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Intro by WBM:
Hello, and welcome to the PracticeLab podcast, where we talk to top advisors about what makes them successful, so that you can apply those lessons in your own business.
I'm your host, Will McKenna, and our guest today is Jay Wheeler from Wheeler Financial in Wilmington, Delaware. Jay’s practice serves roughly 200 clients, and has total assets under management of around $215 million. As those numbers might suggest, many of his clients are what Jay calls the millionaire-next-door.
Jay’s firm takes a behavioral approach to planning by focusing on clients’ values before anything else, which helps them prioritize their goals, lifestyle and finances.
In this episode, Jay shares how he incorporates behavioral finance into his practice, and how he gets clients to determine their personal values (Spoiler alert: It involves some card tricks). So with that, let’s jump into this episode of the PracticeLab podcast.
Will McKenna: Jay Wheeler, welcome to the PracticeLab podcast.
Jay Wheeler: Great to be here, Will, thanks so much for having me.
Will McKenna: Great to have you with us. Let’s go ahead and jump in. Why don't we start broadly with how you think about what makes your practice distinctive, and what you would say helps you guys stand out in the markets that you serve?
Jay Wheeler: Well, I think we take a pretty non-traditional approach by saying, and we really mean it, it's not about the money. Money is just a means of exchange for feelings. So if somebody is saving up for a vacation, it’s about whatever the feelings that the vacation will give them. Or maybe it's a car that will give them status, or maybe it's saving a lot of money just for the feeling of security, which many advisors have seen as well. So I think that by not getting caught up in the pile of money and not even looking at the goals, but looking at what the goals bring the person, is where we think we're unique. And I have training in behavioral finance, which is where finance and psychology cross over, so that's really a big interest of mine, just to understand what makes each investor each client tick, and then tailor our service uniquely to that person.
Will McKenna: That's great. So, behavioral finance, we'd love to hear more about that. You've got some training in that area, and it sounds like you're bringing that into the practice. I'm intrigued with your comment about money is just a means of exchange for feelings. I assume that's what you're referring to: focusing on more of that behavioral finance element. Can you take us deeper, maybe give us some examples of how that comes to life in your practice, and how you're working with clients on the behavioral finance piece of it?
Jay Wheeler: Yeah, the first thing that we do that gets people to understand our way of doing things is a values exercise with them. We get to the goals initially, but we want to understand their most important values in life. And typically, if it's a husband and wife, we'll have them do the values exercise separately and then together, so that it starts to get them talking about how they can look at each of their own personal values in in their financial management, and then what they value together. So that's first the first part. You know, if we're building a house, we've just built a foundation. And you can always come back to this strong foundation of your values when faced with any difficult situation. Where it goes next is we find that a lot of people haven't really done an exercise to say I value X,Y and Z, and even if they have they, a lot of times they'll realize that their actions may be out of alignment with what their values are. And I think that's where we really move the needle for folks, is to sort of challenge them to say, ‘Well, you told me that family and adventure are top core values, but you're working 75 hours a week. So, how can you make your actions more consistent with what really means a lot to you?’
Will McKenna: That's great. When we were talking earlier, you told me a story about using a deck of cards with different values on them. It's a really interesting idea, because values can be kind of an abstract thought. But is this the tool you use? And I love that idea of working with couples separately, then together, maybe compare and contrast. Give us a little sense of the actual mechanics of how you do that.
Jay Wheeler: Sure. So in the past year, I've started introducing this cards exercise. Basically, they spread these cards out on a table, and you've got to narrow them down to like 15. And then you take that 15, and you narrow them down to approximately five values that really mean a lot to you. And different people do the exercise in different ways. We've done it as a work team here, and one person said, ‘I've had three core values my entire life, and that's the way they're going to stay. And then when I did the exercise, I said, you know, as I've evolved in my life, I prioritize different values. And so right now, I came up with seven, I said, these seven things really mean a lot to me at this moment. And then as I grow as a person, I will continue to do this exercise and see what comes up.’
