When we first launched the Retirement Inside Out podcast, we set a mission to create more thoughtful discussions in our industry to help financial professionals meet and exceed today’s retirement industry demands.
So when we had the opportunity to sit down for an episode with financial planning expert Michael Kitces from Nerd’s Eye View and Kitces.com (among many other accolades), we were dazzled by his viewpoints on topics like prospecting and capturing new clients and the focus in today’s fast-changing financial world.
We pulled a few of our favorite soundbites from that episode and turned them into this post so more people can learn from Michael’s insights and analogies.
Oh, and if you want to catch the full Michael Kitces podcast episode, you can head to the episode’s page on the Retirement Inside Out website to give it a listen.
Michael Kitces Podcast Excerpts on Financial Planning
What’s the story with the “Kitces blue?”
Kitces: This is one of those “accidents-that-became-a-brand things.” Back in the early 2000s, when I started traveling and speaking for the industry a little bit, I was probably out at a couple of conferences every year. I guess, maybe just subconsciously, I had a blue shirt on the hanger that I really liked.
So if I was traveling for a day, I would grab the shirt, right? You grab your favorite shirt when you go up, except from the other end of this, you know, like my friends and colleagues that I see out in the conference world, they would only see me maybe four times a year at four different events spanned throughout the year, always had the same blue shirt. ‘Cause I might’ve only worn it four days for the year, but it was the four days they saw me ‘cause I grabbed it as the travel shirt.
So he started giving me a little light-hearted teasing. Like, “Dude, every time we see you, you’re in the blue shirt, what gives?” I said, “You know what, I’m just going to own this.” Like, let’s just go with it. So I bought half a dozen of the blue shirts, so I was like, “Fine: I’m going to wear one every time I travel, I’ll show them.” And then it became a thing. So now it’s the brand color of the platform. It’s the brand color of the site. I now own a dozen of these so that I can grab them in quick succession for a long trip. And it, it just kind of became, I guess, the uniform and the brand.
How do financial professionals stay relevant and keep their brand out there?
Kitces: So, to me, at the end of the day, the disruption of the pandemic has not really changed the fundamentals, what it takes to be effective in marketing, growing your practice as a financial advisor. We’ve had all of these different strategies over the years: seminar marketing, which at the end of the day is about educating the people you want to work with. Drip marketing, which at the end of the day is about showing up for them consistently. Now in the past, we may have done that with in-person seminars and drip marketing. Might’ve been mailers that we sent out to people’s houses on a quarterly basis or whatever your newsletter frequency was.
Now, we get to adapt some of this to the digital world because we can do it with webinar marketing and YouTube videos and podcast videos, and blogging. And we can drip it out on email and social media and all these different platforms to get them out there. But the essences are still basically the same thing. You educate people, you keep it in front of them on a consistent basis because at the end of the day, they’re not going to do business when you want them to do business. They’re going to do business when they are ready to do business, which means some change or events has happened in their lives.
Are you top of mind in their moments of need? And at the end of the day, we’re a relationship business. So how are you showing up in some way, shape, or form that establishes a relationship? And so, you know, in the past, we might’ve done seminar marketing, printed newsletters, and client appreciation events. Now we might do webinars and podcasts, drip marketing via email and virtual online networking events. But the essence of it is the same. It’s the same stuff, and human beings are still going to human being the way that human beings have always human being’d. We just have to change the modality a bit, which I know feels very different for some of us who have not lived in a world of digital…
But the essence of it really is no different than what we’ve done, which still ultimately comes down to most of us tend to lead with education. You’ve got to jerk people over time because they’re only gonna work with you when they’re ready, not when you’re ready, and you have to give opportunities for them to connect with you as a human being, because this is a relationship-based business. And so, I’ve seen things out there of advisors all over the place from virtual events to, you know, one I just had heard about recently an advisor who’s built what is now a weekly prospecting event—virtual bingo. Virtual bingo!
And apparently, there’s like a virtual bingo.com website. ‘Cause, of course, there’s a website for everything. Like there’s a website where you can host virtual bingo events. And so he invites his clients, his clients invite their friends ‘cause everybody’s kind of bored ‘cause there’s not a lot to do in a pandemic world. And they’ve been running these on a weekly basis and it’s building momentum for him and he gets to connect with clients and have fun and connect socially and meet new people and do all the things that we’ve done historically. And he’s running virtual bingo!
You’ve been able to master multimedia marketing…what advice would you give someone who’s really trying to make sure that they can dominate the market and do what’s best for their clients by being everywhere [they] possibly can from a marketing perspective?
Kitces: So yes and no. Be everywhere you possibly can, but don’t try to be everything to everyone you can possibly be someone for. There’s an analogy I like to tell in the world of marketing, so if you imagine what you’re doing in marketing is like a net…imagine for a moment like my hands are outstretched in front of me holding a net, like a fishing net. So, you know, classically, I want to count something with a net. I put my net out and you know, things swim into the net and hit the net. And then I count some fish.
Now what most of us tend to do as financial advisors when we’re not happy with how much things are growing is we take the net, and we stretch it out. Like I’m going to make a bigger, wider net and then I’ll be able to catch more stuff, right? You know, go wide, go broad, go down all channels. But if you imagine me literally holding a physical net and you take the net at the opposite corners and you stretch it out so the net is twice as wide…what happens to the holes? They get twice as big.
