INSIDE INFORMATION (www.bobveres.com)
July, 2007
By Bob Veres
THE THERAPY ALLIANCE
We can now see where the evolution of life planning services is taking us--and how it may benefit you and your clients more than you realize.
After years of close study of all my friends and relatives and my own unexplainable behavior at times, I’ve come to the conclusion that all of us are (get ready for a professional diagnosis here) pretty screwed up. Worse, none of us realize the extent of it.
A few weeks ago, I received unexpected confirmation of this unhappy the-ory from Rick Kahler, of Kahler Financial Group in Rapid City, SD. In working with his own clients, Kahler repeatedly finds examples of what an outside observer would describe as self-destructive behavior--not just not making progress toward their goals, but routine examples of actual self-sabotage in their financial lives.
Some of it, he says, can be defined by what therapist Ted Klontz calls the emotional equivalent of reversion to the mean. “We all operate in an area where we feel comfortable, with an invisible but very real, to them, upper and lower limit,” Kahler explains. “When you move through the top, your social structure and your beliefs bring you back into the realm of normality.” This, he says, also applies to lottery winners and even people with significant stock option wealth.
Consider, for example, Kahler’s clients who had a net worth of $200,000 and inherited $5 million unexpectedly. “They were depressed,” he says. “Their belief was, we didn’t earn this money, and we have no right to it. The average per-son blows through an inheritance in seven years, reverting right back to normal, and without intervention, these people would have followed the same course. They knew they shouldn’t be depressed, but they didn’t know why they were, or how to find out.”
Another example is the woman who earned $250,000 a year, who never had any money in the bank. “She bought homes, she bought other stuff, she never had money that she could put her hands on,” says Kahler. “We worked with her for about half an hour, and discovered that one of her beliefs was, well, if you don’t have any money, then it’s easy to say no when members of your family call you asking for it. Not only that,” Kahler continues; “whenever she saved as a kid, her parents would routinely rob her piggy bank. So she held this belief: why save? It never gets you anywhere.”
The empty piggy bank and the relatives asking for bail money were directly related to--were, indeed, the CAUSE of--her inability to save. Who knew? How would you find that out in a traditional planning engagement?
Today’s financial planning profession is evolving an entirely new client ser-vice model which--at its most refined--helps people articulate and then make progress on their most cherished goals and objectives. We have discovered that many of the obstacles to success (however that is defined by the client) are financial, and financial planners are uniquely qualified to help people navigate through obstacles they never could on their own: the incredible complexities of the business and financial environment.
But now advisors are discovering a new set of obstacles in their real-world efforts to help clients move forward: obstacles that live--indeed, thrive--inside the minds of clients themselves. They may take the form of limiting beliefs or dysfunctional money habits; they may manifest as inexplicable efforts to sabotage their own progress or simply as an inability to move forward when the external ob-stacles seem to have been cleared away.
Everywhere around the planning profession, you are hearing advisors talk about unexpected difficulties in applying this new life planning service to the real world that their clients live in. The advice seems to be good, the service and plan-ning work seem to be right, and the clients may outwardly seem to respond by identifying their cherished goals and buying into a plan to achieve them. But the results seem to be held up by an invisible net of restraints that planners are not trained to find or identify, much less clear away.
The solution? Kahler is one of a very small number of advisors who are collaborating with a psychologist as a matter of business routine, and he is finding it to be the missing ingredient in his life planning services.
“In the past, when a couple would start fighting about money in my office, I would just as soon hide under my desk as deal with the issues they were bringing up,” he says with a laugh. “My usual reaction would be to say: let’s get back to this mutual fund chart. Which,” he adds dryly, “didn’t always resolve the issue.”
Today, his typical client engagement always includes time where he and lo-cal therapist/money coach Laura Longville are in the room together, usually in the exploratory part of the engagement, sometimes later as obstacles arise. “I’ve seen people make progress toward their goals in weeks that would have taken my clients two or three years in the past,” he says. “Working in conjunction with a therapist helps people make progress exponentially fast.”
