On this week's episode of the Financial Planning Podcast, Reese Harper talks about helping his clients pursue and attain financial joy.
Harper, the CEO of Utah-based
Harper founded
But Harper's journey into the world of wealth management dates back to his days as a music major while completing his undergraduate studies. As he grew as an artist, he recognized the gaps in his own financial knowledge, and witnessed the stain that money seemed to place on the lives of so many of his friends and family members.
"It was a part of my parents' lives. My friends' lives. All the musicians I knew. Everyone was broke and just trying to get by and make a buck, and I just felt super intimidated by the subject. And I thought, wouldn't that be cool if I could help myself?" Harper said. "And I thought I could help other people solve this part of life that was so intimidating at the time, and that just sent me down a long road of learning and education and growth and internships and career opportunities that I've had.
"I haven't lost that. The fear of money is real."
During his conversation with FP Podcast host and lead editorial producer Justin L. Mack, Harper discusses how he overcame that fear; what it means to truly extend access in financial services; and what it has been like working with "NYT Sketch Guy" and author
Listen to the new episode — as well as to all future and past episodes — by subscribing to the FP Podcast on
Transcript:
Justin L. Mack (00:02):
Good morning, good afternoon and good evening. Welcome to the Financial Planning Podcast. I'm your host, Justin L. Mack, wealthtech editor with Financial Planning. And it is my pleasure to introduce this week's guest, Reese Harper, CEO of the Elements Financial Planning System and founder of Dentist Advisors. Reese, thanks so much for joining us on the show this week.
Reese Harper (00:21):
Justin. Thanks, man. You're one of my favorite people to chat with — not very many wealthtech beat writers out there these days, so thanks for being one of the proud and the brave going into the unknown.
Justin L. Mack (00:31):
We're holding it down. There's a handful of us and we're mighty. So Reese and I had a chance to catch up before, and I'm excited because he brings to this week's pod nearly two decades of experience as an advisor, another 15 years of experience as a firm founder and is coming up on three years of being a fintech CEO with Elements. So, busy guy. And we might as well call this week's episode "Keeping It Real with Reese" because as we've had a chance to share in the print and digital pages of FP, Reese is passionate about helping advisors forge real, meaningful relationships with the people they serve. And that's because he says he truly wants to help folks navigate every phase of their financial lives. From founding dentist advisors to help those who tend to our pearly whites achieve financial independence, to using the data-driven decision making methodology and tech developed at Elements to help advisors organize and evaluate their clients' comprehensive financial data.
(01:20)
At a glance, it's all about bringing an element of peace to money matters. That desire to help also comes in part from his life philosophy. A philosophy that's all about living with purpose. We'll get into all that stuff and a whole lot more on this week's show, but first, Reese, the listeners here at the FP Pod know that round these parts, we like to start at the beginning. So first, give us a little bit of background. You've done so much that we've already talked about and we'll get into it deep on the show, but how did you first make your way into the world of financial services? What was your calling that brought you here?
Reese Harper (01:51):
Man, Justin. I was a music major in my undergrad and I was probably three years into that and started to feel feelings of like … I had a music studio at the time that I had started and I really loved the arts. Just the arts in general. But I saw a big gap in my financial knowledge and for whatever reason, I really started to get interested in why I was feeling so intimidated by money. It was scary. It was something that was over my head. I was a hyper creative person that had never really wanted to take an accounting class or a finance class. I just wanted to build stuff and that's still been part of me. I think I'm 50% artist in my life still. I ended up getting a master's degree in finance and becoming a CFP and starting a firm, but getting into the business I think was largely about, there's this big looming thing of money that seems to be a part of everyone's life.
(02:58)
It was a part of my parents' lives, my friends' lives, all the musicians I knew, everyone was broke and just trying to get by and make a buck and I just felt super intimidated by the subject. And I thought, wouldn't that be cool if I could help myself? And I thought I could help other people solve this part of life that was so intimidating at the time, and that just sent me down a long road of learning and education and growth and internships and career opportunities that I've had. But that was kind of the beginning, I think, and I haven't lost that. The fear of money is real if you ask anyone in a crowd, and I've done a lot of presentations where I've polled the audience on this. So this is anecdotal. But it's also part of the American Psychology Association's annual stress survey. Money and stress are hand in hand. That's the number one thing people think about when you say what's on your mind right now or what feeling would you associate with money. It would be stress, anxiety, fear, worry. And I really want to see that go to control, security, safety, relaxed, easy. I don't want them to answer that question the way they have been. So that's the journey. That's how I got in.
