← Jill on Money with Jill Schlesinger
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- [00:00]
Jill Schlesinger
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Mark
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Jill Schlesinger
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Mark
Welcome to the Jill on Money show.
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Jill Schlesinger
It's Sunday, December 15th and today we are airing the second part of our interview with Marg Franklin, the President and CEO of the CFA Institute. If you haven't listened to yesterday yet.
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Mark
Do so because I think that's a.
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Jill Schlesinger
Great warmup today with Marg. We are going to chat about what are the skills that advisors of the future need.
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Mark
She's also going to do a nice.
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Jill Schlesinger
Takedown of social media finfluencers, a term I despise and yet I have to say anyway, here is part two of our interview with Marg Franklin.
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Mark
What are the skills you think the advisor of the future needs?
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Marg Franklin
So I think as a baseline, no matter what, you need good technical skills. So that is understanding how investments work, understanding how to build a financial plan, understanding the components of that taxes, costs associated with different programs. So that's the first thing is the Technical skills. The second though, I think is increasingly the ability to really communicate with and understand the client. And we think about those and connect the dots. And we think about that as T shaped skills. And in all parts of the industry we need this. People who have specialization, they have good technical expertise, they're able to connect the dots programs, those will be the ones who will be the most successful. I think AI is going to help us in that regard. But I do think, and by the way, some of the best advisors I've ever seen would not be what you would call naturally empathetic or have those great sort of interpersonal skills.
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Mark
What do you mean? Wait a second. That's very contrary to what most people would think. They'd think, oh, it's a salesperson, someone who can talk. Tell me more about that.
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Marg Franklin
And so let me pick up on that thread and finish the thought. And I think some of the worst advisors are those who have those sales skills but not the required competencies and not the right orientation. And so what I mean by it is some of the best advisors I've seen, first of all, they take it really seriously. They're well, you know, they're well prepared, they're well qualified, they have that orientation around the client first and they enjoy the problem set. And so you can see a level of attention and care to programs. Oftentimes those people have had to learn how do I ask questions of my clients? And you know, sometimes people who are naturally very skilled at something, they're naturally inclined towards friendliness, towards good, you know, good communication skills, don't actually practice them within their craft. And those who actually struggle with it can, I mean, these are all things that you can learn. And so the combination of having very strong competency by understanding how investments work, taxes work, legal, you know, as well as the combination of the behavioral side and we have a lot of science, we have a lot of ways that advisors can equip themselves for both the EQ and the iq. I find that very liberating. And it busts up this notion that it's a sales job.
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Mark
Yeah. And I think that that's something that's incredibly important because one of the reasons that we know many people are kind of scared about entering this business, this profession, is the sense like, I'm not good at sales. Like Marg, I am a numbers person and I do really care about people, but I cannot be the person who is like the rainmaker.
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Jill Schlesinger
And what do we say to those people?
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Mark
Because so many organizations are created around having to be a Good rainmaker look.
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Marg Franklin
I think the rainmakers could succeed in part because the markets afforded them great returns. And so the person who says I'm not a salesperson might reframe that and say, I'm really good at understanding what you're trying to achieve and building a program that meets those objectives. And what you can count on me for is to have the competence to be able to do that and then to be able to explain it to you in a way that meets your needs. Now what does that mean for that person? It means they're going to have to really hone their communication skills. One thing we do in this business, and it's true everywhere, whether you're dealing with an individual or frankly even sometimes very sophisticated entities, we use jargon. We haven't taken the time to communicate things effectively in the ways that our clients can act on it. And that's critically important because at the end of the day, no advisor is going to know as much about the client as the client will.
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Mark
Right.
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Marg Franklin
And so if you reframe it to, we're going to build you a good program because I'm going to really listen to you. I have the technical competence, you can really build trust. Now you need to be able to demonstrate that along the way. And one great way to be able to demonstrate that is to actually, particularly in the early days, build that foundation of shared knowledge with the client in a way that affords them the ability to be able to make decisions for themselves. And I'll give you a really good example. So my sister in law is in the, she's now in her 70s, she's in the tele, she comes from the television business and she fits every endearing, adorable trait of somebody who comes from the entertainment business. And she handed me her statement and she said, I had an appointment with my advisor and she was starting to get ready to think about retiring. And she said, Margie, I don't really understand what she said. And on her statement she had written stocks equals bonds or stocks equals equities, question mark. And the next point was call my doctor, I need to get my annual update. And then four other points that had absolutely nothing to do with the agenda that she was there for. Right.
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Mark
Call Marg and talk to her about this.
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Marg Franklin
And so actually she said, I'm thinking of firing my advisor. The advisor is actually excellent for her. And so I did meet with the advisor and you know, I subsequently said to the advisor over points in time, you need to be able to make this in a way that Nancy can Make good decisions. And if she doesn't understand it, she had the good sense to call me. But that's what advisors have to do. Now, clients, the client experience can't include a language which is opaque, incomprehensible and frustrating.
