Root Ready
A podcast for growth-minded financial advisors
Root Ready
Defining the Six Core Standards of Financial Advisor Excellence
What separates truly exceptional financial advisors from the merely adequate ones? It's not credentials, years of experience, or even what firm they've worked for – it's something more fundamental.
In this foundational episode of the Root Ready podcast, we define the six core standards that constitute excellence in financial advising. Drawing from thousands of advisor interactions and assessments, we've distilled what it truly means to be "Root Ready" – our internal benchmark for advisor excellence.
A great advisor masters technical competence across all financial domains while making complex concepts simple and accessible. Yet surprisingly, they don't rely on software to make decisions – they understand the deeper "why" behind their recommendations, using technology as a supporting tool rather than a crutch. When discussing retirement spending strategies, for example, the difference between an advisor who can explain the research behind withdrawal rates versus one who simply reports what software outputs is immense.
Perhaps most revolutionary is our standard that excellent advisors prioritize life fulfillment over pure financial optimization. Too many advisors encourage clients to delay experiences and joy in the name of maximizing financial metrics. But if all we accomplish is helping clients die wealthy while sacrificing what matters most, we've fundamentally failed as advisors.
Great advisors also personalize their guidance rather than delivering cookie-cutter solutions. They maintain intellectual curiosity that drives continuous improvement and, perhaps most importantly, they genuinely love what they do – creating an experience clients actually look forward to rather than a dreaded obligation.
Before we dive into specific advisor skills in future episodes, this discussion establishes what we're working toward – not because financial advising is a competition, but because this work is too important to deliver anything less than our absolute best.
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Welcome back to the second episode of the Root Ready podcast. Before we dive into specific tips and strategies and things we're going to be talking about to become the best possible advisor, we're going to spend the next couple of episodes really laying the foundation, laying the groundwork for what we believe it means to be root ready, for what we believe it means to be the best possible advisor. And one thing that I think is important to define there is what does it mean to be the best? That can obviously be very subjective. The best is such an arbitrary thing. How do we define it? And so what we're going to do today is we're going to define at root if one of our goals is to have the absolute best advisors in the industry, which means not just having the best people, but give them the best possible environment to continue to learn and be developed and to be trained and to be coached and do all the things necessary to become the best versions of themselves, which is ultimately becoming the best possible advisor. So we are going to define what does it mean internally? How do we think about being the best? What are the things that we use to define that? And if you haven't done so already go back and listen to episode number one, where we talk about the intent of this podcast, why we're doing it. But today is us defining. How do you define what it means to be a great advisor? And I'm doing this because at this point, I've had the chance to look through hundreds, probably even thousands, of resumes, and there's a lot of financial advisors in the world Not all of them, not enough of them I would consider great. I don't care if they have the CFP or don't have the CFP, I don't care how many years of experience they have, I don't care what firm they worked at. There are things you start to notice about what makes advisors great, what makes advisors good and what makes advisors something less than that. So what we're going to be doing is talking about some of that. But whether it's skill sets, whether it's a technical thing, whether it's the ability to effectively communicate, whether it's the ability to maintain confidence and humility in your interactions with people, I've had a chance to see where most people in the industry are and, most importantly, what we've come to define as the traits of a great advisor.
James Conole:So, at Root, one of our internal goals is to say how can we ensure that we have the best financial advisors in the industry and I'm going to define those now and then I'm going to expand upon what do I mean by that. So we have this definition internally, this creed internally, whatever you want to call it. But when we look at this, we say a root advisor is technically sound in all areas of financial planning and knows how to simplify complex topics. A root advisor doesn't rely on software to make financial decisions, but knows how to use it as a tool when needed. A root advisor does not look to optimize every dollar from a financial standpoint, but prioritizes way for the clients to get the most out of life with every dollar. A root advisor always considers an individual client's priorities when formulating advice. A root advisor is curious and always open to learning new strategies. A root advisor truly loves what they do. So these are some of our internal definitions of how do we determine if we've arrived, how do we determine if, where we want to be, which is to be the best, which is to be the best possible advisors we can be? So let's expand upon these to say what do we really mean when we say each of these things? So, when we say a root advisor is technically sound in all areas of financial planning and knows how to simplify complex topics. That one's probably the most straightforward.
