#53 Carl Richards – Transcript

Louis van der Merwe
Welcome to another episode of Financial Planners, South Africa. Today I have in the studio with me, Carl Richards. Carl needs no introduction to any financial planner, the best way that I can describe call is probably the Seth Godin of financial planning. And I look forward to having this conversation, delve into the financial planning elements that can make you a better advisor Cole, thank you so much for joining me today.

Carl Richards
So glad to be here, Louis, South Africa is one of my favorite places. And that was one of the nicest introductions I’ve had in a long time. Consider Seth a friend, and I’ve always sort of and certainly a mentor from from afar. So thank you.

Louis van der Merwe
I think there’s such a close connection like specifically how you put out content into the world, saying, Hey, I’ve made this, you know, starting with your sketches, dealing with clients, I know creativity is a big passion for you. Like, how have you cultivated that creative muscle over the years?

Carl Richards
Gosh, that’s such a good question. And I want to be really clear about this, that it’s really easy to look backwards and tell this cute story. And I think we get enough of that in the business section of the bookstore. Because that’s like, what all business books seem to be like, Oh, look at how great I was. And here was my plan. From the beginning, I didn’t have any plan. Like, here’s the deal, the very first expression of this thing we’d call creativity would maybe be the sketches, maybe I didn’t think I would have never dared think like anyone cared. I was just, it was a compulsion I got it was something I couldn’t not do. And so I every single part. And I can tell I can tell you story after story about this, like how the New York Times column happened, how the books happen, how speaking happened, they were all really just a function of the only thing I really know how to do is embrace uncertainty. And then kind of play in traffic is the way I think about it. So some people would call that maybe increasing your luck surface area. But I’ve always just called it playing in traffic. And and I don’t know, and I don’t even have anything to offer on why some people play in traffic and get hit, and other people don’t, I don’t know why there are certainly way more talented people who have worked harder than me. And so that part of it, I don’t understand. But the part I do understand is there’s this thing, there was this thing that I had to do. And I’m hoping this is just a great way to start, at least for me, like because I love to spend time talking about this, and especially when it comes to financial planners. Because if we’re going to change the world, which I think we have the power to do, and especially when you think about South Africa, like the ability of the financial planning community to make a massive difference in a country. It’s so cool. I love thinking about that, you know, Australia and, and the UK. If we’re gonna change the world, you’ve got to be willing to do things a little different than they’ve been done before. And the moment you go to do that, it’s called new and novel, you’re gonna go do something new or novel, the moment you got to do that you brush up against something really fast, which is imposter syndrome and fear. And you’re tempted to just retreat back to the website with the sailboat and the lighthouse and the compass. What we need is more new and novel. So all I’ve ever really known how to do is have this like thing. Gosh, I want to do this, what if I tried it that way? And I believe from the conversations I’ve had in South Africa, I believe there are a bunch of financial planners there that started in this business because they had a dream about something like they wanted to make a difference they wanted, they saw something and they’re like, I don’t think it’d be done that way. I think it’s been done this way. And then what often happens is we get into the business, and those 4550 year old people that have been in the business a while crushed that out of you, right? That’s how we do it around here who gave you permission. That’s not how it’s done. They crest that out of you just like your grade school teacher did. And I’m just saying, I didn’t have a choice. It was either play with this thing or die. I didn’t have a choice and more healthy people have a choice. But I’m just encouraging maybe like maybe, like dance with that a little bit. Like next time you feel that thing? Like I want to try this question. What if I had, like, I know a planner who has all of his meetings outside? I want to do that. Maybe I should try that. No, that’s not how we do it here. Maybe you should try it. Like just quietly start sometimes dramatically. But at the very least start quietly start dancing with that thing. I call that dancing with dragons. So anyway, that long winded answer to how did I start? I don’t really know I had a thing. I view business, the only kind of business I’m actually interested in is where the business is just a tool to forcibly insert in the opinion the world. And so I just had an opinion. And I was going to forcibly inserted into the world. I didn’t really care what anybody else thought I didn’t care if it was popular, because I had no choice. And that’s, that’s sort of the paradigm I’m looking at it through.

Louis van der Merwe
This sounds like any entrepreneur saying, this is the way it’s always been. I think there’s a different way. Let’s go do it.

Carl Richards
Yeah. All right. I really think of financial planners, just as entrepreneurs who’ve chosen financial planning as the business. That’s it. And I so I agree. And there’s a reason you know, even in entrepreneurship, you see this in the tech space and startup world, you know, people will say things like, you just want to be adjacently different, like, it’s the Uber for school, bus drivers, you know, that’s not new and novel. That’s not hard. If you actually are new and novel, you want to know what it feels like to be new and novel, watch The Big Short, right up until he was right, like, up until he was right. That’s what it feels like. So we’re actually turns out humans are more interested in being seen as creative than actually being creative. Because being creative is, is challenging, it’s hard. It’s scary. It’s, we’ve been trained, like cheese stay in the herd, where you’re gonna get eaten, you know, so. So yeah, I don’t think it’s any different than, than a real entrepreneur or a real financial planner is just a real entrepreneur.