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Mark
No, I think, I think what's interesting is that when I hear from folks, you know, on this show, they call in, they come on the air with us. And many of them do have advisors. But why are they contacting us? Why? Because they trust that we're going to be able to communicate what's going on in a way that is understandable to them. And I feel like many times people feel either embarrassed or shamed or strange or, you know, I'm just stupid about this. I don't know. And they kind of, they stay where they are. And I'm wondering, why do we have. Why is this industry? Why is it so sticky when people are not getting what they need? Why is that? Why are people just hanging around?
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Marg Franklin
Oh, I am not sure I have the answer for you on that one. But this stickiness factor is. It's a real thing. So there are probably a couple of structural barriers. One, when's the last time you tried to move some of your accounts? It's just not easy. Right. And secondly, you probably haven't found the person that actually is any better than the one that you have now. Wouldn't it be great if we as an industry could really lift up, if we could really say, these are learnable skills, technical, you can learn them. I think, you know, again, I go back and I've seen the curriculum and I've seen the early drafts of our private wealth certificate. I just, I think for those of you who are listening and Joel, in the, in the avenues that you have, and we talked about this when we were together in California, is like, it's always on learning. Markets are changing. A lot of people have private markets, you know, private equity, real estate, some of these different types of funds in their portfolios. And now this is getting down right down to, you don't need a lot of money to be investing. That's going to require an advisor to really help individuals sort through if it's suitable for them and what's its purpose. Because the one thing we've seen is a really well designed program can have two pathways and it almost always depends on the communications. One is inevitably there will be a period where you really test the portfolio. The market craters by 25%. That private market investment that you have in. You didn't really realize that you couldn't get out of it, that it's kind of a locked investment. If you understood what the purpose of those investments were and you understood your overall program, you are much likelier to stick with it. And the single biggest destructive element of an investment program or a financial plan is abandoning a program because you didn't understand it. It's the abandonment of the program. And I think that's one thing, you know, we at CFA Institute are really, really committed to, is getting that, you know, professionals equipped to be able to develop good programs, to be able to have the competency, it's likely going to be team environment, and to be able to increasingly communicate that to the client. So, you know, when the client calls you up and says, this is making me really uncomfortable, and they may or may not even say it that directly. Like they'll say, I'm really upset with the performance, you told me there'll be some sort of anger or fear. Your ability as an advisor to a remind them what the program does, hold their hand through this period. AI is not going to get, is not going to replace the human at that moment. And so that's why those skills become so, so, so important. And the communications is the linchpin to successfully navigating a client from here to there or having them abandon the program at just the wrong moment.
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Mark
How important do you think it is? If you're looking at, say, that private wealth certificate or any sort of communication with the public that we are really talking to our professionals about how they communicate? Because we're talking about it, but we're not. Are we really role playing this? I remember this as a couple of my friends are doctors, right? So people our age who are doctors and they laugh because they say, no one talked to us about how to communicate with a patient. Like that was it. It's like, I'm the doctor, you're going to do what I'm going to say, that's that. And so how important is it that we're really teaching this?
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Marg Franklin
Oh, I think it's absolutely crucial. One of the things we did in the CFA program, which was based on extensive interviews and research with employers, with institutions, was actually that practical application of the learning. You know, when you start to do things and put it in practice, that changes everything. This ability to be able to communicate requires practice. And when you and I came out and when most professions were being developed, you know, it wasn't a holistic view of it. We just didn't have a really great understanding of how humans respond to these things. And you would have had a much more hierarchical system. So if your doctor says it, it must be true. I will say that I think the in particular sub 40, sub 45 year olds, they just, they just aren't on with it. And I'm not even sure I'm on with that. You know, maybe by gender, I'm more skeptical about certain things, but I just don't think the incoming wealth creators and those with wealth right now that have really a long life ahead of them, I just don't think they will take it. And that actually is probably the catalyst or the agent for people to improve their communication skills. The other thing that's going to disrupt it is what does AI do that disrupts your practice right now and you'll need to be forward thinking on it. And I see we talked about this in California. I think there are really two things. One is routine, low level activities that can be automated will be automated. And so what's the second derivative or the knock on consequence of that? You know, when a client had to call you up to do something for them or ask you something, you automatically had a touch point of the relationship. Well, if it's not already all gone, it's very soon going to be all gone. And increasingly digital native investors want to do practically everything online. So then you have to say, okay, what is the value proposition that I am bringing as an advisor? And that human in the loop really is about hearing the client, validating, walking them through certain things. You know, this will never be a non human activity. At its core, humans still every piece of research that we look at is that administrative type tasks, things that can be automated, will go away and will be AI'd out, but that there is still this need for human interaction. And I mean a great piece of evidence of this is people still wanting by and large to have some connection at work when people could work remotely full time. There is still a need to come together and we see it in our learning offerings. We see in particular employers want to have both online and some in person. And so as advisors you should be thinking about that. What can you be looking at across the horizon that helps you refine your value proposition? What is it you distinctly bring to clients? Part of it will be building the program, but also a lot of it will be behavioral.