James Conole:You're not just good at investments. You're not just good at retirement planning. You're not just good at selling or getting the client into the door. You need to be great at everything. We are not selling insurance. We are not selling estate planning services. We are not selling tax prep work, but we do need to be aware of how do taxes impact everything, how does an estate plan come into play and what the client is needing. So let's start with the first definition here. A root advisor is technically sound in all areas of financial planning and knows how to simplify complex topics. So technically sound in all areas. That means you can't just be good at investments, you can't just be good at retirement planning. You can't just be good at maybe even the sales process upfront of making sure someone understands what you're doing and becomes a client. You really need to be technically sound in all areas and you need to know how those areas are really connected. We do this internally, or one way we do this internally is we break down each component of a client's financial plan through what we call our Sequoia system. So when a new client comes on board, it's not all right.
James Conole:What do you want to talk about? And let's start there. What we look at is we say how does each area of your financial plan insurance, taxes, estate planning, retirement planning, investments how does all that not just tie together, but how does all that build on top of one another? How do we start with something non-financial related? So, for example, our flow is we start with our kickoff meeting. The kickoff meeting is a chance to dream with the client what do you want to accomplish? What do you want to accomplish? What do you want to do? What's actually most important to you? Nothing incredibly unique, just starting with that.
James Conole:From there, we go to an income meeting, which typically looks at cash flows, typically retirement cash flows to say can we generate, or how much income can we generate, from your mix of assets, your social security, your pensions, et cetera, to be able to maintain that lifestyle that you've talked about Once, et cetera, to be able to maintain that lifestyle that you've talked about. Once that's done, then we go to the investment meeting, because we really believe the investment should be a reflection of your cashflow needs throughout retirement and what you need that to look like. Once we've defined what investments look like, then we go to taxes. Once we define the tax strategies, then we go to insurances and estate planning and what we really believe is each of those logically and progressively stacks on top of one another. Now, obviously there's a little bit of if you change one thing you need to go back and adjust another. But if you're just good at investments, if you're just good at taxes, if you're just good at insurances, you're not going to be able to build out the complete picture for a client. So a root advisor, a great advisor, absolutely needs to be technically sound in all those areas. Now that one's simple enough. I think we look at that and all of us probably agree that that's something every advisor should be.
James Conole:The next thing that we look at a root advisor does not rely on software to make financial decisions, but knows how to use it as a tool when needed. So one thing that I often think about is a great advisor should not need software to be a great advisor. Software should absolutely be a tool to support you. But all too often I find that software becomes a crutch for advisors In the interview process, when we're talking to advisors coming onto Root, or when I'm talking to other people, it's very clear that in a lot of instances they are, whether it's conscious or not, viewing software as the advisor and they're just the one to deliver the news to the client.
James Conole:When we talk about, can I do this or should I do that, it's well, what does the software say, what does the plan say? And I get where they're coming from. But there's this over-dependence upon software and that's not good enough. So I'll give you an example. One thing I think every advisor who's working with retired clients should know is what are the foundations of retirement spending? You know we've heard about the 4% rule. How does that work? So if I'm asking you, if I'm a client, and I say, how much money can I spend in retirement, if you say, well, you know what, we're just going to run through our software and see what works out, that's not good enough. If you just tell me, on average, your portfolio is going to grow by maybe 7, 8%, we're going to leave some money in to keep up with inflation, no-transcript. You say, well, look at the software, look at the projections, you're going to be just fine. That's not going to work.
James Conole:You're not an effective advisor if that's all you're doing and, unfortunately, most advisors when it comes to helping their clients understand what they can spend. All they're really doing is plugging data into software and seeing what the result is and telling clients the answer. You really need to understand at a very deep level why is it that clients can or can't take out certain amounts in their portfolio and be expected to be okay over the course of their retirement? If I go back to the example I just used of you, tell your client, sure, you can take out 4% from your portfolio or 5% from your portfolio, because the software says so. So simply repeating what the software is telling you is not going to instill confidence. You're not going to be a great advisor if that's all you can do.