Kahler suggests that there are three ways you can work with a therapist in your practice, but he only recommends one of them. The first is to refer clients to a therapist. “The problem there is you don’t know what went on, and you lose total control of the process,” he says. “Plus, whenever you tell people that you want them to visit a psychologist’s office, their first reaction is: you must really think I’m screwed up!”
The second option is collaboration, where the therapist meets alone with the client, but the client and therapist sign disclosure agreements which make it legally permissible for the psychologist to share information about the client that is uncovered in the sessions. However, this is less-than-ideal because the client’s time with the therapist may never really address money issues. “I’ve seen statistics that 97% of all therapists have their own money issues, because they haven’t done their own work in this area,” says Kahler.
Finally, the two professions can work in partnership, where the advisor and therapist meet jointly with clients. “I have the numbers, and she has the relation-ship skills,” says Kahler, “and we can go directly to whatever is blocking the client.”
How does it work? Kahler will normally start his services with the present-ing symptom. “Most clients don’t come to us for life planning or financial therapy,” he says; “they come to us because their 401(k) is rolling over, or they had an investment loss, or there is some financial hemorrhaging going on, so I’ll move to that first.”
After that, he offers a choice in the engagement. “I’ll tell them that I can just do investments, or I can do traditional financial planning, or we can do integrated financial planning, which adds financial coaching and counseling to the planning service,” says Kahler. “You choose, and you can change your mind at any time, add or subtract something.”
Normally, Kahler will also introduce Longville to his planning clients early in the relationship, and he has found that they will become more interested in the coaching and counseling as their planning work is accomplished. “The important thing is to have Laura be viewed as a normal part of my team,” says Kahler. “Here is Darla, my paraplanner; here is Lindsay, our admin. person, and here is Laura, our financial coach. So if I decide to bring Laura in on an issue, it is not considered unusual. And they don’t have to leave and go to some unknown office. It happens in my office, and I’m there.”
Cicily Maton, founder of Aequus Wealth Management Resources in Chicago, IL, tends to take a more structured approach with the therapist who functions as a partner on her planning team. Her first meeting with clients focuses on an explanation of the services; the second one is conducted jointly with Marty Martin, a therapist in private practice in Chicago’s western suburbs. “We call it the discovery meeting, which includes an evaluation of all their financial stuff, where they bring in all their documents,” says Maton. “And Marty uses many of the tools that we were using before: George Kinder’s three questions, some things developed by Ted Klontz on change, some of Carol Anderson’s [Money Quotient] materials on money memories and what money means to them.”
If the questions are basically the same, then why do you need a psychologist in the room? Maton says that therapists are trained to spot opportunities for followup questions. “If Michelle [Maton’s daughter and business partner] or I were to ask a question about something in their financial makeup, they would give us an answer and we might say, ‘oh, that’s interesting,’ and write it down,” Maton explains. “Marty says, well, tell me a little bit more about that. How does that impact you? And he knows WHEN to say that. It’s a different level of exploration.”
Martin also helps Maton compile the basic profile of the client, which is presented in the confirmation meeting that follows--the meeting where Maton used to go over all the numbers and make sure she has them all correct. She still does that, but now Martin will check the softer side issues as well. “While I’m checking the financial facts, he’s asking, have we gotten to all the things you want to tell us about?” says Maton. “When we identified those goals, are they really heartfelt goals that will make your life more meaningful? Richer? Deeper? He makes sure that our summary of what these people believe, what they feel, how they want to be in life, is on track.”
Prior to the fourth meeting, Martin writes up the goals, visions and dreams part of the financial plan, and Maton puts a price on them and creates a procedural roadmap from where the client is now to this place that has been identified and confirmed.