Justin L. Mack (04:27):
Definitely understand that. Especially, like you said, being a creative guy by nature and having that kind of be originally your path of professional development was working in music, to be doing such a creative endeavor. There's no driver in that that is about … you know, some people say they make music because they want to become famous. That's a very small group of folks who actually feel that way. You do it because you love it. You want to create and you don't expect to exactly make a ton of money doing that kind of work. You're too busy on the creation part, but that fear of money. I want to go into that a little bit more because it's important. That demon of finances that looms over everybody, doesn't matter how much you got or how little you've got. You're all stressing about what you've got.
(05:09)
That's a big thing. And you say it's still with you. How have you had a chance to use your personal experience to help clients through that? Because I'm sure that you can relate to them in a different way because not only do you have those feelings, you're open and willing to share them. I don't know if a lot of advisors would tell their clients that this is something I fear and something that I didn't prioritize initially because I was about the passion and the creativity. How has being open about that helped you with your relationships with your clients?
Reese Harper (05:38):
Well, I think everyone (has) to learn this the hard way. As a writer, Justin, you can relate to this, but learning to share the things that are hard for you and writing about how you've overcome things that are hard for you, I think that's just a real gift you can give another person when you are willing to acknowledge that something was difficult and you've found a way to make it less difficult. You know, make something hard become something that's easy … but if you don't tell the story of the struggle, I just don't think people trust it as much. They don't trust things that seem easy. They trust things that are challenging. Now, a lot of people will be drawn to an easy answer. But I think most people to develop real trust over time, it's nice to have that element of honesty, transparency, some people would call it vulnerability just to open up the conversation between you and a client
Justin L. Mack (06:48):
Yeah, it's a scary thing to do for a lot of folks just to admit when you've had to learn. But being able to exhibit that you have learned and you have adapted. For me personally, that's going to make me feel a lot better about working with somebody because at least I understand that they are human like I am. And that way we can relate on matters of money and life and love and health because that essentially is also just as important as dollars and cents when you're working between advisor and client. And something I'd love to also jump into deeper is something we touched on briefly when we had the opportunity to catch up with you around the holiday season last year and talk about Elements Value Cards. Listeners to the pod
Reese Harper (07:49):
Those value cards are an interesting experiment. But I think most people don't realize how their values and their own purpose and their financial health are in conversation really deeply. A term I like to use is called financial joy, and it's kind of a weird term. I tweet about it and no one engages my tweets because it's like, dude, there's no such thing as financial joy. And I think that's probably half the problem is that it's such a foreign thing to think about finances. It is something that is a good thing, but man, for me, I think about it as a teeter totter on the playground and on one side of the teeter totter you have your financial health. Not net worth, not account size, but healthy finances.
(08:53)
I measure them using vital signs like someone's savings rate for example. That's a vital sign of the system of their financial body called savings if you wanted to use a medical analogy, and the financial health of a savings rate or liquidity … how liquid someone is or how high their debt to income ratio is. A lot of these concepts are new to wealth managers. We're not used to thinking about finances in terms of what's healthy. And we're used to thinking of things in terms of wealth management and big cases and we've been primarily servicing a small part of the population who delegates all of their financial stuff to another person. A financial advisor, and has enough AUM to pay a good fee to make that whole thing work.
(09:53)
And 95% of those people already don't change financial advisors every year. They stay with the person that they have worked with forever. It's only 5% roughly of clients in that model, the delegator kind of model that even switches every year. So it's a really highly competitive market to go after that part of the market and try to get clients. Alternatively, you wait until someone in their life hits this point where they're a delegator and they want to work with a financial advisor and they call them. Or people in that middle age of their stage of their career where their income's getting higher. Some of them are delegators, but an increasingly large percentage of the population is not a delegator anymore.
