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#7 Penny Phillips – Transcript

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SUMMARY KEYWORDS

advisors, financial planners, business, clients, firms, people, financial planning, industry, important, employee, investor, skill, years, create, thinking, plan, build, serving, consumer, louis

SPEAKERS

Penny Phillips, Louis van der Merwe

 

Louis van der Merwe 

Welcome to the financial planners South Africa podcast, a show dedicated to driving the positive evolution of financial advice, specifically in South Africa to join a global community of financial advisors, sharing and learning with one another to drive the positive evolution of financial advice. Head to x y advisor.com. volumetrics is thrilled to bring you this podcast in support of our common passion, people and the evolution of wealth management. A Global Business links precision investment management to expert financial advice through partnerships and technology. portfolio matrix is an authorized financial services provider. Visual, interactive, meaningful, productive for values underpinning acid map, a financial planning platform loved by advisors and their clients. This episode is proudly brought to you by Alan gray. They say it’s important to live for today. Although that might be true. We can’t forget to plan for tomorrow. There’s a lot of left of all, Alan gray is an authorized financial services provider. Visit w w w dot Ellen gray.co today to learn how we build long term wealth for clients. Welcome to yet another episode of financial planners, South Africa. Today I have someone that’s not in South Africa, but influence a lot of financial planners across the globe. A name might be familiar to you, it’s Penny Phillips. And she’s based in the US in New York specifically, a wealth of knowledge from practice management consulting, a weekly video that you shouldn’t miss building journey strategic wealth and Penny, I’m looking so forward to this discussion. And thank you so much for being here.

 

Penny Phillips 

Thank you a ton for having me. It’s my dream to go to South Africa. So I sort of feel like I’m accomplishing a part of that dream being on being on this session. So thank you.

 

Louis van der Merwe 

Oh, that’s wonderful. kept on we’d love to have you. I’m sure we can arrange. Yeah. One day for sure. For sure. Vinnie, would you mind jumping in and giving us a little bit of a brief bio of kind of your history in financial planning?

 

Penny Phillips 

Absolutely. So currently, I am the president and co founder of a wealth management and financial planning company called journey strategic wealth. I am not a financial advisor or financial planner, but I’ve spent my career coaching and consulting financial advisors. So prior to launching this business with my three co founders who are advisors, I ran a coaching and consulting company and so several years ago when I launched that from it’s called thrive those consulting some of you may be familiar with my my videos that I that I post and promote through thrive O’s. I was really interested, Louis, in what made certain firms and certain financial planners successful despite a ton of change that we’re dealing with now in the industry, technology change, consumer preferences, change, pricing changes. Yeah, in my consulting career, I always found that there were certain advisors and certain institutions that just had an ability to adapt and continuously embrace new things that were coming out in in the industry and embrace those and, and thrive. And so I launched thrivers, specifically, because I wanted to study those financial planners and create more efficiencies for them. And then about a year ago, I started having conversations with the guys who became my partners now about building the firm that we wish advisors had access to. And so we’ve we’ve gone out and done that we manage about two and a half billion in assets here in the US. We have advisors on the east coast in the New York City area, and then on the west coast in San Francisco. And we’re inviting advisors and teams from all across the industry who are either don’t feel like they quite fit in with the institution they’re at now or simply looking for a new business model to consider joining us. We’re a national firm and we’re really excited. I mean, it was a wild year to build and launch a business but so far, so good. So that’s a little bit about me.

 

Louis van der Merwe 

That’s I think that’s such a brilliant topic for us to touch on. You know, you started this business during a pandemic. What a difficult time to stall. Yeah. What are the things that stand out for you over the last you know, as it been six months.

 

Penny Phillips 

You know what we It is been it It’s officially been a year since we started planning this. And we the business itself is six months old. My partners are seasoned financial planners, they’ve been in the business for 30 plus years. But this is a new type of endeavor for all of us. And we launched January 4. So right smack in the middle of, you know, of this global pandemic. And what’s been so interesting, I mentioned Louis, before this session that today’s my first day in an office with my team, what I’m noticing is as difficult as it was to all work from home and launch a business virtually, we adapted and really got used to that it’s almost taking us now time to readjust to working back in an office physically in the same room together. So it’s just interesting as a professional, how you adapt to, you know, the circumstances around you that that was definitely the most difficult part of this, though, not not being able to be with my team as we launched.

 

Louis van der Merwe 

Yeah, that physical presence does seem to bring in that connection with our teams and with our clients. You talk so much about, you know, developing your team. And actually, within our business, we use your professional development framework, and it’s made a massive difference. Awesome. How have you constructed that professional development? Is that just something you’ve managed to take from other industries? or How did you craft your thinking around that?

