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The Trends Influencing Financial Planning Strategies for the Next Decade with Bob Veres

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We talked with Bob about:

  • The power of and potential issues in finding a niche as a financial planner
  • How firms can use a “staff first” mentality to tackle the Great Resignation 
  • The issues with cryptocurrency in financial planning

About Bob Veres

Forty years ago, Bob Veres was hired as the editor of Financial Planning Magazine. Without prior knowledge of the industry, he fell in love with the idea of financial planning and started his own publication, Inside Information. As a well-respected thought leader in the industry, Bob strives to provide financial planners with the most relevant information, resources, and strategies.


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Full Audio Transcript

Lauren (00:00):
Well, thank you so much for joining us today. I feel like you really don't even need an introduction. You're so well known in the industry and have written so many amazing articles and host a conference and are just such an incredible thought leader. So I'm really excited to hear from you today, but for those who are not as familiar with the financial planning space and some of your columns that you've written, I'd love just to hear a little bit more. Do you mind just sharing a little bit more about your background and how you got into where you are today?

Bob (00:31):
Yeah. I was hoping to get a 20-minute introduction so that we don't need be talking for 10 minutes, but obviously that's not gonna happen now. So my background really is that I was a writer in Atlanta and was hired to be the editor of a financial planning magazine. And I start out in this profession with no knowledge whatsoever, which is a scary place to start, but you get a chance to see everything with fresh eyes. The great thing about it was I could go to people and I could say, I'm a dumb journalist, I know nothing, speak slowly, use words I might understand and help me learn. And the funny thing is, this is 40 years later.

Bob (01:16):
Now I'm still saying that very same thing when I do my interviews, because you're never gonna learn all of it or even even a decent fraction of it. So that was back in the 1980s. And I fell in love with the idea of financial planning and was appalled at how it was being applied. Back then, software was being introduced in the financial planning profession. That is literally how far I go back, the age of rotary phones and the way that software is being used; you would input a whole bunch of different client numbers into the software and the software would reliably come out with a recommendation that people needed to buy limited partnerships and whole life insurance. And because the computer was recommending it instead of an advisor, it had this ring of truth to it.

Bob (02:06):
And that was really the origins of financial planning. And I spent a lot of my early time trying to bring a measure of idealism to basically a sales profession and here 40 years later, we're about halfway in. We've got a lot of people who are truly idealistic about financial planning, and we have a lot of people who see it as purely a business opportunity. So, and we can talk about that if you want, but that's how I got into the business. And then eventually I stopped being the editor of the financial planning magazine and started publishing my own newsletter. So I could basically write whatever I wanted.

Lauren (02:45):
Well, you've seen the industry change so much over the years. And I think right now is especially interesting, coming out of, well, hopefully we're all coming out of COVID, right? But there's so many changes between topics like recruiting, mergers and acquisitions, technology, cryptocurrency. What are some trends that you're seeing? I know you started to allude to that a little bit earlier, but are there any key things that we should be looking out for as we look ahead?

Bob (03:14):
Yeah. Well, there's more evolution going on right now than at any other time in my career. The profession is changing and some of it is COVID-driven, some of it's technology-driven, some of it's social media-driven. Then you mentioned cryptocurrencies, which we'll get into in a minute, but so we have all these different winds blowing around in the profession. And the thing that I talk to advisors about is you need to be riding those winds in interesting ways because they're blowing us toward the future. And the first thing I would say is a lot of people are resisting change. They don't want things, some things, to change; they're my age. And they're saying, I don't want anything to change until I've retired in 15 years, and that's not a really good way to manage a business.

Bob (04:05):
And it's not really a forward thinking way to handle things. And I might sometimes in my presentations, I'll say, raise your hand if you would like to go back to where you were 25 years ago. And very few hands go up. And I say what that means is that change has been your friend for the last 25 years. Embrace it, don't fight it. But to get to some specifics, I think the biggest and most important change has been the adoption of this technology we're using right now, this ability to meet with clients remotely. And what that means is basically that if you could meet with clients remotely, you can work with clients anywhere. You don't have to be confined to your 50-mile radius of your office area. But it also means that every advisor in the country is able to compete with you in your backyard.

