| When new clients start working with Thomas Deichert, they receive a set of questions they may not expect from a financial adviser — not just questions about their financial assets but about their life goals and dreams. Deichert, a financial adviser with Poulsbo-based Financial Network Investment Corp., uses a methodology that looks at the person’s whole life instead of simply separating the financial side from the rest.
“The idea is for a financial adviser to get a better understanding for what is important for a client. Way too often advisers jump to the solutions without understanding a person’s passion,” he says. “I’m more interested in what you want to accomplish in your life and aligning your financials to that.”
Deichert has followed this philosophy ever since he got into the business more than a decade ago, but for the last three years he has used a set of questionnaires and various other tools from Money Quotient, a Poulsbo-based nonprofit. Money Quotient caters to financial advisers like Deichert who want to look at more than just financial figures when creating a plan for their clients. And the number of such advisers is steadily growing.
“There is more and more interest in viewing the client as a person and taking a holistic approach,” says Carol Anderson, Money Quotient founder and president/CEO. “… It’s on the cusp of becoming mainstream. Consumer demand will help push the movement along.”
Money Quotient currently only works directly with advisers and other professionals, providing them with materials, training, and ongoing support. The goal is to help them assist their own clients to have a more satisfying relationship with their money by taking a life-centered approach focused on the clients’ values, priorities, future goals and so on. The organization’s philosophy centers on the idea that financial well-being is a combination of financial knowledge and emotional intelligence.
“A very small percentage of individuals enjoy information about yields and returns… and that’s the approach most advisers have to prove they’re good advisers — they focus on the technical aspects,” Anderson says. “When you focus on more subjective aspects, it indicates to the clients you’re interested in them. It indicates that the (financial) plan is tailored to them individually. There will be more of a buy-in and emotional connection.”
Money Quotient initially started out as a for-profit company but Anderson decided to emphasize the educational and research aspects. She moved to make the company nonprofit in order to pursue research projects and grants. Anderson’s daughter, Amy Mullen, is the organization’s vice president and co-facilitator; four other women complete the staff and oversee functions ranging from learning opportunities to communications.
Anderson has a master’s degree in consumer economics and family resource management. A researcher, writer and consultant, she has worked with a variety of companies and nonprofits to design studies, conduct analyses and compile research reports. She initially became interested in financial planning due to her own needs: Facing the unexpected end of her marriage, in her early 30s, she was not prepared for a career or for making financial decisions. “I realized I’ve done little to prepare myself and had to get up to speed quickly,” she says.
Her first job in the industry opened her eyes, as she realized many others were vulnerable to similar situations. “The vast majority of Americans are financially illiterate, regardless of their level of education or income,” she says. So when she had the opportunity to return to school, in her 40s, she looked for ways to engage adults in their financial matters. Anderson took courses in psychology, sociology, and adult education, learning about all the other aspects that impact financial decisions.
“I realized in our prosperous society, very few people reflect on what’s important to them,” she says.
Anderson returned to this area with her husband after getting her degree, starting a consulting company that designed educational materials and studies. “Everything I did, I saw it was leaning toward a more holistic life,” she says. “By this time, there was a core group of financial planners who understood the value (of this method).” Still, there was no systematic approach and not a wide range of resources, nor any structured training. Money Quotient was created to fill that gap, and has since expanded its focus to include not only the design of materials and workbooks but also offering ongoing training and support. Anderson and her group have been mentioned and quoted in numerous financial articles, and she has written widely on the topic herself. This year, Mullen is also moving into speaking, having landing her first speaking engagement.
The organization’s future plans include offering education directly to consumers, through workshops and other resources, as well as revamping its Web site to include consumer information. Already, consumers can use the site (www.moneyquotient.org) to locate an adviser trained in the MQ method anywhere in the United States.
Anderson says many professionals who come to the training are Baby Boomers who have successful practices and are looking to offer more value to their clients. “In midlife there comes the time when you want your work to be meaningful and you’re thinking what your legacy will be,” she says. Still, many people come out of the training transformed, with major life decisions of their own made right there.
Money Quotient was designed as a self-supporting organization, with fees and subscriptions paying for operational costs, plus grants that are sought for specific research projects.
One recent study showed a direct correlation between client retention, cooperation, and referrals and the systematic life-centered approached used by planners. Deichert confirms this through personal experience. He says while it may take longer to build trust and set up a plan for a client because the approach is not a quick pitch, he can see the relationships with his clients are successful through the multiple referrals he receives. And, even more importantly, he sees his clients’ buy-in. “They’re less apt to change midstream, less panicked when the market is going through gyrations, as it is now,” he says. “They don’t panic because they have better understanding about what they want to accomplish and connecting a plan with their vision, so they know they’re making progress regardless of a bump in the road.”
Deichert, who is a two-year winner of Seattle Magazine’s Five Star Wealth Managers survey, says using the life-centered approach would require a culture shift but feels it’s an important change the industry must make. He says consumers today should move away from focusing on the question of which mutual funds to invest in, and focus more on all the aspects that impact their finances and on how to coordinate them.
That is exactly what Money Quotient is training its clients to do.
“Traditionally, quantitative data gathering… is to get the highest return possible. People are realizing that’s not necessarily helping their clients,” Mullen says. “We learned that exploring what clients value allows them (the planners) to create a financial plan more in line with the clients and help them use their money to make a life, rather than live to make money.”
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