Three initial advisor-provided client experiences can set in motion the "human-centric" aspect of financial planning.
It starts on the advisor's website. But the "most connective is the client discovery meeting. That's where the glue is made," Preston Cherry, founder and president of Concurrent Financial Planning and head of the financial planning program and assistant professor of finance at the University of Wisconsin-Green Bay, tells ThinkAdvisor in an interview.
Applying financial psychology enables an advisor to introduce "the human side of money," Cherry says.
What's more, a human-centric approach can improve an advisor's bottom line, he argues.
Cherry's firm focuses on finding your "Life Money Balance," a philosophy the certified financial planner has trademarked and features in the name of his podcast.
Cherry's Green Bay-based practice, which he founded in 2018, targets the affluent Gen X segment and is in "pivotal growth" mode, with additions to his already comprehensive planning services, he says.
A past president of the Financial Therapy Association, Cherry is director of the Charles Schwab Foundation Center for Financial Wellness at UW-Green Bay.
His doctoral dissertation, written while attending Texas Tech University, was "Personality Traits and Financial Risks Among Older Americans."
Cherry is now researching how personality traits influence the way people would deal with the prospect of outliving their money.
Such insight will help guide financial advisors to recommend investments that fit the client's "financial pathways," he says.
In the interview, Cherry identifies the "Big Five" personality traits and why one's dominant trait typically shifts at about age 70.
He also discusses how to give clients what he terms "the country club experience" that leads to referrals.
Before stepping into financial planning, he was with mutual fund wholesaler Salient. Later, he rose to senior financial planner and co-portfolio manager at Wealth Management Corp.
ThinkAdvisor recently interviewed Cherry, who was speaking by phone from Green Bay.
A Carson coach specializing in how advisors can connect with their clients, he stresses the importance of learning clients' "stories."
"Some clients want to spend time investigating the past. Some want to investigate the present or the future, and some, a combination thereof," he notes.
Here are highlights of our conversation:
THINKADVISOR: What's your firm's mantra?
PRESTON CHERRY: Let your life lead your money, not your money lead your life. Live aspirationally!
Why should advisors use financial psychology?
It allows you to introduce the human side of money — the emotionality of money: the ways people think, feel and behave about their money.
It's about how they interact with their money based on their cultures, values and experiences.
Once we learn these pieces of information willingly from clients, they go into the financial plan to [help produce] better outcomes.
How does an advisor introduce the human-centric approach?
If you have a good website, you're communicating it through the language you use: "We value your experiences. We want you to share your story."
If what you say as soon as someone arrives at your website is human-centric, it's laying the groundwork.
Then, when you have the get-to-know meeting, you ask compassionate questions. You're not trying to know everything, but you're setting the table for the type of relationship the client may be looking for and what to expect going forward.
What comes right after the get-to-know meeting?
The client discovery meeting. That's the most connective meeting. It's where the glue is made.
You get to ask not only quantitative questions but qualitative, human questions: "What are your values? How do you feel past, present and future?" You have them share their story.
So you communicate [the human-centric aspect] in those first three [encounters] — and ongoing all through the relationship.
What sorts of stories should the client tell?
They can be anecdotal, for example. Some clients want to spend time investigating their past; some want to investigate the present or the future or a combination thereof.
They may have experienced something in the past — like witnessing their parents having negative conversations about finances, where one spouse was the dominant one.
That could carry over to their own spousal relationship about money.