Louis van der Merwe
So Carl with this, I’m almost hearing that we’re not pushing the envelope enough. We’re not expanding at the fringes saying, you know, I’m a financial planner that focus in this specific area. I’ve been exploring that world of life transitions and working with recently widowed people. And it’s opened up a world of new skills that I had to go and acquire. What do you think of those skills that financial planners are not spending enough time we’re not talking enough about? And we talk about coaching, we talk about all these things, but what are the things that according to you missing? Yeah, well,

Carl Richards
Louis, first, I just want to comment on this idea of solving a problem for a specific group of people. You know, I don’t even know how and I hope people listening to this will understand, like, I don’t even know how to talk about marketing, delivering financial advice. I don’t have I don’t know how to talk about almost anything to do with the business of being a financial planner, unless you have a niche, right? Like, how do you market because we just got to ever understand everyone doesn’t exist. It used to be that maybe, and most people listening, this won’t even remember this time. But there was a time when there was only three channels on the television. And maybe you could get access to everyone. But now everyone doesn’t exist. And so then you add to the fact that everything’s so noisy around personal finance, there’s so many books and podcasts and all these things, the only way to make a difference is to be a really clear signal among all that noise. And the only way to be really clear signal is to be relevant for a specific group of people. So the question I would ask always any finance play, like it’s a question I’d suggest you ask is like, who is who is your work for? And it’s not enough to say, I don’t think it’s enough to say, pre retirees. Okay, like, you know, it’d be better to pre retire. I’ve got a friend who works only with C suite executives at a specific cup company in the US of Indian descent. This is not an Indian company. This is just a tech company in San Diego. He only works with executives at that company that are of Indian descent. Guess what, when you read his website, or you read his newsletter, if you are that person, you are like, how did this guy know? You know, and if you’re not that person, you’re gone in two seconds. So I think that idea first, like, that’s a skill, like, and the reason we don’t do that is it’s scary. It’s really scary. Like you have to put yourself Self cause at putting yourself on the hook. You know, I only work I’ve got a buddy who, who works with he’s called the tattoo advisor. He works with just old tattoo artists. He’s the financial planner for tattoo artists. I remember when I heard that I was actually like, oh, I don’t know if that’s gonna work. You know? And, and simultaneously, I was like, so glad he’s doing this. But he’s put himself on the hook, because there’s no doubt like, if that doesn’t work, he’s gonna have to change and that’s fine. Like, Well, everybody’s fine with that, but he’s not going to feel fine about it. So that’s skill number one would be just like, look, figure out who it’s for. And the narrower the better. And I know that sounds crazy, it’s but it’s, it’s amazing. The narrower you are, the more that will obviously that group will come to you. Right like if I work with If I only work with architects that have to own their own practice, and have 10 or fewer employees, right? Well, the benefit of that is I all I have to do is interview 10 of those people. And I’ll know more about their unique challenges than anybody on the planet. From those 10 interviews, I’ll have all the content I would need for a year. Like I’d have every tweet I’d ever ever LinkedIn post, I’d have a white paper, just from 10 interviews. I then know where they hang out. Because that would be one of my questions. Where do you hang out? I know what they read. I know what they listened to. Because that would be one of my questions in an interview. What do Architects like you listen to? Are there? Is there a podcast you like? Oh, geez, we all belong to the the art small architecture firms of new of South Africa. Association. Oh, really? Did? Is there any? Yeah, yeah, there’s a quarterly publication? Oh, wow. Do you think I can interview the person who does like, I know where they hang out, I know, like, boom. And then if I really am strong, I only work with architects who own their own firm with less than 10 employees. Guess what the architect that owns their own firm with 50 employees is gonna say, hey, any chance you’d make an exception? And you can decide? And I largely think you say no, but you don’t have to. So versus saying I work with architects, or I work with people in the construction field, or I work with people in design. So sorry, that that actually wasn’t even answer your question. But you had mentioned that you had been thinking about this. So I, I love that. That’s a skill that I think we need to get better at. Absolutely. Who is it for?

Louis van der Merwe
I’m wondering like, do you need to be one of those? Do you need to have been an previous architect to do that? Because this morning, I got a mail from a lady based in Johannesburg. It’s a black young lady. And she said, I’m looking for a black young lady that can be my financial planner, who can you recommend? Some morning, how much of it is I identify with you versus how you serve me as a niche or a niche? As as you would say?