 

Penny Phillips 

That’s a really good question. And you know, I will, I’ll answer it in two answers. The first is, when I first started in in the business, I was in a, what I would call more of a pure consulting role. I worked for a large company at the time, this is going back over 10 years ago now. But I worked for New York Life, a company you may have heard of, and I consulted internally for them. And what I noticed about consulting on practice management is that you are required as the consultant to have the answers, right, there’s, there’s a, so there’s a problem, and then there is a solution. And the solution is usually based on something that has worked in the industry for, you know, the last 30 years, we presented as a solution, and we move on. And what I started to notice is that so many of the practice management concepts that were being taught to advisors, were no longer relevant. And what I mean by that is, we’re dealing now with a generation of not just advisors, but employees that think, look, act succeed very differently. And so I’m talking about the millennial generation, you know, the Gen Z generation, either the 20, to now 35 year old and so the tactics that worked for employees 4050 years ago, when there was no, you know, work from home option where everybody went into an office and work the nine to five,

 

 

those

 

Penny Phillips 

tactics to keep those employees motivated are not going to work for this generation of team. And so what I started to realize is, number one, we needed to think differently about development, about how to motivate people, we needed to be very much aligned to what is unique about the the next gen employee or the work from home employee. And we also needed to take a coaching, not consulting approach, meaning we needed to work with. And coaching is very different from consulting in coaching, you work together with the subject to come up with a solution together, you co create the solution. And so what I started to realize is, the way in which we build a professional development framework has to be done has to be co created with the team so that we make sure that whatever we’re introducing is going to motivate the employees and we have to be forward thinking and so that’s how I’ve crafted most of the practice management programs that I’ve built. The professional development and human capital work I’ve done is probably the most interesting and you know, when you get it right, it has the biggest impact on on a company.

 

Louis van der Merwe 

It sounds like such a nurturing role to say, Let’s help you expand and grow in your, in your career, as opposed to you know, the traditional come in, you’re a sales representative, and you need to go out to service clients.

 

Penny Phillips 

Exactly, Louis and also, you know, what I noticed with professional development, in the past, it was very much focused on the leader, right, the leader comes into the meeting, they give the critiques to the employee, the employee walks away with that and is supposed to somehow feel motivated to you know, change and thrive and develop. And what if we put development in the hands of the employee and allow them to, you know, reach their highest potential simply by supporting them and helping them develop As a strategic thinker, and so it’s a tiny nuance difference, but it makes all the difference when you employ empower employees to own their own development. And I talk a

 

Louis van der Merwe 

lot about that. I’m wondering, what are the kind of business pillars that have to be in place to support this? You know, I’m wondering if, if a business is not growing fast enough? Can they create a career path for a younger employee? You know, what are those things that they’re not for you? That’s,

 

Penny Phillips 

that’s a real? That’s another really good question. And I think we, as an industry, it doesn’t matter what country you’re in, where you know, obsessed with this idea of growth for growth’s sake. And we put a lot of pressure on financial planners and advisors who are running a business, to not just be great financial planners and marketers, but also be great business owners and strategic thinkers, and CEOs. And when you have a really strong sales skill set, or client service skill set, that doesn’t always translate to a great leadership or business ownership, mindset or skill set. And so the one thing I talk a lot about is the reason I see so many firms plateau at a certain point and stop growing is because a couple things. Number one, the financial advisor has tried to straddle both roles, right, building the business, and also doing what they do best rainmaking and serving clients. And what I say to advisors all the time is it’s perfectly okay to choose one or the other, you can own the business and run the business, you know, from a leadership standpoint without actually having to do all the operational stuff. And so if you want to really lean into that rainmaking role, you need to free up more of your time to do that. And so you actually do that not by hiring other advisors and rainmakers, but by creating more capacity for yourself, to be able to do what you do best. In other words, if you’re really good at growing the practice, your initial thought should be I need to create more space for myself to double down on what I do best. Most advisors think of it the opposite way, because we’ve taught them that way we teach them, you immediately have to go out and hire another advisor just like you. And oftentimes that model doesn’t work. And so I think we need to think about planners need to think about their own development just as much as they think about an employee’s development. And the answer isn’t always bringing in another revenue generator, sometimes it is leveraging your own skill set to continue to help the business grow past whatever plateau you’ve had,

 

Louis van der Merwe 

I think that’s so true. You know, part of it is you want to create this culture, and you want to bring people in that are like minded, and we tend to like people that are the same as us. And then, you know, then there’s a copy of the original founder. But at the same time, you know, the skill set that you need to maybe start out a firm versus growing and expanding. Those are two really different skill sets, like, do you train that within your existing group? Or do you say, Hey, you know, like, you’ve been saying, Let’s double down on our strengths. Let’s kind of create that real focus and bring in more people. How do you do that? If you have limitations on the amount of people that you can bring in?

