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Use your plan ID (available on your account statement) to determine which employer-sponsored retirement plan website to use:

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Client Relationship & Service
Using behavioral finance to help clients live their best lives, with Jay Wheeler

25 MIN PODCAST

Financial planning is about more than money. Money is used as an exchange for feelings, but personal values get at the heart of what people really want. That’s how financial advisor Jay Wheeler starts each client relationship. His team uses the principals of behavioral finance (plus a deck of cards) to help clients determine exactly what their personal values are.


In this episode, hear Jay talk about how his firm, Wheeler Financial in Wilmington, Delaware, with $215 million in assets under management, serves the “millionaire next door” types with this values-first approach to planning. He also discusses the consultants he’s used to help him become a better advisor and business owner.


Bringing in behavioral finance


To determine a client’s personal values, Wheeler uses behavioral finance to shed some light.


Behavioral finance teaches us that psychology and irrational decisions are as much a part of investing as statistics and marginal utility. Some well-known names in behavioral economics have popularized concepts like loss aversion, which highlights the idea that people feel the pain of a monetary loss more than the exuberance of a gain (a big part of Daniel Kahneman’s research that culminated in a Nobel Prize in economics). Furthermore, retirement plans can be designed to nudge workers into saving more by using automatic contributions that require an opt-out if the participant wants to stop adding to the plan (popularized by Richard Thaler and Shlomo Benartzi).


For financial professionals like Wheeler, these academic concepts can be incorporated in practical ways for the benefit of clients. Wheeler says money is a means to an emotional end. So when a client buys a new car, or pays for a vacation, that transaction is ultimately about whatever feelings it creates. “That's really a big interest of mine: understanding what makes a client tick,” says Wheeler, “and then tailoring our services uniquely to that person.”


Core values in a deck of cards


One of the first steps in his client relationships is a values exercise to help him understand what’s truly important in clients’ lives. He uses a specialized deck of cards that represent various values. Clients spread the cards on a table and whittle them down through several rounds until they are left with about five values. Afterward, some clients will realize their values are out of sync with their actions, he says. Helping clients recognize those gaps is one area where he feels his team can add value. “I’ll say to them, ‘Well, you told me that family and adventure are your top core values, but you're working 75 hours a week,’” he says. 


He compares this exercise to the foundation of a house, and says it can be used to rebuild if necessary. “You can always come back to this strong foundation of your values when faced with any difficult situation.” That doesn’t mean it’s always about purchases and good feelings, however. Sometimes the exercise can lead to tough questions, but a focus on values can still help. For example, clients may find themselves facing a “confrontation that involves money,” Wheeler says. In this case, when clients are armed with reminders about their values, they’re better equipped to just walk away if the issue is inconsistent with what’s really important to them.


Advising the advisors


While Wheeler uses behavioral finance to help clients, he’s also not shy about seeking help from outside experts to become a better advisor. He’s used two consultants and taken away lessons from both. Strategic Coach gave him two main takeaways, he says. First, he learned that a lot of business owners don’t take enough time off to really get away from the stresses of work life. And to really count as a day off, Strategic Coach recommends turning off email and phones. “It has to be a pure, restorative day off,” he said. He finds parallels here to the way advisors can help clients. Similar to Strategic Coach essentially giving him permission to take time off, he feels that clients often talk to advisors because they are seeking approval to make a move with their investments. That gives advisors a powerful perch to help people, he said.


The consultancy also emphasizes the idea of focusing on your strengths and minimizing weaknesses. Wheeler identified 38 tasks he performed at work, but realized there were some he didn’t enjoy and wasn’t good at. In fact, he was a hindrance to the business when he did the tasks he wasn’t suited for. But he has teammates who are good at those tasks, so he was able to shift responsibilities and increase the team’s efficiency.


The other consultancy he used is Edwards Holliday, who challenged the team by conducting a detailed survey. The feedback uncovered some of Wheeler’s “blind spots.” For instance, he had not been listening to the team very much or soliciting input for strategic planning purposes, he said. “I sort of thought that I'm the leader, and I'll set the right path for the team.” But now, the team is more heavily involved in those discussions. He said the big lesson for him was to set aside ego. “Four heads are better than one.”


Relationship-building through bragging rights


When asked what advice he would offer advisors just starting out, Wheeler takes his cue from the musical “Hamilton.” “One of the pieces of advice given to Alexander Hamilton in a song is: ‘Talk less, smile more,’” he says. “[I] just do my best to be a listener, a curious listener, smile more, and have a good time with this. It's a unique opportunity to be a really important part of people's lives.”


His final piece of advice for advisors dealing with clients: Encourage them to brag — about their kids, or whatever else they want to talk about. “Give them an outlet,” he said. “We spend all our time being polite. Give them an opportunity to brag. They'll appreciate it.”


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