Carl Richards
Yeah, I’ve had that train out of me niches just fine. Um, so I, I think there’s a there’s a bunch of different ways to look at, at how to develop a niche. I like occupations as a shortcut. The real key here is finding a group of people with the problem that you are interested in solving. And problem here is used in the technical sense. It’s not bad. It’s just a math problem. Sometimes I like to use the word puzzle, like a group of people who have a puzzle that you’re interested in solving. And you’re going to be doing this for a while. So that’s why I think interested in solving is important. That’s to me, what matters. Now the shortcut to finding a group of people who have similar financial challenges is occupation. That’s the shortcut. But you can do, you can do demographic, right, you could do recently divorced, you could do people who live in maybe there’s a specific town that might even have some tax, interesting tax things going on. I’ve seen that before. Like, people who move here almost always need to know about this. And maybe in I think, as to answer your question, when it’s when you’re focused on occupation, I don’t think it matters. It can, it could certainly help. And I’ve got friends, lots of financial planner, friends that are like this, like, used to be. For some reason, there’s a lot I know a lot of doctors who have left medicine and become financial planners, and their their their niche is physicians, and they, they will tell me, it’s not just physicians, it’s radiologists, you know, who are 40 to 55 or so like they get really specific. But if it’s an if it’s a, an affinity group, or even race, culture, religion, or maybe even gender, then maybe it does help and maybe affinity groups, maybe that’s really important, because I’ve had the same conversation, like somebody’s like, No, I actually really want a female planter or I because there’s something about and I’m also thinking of like, here in the United States, the conversations we’ve had around planners of color. There are some cultural things that might be seen as a shortcut in the conversation, like, Hey, you get me I get you. And that could be valuable. But as far as an occupation, I don’t think that that I had like four or five different niches over the years, like we’d build one. And then we would, I would get bored, we’d build another one, I get bored. We built another one. And none of them were any things like dentists, emergency room, doctors, and I had just started entrepreneurs with a successful exit when I sold my business. So there are always things I was super interested

Louis van der Merwe
in. Just so part of this is just saying, Hey, we’ve seen this before. You don’t need to make the same mistakes as the 50 people we’ve done this for Don’t worry.

Carl Richards
So it’s like we just underestimate how valuable That is like I mean it. If I were to develop a niche, all you have to really do to be head and shoulders above anybody else serving these people is interview 10 people and just ask it like, that’s the first thing. I just started that with the entrepreneurs with a successful exit. I love those people, I consider myself one of those people. I like hanging out with him. The challenges are really interesting. I know what they read, I like to read what they like to read, I like to read the same podcast. So I started interviewing them. And I was like two, three interviews in when I noticed this pattern. And the pattern was, most financial planners show up to entrepreneurs, and they say, if you’ve had a successful exit, so you’ve sold your business for $25 million, what’s 99 out of 100 financial planners gonna say, put on your golf shoes, stop taking any risk you’ve want? Well, 99 out of 100, entrepreneurs don’t want to hear that, what they what they will say is, it’s in my blood, man, I’m gonna keep doing it. And they’ll use words like this. And I noticed this in the third interview, every single person that the two prior, and this third interview, they all said some version of, I’ve got a pool of money, I’ve promised my spouse, I would never lose, or one of them said, I just like to think of this as my over the wall portfolio, I’m gonna keep doing this thing. Because I’ve got unique skill, ability and talent to operate in this inefficient market is the kind of terms we would use. But I never want to have one of them said, I never want to see a foreclosure notice on the door again. So I was like, oh, boom, my white paper is called the over the wall portfolio. Right? And and now the next person I show up to I’m like, Hey, let me just ask you a question. Have you ever? Have you ever like, I’m assuming I know a little bit about you. You’ve been successful at this? You probably want to do it again, don’t you? Oh, yeah, of course. How do you know that like? And is there a pool of money that you’re sort of like, Have you even had the conversation with your spouse? Probably where you’re putting like, no more foreclosure notices on the front door? I probably Oh, yeah. Do other people. Yeah, you know what? You’re not alone. What other people use those words, then you write the white paper, you hand the white paper to them. And this happened every time I did this, they would read the first set the first paragraph of the white paper, they look up and go, How did you know? Because it was in their language, their words nail the problem is what we call it nail the problem in the first paragraph. And they say how you know, and I started responding sarcastically, I’d say, I know, it’s crazy. But we asked you. So yeah, that’s to me how I think about that process.

Louis van der Merwe
That’s working to the same tribe, right, saying people like us do these things. I’m wondering, is there any professions that completely steer away from financial planners just that you should avoid it as a niche?

Carl Richards
It’s a good question. I mean, people traditionally would say doctors, because they’re hard to deal with is what people always told me, but I loved it. I liked the doctors I found, maybe it was because I found them mainly through the activities we all enjoyed. So I was climbing and whitewater kayaking with mountain biking with a bunch of ER doctors, which is always helpful to have around in those activities. But they weren’t interested in being control freaks, like you hear about doctors, they were like, I want to go climb, like take care of it. So I think there may be personality types, you know, I’m thinking more like the people who, for me, I was not interested in the person who saw money as a sign of power or political influence, or prestige, or cared like a whole lot about what they drove. Like, and I’m not saying that’s bad. I’m saying I wasn’t interested. So I think, to me, the best sort of personality type, or always the kind of delegators, and money was just a means to an end kind of people. Yeah,

Louis van der Merwe
I like to have this rule that if you’re excited when your client phoned you, that’s probably a good idea to keep those clients, right.