Will McKenna: That's great. And have there been, without naming names or giving away any anything about specific clients, have there been any aha moments, whether an individual or a couple come in, and once they get into it, they figure out, ‘Oh, wow, we have this gap?’ Or any other aha moments you can share?
Jay Wheeler: Like I said, I've been rolling out this exercise gradually over the past year, and every time they do this exercise, I think they realize it makes things clearer, because they hadn't thought about it in those terms. So that's the result for most people, but I've had some people who were involved in a confrontation that involved money who decided, ‘I'm just going to drop it and move on because it's inconsistent with what's really important to me. I think every one of us sort of gets caught up in real life occasionally. And so again, having those values in your back pocket sort of gives you some clarity.
Will McKenna: That's great. And how is that then informing your planning process? As you said at the beginning, you're very planning-focused in your approach. How was the values exercise dovetailing into the actual planning process for you?
Jay Wheeler: Yeah, so the values are, like I said, at the core, and financial management to me is just a big game of trade-offs, right? So whenever my wife and I decide to do something, like we're thinking about finishing our basement. And, you know, all budgets on projects seem to go over budget, right? And there's project creep. And next thing, what we thought was going to be X can be 2X. And so when we have challenges about whether we should spend more on this – we also want to have a beach house one day – so for us, we can balance how much fun do we want to have now with how much fun do we want to have later, while also keeping retirement security and all the other things in focus. So I'd say, just that sort of anchor and safety place that you can go to when making any major decisions. You know, I think we use e-money for financial planning. It can show you the financial ramifications of a different decision, but it doesn't tell you how much true meaning it would have to you. So I think that adds an extra layer to it.
Will McKenna: That's great. Let's return to one of the things you talked about in terms of the characteristics of your practice and working with women investors, about $215 million in assets under management 200 clients, a fair number of corporate execs. And as you put it, the millionaires next door, great way to phrase it. Talk to us about working with women investors. what do you bring to it that helps you develop a bit of a specialty there?
Jay Wheeler: I think any investor that works with us would say that we listen. So whether it's a single woman, or single man or a married couple, I think they feel like we care when they walk in the door, and there's not a lot of pressure. And, you know, I wear a collared shirt now, but we sort of like the shorts and T-shirt financial advisors and try to make a really relaxed and easy atmosphere in the office. That's not just the atmosphere, but it's the overall approach. You know, it's definitely a no-judgment zone here. We just want the best for our clients.
Narration by Will McKenna: OK, so far, we’ve covered Jay’s focus on behavioral finance and how that helps his clients both identify and stay true to their goals. Now we’re going to hear about Jay’s investment approach and how he uses model portfolios to gain efficiencies in his practice. We’ll also hear Jay talk about how he relies on coaches to help him grow as a leader and what he’s learned from that process. So let’s turn it back to Jay as he talks about his approach to investment management.
Jay Wheeler: So we use Monte Carlo simulation, and we like modeling different things there. But we really like their cash flow approach. So if somebody is starting to retire, we'll have a clearer idea that we can show them, ‘OK, you're going to need $50,000 a year in retirement over and above Social Security and pension.’ And so then what we do is we take that 50,000 and we say, ‘OK, well, your investment income is looking like maybe it would be about $15,000 a year. And so then we need to come up with that $35,000 somehow, in a way that is going to give you clarity. Going back to the behavior piece, I need to know that I have a good chance of keeping them in the market during difficult times. So typically, depending on market conditions, usually we're laddering bonds or bond funds. And so they have real clarity that, over the next 10 years, they can see right where their retirement income would be coming from. So that’s their distribution allocation. That's the money that really we can't mess around with too much. And so then we have the growth allocation, and that's where we use model portfolios. And that's really anything depending on the client's risk tolerance. It can be more or less than 10 years that we cover in the distribution allocation, but typically it's about 10. So in the growth allocation, we use models, and that's helped us to be very nimble. We can move quickly. If we want to make a model change, we use portfolio management software. We can quickly trade across the whole book. And I would say another thing that we do that is non-traditional is we try to spend as much time as possible on planning and the human relationship. And if we can save time on investment management, we will, and that's why we've used models from Capital Group and another company.