(10:55)
What I've been finding interesting is these delegator relationships that most advisors are working with … in those relationships, a lot of advisors are doing exercises like this where they're getting to meaning. Getting to purpose. Understanding values and then aligning money and the goals the client has with these values. And most advisors are actually pretty good at this. The ones that actually have clients in this segment. I've found that if you can use an exercise, this values exercise and purpose exercise with a validator or with a self-directed investor or someone who's disengaged entirely, they start to warm up and they start to come down a nurture cycle. Like a marketing nurture cycle if you're thinking about it this way. And that's one step that moves them closer to going, maybe there is a value in this financial advisor. Maybe financial advisors actually do something valuable.
(11:59)
Not all delegators can afford to hire a financial advisor. They're trying to figure out how to do it on their own because their income is not massive and their liquidity is not high, but they're still delegators. And so there's a lot of people out there that are looking for answers. And I think if we can show these other types of consumers that we can help them in ways they were not expecting, ways they were not expecting because their expectation is you sell investments for an AUM fee.
(12:54)
They think they don't have enough. We have minimums at $25,000. It's like there's the difference between what you say and then what they assume. And the public assumes the good advisors are the people that work with you when you have millions and stuff. And so it's a big nurture cycle. The values and purpose for me is the most refreshing way I can build a real human connection with another person that immediately draws them into my nurture funnel that immediately brings them into my sphere of influence. And it's the work I care about most in life. I am back to this financial joy concept. You can't help someone find joy with their money until you've aligned their values and their purpose with their financial health. And this teeter totter on the playground, think of it as something that's just kind of you play with throughout your life.
(13:53)
It's not static. You're not going to stay where you've got healthy finances and aligned with values and purpose all the time. But when values and purpose might be underserved, you're not focusing on it very much. That's probably when you're not feeling financial joy. And so you can try focusing on values and purpose for a while a little bit longer until you feel more aligned and happy with your money. Maybe your finances are unhealthy and you have a lot of money, but maybe not. You don't have healthy finances, so you spend a lot of your liquidity. You're uncomfortably going backwards. I mean there could be all kinds of reasons why your finances are unhealthy, but that teeter totter of financial health and values and purpose to me are so integral to achieving this feeling of financial peace, financial joy, financial freedom. This is not financial independence.
(14:46)
This is not more money all the time, okay? This is a state that you can achieve at very modest means, and it's a state you can achieve when you're very wealthy, but it's just as hard. It's just as hard no matter where you're at in the spectrum because there isn't a number where you'll finally feel free. There's only a balancing act between values and purpose and health, the health of your finances. And that's very different than how we've thought about the industry before. In my experience, I'm animated and excited about that because I feel like that's where more people are going to become interested in what financial advisors have to say until we go there. We're just kind of serving more functional jobs. We invest money for people and that's what we do. It's like, yeah, we've got to show them that there's a different money conversation here that's more exciting, which is you can feel good and lose the fear tomorrow if we do this right. And that's so motivating. Motivating for a consumer, I feel like. Anyway. what do you think about that, Justin? I want to hear your thoughts about that.
Justin L. Mack (15:58):
I think it's really interesting and what you pointed out really sticks out as not only is there no number, it's about finding balance. And not only is there no rulebook for that … no "hit this number and get there." That balance is going to be unique for every individual, and that balance might shift from person to person within a household or an organization. If, for example, you're advising for firm and you're helping them figure out what they're going to do as a business, there might be different people who feel differently about where that peace comes in. And we're talking more about advisors and the role and how it's changed, engaging other members of the family, that (person who is not the family) CFO, they might have a different balance that brings peace than the person who the advisor might have primarily been working with. But they're getting to that point where money's about to change hands.
(16:45)
We're going through that shift in wealth. So finding that balance, you always have to stay on your toes. And I think it's exciting when I hear folks working more towards that goal and understanding that it has to become the goal because AUM does get boring. Not saying it's not important. We write about it and we rank it all the time because it is important. It shows that high value and that high functioning and hardworking advisor. However, for some folks, that doesn't matter. They don't care about what you've done in that aspect of the profession. How are you helping me find that balance and that peace? So again, I think it's an interesting transition and really shows how the role of the advisor has changed. You're excited about it and I think there's a lot of other folks in the industry who are excited about it as well.