 

Penny Phillips 

It’s it’s Yeah, I mean, it’s the million dollar question, right? How do you do this really, logistically? And so there’s a couple things I always tell planners and advisors to think about, you know, the first being we think very tactically in this business, because it’s, it’s, you know, a sales business. I mean, yes, we’re in the business of serving people and providing financial plans and wealth management services. But at the end of the day, we leverage our sales skills to be able to do that. Because of the history of our business. Most leaders in the industry tend to think very tactically, right? We hire people based on a job description that has tasks, we think about the tasks we have to complete. And what oftentimes happens is we build businesses and teams with a lot of very tactical thinking people. And so one strategy that I recommend advisors deploy is give everybody on your team. And it’s a long way of saying, Louis, the answer is yes, you can teach strategic thinking and critical thinking ability, which is what you need to be able to grow the business you need to have everybody from your receptionist, to your service associate to your marketing person able to understand what results are we trying to achieve as an organization and How can I help get us to those results? And here’s the difference between somebody who thinks tactically, and somebody who thinks strategically. Let’s say you have a service person who is responsible for processing new business, somebody tactical would think about, Okay, I’m going to continue to do things, the way we’ve always done them with the process that we established five years ago, somebody strategically thinking would think, you know, what, I’m not sure if this process is going to work. If we continue to add the number of clients that we’ve been adding the last couple years, how can I find efficiencies, so that there was less required of me, and, and more automation. So if everybody on the team thought like that, then we’d be able to find scale and capacity, when otherwise we would hit capacity. And so that’s one thing I want advisors to do more of teach others to think strategically. And then the second thing I’d say is, don’t be afraid to hire at a certain point, somebody to come in and manage operations for you. It’s not a wasted expense. So I would say those two things, I think advisors need to put more thought towards,

 

Louis van der Merwe 

it’s that old adage of, you know, spending time working in the business versus working on the business and saying, Hey, we need to be cultivating this mindset. I think there’s an element of that, you know, that could potentially backfire as well, someone that just like chasing strategy and saying, again, this route and that router. Yeah, well, I wonder what you think about that.

 

Penny Phillips 

It’s a fine line, right? Like we want, we want to create this culture of autonomy of self development of everybody thinking 10 steps ahead. That’s the idea. And one, one trick I always tell teams is, when you’re thinking about making a decision about the business, should we deploy this marketing strategy? Should we you know, does this client service structure work? If you’re asking yourself these questions, you always need to ask yourself, would this work if the business was 10 times the size, if it doesn’t work, if the business is 10 times the size, you don’t implement it now, it really simple sort of gut check for yourself. So making sure that you’re you’re fact checking your own decisions, is one way to prevent you from sort of going on this creative, you know, strategic thinking, your journey. But But the other thing is, you’re right, in that if we get everybody sort of constantly thinking 10 steps ahead, then it could become a little bit disorganized. And so I’m a big proponent of organizations having very clear annual objectives and key results that they want to achieve as an organization. And then individual employee objectives and key results that tie to the companies. And so if everybody has an alignment around what we need to achieve in a year, and how we know we’re going to achieve it, then that prevents us from going off the rails with our strategic thinking and creative thinking mindsets.

 

Louis van der Merwe 

It almost sounds too simple. To be clear on what you want to achieve. Is this waterfall down and, you know, it’s everyone work towards it. I think there’s an element of us just wanting to move at such a pace that we say, oh, okay, we don’t have time to spend on these kinds of things. Let’s just get down and chase more clients or service them better.

 

Penny Phillips 

Yeah. And look, you know, I don’t blame planners for thinking that way. Look how fast technology and AI artificial intelligence is moving and impacting the business. One of the great challenges today in our industry, no matter what country you’re in, is that the consumer is changing faster than our industry, I think has been able to manage. Now, that’s a gem generalizing there, because of course, there are advisors and firms that have done a great job. But if you think about the experience the consumer has had in different sectors, so or different industries. Think about how we watch television now. You know, we don’t wait a week for the next episode of a season to come out. There’s no here in the us it was Blockbuster Video, the video store we’d get our videos from and then, you know, we’d have two days to watch and then we’re done. So all that’s gone. It’s an instant gratification, cult positive reinforcement culture, very, very different than what we’ve been used to in the you know, in the past over the last, you know, 30 or 40 years and just in the world and so, the financial services industry has not caught up with the way the consumer wants to Consume goods and services. And so that’s why I think it’s, it’s been difficult sometimes for advisors to figure out, gosh, should I be on LinkedIn? Now everybody’s not on LinkedIn, and they’re on Instagram. And so they constantly feel like they’re getting left behind. And I understand why.