Carl Richards
Yeah. Oh, wait, that’s true. For sure. Like, and it’s hard for people to believe this. Like, I know, it’ll be hard. It was hard for me, it’s still even hard for me to say it. But I know it’s true. That the sooner you can believe that you only have I mean, I always think about it as 100. It could be 50. It could be 500. I don’t care. But you if you start thinking like, Okay, I’m going to build an airplane, I’m going to buy a 747 I’m going to tear out all the seats, I’m going to put in a 101st class seats, if you start thinking that way. And you’re like, and by the way, 47 of them are already full. And then you start thinking like I only have 53 seats left, as soon as you can get to the point where you start to believe in your bones, that this is a mutual process. Like I’m being as selective as you are. And I would encourage you to be selective and I’m going to be selective. And Louis, if it’s not a good fit, I promise you I will be the first person to tell you in fact, I might even have somebody I can send you to the sooner you can get to the point where that’s not an act I mean If you need to act for a little while, but the sooner you get to the point where that’s not an act, you really believe like I’m gonna make such a difference in your life. And I’ve only got 53 seats left, the last thing I’m going to do is give one to somebody, either a who won’t value what I do, or be we won’t like each other, because I’m hoping that I work for you worked with you for 20 or 30 years. Last thing I want to do is spend a year trying to get you as a client, then spend a decade regretting it, the sooner you can get to that spot, narrow niche, and you’re as selective as they are, and you communicate it that way. It lets them off the hook. They’re like, Oh, yeah, this isn’t a good fit, they’re not going to try to talk me into it, instead of what I was taught, which was a prospect is anybody who has a pulse. And look, maybe that’s required to get through early years, maybe I don’t know. But I have seen that the sooner you can get to the point where you believe so deeply that you’ve only got X capacity, and you’re going to be selective. And you’re just trying to find those 100 people to fill those seats, the faster that will happen. And the more the happier you’ll be with the business you build.

Louis van der Merwe
Cole, you said, first class seats, what does first class look like in financial planning?

Carl Richards
Yeah, and I want to be careful here, because you may decide that you want to build, right, if your niche doesn’t, your niche doesn’t match the type of business you want. So it doesn’t really work to say in the United States, at least, it wouldn’t work to say, I really want to work with first grade teachers, and I only want to have 25 of them. Because that demographic just wouldn’t be profitable enough with 25. So you get a choice here, you can say, I really want to work with first grade teachers, like elementary school, you know, one through five, that’s who I really want to help because my mom was one. And it’s just really important to me. In fact, it’s so important to me, I want to figure out how to scale a business. So your seats may look more your plane may have 500 seats on it, or even 1000 seats on it. And those seats will, instead of thinking first class, as soon as I said that, I was like, Yeah, I’m trying not to say that anymore. What I’m trying to say is seats Bill fit for purpose. So you’re offering the service levels, the products you use, the tech you use should match the kind of problem you’re trying to solve for the piece. So it’s possible to have 500 people as clients, if the solutions are relatively simple, maybe you can start thinking about as like almost like group membership business model, which I love a huge fan of, and we need to see more of it, you know, you might do a monthly call where everybody can, can join the monthly zoom call, and you have a topic every month, like I’m gonna do taxes this month, I’m gonna do retirement this month, I’m going to do it in investments, you could build a service model around 500 to 1000 people, if that was the niche you wanted to serve. If the first class reference is more like, look, I want to serve, I’m gonna serve people who their lives are a little more complex, they require a little bit more attention. It’s it’s advanced planning, well, that I may only be able to have 50 clients. And the way that looks is but independently, it allows you to do you whatever you want to do at scale, whether that scale is 50, or 500. And if it’s 50, then of course, what it looks like there is, you know, a very clear set of deliverables, preferably systematized, I still believe the business should be optimized for the happiness of the owner. In other words, it should be a lifestyle, because every business, Louis, I don’t know if you know this, but every business is a lifestyle business. Right? It’s just is it has it been intentionally optimized? It’s just are you miserable? You know, human? That’s the lifestyle you optimize for? Or did you optimize for happiness, freedom, you know, whatever was important to you. So I think you systemize the business, you optimize for your for whatever is important to you. For me, that’s freedom. And then you, I always believed I’m going to build the business I want and I’m going to find the people who fit into it. You have a lot of people in our industry that teach you to play chameleon, I will change the business to fit your personality, your needs your and I wasn’t smart enough to do that. To keep track of that. So I was like, No, this is what we do. Surely there’s 100 people that need that.

Louis van der Merwe
You don’t need to service it, everyone. It’s just your tribe.

Carl Richards
Yeah, yeah, you can’t. Everyone doesn’t exist. It’s impossible. We’ve all heard like, if you if you try to service everybody, you’ll be serving nobody.

Louis van der Merwe
And then does the way you get paid actually matter as long as it’s in line with what your tribe is willing to pay and able to.