So we're actually going to take a quick break and enjoy a word from our sponsors, but when we return, we're going to dive back into this conversation. We're going to be continuing to keep it real with Reese Harper. Stay locked. We'll be right back after this break.
(17:43)
And welcome back to the Financial Planning podcast. I'm your host, Justin Mack, and we're diving back into our conversation this week with Reese Harper, CEO of Elements and founder of Dentist Advisors. Now, Reese, we've had a chance to talk about your philosophy and how you bring that into the work you're doing and have been doing for, like we said, nearly two decades of experience as an advisor and helping folks and coming from a creative endeavor as a musician who wanted to slay that demon and that fear of money. So I know you've got a lot on tap for this year because you've always got a lot on tap. What is Elements working on so far in 2023, and why should advisors be excited about the work you guys are doing right now?
Reese Harper (18:20):
Well, I think the most exciting thing for me is that we're building what I would call a prospect nurturing engine right now that is kind of more in line with what the modern consumer wants in our system. If you think about where Elements is sitting … there's those four types of consumers. The delegators, which we've traditionally served. The validators, the self-directed investors and the disengaged. You might call the self-directed investors DIY investors. I don't really love that term because I don't feel like most DIY people are wanting to hide in a closet and do calculations. Most of them are just, they do more of their own research than is typical, but they still get second opinions and they still can use an advisor.
(19:24)
I just think our industry has so many talented people and so many specialist advisors that have unique knowledge. And in my experience, a much larger set of the population wants to be able to get a second opinion, get answers, get a question answered, have a conversation, and I look at the traditional AUM business as the holy grail of where you'd want to get a client to. It's the bottom of the bottom of your funnel. But dude, if you go tell someone who happens to be a validator (and) someone that wants to do their own research you're a paid opinion on whether they're doing the right thing, they will migrate to becoming a delegator if you have a few conversations with them. I have self-directed prospects that have converted to deep delegators because they've just had enough experience with me now where they're like, I like the way he thinks. The way he helps hold me accountable.
(20:35)
Things they didn't value a year ago, they value now because of the number of interactions we've had. But if I put up a massive paywall, we'll call that a big AUM fee, big planning fee, kind of some big barrier to the prospect actually experiencing me answer a question or engage with them. How in the world are they supposed to eventually get enough conviction to say, okay, I'll pay a big AUM fee and just give you all my money? And delegation is kind of the final step. It's just that we've been able as an industry to enjoy all of this migration over to independent advisors or AUM based accounts at broker-dealers because people used to be in brokerage accounts getting sold boiler room style stocks. This was a better value proposition than the old one. But now everyone's got an advisor except for the up and comers that have really high incomes.
(21:45)
Those are the ones we're competing for, plus all the people that already have an advisor. If you look at TD Ameritrade retail versus TD Ameritrade institutional or Schwab retail compared to Schwab Institutional, there is more money on the retail side than there is on the institutional side. And do you really think that as an advisor community we have nothing to offer all of these people that just happen to set up retail accounts? We've just never really had a prospect nurturing engine to be able to go out there and say, look, I've got a freemium model. I've got an answer a question for free model. I want to just see your data and tell you a couple of insights that I have to kind of model. There's a lot of compliance challenges with this kind of approach, and I haven't solved all of them.
(22:40)
But if we really think that compliance is more important than getting people actually deeply converted to the power of a financial advisor … I'm a little concerned that we've created some really harsh lines in our mind around who works with us and who doesn't. And I think it's much more fluid than that in the market. I think there's a lot of people that have lots of AUM and there's lots of people that have no AUM that are looking to engage with a professional at some level. We just haven't had the tools really to do it up to this point because all the tools that we built were for this one segment of delegator. High net worth AUM clients. And we really haven't been receiving other types of fees like cash payments.
