think this comes back to this question of defining enough and how your audience can start thinking about this is just like the types of questions you want to ask can be really simple. Like, if we were meeting three years from today, this is Dan Sullivan's question. If we were meeting three years from today and you were happy with how your financial life has gone, what would have had to have happened in order for that to be true? Or what's important about money to you? A little bit further off the spectrum on the emotional side of things or just even paying attention, how about a question like this? Totally get that you're here today because your performance has been bad at the other place. Get it. Like, help me understand what would be important about perform. Like, why does performance matter to you? What are we trying. Oh man, I just. Someday I want to retire. Okay, totally got that. And then you start looking for crunchy bits like, like the emotional resonance of like, tell me more about just want to retire someday. How are you balancing that with living today? Like part of financial planning is this never ending series of trade offs. Right. How are you balancing that? Like what, what, what else is going on? Oh, I'd like to spend more time with the kids. Okay, interesting. Right now we're okay. What does more time with the kids look like? What would have to happen financially for you to spend more time coaching your daughter's soccer team? Ah, this would have to happen. Now. We're talking about a financial plan built on a sense of purpose and goals. And we could go on for an hour here, but that's the kind of way I would start to look for those things. You know, some hints would be, what do you do in your spare time? What podcast do you listen to? If you subscribe to magazines, what magazines do you get? Because we're not trying to beat an index, we're trying to build meaningful lives. Right. And so back to where we started. You know, that's the idea of like two things need to happen with prospective clients. And this is something I think is important for your audience. You need to be able to thoroughly diagnose them before you prescribe. Now, with your audience, many of whom have had lots of reps at this, there's probably already some pattern recognition that goes on in the first three minutes. I bet everybody listening can relate to this. Like, I knew in the first three minutes what we were going to do and you were probably right. Right. So that's one half of the equation. But here's the question. Does the client feel thoroughly diagnosed? So you have to thoroughly diagnose. Right. And those are two different things. So you may know in the first three minutes and it's okay with a piece of this being theater. Right. The rest is an opportunity to give them the chance to feel, feel seen and heard. They're going to walk. You want them walking out of your office being like, gosh, I never really linked how hard we're working to the idea that we want to make sure the kids go to the best school possible. Right. Because that was so important to our parents and us. And other people may say, I've never really thought about how hard we're working because we want to have time with the kids now and we'll help them figure out the school later. Those are both fine, but you got to hear it in order to help them paint that desired future state.
- [19:39]
A
You know, I, I really saw the biggest error that I was making early in my career and I got so lucky because I had a mad client and I was bringing up their performance. And look at how relative performance is doing so well. And you know what they said to me, Carl, what does that have to do with me? I was like, we won, we did great. But it wasn't relevant. So I switched then from relative to performance. And you always have to show it, but a focus on why this performance is relevant to you, what you want to achieve. You said you care about these three grandkids. You said that you wanted to live on a lake. You said that you just wanted to have the freedom to not work anymore. And those are all the relevant things that clients are looking for. And we can deliver if we remember the technical side is built to provide the relevant.
- [20:45]
B
Let me just comment on something real quick. Just remember, clients don't care. I mean, look, they might because you've got headline risk in the news and all that stuff. Of course we got to deal with that. But they care about progress towards their goals. They don't care about beating an index. And, and I'll go one step further, clients don't actually care about your solutions. They care about their problems. Right. And that's really hard for technical professionals to accept. You thought your value was in solutions. Your value is actually in presence, like deep presence, allowing somebody to feel and heard and seen and getting clear about a desired future state, then lining up the use of capital against all that stuff and all the technically smart ways you do it. So I love that story. Thank you.
- [21:32]
A
I agree. And let me do a quick ad here. We have a PFP symposium coming up January 21st through the 23rd in San Diego. And if you like listening to this level of thought leadership where, look, I know how to do the job, but you want to do it better. You can sharpen your expertise. You can earn 17 CPE credits and connect with some of the brightest thought leaders in financial planning. And if you want to earn a PFS credential, just show up a couple of days early. There will be a PFS live workshop and you can take the exam right then prior to the PfP symposium happening January 21st through the 23rd in San Diego. Carl, your work sits at the, let me call it, the intersection of behavioral finance and the art of financial planning with storytelling. What advice do you have for the technically minded advisors who want to bring more creativity or even vulnerability into their planning conversation? I'm buying into what you're saying, Carl, and I want to know, how do I do this? How do I get it started?