So, what ends up happening? More fish hit your net. You don’t catch any more. In fact, more fish hit your net and swim through the net, which means you know, in practical terms like your prospect count goes up and your close count goes down. You’re like, darn it. I’m not closing well, I got to go to sales training. Like I got to learn a new technique. How do you convert this business? No, you don’t actually have a sales training problem. You have a net that’s got holes that are too big to be relevant to any one problem. If I imagine like, how do I actually do this if I want it to work? I tightened up my net into a really tight net with tiny holes that nothing can swim through. And then I go find a river with fish, and I put the net there.
I put a really tight focus net exactly where the fish are. Now, if you get really good at that and you make a fantastic net and you learn exactly where the fish are and you start catching a lot, and then you realize like, Oh wait, this is actually just a tributary. There’s like a bigger river upstream. And this is only one of four branches off that stream. Like cool, take your tight net and put it in one of the other streams that’s a mile away off to the other side. And maybe now you’re working two different channels at once because you’ve got multiple different nets that you’re casting, but you’re not casting a big broad net. You’re casting multiple tight little nets. And each of the little tight pockets about where you know that your prospects are. And the biggest problem that most advisors get into was certainly when we talked about this from a marketing perspective, is that we focus most on how to make the net wider and wider and wider…
What we ended up doing is we spend so much time trying to figure out how to stretch and move the net that we don’t focus on the part that matters the most, which is what kind of fish are you going for? And where are they? And you know, my analogy gets stretched a little bit, but what do they care about? And what’s of concern for them? And what do you have to actually talk about in order to be relevant for them, instead of just trying to be relevant for everyone all at once?
Do you feel that there is a nationwide retirement planning and retirement dilemma facing us today?
Kitces: You know, honestly, I’m a little bit mixed on it. I’m both mixed on whether we have a nationwide retirement dilemma and I’m actually even more negative on the fact that we keep talking about it the way that we do. So, let me frame that a little bit. There’s actually a psychology principle out there called social proof, and it says when we are uncertain about what to do in a particular situation, we look to others around us for cues, for insight, for guidance about what we’re supposed to do.
I think this gets all the way back to, you know, like early primitive, human being brainstem levels. At the end of the day, we’re herd animals, you know how to survive? Stick with the herd. How to die? Get separated from the herd and get picked off by a predator. So, we are really hardwired in the brain. Like if you are running with the herd and the herd banks hard left, you don’t stand around and go, “Why is everybody turning left? This is so strange.” You go left with everybody else so you don’t get picked off by the predators and later you can figure out why did we all turn left.
And, the problem with this is that sometimes it happens in unexpected ways. And it creates a lot of social pressure dynamics around it. So, anybody who’s got a kid that’s sort of been through these moments with a teenager, like, oh my gosh, if all your friends jumped off a bridge, would you have jumped off the bridge too? And the scientific answer is probably yes, actually, if all their friends jumped off a bridge, you would too. We feel that much social pressure to align. And it creates all sorts of weird effects.
So there was a famous study for this a number of years ago, where they had a problem with one of these beautiful, petrified wood forests out West, and people would travel into the forest and like steal souvenirs from the forest and you know, that’s not good for natural habitat environment. So they put up a giant sign, said “Prior visitors to this forest have taken pieces of the forest, damaging the natural habitat. Please do not take.” So they put the sign up, petrified wood theft went up 30% immediately, because the sign says that everybody takes a souvenir. Please don’t do it. But it clearly says everybody takes the souvenir. And we use this to rationalize these things for ourselves.
And so the reason why this is significant is when we keep putting out headlines, like “The overwhelming majority of baby boomers are not saving enough for retirement,” You know what that says to any particular person who hears it? You’re normal. You’re completely normal like anyone else who doesn’t feel like they need to change people who feel completely normal, like everybody else. They’re already safe with the hurt. So first of all, I don’t even like the whole framing around how big the retirement dilemma is just from an actual client motivation sort of problem, because it distracts them. It tells them that they’re okay and don’t even need to change, even in the process of trying to scare them that they need to change. It actually tells them you don’t need to change. You’re just like everybody else. you’re normal and part of the herd.
So the first opportunity around this is, is even just with clients, reframing the conversation. Well, you know, the general industry statistics would say things like “The overwhelming majority of baby boomers are saving only 3% for their retirement. It’s not enough and they’re not going to succeed.” And so if I’m saving 5%, I’m like, A) I’m actually better than the average person, and B) at least I’m pretty close to the herd so we’re all good.
So if I come at this from different eyes, so, you know, as an expert, I’ve worked with hundreds of clients over the years who’ve successfully navigated for retirement. What I’ve found is that our successful clients typically save at least 12% of their income; you’re saving five. Well, let’s talk about that. They’re like, “Well, I want to be with the successful herd. I mean, I was with that herd, but that herd’s not cool; like your herd is cooler and your herd does that?” It’s like, oh, okay. I guess I need to do that so I can be normal and part of your herd of what successful clients do. And the irony to me is a lot of the time in our business, we’re actually trained not to help clients with this. Right? Clients say things like, “Well, what are your other clients do in situations like this?” No, no, I’m creating a customized, personalized, individualized financial plan just for you. It doesn’t matter what all of our other clients do. This is a personal financial plan for you. And will you rip away that hurt validation that they’re seeking and asking for?