Bob (05:03):
And so what does that mean? Well, it means if everybody's competing with everybody else, anywhere in the country, then there's really two strategies that could conceivably win under those circumstances. The first is you could be low cost, the low-cost producer, the low-cost provider of services. And you could be lower cost and somebody else could undercut you. And then somebody else could undercut that person. You could undercut somebody. And what we're doing is spiraling down to zero, where you offer your services for free for roughly as long as it takes for you to go bankrupt, which is not, I think, a great business strategy. So looking for an alternative to that not great business strategy, the only other way to manage that emerging competition, that emerging global competition, is to have a niche, to have a specialty, to have a specialty client.

Bob (06:01):
Niche was a pretty good idea. It was a good business idea for a while. Now it's a necessity. Now I don't say it's a necessity this very moment, because I think most advisors haven't really started marketing themselves globally yet. But those who have are really well off when they have a specialty, when they work with a particular type of client. At the last presentation I gave, I invited the audience to imagine somebody who's coming out of residency, a doctor coming outta residency, and they've got a whole bunch of questions and the questions are not confined to will I be able to retire? And do I have the right insurance coverage? Their questions are things like where should I affiliate? Should I start my own practice? What do I need in my practice? What kind of insurance will I need in specialized doctor-related insurance?

Bob (06:54):
So what's the word? Liability insurance. What should the office look like? How should it be staffed? How much money do I need to invest in it? And when can I expect to start turning a profit and what are the banking arrangements? Where can I get the loan for this? Those are very difficult questions for somebody coming out. And so I'm looking around for an advisor, right? And I find one; he's right next door, literally right next door to my apartment is this advisor. And he provides comprehensive financial planning on a fee-only basis. And he's a fiduciary, or she's a fiduciary. And somebody way over on the other side of the Mississippi specializes in doctors coming out of residency and has helped dozens of people answer all those questions this physician has. Who would you go with?

Bob (07:45):
Who would you work with? So geography means nothing anymore. And we're only now starting to figure that out, what I think is the biggest challenge for most advisory firms. There are two implications. First is that having a specialized clientele means that you are gonna be more efficient. When I've talked to business consultants—Tracy Beckes was the person who told me this years ago and she was right. She said the single most important thing that I notice for the most profitable firms in the business is that they have a specialty clientele. I said, well, wait, what if they work with not like poor people or what if they work with the homeless or something. She said it doesn't matter. She said the efficiency you get working with people who, when they walk in the door, you know their challenges, immediately trumps everything else in terms of profitability.

Bob (08:44):
And the second thing, and this I think might even be more important, is that when you have a specialty, you can deliver much more valuable advice than you ever could. When you were reinventing the wheel every time somebody walked in the office, when you offer generic financial planning and manage assets for a fee, there's a value to that. No question. But the other more specialized advice is much more valuable. And I think we're finally getting to the point. I remember, years ago, people would say nobody will pay for financial planning advice. And that was true when most of what you were offering could be done with a spreadsheet. It will not be true when you're offering that very specialized advice to specialized clientele. All of a sudden people will be willing to open up their checkbooks and pay for financial planning because it'll be that much more valuable to them in their lives.

Lauren (09:41):
So, Bob, we have some clients where we've been encouraging them to pick a niche, or even we talk a lot about firms’ structure, right? There might be that umbrella target. And then there's advisor groups, if you will, that have a specific vertical, but sometimes I see situations where leadership is afraid to be able to pick a target. What would you say to owners who just wanna kind of market to everyone?

Bob (10:09):
You know, I'm a big believer in saying, just get over it. But I don't think that's very valuable consulting advice, just get over it. Surprisingly, not everybody takes my advice when I just use those words, but you know, the danger is that you'll lose your existing clients and your existing business when you decide to specialize. I mean, the way to specialize is you find people you really enjoy working with, you find what they have in common, and then you try and replicate that client base and increasingly focus your services on those people. And, it's a tried and true method, but it does leave out the other 80% of your clients. But when you decide to specialize, they'll notice when you put in your website, we now call ourselves the doctor solution or something. You know, the people who are not doctors are gonna say, wait a minute, what was this? Your website? What are you doing again?

Bob (11:05):
And so what you do is you go back to them and say before you put that on your website, you say we're creating a specialized service for doctors, and we're hoping to do a really good job with this. But you've been really valuable to us. We really enjoyed working with you. And would it be possible for you to continue working with us as we go through this process forever. We don't ever wanna lose you as a client. We just want to be working more and more and more with this specialization. The danger really is when clients say they're gonna leave me behind. And so I'm gonna break up before they break up with me, and everybody who's ever been in a relationship understands that dynamic. What you wanna do is preempt that dynamic. You wanna say you are a special client. We want you to work with us before the suspicion grows that there's gonna be a breakup. Yeah. And then you maintain your client base.