Will McKenna: I'd love to hear about the rest of your service model, because earlier you said the key to being a successful business is to provide a ton of value and offer great service. Give us a sense of what that looks like for a typical client. What is the kind of service and the value that you're adding for them?
Jay Wheeler: Yeah, so right off the bat, we've got 52 touches with the weekly update, and they’re thoughtful touches. We’ve found that that those touches provide more value to clients than the traditional model of calling clients quarterly. That was really another thing that came out of our client advisory board dinner. One client in particular, who always gives us great, honest, no-holds-barred feedback, and I said, ‘What do you think about our client contact?’ And she said, ‘Honestly, Jay, it can be annoying. Sometimes I’m out in my garden, I’m having a great time. And you’ll call with an update and see how I’m doing and see if I need anything.’ She basically said, ‘I’ll call you if I if I need you. I just want to know that things are under control, that we have meetings periodically throughout the year.’ But she said, ‘There comes a point where those extra calls don't provide. They actually turn into a minus.’ So I was kind of shocked. But as I thought about it, that traditional model of calling people was a lot of times just to talk about a product, and the sale of a product. Now that we don't do that, the amount of value that could be provided was for advisor or client was a lot less. So I really look hard at how we spend our time. And that was a hard one to shake. I was just trained to make these calls. It's just what you do. But we got away from that. So anyway, so there's the weekly update. And then, depending on the client relationship, there'll be other contacts throughout the year. You know, the annual review is our big course, our big planning meeting, where we sort of set the expectation for the year and everything kind of works in conjunction with that. And then at the end of the year, we're trying to think about what tax-efficient moves we can make for our clients.
Will McKenna: That's great, very helpful. We talked a little bit about the way you're streamlining your practice by using models and other approaches to the investment management. But I know you've also told me that you use a coaching service in your business to help you get better at your craft and look for other opportunities to streamline and be more productive. Tell us about the coaching service that you're using and what benefits you get from that and how that works in your practice.
Jay Wheeler: Yeah, I've used a few. You know, as an advisor, I obviously value planning and advice. And so I think it's only consistent with those beliefs to go out and seek planning and advice to make me a better person and to make my practice better. So I’ll give you two examples of coaches that we worked with. We worked with a company called Strategic Coach for several years, and a lot of financial advisors go there, they're in Canada, four times a year. And there's a one-day classroom experience every quarter. Just being away from the office is good for me to think about the business. I'll give you my top-two takeaways from them. The first thing they do with you is what they call the entrepreneurial time system. So Strategic Coach only works with business owners. And so one of the things they found is that a lot of business advisors don't take enough time off, or a lot of business owners don't take enough time off. So they get you to break your schedule down into three different groupings. The first of those is the time off you're going to take. And their rule is, on a day off, you're not allowed to look at email. You're not allowed to return a phone call. You can't think about work. And it has to be a pure, restorative day off.
Next thing they did was to do what they call your unique ability exercise. So, they basically ask you to list all your responsibilities. And I think I had do 38 different things at work. And then you start at the bottom with things that you're not good at and don't like doing. And you gradually work up to the top of the four groups, which are things you are really good at, and things you love doing. And so that was really a liberating exercise for me to admit there are things that I'm not good at and things I don't like doing. And there's no shame in not doing them. In fact, I'm a hindrance to the business by trying to do these things. And I'm fortunate enough to have three other people. So my team members are total rock stars, and they happen to be really good at the things that I'm not good at.
And then the other coach is a guy named Edwards Holliday, who's helped us out on and off over the years, and we're working with him now quite a bit as a team. And really good at challenging me, and challenging all of our team. In fact, he started off by doing a pretty involved survey, and surveying everybody on the team. And I got some feedback on the team that there were some blind spots in the way that I worked with the team that I didn't realize that I had. I was grateful that the team was courageous enough to speak up. And we're working really hard together to try and fill some of those things, you know. It’s a process, but we're leaning in to it. And with Edwards help, we've made a lot of progress there.