James Conole:If, on the other hand, you fully understand why is it that we can spend 4%? Why is it that people can spend more? You've learned the research. You know the research. You know what that research is based on. That's completely different. How different of an experience is it going to be when you can look at your client and say with confidence, you know what there is research done on this of yes, we have no idea what's going to come.
James Conole:I have no idea if you're going to retire and the market's going to be up or down or sideways or anywhere in between. But what I do know is that there is a lot of really great research that says, when you go back several years and when times aren't good and let me actually give you an example what if you retired in the beginning of 1973? The market was down 15% that year. Then the following year it was down 27%. Not just that, but in 1973, inflation was almost 9%. The following year, inflation was up 12%. From 1973 to 1982, inflation averaged almost 10% per year, meaning the cost of goods that you were purchasing increased 240% over the course of that decade.
James Conole:Now, not just that client, but in the midst of that, you had an oil crisis, you had stagnant economic growth, you had the Watergate scandal, the US dropped the gold standard in 1971, and the value of the dollar declined against many other major currencies by about a third. That is a horrible environment to retire into. Despite that, what this research showed and what this research was aiming to do is to say we know that there might be times like that ahead of us. What is the most that we can take out of our portfolio without jeopardizing our principle and jeopardizing our ability to continue creating income for ourselves, not just today, not just next year, but over the duration of our retirement. And what this research showed is if you spend this much, then you're going to be, in almost all cases, okay over the course of a 30 year retirement. So there's other ways, there's other things you can continue to build on top of that.
James Conole:I'm not saying the 4% rule is a golden rule that you can never deviate from. I think there's a lot of things that have happened, even since then, that can allow you to create even better spending strategies for clients. But when you talk like that, when you talk with confidence like that not just saying, oh, the software said so. But let me paint a picture for you of what this research is based upon, and it's not just based upon everything being rosy and everything being perfect and markets continuing to cooperate. It's based upon what's the most we can spend, knowing full well we're going to go through some very difficult times when we look at that environment. What we're really doing is we're reminding clients that what they're going through isn't new and we are then reassuring them that the withdrawal strategy that we're recommending is based upon withstanding very bad economic environments.
James Conole:Completely different than oh well, my software's projection says you're going to be fine. Completely different from saying you know what. You're going to leave some money in your portfolio and take out the rest and you're going to be okay over time. When clients are working with you, they are hiring you, which means they want your perspective, your empathy, your guidance. They can get software projections anywhere. What's different about you is going to be your ability to do those things.
James Conole:So too often we as advisors, we look to the software to be the advisor. The software should support our guidance. It should support our advice, but it should not replace it. So this episode is not about the 4% rule. I'm just using that as an example to say too often I see this of people saying that the advice they give is because of a random output from their software. Plenty of issues with that, not the least of which is what I just talked about. That's taking away from you and your expertise and the guidance people are wanting from you, as opposed to a printout from a software. So that is why that's one of our standards.
James Conole:A root advisor doesn't rely on software to make financial decisions, but knows how to use it as a tool when needed. Now, the reality of this is we use software all the time. We use software for very good purposes, we use a lot of great softwares, but it's never to replace us as advisors, never to replace our advice and guidance. It's to supplement what we're doing and it's to be used as a tool to support that, the next standard that we have. What does it mean to be a great advisor? As we say, a root advisor does not look to optimize every dollar from a financial standpoint, but prioritizes ways for the client to get the most out of life with every dollar.
James Conole:I think most of us, when we get in this industry, we start out by thinking that this is a big math problem, that a client's financial plan, a client's financial strategy. Can we optimize the numbers? Can we get the math right? Can we optimize investments, optimize taxes, optimize spending all that? And yes, there's absolutely an element of that, but it misses the point if we're not connecting all that to something bigger. How many times have we fallen in the trap of encouraging clients to keep working because it means one more bonus, one more stock fest, more compound interest happening in their account, just to say what's this all for? Yes, the financial model looks better when you do more of that. Yes, the financial model looks better when you save more. Yes, the financial model looks better when you take the higher paying job, but at what cost?