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Mark
I love the behavioral stuff. It's like why I have so much fun with this show. I'm a voyeur, I like people's stories. I find the numbers fine. Like I'm, I have, I have facility with numbers. I understand that. But what's more fun to me is to listen for what this person's really saying without judgment and not wagging my finger, which I think a lot of people in my position tend to do. And it's kind of annoying, you know, and, you know, if anything, if, if people just feel like they're heard and then you're designing an outcome for them or a range of outcomes for them, which they can actually have some agency over. I mean, to me, the problem with so many people in the industry is it's like, it's. This is the way it is and it's not. There are a lot of different ways to get to different places. And I think that people start to feel anxious, which then gets, you know, kind of converted to anger, like, you didn't do this. And it's really about, like, I don't understand and I feel bad about this and you make me feel worse about myself. So you're fine. And so I think that as an organization, you know, any, you know, anyone out there listening and folks who, like, you know, we do have people who are advisors who listen to the show and that you know what you do and you know that your value is not being able to do future value calculations by hand, which I can do, I might add. I did have an HP12C and so did you.
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Marg Franklin
Yeah, I did.
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Mark
And so we know how to do that. But what I think really holds this together is, you know, listen, you're gonna go to somebody who you assume whether because they have the designation of certified financial planner, chartered financial analyst, cpa, any like, that these three biggies, that they are going to have good technical skills. What you don't know is if that you sync up with this person. And it doesn't mean that they're bad people, but you do have to kind of like them.
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Jill Schlesinger
I remember when my dad was looking.
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Mark
It was talking to doctors and he's like, look, this dude's going to like carve open my chest and do an open heart surgery. I don't have to be his friend. Like, I'm fine. He has to be the highest technical guy and hopefully is someone on his team who I can talk to. But the ongoing relationship I have with a cardiologist, that's different. I really have to like that person. And I think that, you know, we, as people in the profession, you really have to say that, like, of course you have the technical skills. That only gives you half a chance to screw everything else up, gang. So I think that listening, creating, helping people feel like they have agency. I think that's really important. Marg, I have to ask this question because sometimes some of my colleagues at work will be like, well, I saw a TikTok video about so and so and doing this and like, what is the, what is the reaction that we need to have as professionals to people who are out on social media providing and proffering advice to so many younger folks especially, and they're not credentialed. So what do we do about this?
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Marg Franklin
So first of all, we started by talking about the qualifications and the CFA program and really those kind of learning things. Another component of CFA Institute is the research that we do. And one of our most popular pieces is the piece we did on Finfluencers and it's been picked up by regulators, by firms. This is a hot topic and a caveat emptor all the way. We encourage the regulators to get on this because this is a major channel for in particular younger investors. You will find in their total conflicts of interest that aren't declared and actually behavioral conflicts of interest, which was one of the most, one of the most interesting dimensions. There's an aspect of influencers of likes and compensation and you know, and it's not disclosed how they're paid and you can't understand the integrity of the person on likes. But oftentimes we've seen unregulated influencers who put out bad information and never correct it or never refer back to it. They don't have to live with their results. And that's because I didn't want my likes to go down because it would make me look worse in the eyes of my audience. Now, honest to God, you probably can't have a worse situation than the amalgam that is social media in an unregulated way in providing advice. So I think where advice is given on things where there isn't the qualifications and you don't know about the person, I mean, really all guard up. Yeah, I would, I would say this area is fraught. We're doing research on it and your listeners can take a look at that on our website@cfainstitute.org if you've got a.
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Mark
Question about who you're working with, the.
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Jill Schlesinger
Kind of a financial advisor or planner you need, or you just want a second or third set of eyes and.
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Mark
Ears on your situation, just let us.
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Jill Schlesinger
Know, go to our website, jillonmoney.com, click the contact us button, write us that note. And if you want to join us live, just check the box. You can subscribe to us on the Odyssey app or wherever you find your favorite podcasts. Please try to put your hands metaphorically on someone's back.
- [23:13]
Mark
Someone needs a hug. Maybe it's even a physical one.
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Jill Schlesinger
Change your work. Change your wealth. Change your life. Thank you for listening. We'll talk to you tomorrow. Hi, this is Jill Schlesinger.
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Mark
Being a business owner means you're always.
- [23:30]
Jill Schlesinger
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Sharon McMahon
McMahon, host of here's Where It Gets Interesting. Each week I speak with authors, experts and thought leaders on everything from American history and democracy to how to be a better person on the Internet. And don't miss my extremely popular docu series, which educate you on things you never learned in history class. Follow and listen to here's Where It Gets Interesting on the free Odyssey app or wherever you get your podcasts.