Will McKenna: That's great. I would love to hear, I mean, if you don't mind revealing, what were some of the learnings that you took away, both the two pieces — the delegation piece of the 38 things, and the things you didn't love doing or weren't good at that other team members could pick up? And any of the feedback that you felt helps you improve in that, kind of, 360-feedback exercise?
Jay Wheeler: Yeah, so I'll start with the second one. First, the feedback that I got, a lot of it was around strategic planning. They thought that, you know, it’s basically Jay’s idea, and then I'm asked to implement it. There was not a whole lot of input solicited in strategic planning. I guess I sort of thought that I'm the leader, and I'll set the right path for the team, and I’ll listen when I can, but must not have been listening enough. So we really sat down, and the team has gotten heavily involved in strategic planning. And, you know, I think for me, the big thing I learned was to set the ego aside a little bit and take a step back. My team is awesome, and we're really just scratching the surface. You know, four heads are better than one. And we're really learning a lot about where we can go, especially because I think we all kind of get to the same place. But we get there in different ways. So they challenge me to think differently. And then, back to the first part of your question about the unique ability stuff, I mean, simply, work is a lot more fun when you do what you're good at, and you're doing what you like to do, and when you give yourself permission to do that. I would give kudos to Strategic Coach for helping me give myself permission to do that. And just dovetailing back into the behavioral finance piece, and maybe a lot of the advisors listening have had an experience like this, but I find that a lot of times people are coming in with an idea, and they just want the advisor’s permission in order to do it. And I think we're kind of sitting in a great seat so that we can help people to do things that they wouldn't have ordinarily done.
Will McKenna: What advice would you give other advisors listening to this program for some of the top things they can do to improve their practice?
Jay Wheeler: Yeah, that's a great question. So my wife and I have a 10-year-old daughter and 12-year-old son, and we're watching on Disney+ the “Hamilton” musical over the past couple weeks. And one of the pieces of advice given to Alexander Hamilton in a song is: ’Talk less, smile more.’ And what I mean by that is, just do my best to be a listener, a curious listener, smile more and have a good time with this. It's a unique opportunity to be a really important part of people's lives, which I think, you know, probably all the advisors listening already know.
Will McKenna: That's great. And with that, what two to three key messages would you want to leave with the audience today?
Jay Wheeler: I guess it's not about the money. And be a value. Do only what you're good at and enjoy doing. And I guess a last quick one, real quick story. I just went on a fishing trip with an old buddy. And this was a trip that we've been talking about for 10 years. When COVID happened, we're like, you know, ‘Life is short. Let's go.’ And so we went on a trip, and we're sitting around the campfire talking at night, and he asked me something about our kids. And I was like, yeah, you know, try to be polite, tell the story. And he said, ‘Wheeler, I'm one of your best friends, you can brag.’ And so it was fun to get that permission from a friend to really tell all, rather than holding back, on how our kids were doing in sports, in school, brag. So I would say my last piece of advice, and I appreciate my buddy Kevin for giving me this: Encourage your clients to brag. Give them an outlet. You know, we spend all of our time being polite. Give them an opportunity to brag. They'll love it. They'll appreciate you for it.
Will McKenna: I love it. Give them an opportunity to brag. That's a great endpoint for us. Jay Wheeler, thanks so much for coming on the PracticeLab podcast.
Jay Wheeler: Will, thanks a million. This was a lot of fun. Best of luck to you.
Will McKenna: That wraps up this episode of the PracticeLab podcast. Special thanks to Jay Wheeler for coming on the show. And thanks to my colleague, Mick McCreesh, for connecting me with Jay. If you liked what you heard today, please hit the subscribe button and consider leaving a rating and review. PracticeLab is sponsored by Capital Group. You can find all our episodes and more by visiting practicelab.com. I hope you found this episode as interesting as I did, and I look forward to joining you on the next episode of the PracticeLab podcast.