James Conole:If we are just in the business of helping our clients die with a whole bunch of money because we've optimized everything that they've done from a financial standpoint, we have missed it. We've not actually helped them to live better lives, and to me, the sign of a great financial plan is a life well lived. So are we good advisors? Doesn't just come down to the tax strategy, the investment strategy, all the things we do. That should absolutely be something that we do. We should be masters, we should be wizards when it comes to our ability to do those things for clients. But if we're missing the bigger picture, we're missing it. All that is for naught if we can't connect this to helping our clients live better lives, to help them spend more time with the people they care about, to help them have the types of experiences they want to have, to help them make the impact through charity, through time, through whatever it is that they want to be able to make. So the sign of a good financial plan isn't a Monte Carlo analysis that says you have a 99 or 100% probability of success. A sign of a good financial plan is a life well lived, which means helping to remove the confusion, the anxiety, the stress of managing one's financial affairs, which means we are optimizing every dollar but controlling for living a great life first. So once we fully make sure that we're doing the right things with the client for them to use their money as a tool to help them get to where they want to go, yes, we're optimizing. Within that context, we're never going to over optimize the plan from a financial standpoint to the point that actually hurts them when it comes to the life that they're able to live.
James Conole:I think a very common example of this is I was talking to a client. This was some time ago now, but we laid out a perfect Roth conversion strategy on paper. It was going to save them all kinds of money in taxes. It involved keeping their income super low the first few years of retirement so they can convert a lot of their traditional IRA assets, their Roth assets. Everything looked great. Then we met again and their feedback was they wanted to take a family trip, but they were going to push that off. They're still going to take it, but they were pushing it off a few more years because they didn't want to have to pull more income from their portfolio to take that trip, because it would have lessened how much they could have done in a conversion. And in that moment it really hit me that we're missing the point here. Yes, this tax plan is awesome and, yes, we can quantify to an extent how much that's going to save them in taxes over time, and it's going to be a lot of money saved in taxes. But when they fast forward 20 or 30 years and they're looking back on their life, are they going to be really thrilled that they saved all that money in taxes that's going to go with them to the grave? Or are they going to look back and be a little bit disappointed that they held off on doing some of the things that they wanted to do today because they were so focused on optimizing their financial plan and I, as their advisor, played a role in that. So when you start to realize that, yes, the financial things we need to be able to do and we need to be absolute experts at it, but we can't focus on that and prioritize that over the actual purpose of the money, which is helping clients to live the lives they want to live.
James Conole:Our next standard is a root advisor always considers an individual client's priorities when formulating advice. So what does that mean? It means a few things, but the way I'd start is an advisor has to be able to understand the various options in front of a client and the financial impact that each of those options might have. You really have to understand that, on the one hand. Then, on the other hand, you have to deeply understand the client's motivations, what drives them, their preferences, et cetera. From there you have to understand when does it make most sense to prioritize the option that the client's motivations, what drives them, their preferences, etc. From there, you have to understand when does it make most sense to prioritize the option that the client prefers, based upon their motivations, based upon their biases, based upon their preferences, versus when does it make sense to prioritize the best financial option? And this is an art, more so than is a science sometimes.
James Conole:I think the classic example that everyone would use, every advisor would use, was well, do you pay off your home or do you invest if you have extra money? Well, the spreadsheet answer at least a few years ago, when interest rates were much lower is why, on earth, when you pay off your home, when you could get a better return financially by investing that money, that's obviously the first thing that we think of. We say I'm smart, I'm a financial advisor, I know the numbers, that's the best thing to do. And then we start to realize, okay, that's the right financial answer, but we have to understand the client's motivations, we have to understand their preferences. We have to understand the things that matter more than just a spreadsheet answer, and we should absolutely consider some of those things. What's it going to feel like to pay off a home? What's that going to do to your emotional state, to your confidence, to your ability to do other things, knowing you have a fully paid off home? So that's a classic example. That's super basic.