Lauren (12:06):
Yeah. Honestly, in the firms that we've worked with where they've decided to specialize, and while it does not align with their current base, it hasn't necessarily turned away current clients because there's that trust that's already been built. But I think that you make a very valid point about that transparency upfront that helps to set the tone moving forward. 

Bob (12:26):
Here you've noticed in your consulting that advisors never have as much confidence in the actual solidity of those client relationships. Clients always underestimate the power of their relationship with their clients.

Lauren (12:42):
Yes. That's fair. I think very accurate as well. Now we also have some firms we've worked with where you mentioned earlier, right? We're in this virtual world. And so I've had some firms we've worked with, especially those that work with more of an ultra-high-net-worth client. And they talk about the onboarding process and they've entertained buying iPads. They wonder if they should send those out with all of their firm information. We talk about the metaverse and how that could be changing the future and even potential engagements. I think we've all been surprised about Zoom, right? And how we've been able to have these kinds of conversations like we're having now. What do you think as we move forward will be that kind of dialogue if we are kind of flattening the field and it's not so geographic specific?

Bob (13:28):
I'm gonna give you an out-of-the-box answer. But my facetious answer is I really think this social media thing is gonna go away pretty soon. And, I said that about the internet and I think I was pretty much right about that, right? The internet was gonna go away and not be the out- of-the-box answer. I think the communication technology, if you will, the social aspects of the technology, are really more of a marketing thing than they are a client relationship thing. I mean, the Zoom meetings are a client relationship thing, but what I think that the big change right now is it's not how we'll meet with clients. I mean, we'll meet with clients on Zoom, we'll meet with clients in-person. They'll probably wanna meet in-person the first couple of times if they can, if they live in a proximity; if not, you know, we're communicating just fine at this very moment. The big change, I think, is that most advisory firms, they put on their website a picture of themselves. And it looked like a walk-in bank and they put pictures of their staff and their head shots, very professional. And the old paradigm was we wanna look professional and the paranoia of advisors was we're not professional enough. People don't think of us as a real profession. I think we've passed that hurdle. And now what I think the paradigm is we wanna be accessible.

Bob (15:03):
And accessibility is posting things on social media that show who you are and what you're about and where you live and what you're doing. And maybe some children, maybe some dogs; I’m not opposed to a picture with your family and a dog looking proudly into the horizon. So candid shots. The firms that seem to me to be the most effective marketing right now are using these candid pictures on their website. And they're also inviting people. Each one of their profiles invites people to follow them on Twitter or Facebook or something. And if I'm a client, or a prospect I should say, and I'm looking around at different firms, I find this one firm. And they look like walk-in banks, they have suits and ties. And they look a little bit smug and professional, and I'm thinking, wow, those guys look really impressive. They could steal my money and I'd never know it.

Bob (16:02):
And this other one, boy, that person looks like a lot of fun. You know, I'm gonna check 'em out. And then the first one that looks like a walk-in bank, they're not on social media. What are they hiding? They're out there. This is who they are. This is what they do. And that may turn off an occasional client. But if you've got everybody on your staff promoting themselves in their own way and being out there, there's gonna be a point of connection with just about everybody, I think.

Lauren (16:30):
Yeah, I agree. It comes down to trust, right? Because as you mentioned earlier, it can be the only fiduciary, comprehensive financial planning, all these kinds of things. And then if you've got a niche, your differentiator could be that particular target, but what it is at the end of the day, it's about that relationship and that trust and how you can build that authenticity through being you, right? 

Bob (16:55):
Yeah. Authenticity is trust these days, I think.

Lauren (16:59):
Yes. I agree. And I think, especially in this digital world, where people are checking you out before they're gonna make that phone call. They're gonna review your website. They're gonna look at LinkedIn, these kinds of places. And that's a little bit of an indicator of who you are and what you'd be like to work with. 

Bob (17:17):
Philip Palaveev of The Ensemble Practice just did a research study. And I talked to him on the phone about it. And the first thing they asked clients was where did you find your advisor? And many of them say through a referral of one sort or another, my accountant, or my friend or my family or whatever. And so you would think that it was all referral marketing, right? But then when you got deeper, there were follow-up questions. How many people did you consider? And the answer, I think the average answer was four. And they checked every one of them, and then another answer was they work with people like me or they couldn't find those things out without doing a web search. And so, maybe they did get a referral. Maybe they were told, go see my friend Joe, he's a great financial planner, here's his number. But there was a certain amount of checking out for every one of those referrals. And so people who ignore social media and say I do referral marketing, people who ignore the value of their website are probably not getting the value of those referrals. It’s probably much more hit and miss referrals they're getting.