 

Louis van der Merwe 

So Penny when you guys were constructing journey, strategic wealth and thinking about the client experience, what are those things that you mentioned, advisors were looking for, you know, the, the business that they always wanted to create or join? Or what are those things that you think is important from a client and an advisor? perspective? Yeah,

 

Penny Phillips 

so the first thing is dovetails off of that comment, it’s the, the client is now in generally, and it doesn’t matter what generation either because that sometimes I’ll get advisors or, you know, leaders of firms like, you know, the older generation Tell me, Well, our clients aren’t on social media, you know, we don’t need to, everybody’s on social media, you know? Exactly. I mean, you know, our 90 year old grandparents are on Facebook. So, the one thing we really thought about is, advisors need to have the ability to engage with the client, the way the client wants to engage. And doesn’t mean that we requiring everybody to suddenly have an Instagram and a tick tock. But we need to give advisors the option to pivot between channels to communicate with the consumer. If a firm doesn’t enable the adviser to do that, that firm is not going to be around in the next 20 years. And that is just the truth. So that was one thing, like the fact that advisors couldn’t, you know, have a social, you know, channel or they couldn’t text their clients like, it’s not aligned with the way the consumer engages. So we need to give them the ability to do that, to serve the consumer how the consumer feels comfortable. The second thing we thought about is, we need to give advisors flexibility around how they structure their services, and how they price their services. Here in the US, there are firms, I mean, in Canada as well that that are still very much stuck on the old school model, you sell a product and in one segment of the market, it’s you sell a product life insurance product, or whatever, you get paid a commission, the other side of the industry is you collect assets, and you charge a fee on those assets. And there wasn’t really any wiggle room in between. And so what we thought a lot about is there are clients that have complex situations that need financial planning that we need to be able to serve that don’t fit into either one of those models. And so giving advisors the ability to charge subscription fees, planning fees, hourly fees, to really work with the client, and create a solution that’s right for them at that stage of the lifecycle that was really important as well. And I’ll throw out a term here that I want everybody to remember, scale and customization. That is what is going to make financial services firms successful for the next 20 years, being able to scale an offering, but make an individual person feel like it was created just for them. And so we have to give advisors the ability to do that. The last thing I’ll say, and this is something we definitely noticed as a trend, the development pathways for an advisor were you’re successful advisor, you can generate a lot of revenue, and then you become the CEO of the business. And there were just so many advisors that don’t ever want to be the CEO, they just want to advise, But to your point earlier, it became becomes harder to scale and do that effectively. And so we wanted to create a model where we centralized operations, but allow the advisors to own their book and their business and be independent, but but have us really do all the things behind the scenes. And it’s worked. I mean, we you know, and advisors are really responding positively to the model.

 

Louis van der Merwe 

So if you created that platform to say, as an advisor, you plug in, we help you to communicate better with your clients, allow you not to worry about the implementation and the pricing and those kinds of things around it. And yet you can spend your time dealing with your clients, because inevitably, financial planners want to help people, right that that seems to be the core driver, but with any financial planner that you speak to.

 

Penny Phillips 

It’s so true when they you know, I think some of them enjoy some aspects of running a practice. They enjoy the leadership aspect of it, they enjoy the branding aspect of it, but they don’t necessarily enjoy negotiating a contract with a tech vendor or thinking about you know, Gosh, I need to hire another team member, I need to call, you know, the payroll company and I need to get this job description posted. And so these are the things that really prevent advisors from being able to get past that capacity plateau that we talked about. Because opere, as you grow, obviously operations become more complex. The challenge, I think, up until this point is that there weren’t many, up until this point meaning about, you know, we’ll call it about seven years ago, here in the US, there weren’t many options for advisors, you either run your own practice, and you’re on an island by yourself, or you become an employee of an institution, you know, like the Morgan Stanley’s or Merrill Lynch’s of the world. And they own your business, we said, What if we find something in the middle advisor owns their book, meaning it’s their clients, they, it’s their equity, but we run the operations for them. And we’ve been able to do that. And we’re registered investment advisor weren’t Alright, that’s a term here. And I don’t know if there’s a similar term in, in, in South Africa, but we’re a different sort of institution where we are independent and can be completely

 

Louis van der Merwe 

objective. So Penny, would that also solve the succession planning problem, saying that it’s really easy for someone to carry on or buy out your business when you want to exit? Yeah, that’s

 