Carl Richards
Yeah, I think that’s a that’s a good way to think about it. Like I think it would be cheating on my part to not talk a little bit more about it. Because it’d be easy just to say it doesn’t matter. But I do think the argument that We all like to have is a total waste of time. Sorry, outside of being honest and transparent. Yeah, it’s a total waste of time, you can be an hourly financial planner and be honest and transparent. You can be a retainer planner, and be honest and transparent. You can be an AUM planner to be honest and transparent. You can even be a commission based planner, and be honest and transparent. The honest and transparent part is not up for debate. Everything else is like, well, let’s just make sure that the business model matches what the clients need. And I think the way to think through that is financial planners actually get paid, you’re not actually a financial planner, you don’t have a financial planning business, you own an intellectual property business, right, you get paid for wisdom. That’s what you get paid for. And so the more direct, you can make the link between your wisdom and your compensation, the better. I remember, one of my classes was 15 years ago, one of my clients said, Carl, your business makes no sense to me because you chart I was named I’m planner, you charge for the commodity, and you give the valuable stuff away for free. I don’t understand that was 15 years ago from a client, right? Like, we’re still seeing that. So the more direct you can make the link between the valuable stuff you do, I think of it as wisdom, and your compensation, the better. And then the other piece that I think is really important, is if there’s the way you charge tells a story, it is a story. Value is just a story. But specifically the way you bill your clients tells a story. And if there’s anything about the story that you’re telling, through the way you bill that you are uncomfortable with, if there’s anything about the story that you’re telling that you don’t want people to know, then I really think you owe it to yourself to work that out. Right? Either change it, get comfortable with it, do what like if there’s anything about the way you the story you’re telling with how you bill that needs to remain hidden, that is probably a sign that you need to dig into that a bit, make some changes, and call

Louis van der Merwe
it for you delivering wisdom. My question would be, how do you become wise then?

Carl Richards
You practice, right like, by wisdom, I simply mean, like, pattern recognition, right, which again, goes back to the niche, it’s so much easier to get reps in. And to start recognizing patterns. If I’m dealing with the same person. It’s literally like, like by the fourth interview with entrepreneur, I knew what he was going to say, he or she was going to say, and we’ve all had this experience. If you’ve done this work for more than a month, you’re like, Oh, yep, I know what’s gonna happen next. Right. So deep pattern recognition is wisdom. And, and that’s valuable. So you get reps in, right. And the way I think about reps, especially for young planners, is I would just try to find problems to solve, that are 10% below my technical capacity 10% below. And as my technical capacity moves up, the problems I’m solving move up. So right, like I may start with, I’m gonna help people with some budgeting, cash flow issues, because I really know how to do that. I’ve been doing it myself, I’ve done it for other people. I’m going to help people with budgeting and cash flow, right? And then then then you might, you know, like, you might get comfortable with that. And you might start saying, hey, you know what, I think I understand the investments enough now that I think with these five model portfolios, I can I can help people with investments, right? I, you know, so you just, you just now if you run across a person where the problem is above your technical capacity, you say, I don’t know. And you will, you’ll, you’re more likely to get that client now than you were before. Because I’ve ever heard that before you say I don’t know, Louis. But guess what? It’s like two or three phone calls away. Let me understand what your real concern is here. What’s the deal? Give me as much detail as you can give me a day or two, I’ll be back. Right? And then at that point, you either say, hey, you know, it turns out, this is a problem, I can help you solve this. Here’s how we do it. Boom. Or you say, Hey, Lily, after digging into this, I think it’d be really good for me to refer you this specialist. You know, here’s Sally’s number. I talked to her earlier, she’s expecting your call, please let me know circle back if I can be helpful in any way. And if for whatever reason, Sally’s not a good fit. Tell me I’ll go to bat again for you. Like that’s how I would handle that ability to just get reps, gather wisdom, get pattern recognition under your belt?

Louis van der Merwe
Yeah, I’d have to add, I think the value of that professional network of people that you can refer to becomes even more valuable, the more complex the decisions that they have to make. Susan Bradley talks about this idea of a thinking partner. And so now the question is like, Where does financial planning really stop? Is there even an end like shouldn’t be, we be pushing a little bit and saying, Well, let’s explore other areas of your life in kind of your holistic well being. Yeah.