Lauren (18:40):
That's fair. So I'm gonna shift gears a little bit here. So, we'd like to talk a little bit about the Great Resignation going on. There's also a huge trend. Well, I shouldn't necessarily say trend in this industry cause it's been a long-term challenge about recruiting and hiring, all of these types of things. And we've talked just recently about really positioning of the structure, the target market, if you will, and marketing terms and all these things, they basically tap up to the big picture business strategy, right? Are we gonna merge, what does our recruiting structure look like? Who do we wanna hire? And I'd love just to hear your thoughts about what's happening in the industry with those pieces that are a little bit louder now perhaps than they were even a few years ago. 

Bob (19:29):
The big picture, your story of course, is that advisors who are on staff and operations people on staff have a lot more options now than they ever did before. And when you give them options, they can work remotely. They've been working remotely and had time to consider their current firm. And they got to see the character of their current firm: Are they trying to micromanage me at my kitchen table? Are they gonna force me to come back in the middle of the pandemic? And having those options and having more data and more concern about, I've got a life and this is part of my life, a big part of my life. What am I gonna do? So what everybody's calling the Great Resignation is really a great reassessment.

Bob (20:17):
There's a lot more reconsidering where I am right now and noticing that I have a lot more options. And so the obvious solution, once you frame it that way, the solution is obvious. You need to create an environment that people will enjoy working in where there's a commitment to the career development of your people, where everybody is treated like adults, like valued members of a team and where there's a certain willingness to let people do their jobs without being told what to do and how to do it, if that makes sense, a certain autonomy that needs to be. And don't forget the salary thing, the pay and compensation studies and the money; the salaries really haven't moved much in the last five years.

Bob (21:16):
And now that we have raging inflation and people have more options, there's probably gonna be a demand for higher salaries. And the firms that refuse to pay that are the ones that are gonna lose out on the best talent. So I've been writing about firms that have a staff-first mentality. And that sounds like heresy. The first time I wrote about that, people were saying, well, Bob, the clients come first; don't you understand that? And the truth is the clients don't always come first. If a client is an asshole to your staff, your staff comes first. So what the staff-first mentality really means is we are first and foremost committed to our staff, people being the best people they can be in the context of the profession, and when they are that, and when they're allowed to excel, they will deliver exceedingly good service.

Bob (22:12):
One of the firms I talk to, they take five hours a week of training and moving your firm forward, coaching, mentoring. Instead of a 40-hour week, it's a 35-hour week. And I said, well, that probably means production goes down, right? And he said they work harder in those 35 hours than they ever worked in the 40; they get more done in the 35 than they did before. And I tell people, I get more done by noon every day than most people by 12:15, 12:30 or so, maybe 12:45. So the point is, people respond to certain things that I think we all know about. The question is, are you willing to offer those things?

Lauren (23:00):
Yep, that's fair. If you can take good care of your people, they're gonna take good care of your clients and help everyone to flourish. 

Bob (23:07):
And you will win the Great Resignation environment. People will leave other firms and come to you and they'll be good people.

Lauren (23:17):
Yeah. That's fair.

Bob (23:17):
Because you're only hiring good people, right?

Lauren (23:19):
Yeah. I think it comes down to values. You're upholding those firm values and that pulls through to your team and then that will pull through to your clients and all of that. 

Bob (23:30):
I know that a lot of advisors are much better at technical stuff than they are at people stuff. And they sometimes fail as a manager. I tell people two things. One is, if you're a really good technician, you need to hire somebody who's a really good business manager. There needs to be the visionary and the implementer. And the implementer is the person who handles that staff environment. And the second is you need to turn over a lot of the decision-making to the next generation and let them create the firm that they ultimately want to inherit. Don't stand in their way. And guess how many people take my advice? There was that one guy in, I think he was in Iowa, and I'm not sure about that person in Rhode Island. You know, it tends to fall on deaf ears because a lot of people are just not willing to change.

Lauren (24:22):
That's easier said than done, right? I think that's right. And contextually, you don't always realize how intrinsic that can be into just the day-to-day and minute-to-minute decisions. 

Bob (24:35):
It's change. And it sometimes goes against the mindset that brought somebody into the business to begin with. I wanted to be a technician. I didn't wanna be coddling all these damn people.