Penny Phillips 

  1. So yes. You know, what, what’s the again, the challenge in some of these bigger institutions is that there were limitations. There, there was limitations around who you can sell the business to. I mean, if you work at an insurance company, the company owns the insurance contracts, you’re going to sell the business, and I quote, If you could see me, I’m quoting, you sell the business, essentially, to somebody, somebody internally, for a, you know, agreed upon multiple. And that model worked until it didn’t anymore. And you know, the m&a activity in our industry is at an all time high, people are realizing that if they leave these big firms, if their relationships are really strong with their clients, not only do they have the ability to continue the business, but monetize the business when they’re ready to retire. And I think because firms are so big and trying to manage, you know, a huge problem, which is we have a ton of retiring advisors in our industry, there aren’t a whole lot of solutions for you know, the individual practice that wants flexibility. So with journey, you know, we really work alongside the advisor to determine the timeline. If an advisor is not thinking about, you know, retiring for the next 25 years, why would they sell their book of business right now, we don’t want to force an advisor to do that. If they want support in finding, you know, a successor, if they want capital to be able to expand or so all options are on the table. And I think that having flexibility to do that honors the experience that the advisor wants to have and wants their clients to have, versus being forced to do something by some big institution that, you know, really doesn’t care about you.

 

Louis van der Merwe 

It’s the exact same problem we see in South Africa. It’s a very, it’s getting an ageing group of financial advisors. But the problem we have is that we don’t have enough younger financial planners. And, you know, part of the show is about keeping people motivated to just stick it out. You know, I speak to so many people saying the first 10 years were really difficult. I had all these like challenges. I stuck it out. And now I get to make a massive difference in the life of my clients. And, you know, it’s also personally very fulfilling. Are you balancing out journey strategic work with a group of younger financial planners or how have you solved that part of the equation?

 

Penny Phillips 

Yeah, you know, we are we span the entire generational spectrum, right? We have our my senior partner who has been in the business a really long time, 40 plus years has seen it all. I would say the best thing about him his best qualities, a financial planner and advisor is very forward thinking and recognizes that the future of this business is in the 20 something advisor, right that that is who is going to be around for the next 30 plus years to actually see the great wealth transfer happen that we’ve been talking about for, you know, 10 years. And so we are, I would say most of us are in our 30s, early 40s, early 20s and it’s been incredibly rewarding to build it with people from sort of all over the spectrum bringing different experiences We are a younger firm, we’re a female majority firm. And so those two things are actually quite rare in our business. The one thing that’s important if if anyone listening is sort of thinking about this challenge is you have to get rid of any preconceived notions about what you thought your business would look like. And let me explain that when I was coaching, older advisors, advisors who had, you know, let’s say, five to seven years left in the business, I noticed that they were very, almost resentful about how, quote unquote, easy it’s been for the younger generation. And I challenged them on that, because it has not been easy. We’ve grown up in a world where you can’t just cold call people anymore, right there is do not call us there is no answering machines, you know, at people’s houses. So getting rid of what they thought their successor would look and act and be like, you have to rid yourself of those belief systems, because the younger generation of advisor thinks differently, they’re more team oriented, they don’t necessarily enjoy the loan, you know, the lone wolf advisor culture that the industry was built on. And so if we can embrace that next gen of owner and, and really work around their style to help them develop as leaders, then we can solve the the challenge, but I just think people have a hard time embracing, you know, something that’s different, or that they don’t know or like, and that’s what it comes down to.

 

Louis van der Merwe 

I love what you’re saying, Ben, it’s almost saying that, you know, it wasn’t necessarily more difficult or easier, it was just different. That’s right experiences that they had, building a business, building up clients, physically going to someone’s door knocking, you know, good luck trying to do that now. But if you had to put that same person in, you know, a younger advisors shoes today, trying to, you know, both connections electronically and service clients differently, is equally difficult. And it’s very different, you need a different skill set for that.

 

Penny Phillips 

Absolutely. And, you know, I challenge the older generation, I always say this in my speeches, I say, the responsibility, unfortunately, whether they like to hear it or not, is on the older generation to to adjust, and not the younger generation. And the reason I say that is because the younger generation has old and younger meaning let’s just say younger than, you know, 20s to early 30s, they have only ever grown up in a world that was tech enabled. They don’t remember a time without, you know, instant messenger. I mean, now instant messenger is old. Now we’re talking, you know, like, you know, the Facebook’s and LinkedIn of the world and Twitter, they don’t know what time before that the older generation has seen a time before that. So it’s easier for them to, you know, pivot back and forth. For the younger generation, their brains have already been wired differently. So you know, we can’t get mad at them for not enjoying door knocking or cold calling. It’s so foreign concept. You know, the other really important thing that we need to be mindful of is this industry was built on a negative reinforcement sales culture, meaning you didn’t hit your numbers, you didn’t bring in the assets, you were fired. You were yelled at by your branch manager, whatever it is, we’re now in a positive reinforcement society, meaning. I mean, our entire lives are built off of how many likes we get on social media, or likes we get on Twitter, when we post something, it changes the way you perceive success and how you work through challenges. So it, like I said, it’s not more difficult or less difficult, it is simply different. And so we have to adjust the way we think about succession and continuity, because we’re dealing with a different generation of leaders.