Carl Richards
I yeah, I don’t think financial planning is never done. So there is no our financial planner, we hired a new financial planner two years ago, maybe two and a half years ago. And she’s a really, really, really big planner like, and she thinks she prides herself on these plans that she makes, and we’re two and a half years in, and I’ve haven’t seen the plan yet. And I came to the conclusion like the plan actually doesn’t ever exist. It’s the plan doesn’t exist. It’s this never ending process of planning. And that’s like goal clarification over time. You know, course corrections, my goals have changed, the world was different than we expected. Oh, really? Let me see what you put in for inflation this year. Right, like, so that, that it never that part never ends. You can get to a spot though, where maybe that you’re not interested in increasing the technical challenge of the problems you’re solving. I was this way I was like, you know, I mean, I remember one of my biggest clients, his CFO called me and said, Carl, David wants you to spend some time calculating how to best get the best tax deduction for the for the jet, or how to make the jet like how to how to how to lower costs on the jet. And I said, Hey, just tell David of fly southwest. And that was the end of that relationship, which was good, because it wasn’t a good fit for me anyway. But I realized that like I wasn’t interested, I’ve got a friend Vance bars, who is like one of the most technical advanced planners I know. And listen to Vance, talk about what he’s doing with credits and eyelets and Kratts. And reverse cripples. I mean, I don’t even know what that is. Like, I’m like, wow, he loves that. So you can get to the point where you’re like, No, the challenge to me now, is not the technical challenge going up. Maybe it’s the challenge of building a really beautiful, elegant, simple business now, like I just want to serve people with, I didn’t really like working with people with more than 3 million is what like mine was like 500,000 to 2 million. I love that group. Now I wanted to figure out how do I build a really beautiful, simple, elegant business that delivers massive value to them, is optimized for me. So in that way, it doesn’t change there either. Right? Like in terms of like, it’s never done. Like, it’s always sort of this growth and fun. And once we accept that, that like a the planning is never done. Be you could have never ending moving up of technical challenges, if that’s what you enjoyed, you could just continually move up, like I’ve got another friend that they, they actually just they find a new home for their bottom 10% of their clients every year. And they only accept new clients that will be above their highest client technically. So you know, they’re always just filling in the top. And that’s what they love doing. And nothing wrong with that. So you can do it that way. You could focus on the business of it. You could build a beautiful business that you want. And then say I’m done. Got a friend, James 75 clients, about $5,000 a year in retainer hasn’t added a one. He’s got a 18 month waiting list. He doesn’t bring on new advisors. He doesn’t bring he brought on one, but they’re both full now like him. And when I asked him, he’s like, Carl, I ride my bike 15 hours a week, I make breakfast every day for my son. Why? Like what that works perfect for James. Right. So that’s the way I think about it is like it’s a multifaceted opportunity to optimize for the growth that you want to optimize for,

Louis van der Merwe
like you would say it aligns with his purpose statement, right, like this business fall. And it’s then shifting your creative expression from clients into maybe business or your family or other areas. Exactly. Exactly. Cool. How has this changed your family’s life? Like, because you’ve moved quite a bit. You’ve had many different ventures, like, how has that impacted the life of your family?

Carl Richards
Yeah, I don’t know the jury. I mean, I like to believe, you know, we moved to New Zealand, that was a pretty abrupt decision. You know, the idea of moving overseas had been discussed a lot. But the idea of New Zealand had never even been brought up. And we were on a plane 90 days later. So that was pretty big. Yeah, yeah. Well, we always like people are always like, we just we’ve been back. So we were and we were only going to New Zealand for one year, we stayed another year, and another year and another year, so it was four years. And then you know, we always joked we’re like we’re three and a half years into a one year trip. And then London, like the idea of us moving to London. Honestly, it was like not even like if I’d made a list of 100 things we were going to do. London wouldn’t have been on And then just because we had hadn’t occurred to us, we often say, you know, men make plans, and God laughs like we don’t, I don’t even know what I believe about planning anymore, I just believe in the idea of like, let’s embrace the uncertainty of it all, and realize that real planning is about navigating a changing landscape being a guide in the changing landscape, and not a defender of an outdated map. But we do believe largely, that our kids were into it. And the evidence is so far. I mean, the only problem we have with what it did for our family is that we don’t know, you know, like, I think before we did that, we could have reasonably expected our kids to all live in the intermountain west, you know, in Utah, or Idaho or Wyoming, in the mountains in the in the West. Now, all of our kids are like, I’m gonna live in New Zealand, I’m gonna live in London, I’m gonna live here. So we’re like, where do we go? That’s the, you know, it’s open, the potential range of outcomes is really wide now, which is great, but comes with its own set of challenges. You

Louis van der Merwe
know, we’ve seen the exact same thing in our client base in South Africa, where, you know, kids are moving abroad, never in the same place. And when people get to that retirement phase, they tend to spend half the year in South Africa of the year abroad, which makes financial planning quite complex, especially if you have to take into account different jurisdictions and taxes and all of that, what advice would you give to advisors that are dealing with clients now in a global landscape? Like, what would have helped you? In your trips? from a, from a planning perspective?