(23:35)
We've never received cash payments really as an industry. It's still a very, very, very small part of our space. But how do CPAs get paid? How do attorneys get paid? These industries are bigger than financial advice folks. They're on cash payments. It's not like we have to be so rigid about we're an AUM industry and we can have businesses that have both really profitable AUM services for these people that choose to delegate everything. I mean, that service is impactful. I will take all of this on. I will be the mind that analyzes it all and makes decisions and you don't have to lift a finger. I mean, that's an expensive service. I can see why an AUM fee has supported it really nicely and there's a whole majority of the population out there, both the majority of the AUM and the majority of the consumer population, that is willing to engage at some level. But we haven't had a business model evolve in like 25 years.
Justin L. Mack (24:47):
Got to get to work on that. And hearing you say that, it sticks out to me too as someone who does cover the wealthtech beat. So much I hear about is technology's ability to extend access, especially in financial services. However, as you've pointed out, if we're extending access in different ways to the same group of individuals, is that a true extension of access? Or is it just the illusion that we are extending access? It's something that we talk about quite a bit. Who exactly is getting the benefits of this new access created by this technology? Is it really somebody different or it is, is it still someone who wants that AUM based model where that's what matters?
Reese Harper (25:27):
I think it's a really good question. I launched what I thought was a delegator membership program and placed a lower AUM fee on it. I just interact. I just engaged with Betterment. I set up this Betterment interaction and then I had a subscription that was tied to it. And in the last month, I think we brought on a few dozen people in that model, a few dozen dentists and I went through and did a deep dive of the data. What kind of people are these people? Why did they buy this subscription? Because we've got these private client models, high net worth models, kind of the traditional models. And for some reason, 20 to 30 people this month said, I want this one for $79 a month.
(26:30)
I thought people were going to be setting up investment accounts. Dude, I was surprised. We had almost no one at the beginning say, I want an investment account. Almost no one said that. They all have accounts. You name it, man, we have a hundred custodians that these people have accounts at. And what that tells me is they were the type of person that at some point said I'm going to do my own research and make an investment decision here. And when I said, we can manage these inside of this Betterment account here for you, that's a much reduced AUM fee level. Everyone was like, I got that commodity already. I learned a lot from this. I'm wanting to share it with people just because I was learning things I didn't know. This is all new information to me.
(27:17)
And the thing that I took away from this was from this cohort, the last 90 days, it's not a huge sample size yet. So we've got less than a hundred people, but we have single digit percentages. I don't know if it's eight or seven or nine. It's somewhere in that range that so far I've experienced people switching from validator to delegator from the exposure they had to our firm. And I'm like, man, that's seven to 10% conversion that I wouldn't have had anyway. And these people aren't … it's not like the people that picked this model said no to my AUM model that was more expensive. They just would've said no to me, period. They wouldn't have worked with us. They wouldn't have been consumers. And this revenue that we got, it's improving EBITDA. I mean, I don't have any new marginal costs for this revenue.
(28:16)
And I'm more profitable. They're not opening up investment accounts. But for me it is actually quite nice because now I'm like, oh my gosh, I'd have to administer all these $50,000, $25,000, $10,000, $5,000 accounts compared to the administrative burden. A million dollar account is very similar in terms of its administrative cost. And so it just makes a lot of sense to say if we're trying to expand access, we've got to lower the cost to serve and we're going to have to start engaging another type of consumer because that's who hasn't engaged up until now. It's not like we're like, well, if we bring down the AUM fee costs somehow that says going to expand access. We've had that since Vanguard Man.
Justin L. Mack (29:03):
Yeah, it's not Automatic.
Reese Harper (29:04):
This has been free for 25 years. This isn't like, it's not a cost thing. It's not an AUM cost thing. It's a human access problem. It's a human act. It's an intellectual capital problem. I'm way off script here though.
Justin L. Mack (29:25):
<laughs> But that's what we do here! That's the whole point. But it's really interesting. And like you said, that access is something we'll be keeping an eye on. I know it's something we'll probably be talking to you about in another year and say, hey, what do you think we've done as far as the progress on that and are we still in the same place?
Reese Harper (29:39):
Same place, same story. I just love that you're trying to bring it up, man. So thanks for doing it.
Justin L. Mack (29:46):
Well, someone's gotta do it. <laughs> And as we are closing up here on our time, I actually want to give a quick shout out and ask a question. We also know that you are no stranger to the podcast format. Not one, but two different podcasts as I've recently learned. But your podcast for advisors as part of Elements,
Reese Harper (30:17):
Right. He got upgraded. He was chief evangelist when he started, but he's a chief brand officer now.