 

Louis van der Merwe 

And it’s quite striking because your role as a financial planner is literally to help someone change, you know, we can get stuck in our own thinking saying, Oh, no, it’s a it’s a, it’s a difficult thing to change. But we see that accelerating I think we see it globally, in like you’re saying within your businesses, we see that within South Africa within our business and the industry globally feels to me as if it’s getting closer and closer and it’s moving into that, you know, talking about someone’s purpose and you know, helping them define their values and actually, what you’re saying that positive reinforcement which can be life changing,

 

Penny Phillips 

yes. And you know, you just you said something really important that I want to touch on you, you said that, you know the the financial planners job really is to help people change. And I want advisors and planners to remember that because sometimes they’ll get mad at themselves about, they’ll say, you know, I’m so good with clients, and I really love my client relationships. But Gosh, I’m just not great at managing my team or, you know, embracing change. And what I say to them is, first of all, yes, you are, right, you’re in the business of managing people for a living, you manage clients emotions for a living, that skill set is translatable to leading a team of people. And so you have it in you. You’re just not maybe channeling it sometimes in the right way. That’s what I say, say to the older, older generation, because, you know, it is it is hard to keep up with all the change necessary to serve clients, and also all the change necessary to keep up with all the other things, you know, in your life. It’s a really important point.

 

Louis van der Merwe 

Absolutely. And I’m wondering, you know, you mentioned that a lot of your financial plan, the majority are women, financial planners, you know, and I think that inevitably, the skill set is more inclined to help people through change. Right? And Shouldn’t we be talking about that more and more, like, we’re starting to see that in South Africa, but it’s moving very slowly. And I know, that’s something that’s close to home, and that you’re very passionate about as well.

 

Penny Phillips 

Yeah. And it’s, you know, and I have to say it as I mean, I guess as a woman, I can say it, there was, you know, it’s it’s the EQ factor, emotional intelligence. And actually, when we launched the business, one of the things I met Scott, I’m sure it’s on our website, we said our E. E q is as important to us as IQ in this business, you can have all the technical competencies, you need to be a great financial planner, if you have low EQ, can’t, you know display empathy and can’t actively listen to people, you’re not going to be in business for a long time that and actually, there was a study done, I should try to find it and share it with you, Louis, your listeners would probably appreciate it, there was a study done about high net worth baby boomers. So you know, 65 Plus, and their propensity to move assets to an advisor here in the States. And what what this study did is it looked at the EQ and IQ of advisors, so how, how credential they were, how good they were at getting, you know, positive returns, and all that good stuff. And then we looked at their EQ. And the advisors that and excuse me years of service, the advisors who had long, 10 years in this business, 35 plus years, but low emotional intelligence, meaning they didn’t really listen to the client, they maybe only worked with the male spouse, much, much lower propensity to garner assets from a new high net worth baby boomer than an advisor that had five to 10 years in the business, but very high EQ. And so what it’s indicated to us is that the consumer of today and tomorrow, that’s what’s more important to them, then being at the center of the conversation, somebody to listen to them, somebody to be able to, you know, read through the lines of what they’re saying, when they’re feeling emotional about a situation. I think women have, are naturally more able to do that. I think it’s a skill set you can work on. But you know, it definitely shows I mean, the proof is in the proof is in the pudding, as they say.

 

Louis van der Merwe 

I’m just wondering how those financial planners that have been doing this for 35 years, still on particular good at listening? Well,

 

Penny Phillips 

you know what, Louis, I think it’s because if you look at the demographics, it is the, you know, 65 year old, you know, white male advisor serving the 70 year old white male wealth holder, and that was the prominent wealth holder of 40 years ago, at least here in the States, that is changing, the demographics of wealth holders has changed dramatically. And over the next 2030 years, the prominent wealth holders are going to be females, females are going to double inherit, they’re going to inherit, first from a parent, and then from a spouse. So really important demographic of investor. And then we’re seeing especially here in the US, culturally diverse groups becoming wealth, but a prominent wealth holders, younger folks becoming wealth holders, because they’re willing to take risk more than their parents are, were rather they’re starting businesses. And so as that changes, the demographics of the wealth holder and investor, the skill sets of the advisors are naturally going to have to change to be able to serve them. So we’re still not there yet that great transfer hasn’t yet happened, but