James Conole:But what about other things? What's the right asset allocation? Are you at a firm where, oh, you're retired? Well, that means our firm's standard advice is you have to have a 60-40 portfolio, because that's what retirees do. Well, why is that the case? Why not 100% equities? Why not 50% equities? Are you delivering advice that's unique to your client, or is it getting to the point that it's too cookie cutter, where you say you're in this phase of life, you are this, this is your situation. Therefore, you get this product or the solution. If you are doing that, it's hard to be a great advisor. Maybe it's impossible to be a great advisor. A great advisor a root advisor Maybe it's impossible to be a great advisor. A great advisor, a root advisor always considers an individual client's priorities when delivering advice.
James Conole:What about how much of a concentrated stock position to hold? Some of you might immediately jump to none. Others of you might say, oh, 10% is a good rule of thumb, why? Why should it be 0% or 10%? Are there cases where it can be much higher? I absolutely think it should be and can be.
James Conole:So these are the types of things where you have to really think about it. There's always a rule of thumb. There's always a textbook answer. There's always something that maybe we learned in the CFP curriculum, or it's just a general rule of thumb that we've adopted for whatever reason in our industry. That can be helpful as a starting point. But really ask why, why, why?
James Conole:What's the best thing for the client? What's the best thing financially? How do I hold that in one side of my mind, while also considering what's the best thing for this specific client. What's the best thing given this client's history, this client's experiences, this client's desires and the motivations they have for the things that they're going to do? So when you can marry the two of those things and use your financial knowledge almost as guardrails to make sure the client's not going to do anything that could ruin or jeopardize their ability to accomplish their goals? But understanding there's enough here. There's enough that we can prioritize the emotional side, the client side, their own priorities, even if it's not always the best financial decision.
James Conole:So a great advisor considers the individual client situation when delivering advice. What about when to collect social security? Is it 70? Is it early? Understand the trade-offs but then work with the client to see which do they feel most secure about. With that same approach I talked about before, don't let a client make a decision that you know financially is going to jeopardize their ability to do what they want to do, but to the extent something's not going to jeopardize it. What are the trade-offs? What are the trade-offs when it comes to leaving some money on the table financially, if it adds to confidence, if it adds to a sense of security, if, in some cases, you know this simple decision is going to mean the client's going to take ownership of that and they're going to be more willing to do something, more enthusiastic, to do something that they decided they wanted to do, not just doing it because their advisor told them they need to.
James Conole:Our next standard is a root advisor is curious and always open to learning new strategies. To be the best at something, you have to enjoy it. To enjoy something, there has to be some natural level of curiosity. There needs to be a level of curiosity that drives you to keep discovering new things, to keep learning new things, to keep developing your skill set, to keep wanting to be the best. If you don't love something, chances are very good you're not going to be great at it. If you don't love something, you constantly have to drive yourself or push yourself or remain disciplined to do it. You're just not going to be great at that thing.
James Conole:But a great advisor has a natural love, a natural enthusiasm, natural curiosity to learning new things. You're never going to know everything. There's always new information, new technologies, new research. But you can always be hungry. You can always be hungry that when a client asks something, you don't just give the templated answer, knowing you know I don't know the real answer. But I'm going to give them an answer to placate them. I'm going to give them an answer that they're going to be satisfied enough with, even if it's not the answer they deserve. If you don't know something, great, let them know. You'll get back to them. Go do their research, go figure that out, go add to your tool belt of knowledge as you're trying to be the best possible advisor you can.
James Conole:I occasionally meet some advisors. That's great. There should not be shiny object syndrome. You should not constantly be doing new things every day, every month, every year. Even so, in many cases that is great. When you find something that works, a core of something that works and is helpful to your clients, keep doing it. Don't change what's working really well and certainly avoid shiny object syndrome.
James Conole:But it is clear, these aren't necessarily great advisors. Amazing here. These aren't necessarily great advisors. Amazing advisors they're a little bit of just performers. They put on a show to close the deal with their clients, to get clients in the door, but they don't have an intellectual curiosity that drives them to constantly learn new things and become even better at their craft. Those advisors are successful a lot of times on the outside. They make a good living, they do what they want to do, but they're not great advisors. They're not root-ready advisors as we would define them here. Root-ready advisors great advisors are always curious and always open to learning new strategies, and our final standard is a root advisor loves what they do.