Justin L. Mack (30:22):
Fantastic. And I know Carl has been busy, had a chance to check out the work he's doing and continues to spread that understanding through what he's done from sketches, and now doing it in a bunch of different ways at Elements. But how's that experience been for you working on the pod and working with Carl at Elements?
Reese Harper (30:37):
Both of us are pretty artistically bent. I mean, this has been a really beautiful partnership because artists … they really like to find answers that feel like the right answers. They're not very comfortable just trying to make money. They actually want the right music, the right new sound, the right access, the right lyric. They want the right temperature. They're really sensitive to getting to what they think is right. It's kind of subjective and not no one person's story is the truth. But I think that Carl and I have really battled intellectually trying to figure out how we could change, finally change the industry in a meaningful way. And we define that. I think it's really hard, but I really define that by the number of advisors engaging with consumer types that we were not previously engaging with before. These are actually new people. These aren't … these people look different.
(31:51)
They talk differently. They have different jobs. Their incomes are generally lower than their traditional prospect that they've worked with and they're doing it profitably. I want to create, Carl wants to create, we both want to find a way where this isn't like a charity project. This is a capitalist enterprise. We're just trying to say, there's a bunch of advisors that are really brilliant and there are like 200 million untouched consumers. How can you add a component to your business that brings in new types of people, helps you funnel down the same types of people that you've already had into your existing business, but gives you a chance to not only serve but be profitable in a new way. I just think that would be amazing. I think that's what we're trying to do together, and that's what's helped is just the brainstorming. The intellectual back and forth on trying to solve that problem every day. I mean, we were getting tacos on Saturday for three hours because we couldn't stop working. We went all day, five days and Saturday, we still had to get together to get tacos in the afternoon because we both had one more question we wanted an answer to.
Justin L. Mack (33:15):
Sometimes, all it might take is one more answer to change everything. So glad to hear that it has been really cool working with Carl. We've been keeping an eye on that, and it sounds like you guys are having a lot of fun on this show. So again, congrats on that milestone and I'm sure there will be many, many more episodes coming up. And as we close here, we're going to close with something that has become customary here on the Financial Planning Podcast, which is closing with some good vibes. And we spent a lot of time talking about what motivates you, how you got into this business, what sustains you through it, and continuing to do what the industry sets out to do, which is helping people. Helping more people, different kinds of people. So it might be a hard question to answer, but it's a simple one. What do you love most about your job? What keeps you going? I know we've heard a lot, but if you have to pick that thing that you love most, what is it?
Reese Harper (34:00):
Yeah, man. I tweeted this out yesterday and I think it was something like making friends with clients and prospects and seeing them year after year knowing that my advice or my friendship has helped them navigate their life a lot better than they would've been able to do it without me. Intervening, often at my own pain. Intervening and just being a friend and a listening ear. It's been, by far, the greatest gift of my career is the friendships that I've got from this industry. And I'm just grateful for them. People like you I've got to meet and just have a lot of respect for, but I think just about people … I can get emotional about that, dude. That's good. You got me. You got me to almost cry. That's a good sign. You're a good host. <laughs>
Reese Harper (35:06):
But it's about that love for people. That's it.
Justin L. Mack (35:08):
Yeah. And I think that response is kind of why I we might as well call this episode "Keeping It Real with Reese," because it doesn't get any realer than that. And I appreciate you, as always, sharing your thoughts and your passion with us, and really excited not only about what you're going to be doing over at Elements and Dentist Advisors, but just in general as you clearly have that deep passion for changing things here in the industry. So thank you again for spending your time and for keeping it real with us this week.
Reese Harper (35:32):
Thanks, Justin. Look forward to seeing you again soon.
Justin L. Mack (35:35):
Absolutely. And I want to thank everyone for listening to this week's episode of the Financial Planning Podcast. This episode was produced by Arizent with audio production by Kevin Parise. Special thanks again to our guest, Reese Harper, CEO of Elements and founder of Dentist Advisors. Rate us, review us and subscribe to all of our content at