[As fintech companies, robo-advisors and AI-driven chatbots are continuing to provide a “democratization” of access and advice into all areas of the financial services industry, some financial advisors in response have developed very innovative approaches to redefining and redrawing the parameters and expectations of what a financial advisor can do and be for their clients. They are creating highly competitive business models that go well beyond the traditional expectations and capabilities that clients have attached to financial services. The end result of the effort is that these advisors are developing substantially deeper relationships through a more profound value proposition.
To further explore how some advisors are pursuing those goals, we reached out to Institute member Alyssa Yocom, CPWA, CFP and wealth manager at Schultz Financial Group (SFG) — an independent RIA firm with a decades-long commitment to deepening client relationships and offering a unique integrated package of services to create a working partnership with their clients. With a firm motto of “A Legacy of Trust and Innovation.” they started their firm in 1982 with a belief that true wealth is measured by more than money, and that it is as much about aspirations as assets.
SFG has implemented this belief in providing a more holistic and carefully integrated family and business wealth planning approach by bringing “the Four Capitals of Wealth” to their service offering. Those “Four Capitals” include: financial matters, physical well-being, intellectual engagement and psychological space.]
Bill Hortz: Can you share with us the thinking behind developing your Four Capitals of Wealth approach with your clients?
Alyssa Yocom: By working closely with our clients, we have seen how a client’s investments, or financial capital, impacts all areas of a client’s life including their health, psychological state, and intellectual pursuits. Financial matters are really a web of connections to all the other areas of clients’ lives. Financial matters can inform your estate planning decisions, tax strategy, retirement lifestyle, and even your view of yourself and the world around you.
We commonly say, “What good is your wealth if you don’t have the health to enjoy it or the peace of mind knowing that it is working for you in the right way?” And we understand that each client’s goals for their physical, psychological, and intellectual well-being will be unique. We aim to help clients work toward whatever goals are most important to them, such as taking care of the next generation or fulfilling charitable desires. Another way of looking at this was brought to my attention when I attended a behavioral finance keynote at a conference that was talking about budgeting. It was discussed how you cannot just tell a client to cut golf, for example, out of their budget because they won’t reach financial independence in retirement. Golf is not just an expense on a spreadsheet. Golf is their psychological connection to friends, their physical excuse to get out and exercise. This important perspective helps us think of financial matters in a different way.
We want to ensure that our clients are living fulfilled lives. First and foremost, clients hire us as financial wealth managers, but we believe that wealth only becomes impactful when it supports clients in these other areas: when it supports them to live a healthy, active lifestyle; if it gives them peace of mind that things are being taken care of the right way; when it means they can pursue being intellectually fulfilled. Looking at and acknowledging the whole client who we are serving is really how we think about these Four Capitals.
Hortz: How did you build your advisory business model to help support clients in developing their Four Capitals of Financial Matters, Intellectual Engagement, Physical Well-Being and Psychological Space?
Yocom: Our financial services are the most important part of our business, but we also weave in discussions about the Four Capitals very early in the discovery and client relationship-building process. In addition to talking about the Four Capitals with prospects, our data gathering questionnaire addresses all four areas and asks clients to set goals within each capital. What do they want to do with their physical well-being, intellectual engagement, and psychological space? As we start putting together a Four Capitals Plan for a client, we integrate their goals in each of the capitals. The Plan not only provides financial projections, but it also connects clients with resources, including apps and other tools to help achieve their goals. Another way to look at it is that every financial advisor asks you about your living expenses, right? But when we get those living expenses, we don’t just take that spreadsheet of expenses and enter them into our financial planning software. We study it and let’s say we notice that they listed a miscellaneous membership fee. That leads us to ask, for example: What is that? Tell us more about it. Are they a member of a travel club or running club? We start to learn these client characteristics that can be used to better tailor our advice, recommendations, and the resources that we can provide.
Hortz: What other structural elements did you have to build into your practice to support your Four Capitals model?
Yocom: Technology opened a door for us to be able to implement the Four Capitals in a more formal manner. To increase engagement and more efficiently communicate with our clients, we are launching a client portal where clients can share their goals and progress updates, and we can directly link a resource to them. The portal does not replace periodic phone calls or human interaction from our team, but it is another medium to give clients access to information.
We are also building a knowledge database of resources that we have vetted and used over time. We spend a fair amount of time identifying potential resources and vetting them because we know that there is no “one size fits all” solution. Our whole team contributes to this process so that any one team member can leverage the database to serve client needs. The other structural piece we have built out is our human capital. We developed an internal culture document that has our internal values, and it describes our team. We look to hire people that live the Four Capitals in their own lives, that understand their importance, and are applying them. As an example, we have Nicole Ninteau on staff who has a PhD in Biochemical and Molecular Nutrition and Exercise Physiology, and a Master’s in Public Health. So, if someone wants to improve their physical well-being, we have an internal staff resource who can work with them.
The Four Capitals are never going to be evenly weighted at 25% each in a perfect balance, rather these things ebb and flow and we want to nurture each of those areas. As we find the things that each client is interested in or that is pressing in their lives right now, we endeavor to provide them with the appropriate tailored resource. This would directly translate to helping our clients lead fulfilled lives. Helping them is in our nature.
Hortz: A resource you created for your clients is maintaining a firm library and offering complimentary copies. Can you discuss your thoughts behind this labor-intensive effort and how you choose the books for the library?
Yocom: We have made a conscious effort to regularly communicate about the Four Capitals approach to wealth management. We mention it in our newsletters, blogs, and our other communications. When we originally put the firm library together, we had topical books on our shelves in our conference room. If something came up during a client meeting, we offered a book to the client, but then the pandemic hit, and our library went virtual. It has become very easy to deliver books as resources to clients, no matter where they are.
To grow our library regularly and consistently, we leverage our SFG book club. We meet a couple of times a year and everyone in the firm reads one non-fiction book and shares a review on what it is about. We add books to the library that we think are appropriate for clients. That’s how we have built the library over time.