Carl Richards
Yeah, and I think that’s a particularly you know, like, you hear that a lot from South Africa, New Zealand to just a much more like, you know, there’s some stat, like 50% of Americans don’t have a passport or something, you know, like in a much more sort of global in your thought process? And I don’t, I don’t know, I think you decide, like, what would have made it easier for me is, I mean, I didn’t even know what I didn’t know, you know, I found out some things about New Zealand that we should have been thinking about. But we didn’t know, if you’re gonna stay there more than two years, there were some things we should have been thinking about, well, one year, like six months into it, I didn’t think we were going to stay more than two years. So to me, it’s, it’s less about what specifically can you do, and more about the attitude of understanding that uncertainty is reality, that change is constant, that that’s what you do, like now, you may decide that your niche is not that I work just with retirees in Durban, and most of them have some sort of government pension. And they’re super stable, beautiful business. Right. But another niche could be, I work with families with global exposure. And I’ve got a network of people. I’ve got somebody in the UK, and I’ve got somebody in Australia, and I’ve got somebody in the states that I know. And, you know, what would be really hard is if you had one of each of these 50 different things. And some people actually like that, or like, I like it, because it’s everybody’s really interesting. But that sounds to me, like a nightmare to manage. And certainly the market.

Louis van der Merwe
Yeah, the complexity for small business to confidently and with good capabilities actually serve those clients, it becomes impossible.

Carl Richards
Yeah, I, I believe that to be true. I don’t know how unless you are like, I do have a huge minimum. And therefore I can dig into each client’s situation, and they can all be different. I do believe that’s true. I’ve seen people successfully do like one or two. But yeah, so I think having a niche that’s like, Look, these are international families that like to travel a lot and have kids a lot of places and I’m really, really good at that is the way I would probably solve that problem.

Louis van der Merwe
Cool. What’s next for you? Like, what does this next chapter hold for you?

Carl Richards
Well, given what I just said, I don’t know. Actually, I mean, we’re, we’re just I have I just got I mean, I know this is just a podcast. So we’re not doing art on the radio, but so it doesn’t help to hold it up. But I just got back from the printer, this little manifesto that we just I just wrote called real financial planning a manifesto. So we’re getting that out into the world. The Society of advice has really gone way beyond my wildest expectations. So we have a program called the membership. And the membership is a once a month meeting, we meet 90 minutes once a month, we call it the worldwide chapter of the Society of advice. And we have guests on like we’ve had Seth Godin on we’ve had James clear on and Morgan Housel and a bunch of others. So I’m gonna keep focusing on that and just sort of with a hope that we can, I think the opinion I’m trying to force Suddenly inserted in the world now, in our industry, for a very long time it was, let’s make this simpler, like you can do hand drawn sketches, you can have a one page financial plan, you know, like that that was the that was the message. And I feel largely like that’s resonating and people are incorporating it. And now, what I’m really focused on is like, what I think of as real financial planning is this reality based planning that you’re not a defender of a map. That’s not what you do for a living, you don’t draw maps, and then defend them. You’re a guide in the changing landscape. And if we can get the attitude, the even the tools we use change, when we start when we the tools we use were built largely as testing tools for the atomic bomb. I mean, like, like Monte Carlo analysis was not built for us. And because we have like physics, envy, and around the world, we’ve become sellers of certainty. We think that’s Well, everybody does want to buy it. The problem is, certainty is easy to sell, but impossible to deliver, impossible to deliver, because life is uncertain. So I’m trying to get that that’s my real focus now is like, look, what does that feel like? What do you need to be? How do you approach resilience? How do you keep yourself good at it if your job is truly to help people make mission critical decisions in the face of irreducible uncertainty? Like you’ve got to look people in the eyes with incomplete information and say, Louis, we’re going this way. And you don’t know. That’s your job. Well, what’s that? Like? How do you do a job like that? Turns out, there’s been this kind of stuff in other areas, we just have been really slow to adopt. Right? The entire world of complexity theory is, like, fascinating. So understanding what it means to actually understand really what your job is, to look people in the eyes and say, we’re going this way, even though you don’t know for sure. What’s over that next mountain pass. You’re the best map draw in the world. Sure. But you know, for sure that the only thing about your map, it’s the only thing you know, for sure about your map, is this wrong? How does that feel? Like that’s, that’s, that’s what’s next for me. It’s actually not next, it’s what I’ve been doing for probably the last five years. But I just want to keep driving that home until we realize until we build different tools, we have different conversations that are more based in reality and less based in our MV that we have a physics, like we so badly want a law of gravity. Well, it doesn’t exist,

Louis van der Merwe
called that’s not taking ownership of the decision. Right? That’s just helping the client figure out what would be the base base next step for them? Yeah,

