Shaping Wealth, a behavioral finance training firm co-founded by Brian Portnoy and licensed clinical psychologist Joy Lere, pursues a mission of helping advisors understand the psychology of financial planning. The firm recently held its first behavioral finance-focused virtual event, the BeFi Summit.
Portnoy said that in addition to its mission, Shaping Wealth seeks to help advisors in providing end clients with “funded contentment” in which they have the “ability to underwrite a meaningful life.” In that spirit, the four sessions of the inaugural event focused on building a bridge between who clients are and who they want to be.
Defining Your Clients’ Future Selves
The first speaker was Hal Hershfield, a professor at UCLA’s Anderson School of Management. His debut book, Your Future Self: How to Make Tomorrow Better Today, was published in June.
“What I want and what I think I should have for the future: If we want to help people bridge that gap (we can) better understand how people think about themselves now and later,” he said.
Hershfield said he was interested in the motivations behind clients’ decisions about saving and investing. He said these “boil down to trade-offs.”
Oftentimes, he said, people fail to identify with a version of themselves in coming years.
“If a teenage boy starts to smoke, he doesn't identify with his future self,” he said.
As an example, Hershfield referenced the opening of the episode of the “Seinfeld” episode, “The Glasses” in which Jerry Seinfeld tells a joke about the inner tension of “Morning Guy" vs. "Night Guy.”
“I never get enough sleep. I stay up late at night because I’m Night Guy,” said Seinfeld. “Night Guy wants to stay up late. ‘What about getting up after five hours of sleep?’ Oh, that’s Morning Guy’s problem. That’s not my problem, I’m Night Guy. I stay up as late as I want. So, you get up in the morning, the alarm (rings,) and you’re exhausted and groggy. … There’s nothing Morning Guy can do.”
Hershfield said this sort of dichotomous thinking was acceptable, but “what's important is the type of connection we have.”
“We have to befriend and get closer to future selves,” he said. “Future selves are fundamentally disconnected from current selves.”
This is especially difficult, Hershfield said, because, for any improvement to be made, the current self is constantly required to be the one making the sacrifices. He said those who want to reach their future goals should “try to dial down the pain on the present selves' life.”
“It's like being in a relationship where you're always sacrificing for your partner,” he said.
Another method was to engage in what he called “temptation bundling,” in which pain and pleasure were combined to achieve a goal. As a technologically based example, he a website that allows users to publicly declare a target and pick an accountability partner. Depending on whether the participant does or does not achieve their stated goals, some of their money is either given to a charity or an “anti-charity,” which funds a cause they don’t support.
Age progression software can be helpful in digitally visualizing these pursuits. Such filters, like “Aged” on TikTok, can give users an idea of what they’ll look like when they are elderly, helping them better picture what could be.
Hershfield also worked with the Consumer Financial Protection Bureau to create the Future Self Tool. He said it was based on the same concept therapists use called the “empty chair” technique in which patients talk to a piece of furniture as if someone else were sitting in it, then switch seats and talks to themselves as if they were the other person. The Future Self Tool asks participants to either write a letter or email to their future selves and then vice versa, draw a picture of their desired future reality or have a conversation with their future selves.
The goal of all this, Hershfield said, was for clients to eventually “befriend their future selves.”
Couples, Love and Money
Up next were Heather and Doug Boneparth, authors of “The Millennial Money Fix” (they also run New York-based RIA Bone Fide Wealth). The couple is currently writing a second book due next year called, Merge, which seeks to examine the dynamics in relationships.
“Your money beliefs are forged long before you find a partner,” said Heather Boneparth. “They're part of your identity. You're making room for both of your full selves.”
The Boneparths recommended focusing on five alliterative concepts: connection, communication, contribution, collaboration and consistency. Couples should start a conversation on money beliefs and behaviors by scheduling dedicated times to have tough conversations around money. Each person should also write out and review the financial and personal contributions the other makes to the relationship. Next, couples should make net worth and living expenses lists so they can construct a budget. Regular money meetings should follow on “at least” a quarterly basis.
Building a Human-First Practice
Ross Marino, CEO of Advisor 2X, said when talking to prospects, advisors should be careful to not give away too much too soon.
“The more questions I answer the less likely meeting number two will happen,” he said. “Most of the time … it wasn’t them. It was me. It took me forever to understand this. Answering their questions one after another can do more harm than good. Eventually, I’m going to get to the questions. But not during the first meeting.”
Marino said when talking to a prospect, “Reasons come first, answers come second.”
“I rarely interject when they’re talking,” he said. “They do most of the talking.”
When he does contribute to the conversation, Marino said he speaks in “sentences, not stories.”
“I cannot hijack the conversation,” he said. “I need them to share their story. Storytelling is good, story listening is even better. We all need to be heard. We all need to be understood.”
Communication Strategies During Times of Crisis
Rounding out the summit was the well-known speaker and writer Meghaan Lurtz, PhD. She said advisors should think of clients’ stress as a “bucket of water,” wherein “the minute you share that, they’re going to hold it with you.”
“We want to make them feel heard before they later hear our advice,” she said.
Lurtz said advisors should ask questions to create common ground and reduce stress. She said giving people a choice in where the conversation is headed provides them with a feeling of power.
“Ask them permission if you can ask a question,” she said. “How do you want to be supported during this time? Give them a salad bar of opportunities for you to respond differently. Let them know you can show up in many ways.”
Other Behavioral Programs From Shaping Wealth
For those unfamiliar, Shaping Wealth offers different programs for advisors, including a 100-day experience called “Building the Behavioral Advisor,” which includes live teaching and cohort-based work for $7,500 per individual (although family rates are also available). In November 2022, the organization launched a subscription-based membership program called OCBO, standing for “outsourced chief behavioral officer,” which costs between $150 and $200 per advisor/per month, and operates akin to third-party tech support, letting smaller firms manage costs while benefiting from Shaping Wealth’s behavioral finance insights.