James Conole:When someone loves something, it's contagious. I'm sure you've had these experiences, whether it's a coach, a teacher, a doctor. You could feel how much they loved what they did and it made the experience so much better. Now, that word experience that matters If you want to be the best possible advisor. It's not just about your technical skill set. It's not even just about your ability to connect well with people. You have to create an experience that people look forward to.
James Conole:One of the things I love about Root, one of the things I love about our advisors, is that our clients genuinely look forward to meetings. I know that I genuinely look forward to connecting with our clients. You want that to be an experience that's contagious, an experience where that sense of passion and joy and love for what you do comes across. You don't want this to feel like it's a DMV appointment. You don't want this to be something that your clients feel like they have to check off the box. Oh, I want to talk to my financial guy today. Got that out of the way. That's not the experience that we want. We want our clients to look forward to the experience they're going to have, not just because of the solutions and the technical stuff that we're going to talk about to make their plan better and make their life better, but because it's a wonderful time to connect with someone who so clearly loves what they're doing and that enthusiasm is contagious. So a quick story to illustrate this Our main office is in Encinitas, california, and we work right next to a mailbox store.
James Conole:So PO boxes you can ship stuff there, you can get stuff there, notarize stuff all that good stuff and a gal named Paige works there and Paige's enthusiasm is contagious. The way she greets people coming in to check mail, to send a package, is so abundantly clear. I can tell people are visibly excited to walk in and do something as mundane as sending mail, because the enthusiasm Paige gives off while she's helping them is felt. Now here's the thing Paige can be the best organizationally and she can know all the information there is to know about PO boxes and shipping rates and all that good stuff. But who cares If it was a dreary experience, people come in. Hey, I got mail, cool. What do you have for me? Nothing, okay, cool, see you next time. That's not fun, but what Paige has done is she's turned something that can be very mundane into a wonderful experience. I love getting to go next door because I'm printing something out or having something scanned or having something notarized.
James Conole:The experience there is so wonderful and it has nothing to do with the PO boxes or in the actual services. It has everything to do with the enthusiasm, with the way you're going to be greeted, with the energy that you're going to feel when you walk in and, more importantly, the energy you're going to feel when you leave, in that little brief exchange, that little brief experience. So it's the same with financial advisors. How can we all be pages, how can we all be the person that clients cannot wait to come to a meeting? Yes, hopefully they are a little bit more excited about the financial work we're going to do than they are about a PO box or picking up mail. But beyond that, can the experience we create, which should be insanely simple, has everything to do with the attitude we have, the way that we show up the love that we have for our work, because when we truly have that love and we're not faking it, that is contagious.
James Conole:If your clients don't feel your passion for what you do, passion doesn't just come from a technical aspect of what you're doing, but from the transformation you see in the client's lives you serve. You're not going to be the best advisor. You might be good, but you won't be the best. So that experience comes down to our ability to totally fall in love with what we do. And that's not just loving the technical side of things, that's not just loving to read Kitsis articles and listen to the latest podcasts. That love comes from seeing the transformation, the experience and the impact we get to have in the lives of our clients.
James Conole:So this episode was all about laying the foundation of some of the things we're going to be talking about on future episodes of Root Ready and this podcast again is all about how can we assure that we at Root are constantly developing and growing and training to become the absolute best advisors in the industry, not because it's a competition, but because this work that we get to do we get the best job in the world and to be anything besides.
James Conole:The best version of ourselves is to sell ourselves short and to sell our client short and to sell our team short. This is a place where we could do incredible work for incredible clients and there should be a natural desire to say how can we be the best, how can we be root ready so that we can grow, our team can grow and we can take that and impact all the clients we serve in an incredibly transformational way. So this is part of the foundation. Before we start jumping into specific skills and ways of working in future episodes, it is important to define what we're working towards and what we're working towards and to say how can we be great advisors, how can we be the best possible advisors?