- [22:52]
B
Like anything that you want to get better at, you practice. And I Think the core competency you're trying to practice is curiosity. We could say listening, ask open ended questions, do it. But underneath all that is real deep interest in the human being you're sitting across from. And that can be phrased up in this idea of curiosity. And so the way I would do that is I would just start paying really close attention. Just, just remember, like before we started recording, I have a little process I go through to remind myself to be right here. Right. Like just start practicing that with the next client who comes in. You can practice it at home. I do this all the time with my kids and my wife and I. I screw it up a lot. So it's not like I'm great at it. But I'm trying, I'm practicing. And I find it not particularly useful to get too prescriptive in terms of tactics because the tactics are out there. You know how to ask open ended questions. If you don't, you know where to find a book and it's on YouTube. Right. What would it mean if you were just 10% more present in the next client meeting? What would it mean? How could you just look for things that cause you to go, hmm, I have a, I call it the huh face. Look for things when you make the huh face or. And all you have to say, to be honest, all you have to say about those things is, oh, that's interesting. Tell me more about that. That's it. You know, there's not like super jiu jitsu moves, you don't have to be a black belt, just all you have to be is curious. Just practice being curious.
- [24:33]
A
I'm going to be curious for a moment. Here are CPA financial planners listening, I'm sure are thinking about this question. Okay, I will try to be more present. And by the way, as I ask this question, I will develop my own way of being more present. But share with us what you do to get ready to be more present, to be in the moment like you're talking about.
- [25:00]
B
Yeah, I love that you pointed to I will come up with my own way because this doesn't require you to be somebody you're not. Right. And there's a whole bunch of different versions of this and one is not better than the other. And so being who you really are and sort of leaning into that. And by the way, Carrie, I think that's going to be increasingly important. I think being more human is the answer to any sort of perceived threat from technology. Be more human. And the way I try to do that is I try to Turn all the distractions off. So that's a tactical thing. I can't touch my phone because it's my camera, which people aren't seeing. But over on that other computer I could certainly check my email or something right now. I try. I don't always succeed, but I try not to do that. And then I try to remember, like, this is everything I ever wanted. To have these kind of conversations and to have anyone care, you know, and listen, what an honor. And I think the way I would phrase that if I was still a practicing financial planner, I've still got my CFP designation, I keep up every year. But. But if I was practicing and I do this in individual conversations and I have friends who still come to me, like if I was a financial planner, I would. Just before I develop some cue or two, it could be that your hand on the conference room door when you go to open, could be before you get up out of your office. It could be when the receptionist calls and says the Jones are here and you're going to go. Just take a second to just remember what you're doing. You have one or two humans that have come to you to talk about something. They have no other place to go. It's become so normal for us CPAs. Like, come on, like, he's just like numbers all day long, money all day long. Most people don't do this. The people that you're about to walk in to talk to are nervous to talk to you about it. They're nervous to talk to anyone about it. Underneath all of this talk of balance sheets and income statements, all are dreams and goals. If it's a couple, the balance sheet has all sorts of embedded shame and blame already in it. Because one couple thought it was a good idea, the other thought it was a bad idea. Whether it went good or bad, you got something going on. It's just pause to be like, I want to use the word. What a sacred opportunity to be in that space with people with all your technical prowess and all your creativity all in one place and just. So just develop some little reminder, some little reminder, as callous as it may feel for you, some little reminder like, wait, wait, this is important to them and what a blessing that I get to be in that meeting today. Like some little reminder. That's what I would do.
- [28:06]
A
Carl, thank you for sharing with our community of listeners. And if you're an advisor listening now, who wants to deliver premier financial planning similar to what Carl is talking about, with confidence, explore everything. The AICPA PfP section has to offer. You can go to aicpa.orgpfp if you're interested. For 269 a year, AICPA members get access to a library of technical guidance, webcasts, behavioral finance insights, planning tools, and expert insights, all designed to help you serve who your clients at the highest level. And if you're a CPA with 3,000 hours of financial planning experience already, consider showing your expertise. This is near and dear to my heart. Show your expertise next to your name by obtaining the PFS credential@aicpa.org PFS. You know this is our podcast together. If this episode helped you in your practice, we'd be honored and grateful if you shared it with your professional community. With almost 500,000 downloads so far, the AICPA PFP podcast is helping to advance the profession one listener at a time. This has been Kerry Sinnett for the AICPA Personal Financial Planning Division. Thanks for listening and until next time, keep earning trust through clarity, guiding with compassion, and delivering premier planning that elevates our profession.
- [29:45]
C
This content is designed to provide illustrative information with respect to the subject matter covered and does not represent an official opinion or position of the aicpa, the association, or cima. It is provided with the understanding that they are not engaged in offering legal, accounting, or other professional services. If such advice or expert assistance is required, the services of a competent professional person should be sought. The aicpa, the association and CEMA make no representations, warranties or guarantees as to, and assume no responsibility for the content or application of the material contained herein, and especially disclaim all liability for any damages arising out of the use of, reference to, or reliance on such material.