Carl Richards
well, I think there’s a couple different versions of this like a, first of all, the thing that matters is the client stays the hero of this journey. Like you’re not the hero. It’s not your values. It’s the clients values. It’s the clients plan. But and there are some clients who want to be really actively engaged, guess what I want from my planner, I don’t want to be educated in any way. I want my planner to know me well enough to tell me what to do to be able to look me in the eyes and go, Carl, based on everything I know about you, this is what we should do. That’s what I want. I don’t want I don’t want anything to do with educate. I don’t want anything to do with money period. Like I literally just want to be like I’m playing songs over here. You just take care of all that. That’s what I want. But but it needs to be based on knowing me well enough to know what that means. My planner knows me well enough to know that in our last meeting, she fired me. She said, My wife’s name is Corey, she said Carl Korea and I have it from here. Like your job is to go do this. And she gave me a specific number in the next three months. We need x in free cash flow to make this remodel work. You go do that. And I was like, seriously, that’s the best news I’ve ever heard. That’s what I want. So yeah, in a large part, and those are my decisions, but I’ve completely allowed her to make them like you. Carl, do you wanna invest in this? Or this? I don’t know, you know, me well enough, decide. That’s what I want. Now, a lot of other clients, I know, I’m probably pretty unique in that. But like all of my friends that are really like sort of more Creatives or artists, that’s what they want to. So I think there’s a that’s again, another niche could be just sort of personality types that are like, I don’t I don’t I don’t care if I don’t care if I have another money discussion ever in my life. In fact, I’ve told my wife like if you would just take care of this. I promise I’ll never come back and go, Oh, you know, but I know there are other people that want to be far more involved. Like the model is more like, I’m a co pilot, right? I just want to sit in the back of the plane and play the guitar. But most people I think the correct model, the correct way to think about financial planning is to think of like, I’m just a co pilot or maybe even the CFO, you’re still the CEO. But guess what the CEO really gets paid for When times are tough, the CEO reaches across the table grabs the CEO by the collar and says, This is what we need to do. And that’s, that’s what I want people to understand is, sometimes you have to look people in the eyes and go, poof, I didn’t expect the storm either. You know, like, and that doesn’t make you wrong. Because you’re not a defender, you’re a guide, see, like, believe me, we do the best route up this mountain. And believe me, I looked at the weather. And this storm was not on the weather map. But I’ve been up here before in storms like this kind of, and I got all the tools in my backpack, don’t worry, I’ve got you were going to be fine. And you don’t know what the next step is. But you just know that you know how to take the next step. And there’s a whole bunch of that and complexity theory that’s really, really, really valuable.

Louis van der Merwe
Yeah, I’ve helped people like you navigate the storm.

Carl Richards
in things like this before, it’s not. My value is not because I know this place. Exactly. It’s because I know how to be uncomfortable. I know how to, here’s one way to think about the reality is we’ve built financial planning, largely the tools and the way we do financial planning is built on the idea that we’re in a simple or maybe a complicated system. So simple, complicated, complex chaos. We’ve our tools are largely built on simple a simple model, which is you do a you understand what happens and you get b That’s simple. That’s the world that all the financial planning books are in that’s the world that all the entrepreneurship books are in seven hacks, seven tips or tricks like I can tell you, if you do this, you’ll get this complicated, just one step down or up one step up. Complicated would be you do A a thing goes on that you don’t quite understand it while it’s happening and you get B. But with the benefit of hindsight, you can explain what happened that’s complicated. Complex is you do A a thing goes on, you do not understand and that you can’t even explain in hindsight, and you get you don’t know what you get. Sometimes you get a sometimes you get why sometimes you get. That’s a complex system. In a complex system, all you’re left with, in hindsight, like your explanatory power, you have no explanatory power. So what you’re left with is rather the literature which I love, because it’s you can see it everywhere, is story and myth. So you see this with entrepreneurship all the time, like I, I built this business, I did this thing, and I have an S chain it painted on my chest, I can tell everybody else how to do it turns out the thing that you did will not work for anyone else, it wouldn’t even work for you again, because there were some timing involved. So if we’re in a complex system, and then you add one more element to it adaptive, so we’re in a complex adaptive system. And adaptive means every time you interact with the system, you change the system, right? So if we’re, we’re living and planning and using tools, like we’re in a simple system, and we keep doing that, if we want, we keep pretending, and we’ll get the same result, which is people will be like, wait, you told me this, and this is not what happened, you know? Yeah, blown up life, life insurance projections, you know, like all of those sorts of things that we’ve seen. But that’s what we’re choosing to do as an industry. If we want to choose to face reality, which is complex, adaptive system, the only thing to do is the only way to navigate a complex adaptive system, is get really clear about where you are today. And what the literature says is solve for the next local optimum, which would mean just take the next step. And Louis, what happens when I take the next step? What happens if I take the next step? What’s going to show up?

Louis van der Merwe
Yeah, there’s some certainty there’s an outcome, you start building confidence,

Carl Richards
new information is going to show up, right, right. Like if I if literally, if you do this in your office, you stand up and look at everything you possibly can. Right now you take one step forward, new information will show up. So with a client, we take one step new information will show up what do we do we incorporate that new information to get clear about where we are today. And then what do we do we take the next local optimum the next step. So financial planning, done from reality is not about being precisely correct today, it’s about being less wrong tomorrow. And that’s that’s what I’m doing. Like that’s all I really care about because it otherwise we’re fooling ourselves

Louis van der Merwe
Carl, I want to thank you for going first for setting and pushing these boundaries for crafting, like my own career. So those meetings 10 plus years, shaped where I am today. I want to thank you for that and I am 100% Sure 1000s of advisors can say the same. I wish you all the best for this next chapter.

Carl Richards
Cheers though, is super fun to talk to you. And please encourage all your brothers and sisters in South Africa to keep doing the work.