 

 

it’s happening. It’s

 

Louis van der Merwe 

starting. I can see what you’re doing in terms of looking forward. So what are the people that you’re going to be Serving five or 10 or 15 years from now on, what will they be demanding? And what I work on that now, right so that you have 10 or 15 years and, you know, around every second corner, people are talking about financial coaching and financial therapy. And my advice would be, like, start working on these skills, because it takes a long time to build it. And the sooner you start, the better hey,

 

Penny Phillips 

yeah, you and you, you know, for us, I think about this, you have a long time left in this business. And, you know, for me, and any other leader that has that runway, you have to think about it, you know, what got us here won’t get us there, right? That’s, you know, one of my favorites, you have to think about what are the skill sets that I’m going to need to have that are going to be important over the next 10 to 20 years. And this is why it’s important from a practice management standpoint, to have these business planning sessions with yourself, your coach and your team to talk about what do we need to bridge the gap between where we’re at now, and where potentially the industry is going to be in 20 years, I mean, artificial intelligence technology, the Do It Yourself investor, these things are only going to become more prominent and impactful on our business. You know, back in the day, the advisor was valuable to the consumer, because the advisor had information that the client couldn’t get elsewhere, right, there was no, you know, internet, you just Google anything you need to know, there was no Reddit threads that you can, you know, find out what the hot stock, there was none of that the advisor held the information that has changed, the advisors value is no longer knowing more information and the client, because conceivably the client could figure it out themselves on the internet, the value is being able to interpret information, number one, and number two, be able to translate messages to what’s relevant to the individual client. And that’s a that’s a nuanced difference in value proposition. And you need to work on developing the skill sets that back that up,

 

Louis van der Merwe 

it’s almost the exact opposite of information. It’s like, what you have exposure to right, which is surprising, if you are someone 20 years ago, like what are the skills that you would need to be successful? 20 years from now? I’m wondering like, how many people got it? Completely right? Probably no one, but the ones that said, No, these are the skills that might be helpful, and painted a vague image of what the future look like, and then kind of will almost correct that that’s probably more valuable than being 100%. Correct. of, you know, what the future of financial planning is going to look like?

 

Penny Phillips 

totally right. And there are some advisors, I mean, we run across them and, and they, by the way, some of them are the ones that are doing the best, you know, when you when we talk about the best in the business, when I talk about the best advisors in this business, I don’t necessarily care about where their aim is I care about, have they been able to prevent their business from plateauing at any point in time, plateauing, because they’ve hit capacity or plateauing. Because their value proposition is no longer as strong as it once was. And so there are advisors that have been able to really reinvent themselves and evolve. And those are the advisors who were doing things 20 years ago that nobody was doing. They were charging fees. They were you know, getting different licenses here, the certified financial planning. credential is, you know, the most prestigious you can get in financial planning. It’s become much more popular now, with firms actually mandating that. But there were advisors doing that years ago, there were advisors who were, I think this is a neat idea, getting trained as life coaches, and personal coaches. And using that I’ve gone through certification, it’s it’s incredibly helpful in terms of being able to craft questions while really create a powerful experience for a listener. There were advisors going through that type of training 20 years ago, and people thought they were crazy. And you can’t get a more valuable skill set than that in today’s day and

 

Louis van der Merwe 

age covered Jeff Bezos of financial planning those people that exactly I’m you know, if you look at what he said is it’s not about what to focus on. It’s about what you shouldn’t be focusing on.

 

Penny Phillips 

Exactly right. And I think, you know, with when we think about that the the issue around access to too much information, I think, teaching clients how important it is to I say have Jomo instead of FOMO. So FOMO is the fear of missing out and the fear of missing out fuels, so many decisions, not just in our personal lives, right, but I shouldn’t go to the party, but I’m gonna go to the party on a work night. But you know, it fuels so much of an investor’s decisions around things like here in the States, it’s GameStop. And all these, you know, stocks that people are just literally investing in because because other people’s people are investing in it. Advisors need to teach the joy of missing out, right? Joe Meaux. So, so important to teach the investor, how to protect themselves from themselves and how to filter out noise and how to read through headlines and pass the things that are not relevant to them, because it’s not going to have a material positive impact on their financial plan. And that’s a role that I think most advisors never expected to have to be in. And that’s why it’s hard to adjust from being the old Knower, you know, to the supporter and mentor of of the investor. So it’s a slight difference. But it’s, you know, it’s it’s hard to, to change what you thought you were as an advisor,

 

Louis van der Merwe 

you know, that image of a cheerleader comes to mind. Hey, Ray, thanks so much to be able to give themselves the permission to say no, yeah, actually, I think it comes down to that a saying, No, with the help of my advisor, I’m really clear on what my objectives are, what my purpose is. And I’m aligning my finances to that, as opposed to saying, Hey, what’s everyone else doing? And let’s just copy that and hope it works out?