Maton’s therapist partnership has only been active since January, so she hasn’t yet seen the client progress benefits that Kahler describes. But she does see a big difference right off the bat. “I think the level of trust with us gets deeper quicker,” she says. “And it seems like we discover barriers for people that would keep them from implementing, right in those first few meetings.”
How are clients billed for the therapist services? Kahler contracts with Longville for an estimated number of hours in the first year--which may be different for each coaching and counseling-level client--at a discounted rate of $100 an hour. The charge is built into this first year’s retainer, and new estimates are arrived at each year. “My lowest tier is zero hours of her time,” Kahler explains. “Those are my clients who are under my minimum, that I just haven’t let go of. In my first tier, it is 3 hours a year. My second tier, six hours a year. My third tier is 12 hours, and my upper tier is unlimited. If you exceed what we estimated,” he adds, “this is the only thing under our agreement that you will pay for in addition. You will pay for Laura’s additional time. She bills out at $150 an hour.”
Martin, meanwhile, bills through Maton at his regular $160 an hour, and she includes it in her new planning fee, which typically ranges from $4,500 to $8,000. Other procedural issues are more easily dealt with. For example, do clients have to sign extra documents in order to let the therapist share information? Both Kahler and Martin (and their therapist partners) take the position that this isn’t necessary, for two reasons. First, because both are in the room when the clients are discussing their goals and dreams. And second, because what takes place in the planner’s office is not therapy.
“The client may already have a therapist,” says Maton. “In our meetings, Marty isn’t about long-term therapy. He isn’t going to displace the person who is already in their lives as a therapist. His focus is totally on dysfunctions they may have around money, or obstacles.”
This addresses a question that has swirled around life planning services since the beginning, and which is certain to haunt the planner/therapist partnership arrangements: where does coaching end and therapy begin? Kahler quotes Klontz in addressing the issue. “People keep asking how you know when you have crossed the line?” he says. “Ted says, you can never harm a client by listening to them and feeding back what you just heard them say. And you know you’ve gone too far when you feel uncomfortable. When you feel uncomfortable, it is time to stop. And, he says, get a therapist. And probably the therapist should be for you, the planner, as well as for the client.”
One more procedural question: where do you find the therapist to bring in to help your clients? This may be a problem for many advisors, given Klontz’s estimates that very few psychological therapists have done their own work around money. Maton found Martin through a mention on the Nazrudin discussion boards. “Carol Anderson at Money Quotient was talking about a therapist in Chicago who was using her materials, and I almost jumped out of my seat,” she says. “It turns out that in 2001 and 2002, when he was practicing in New Orleans, he started having an influx of planners and brokers who were depressed as a result of the bear market. He didn’t know how to talk to them, or make a judgment about whether their depression and anxiety was real, imagined, typical or whatever.”
As a result, Martin decided to take some CFP coursework and Money Quotient training, which makes him uniquely cross-qualified to help clients with money issues.
Kahler has a little easier time of it, in part because he is pioneering a whole new kind of planner-therapist partnership, a financial therapy he and Klontz offer over the course of a week, called OnSite. “We’ve trained a lot of therapists, even though it’s open to the general public,” he says. The two now have a list of planners and therapists who have been through the program on their web site (http://www.consciousfinance.com/) under a tab called “endorsed professional.” “We have people in a lot of locations around the country,” says Kahler, “so it isn’t quite as hard to find dually-qualified people as it once was.”
Meanwhile, the planner-therapist symbiosis has opened up new professional opportunities for Kahler. “I have a new niche that I never, ever thought I would be servicing: high-income overspenders,” he says. “In the past, our position, which I think was normal, was: if you cannot save money, please don’t come here. I can’t help you. But we have worked with people where Laura and I have charged them $20,000, and we have reduced their spending $80,000 in the first year.”