Lauren (24:46):
That's right. But it's important to recognize that. And then delegate or die if it's not the right fit. How I sort of like to describe it to people is, if you've got an orchestra, each person has their own specialty and it's the music that comes together where you see you've got something brilliant. But without the delegation, without building the team, it can fall flat.

Bob (25:11):
So that's a good way to do it. If you're in your consulting area, you're getting people to change. You're doing better than I am with my writing, I have to tell you.

Lauren (25:18):
Well, it's one of those things where I think you can all throw things out there, but it ultimately connects to the business strategy. And that decision-making and the buy-in from the team. So it's like I said, easier said than done. So, I can't let you off the hook without one more question. So cryptocurrency has been a trend. I feel like when we talk with firms, it's more of a shiny object for clients. And so they are having a lot of inbound requests around crypto in general. And, I’d just love to hear your thoughts on this. What does cryptocurrency mean for firms in the future and what are you hearing and seeing?

Bob (26:00):
I really think cryptocurrency is the most vexing issue facing financial planning right now. So of course I've been asked for my opinion and you really have to look at what cryptocurrency was intended to be. Let's start with Bitcoin, because I think that's kind of where clients are asking. Where in any of the manifestos written about Bitcoin, where in any of the intentions for what Bitcoin was supposed to be, did it say that it would be an investment? Or did it say that it would be a get-rich-quick investment? Bitcoin was created to be an alternative currency that could not be debased as a medium of exchange. And the idea behind it was to replace what is a very effective but very inefficient system of fiat currencies and nowhere in there was there any mention, and I don't think there was ever any intent, for Bitcoin to be a 15% allocation in an investment portfolio.

Bob (27:13):
Now, the reason Bitcoin and some of their cryptocurrencies are being discussed in that light was because Bitcoin unexpectedly became incredibly valuable for no reason anybody I know has ever explained. And so the first thing I would say is that I don't think we're talking about an investment. So we'll start with that. I think we're talking about something that could conceivably replace the global banking system, but isn't there yet. The second thing about it, though, is that I think we all know about investments where all the money that was going to be made has been made. So, a mutual fund takes off and it rockets and it gets great five-year returns, and it's got about 12 billion in it right now. And people pile in expecting it to go to the moon the next five years.

Bob (28:06):
And it's become an index fund. It's the same thing with Bitcoin. I think most of the money that is going to be made has been made. The Johnny-come-lately who comes in after there has been a huge windfall, never experiences anything remotely like the initial windfall ever; in all the time that I've been watching investments that has never happened. And I'm just guessing that it won't happen with Bitcoin. So then the third issue, and I think it's an important issue, is what is behind any of these cryptocurrencies? Who stands behind them? And of course the answer is nobody. And so you have a question of will these go down to zero. And I think that it's such a really interesting idea that I suspect that some cryptocurrencies will survive and will become some kind of a standard, but the question is, do we know which ones? I go back as far as Lotus 123, which was the standard in spreadsheets, and everybody assumed that would be the survivor.

Bob (29:14):
And it wasn't. There was Ashton-Tate that had its own database program that was the market leader for years. And the company disappeared. So if you own crypto as an allocation, you probably should diversify. So what does that mean when you diversify? Well, there's a non-trivial chance if you own nine or 10 different currencies that seven or eight of them will go to zero and disappear and no matter how much return you get from the other one, two or three, it's not gonna make up for the other investments going to zero. So I would suggest that if you wanna speculate, if you wanna go with it, the play money that advisors are allowing their clients to do, maybe that's all right. But if you're giving advice on something that probably shouldn't be considered an investment in the context of their overall financial plan, where does this fit? It's three times as volatile as any stock. It's not backed by anything. And so if you’re set with your financial needs now, we talk to you, then maybe this is something that you can consider, but if you're not, then a little more safety might be called for. That's the sum total of what I think about the cryptos. 

Lauren (30:44):
Wow. Well, thank you so much for your time. I feel like we could, as I said before we started the call—we were chatting and discussed that we could probably be here for a very long time. 

Bob (30:56):
I think it’s good that we finish this asking. I'm pretty sure they're ready to get on with their lives.

Lauren (31:01):
I could keep poking you with more questions, but, I appreciate your time today. Thank you so much for sharing a little bit more about not only your background, but insights on the future of the industry at large. I appreciate your time.

Bob (31:14):
All right. Well, thank you for having me.

Lauren (31:15):
Absolutely. Thank you, Bob.

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