 

Penny Phillips 

Exactly. And, you know, and also, I mean, advisors are facing something that they certainly never, we never train them for this idea that, you know, you go on Twitter, or wherever, and you see that everybody, it seems like everybody is doing great, and making all this money. And, and it’s this constant feeling of like, Am I doing enough, I’m not doing enough and self doubt. And, look, that’s why we have financial planning as a discipline, you know, because we are able to provide a pathway that is, in some cases, foolproof, as long as the investor sticks to the plan. And so now advisors are having to sort of navigate, you know, the emotional toll of seeing someone else’s seemingly perfect life on social media and feeling like you’re not living up to it. And that’s just a dynamic I think we weren’t prepared for as a, as an industry.

 

Louis van der Merwe 

It strikes me that, you know, in economics, we talk about the rational investor. And I think everyone agrees that there is no such thing. But yet in financial planning, we assume that someone’s gonna stick to the plan. But in reality, no one sticks to a plan.

 

Penny Phillips 

Yeah, and look what it’s worth. Again, it goes back to the instant gratification, like the way the consumer that the investor or the client talks about his or her their goals now is different than the past in the past. Like I think of my parents and grandparents generation, you know, they all they could think about was, I want to save up as much as I can to get to retirement to give my kids the best life they could possibly have. We are and I don’t mean it in a negative way. We are a more selfish society now than we ever were. It’s it’s much more about how can I live life to the fullest today, you know, tomorrow isn’t promised I want to go to Thailand on my holiday. And, you know, I don’t want to maybe buy a house because it’s too soon, the way we think about what we want, and what fulfills us is different. And that inevitably is going to impact the way we think about a financial plan, you know, sticking to a 30 year plan and waiting for the payoff, when you’re 60 is not as appealing to the younger generation. So advisors have had to change the way they think about planning to meet the client goals.

 

Louis van der Merwe 

Yeah, just another example of why you need to be listening to your clients. And I guess if you’re in that boat, it’s easy. Just say, hey, what am I looking for? In a financial planner? You know, if I had to ask Penny Phillips, like, what do you look at when you pick a financial planner? Like what’s at the top of your list?

 

Penny Phillips 

Yeah, I mean, for me, it is about somebody who understands my, the way I think about my life and my family and my challenges, like having somebody that very much understands that somebody that needs to know all of the information, but then understand what is and isn’t relevant to me and needs to understand that I have goals that go beyond you know, maybe my personal plan, but what goals to help my family and goals to really make sure that a lot of people are okay, and somebody who can sort of understand the way my mind works, that’s really important to me, and that’s required. Hiring a lot of a financial planner, you know, in the past there, you know, whoever had, you know, the best returns or who, you know, whoever was, you know, Merrill Lynch was promoting that was the advisor. But But for me, it’s very much about Can I form a relationship with somebody who’s really going to stand by my side and support me and making a lot of decisions, some that have a financial implication, and some that don’t. I mean, when we’re making a decision about, you know, health care for our parents, let’s say or, and helping them navigate to a decision, that that may not have a financial implication for me, but it has an implication on my family. And so that’s why financial planning is so important, because it’s not just about investments, or cash flow, or any individual thing. It’s the compilation of all things that impact somebody’s life. And so somebody who understands that, that’s important to me in a financial professional

 

Louis van der Merwe 

Yo, in the profession of serving and supporting and it just happens to be finance. Money and then said, Okay, there you go.

 

Penny Phillips 

That’s exactly it. Yeah, we’re, you know, we say that, you know, you’re, you’re in the business of serving others to your point, and you happen to do it by, you know, by delivering wealth management solutions, but first and foremost, it is serving others. I totally agree.

 

Louis van der Merwe 

Wonderful, Penny, thank you so much. This has been a really exciting discussion. I so much enjoyed it. Where do people go when they want to hear more about you? What’s the best way to reach out?

 

Penny Phillips 

Oh my gosh, I’m all over all this social channels. So you can find me on Twitter at thrive O’s, th ri ve o s LLC, Penny, a Phillips on LinkedIn, I have a YouTube channel called practice management with Penny and I definitely invite you to visit visit our journeys website, journey s w.com. And if you google me, you’ll find me somewhere

 

Louis van der Merwe 

awesome, y’all don’t miss out on those YouTube videos. They are so helpful for anyone in our industry and like building a business. Thank you so much. have you on the show again in the please have me back. I’ll definitely be back. Thank you. Thank you penny. All the best. Take care

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