Interestingly, Kahler encountered some of his own limiting beliefs around money when working with this group of clients. “I recently had a client couple approach me, didn’t have any money, and my minimum is $5,000, and they are going to need a lot of Laura time, and a lot of my time,” he says. “They were spending $130,000 a year and made $50,000 the year before, and I turned them down several times. Laura is telling me, Rick, let’s explore your money scripts.”
The conversation, he says, went something like this:
-Didn’t you just have an operation on your shoulder?
-Yes.
-Did the doctor tell you how much it was going to be?
-No.
-Was he concerned about how you would pay it?
-No.
-How much did it cost?
-$15,000.
-Was that much of a consideration for you?
-Not really.
-Well, Rick, do you think it’s possible that working with you, they will actually reduce their spending?
-Probably.
-Is that a good investment?
“So I priced them at $7,500, with 20 hours with Laura,” says Kahler. “They’re having to borrow to pay my fee.”
Maton is starting to address the same clients, but in those cases, she prefers to have Martin handle the therapy work without her. Meanwhile, she marvels at his creativity.
“He’ll go shopping with them,” she says. “And he will ask questions like: what are you feeling as you’re interacting with this salesperson? What is the emotion that is welling up? When have you felt it before? What is it doing for you? Are there other times you’ve felt this same emotion? Is there something else we can substitute for that? A couple of clients of mine, who have been over-spenders for years, have recently called me up and said, can I meet with Marty?” adds Maton, noting that the result will be more cash flow and a greater likelihood of meeting their financial goals.
It seems clear that they key to making a planner-therapist relationship work effectively for the client is to have an ongoing close relationship with the psychologist, and to introduce him or her as a normal part of the planning process. It cannot, Maton says, be somebody you bring in occasionally ad hoc, and it cannot, Kahler says, be somebody whose skills you haven’t evaluated first. The partnership may not make you planner at running the numbers, but it does seem to help clients become better at making the changes they need to make based on your recommendations.
My instincts tell me that this planner-therapist alliance may be the endgame for where the life planning service is going. Financial planning is becoming increasingly personal, increasingly about the client’s goals and ability to achieve the goals, and the service has become more and more involved with figuring out how to handle complex personal issues and questions that the planning profession is not--and never will be--trained to do.
So far, the state of the art seems to be, here are some great tools that you can use awkwardly. The planner-therapist alliance adds somebody who is skilled at using these tools and can bring others to the table, and who can address those invisible barriers that clients have somewhere in their minds and their backgrounds, the limiting beliefs, bad habits and instinctive reversion back to the comfortable mean of their lives before the planning engagement set them on a higher path. If clients can make more progress more quickly with the help of a therapist, the cost--based on these two examples, at least--seems to be quite reasonable.
And there may be other benefits as well. Kahler says that the partnerships with Klontz and Longville have greatly--and unexpectedly--improved his ability to relate to clients; in other words, the magic has rubbed off a bit.
“Ted suggested that part of what I could do with clients is just shut up, put my agenda on the shelf, and let the client talk,” he says. “But I kept pushing back against it. They’re coming to me for solutions, aren’t they? Having me listen is just a waste of time.”
Then he had a meeting with a client who Kahler describes as “the one we would all like to vote off the island,” who constantly nit-picks returns, questions his fees and generally doesn’t seem to put a high value on the planning service. “This time, I asked him, what’s new since the last time we met? What’s on the top of your agenda, that you want to make sure we cover today? He started to talk about his farm,” says Kahler. “He had traveled seven hours to see me, we had a two-hour meeting, he talked for an hour and fifty minutes, how he decided not to sell it, how it makes him feel grounded, we buzzed over my agenda in the last ten minutes, and I’m thinking, Gosh, what a waste!
“Then,” Kahler adds, “he gets up and says, this was the best meeting we’ve ever had. We got so much done today, I can’t believe it. It turns out he didn’t want a fancy analysis; all he needed from me was to reaffirm his decision.”
Who knew?
Labels: bob veres, financial planning, it's not about the money, Laura Longville, life coaching, life planning
