Money is a Magnifying Glass - For Better or Worse, with Zach Hearne

If you could have a candid conversation with financial advisors who have decades of experience helping professionals, business owners, and families just like yours plan for their financial future, what questions would you ask? I'm Chip Munn, financial advisor, author, host, and CEO of Signature Wealth Group. For decades, my partners and advisory teams have had the opportunity to answer the tough questions for hundreds of our clients. Now we want to do the same for you. On the Signature Life Show, you'll hear answers to your burning and most perplexing finance, investing, and retirement questions from our Chief Investment Officer, Senior Wealth Advisors, Certified Financial Planners, and more. We aren't just financial advisors. We're parents, children, community leaders, and entrepreneurs with a passion for helping empower our clients to live life intentionally, what we call a Signature Life. John Tate, what's up, man?

Happy Friday to you, Chip Munn.

It's always a good Friday. It's particularly good this Friday because we've got one of our favorite guests returning, John. Zach Hearn's going to be back with us. Zach's one of our wealth advisors, senior wealth advisors in Greenville, South Carolina. And John, you and Zach spent a little time together, am I right? We did, we did.

He was unlucky enough to be voluntold to go to the New Bern office and work out for a while. We ran into each other on a weekly basis. We got to spend some time in the car together. You don't learn as much about somebody until you're forced to be in a car with them for 5 hours on any given day. And he's a good guy. He's one of those people that we'd love to have back on the show. And so far, I think he is our most frequent returning guest. And I was kidding around with Zach and said, if he gets on the show 5 times, you know, he gets a jacket. I don't know what color we make the jacket or I don't know that you and I have had that discussion, Chip, on what kind of things we give to our frequent guests.

We ain't gotten that far, but I think that it certainly is going to be food for thought. And it gives Zach something to work towards, you know, 3 more times and he gets a jacket. It's a little bit like if you've ever been to the fair and you can win the different size prizes. If you win 1 time, you get the small, you win 3 times, you can trade it in. Yeah. I used to joke with my kid, cause I've got 3 boys, different ages, and people would talk about how cute they are and I'd say, well, you can pick your size. Do you want small, medium, or large? You don't even have to trade up. But for Zach, at some point he'll get a, a sursi, as my grandmother used to call it, for being a frequent guest. And one of the interesting things, John, about Zach is Zach has had a unique journey so far in his career that has allowed him to work in 3 different markets. And I think unlike I started my career in Florence. I've always been in Florence, though I have clients all over the country. This is where I've been. And Zach has had a unique opportunity to meet a lot of different people in a lot of different places. And I think that brings him a really interesting perspective. Zach, we're glad to have you, man.

Welcome back. I appreciate it. Thanks for having me. And there's nobody else I'd rather explore the coast of North Carolina with than the John Tate.

It was a good journey. I'm glad you got that experience. I'm glad I got that experience. I think we both learned a little bit from each other. But jump-starting this podcast this morning, if I throw out the name Dick Fosbury out loud into the universe, does that mean anything to either one of you guys?

Can't say it does.

Dick Fosbury was not a particularly great high jumper in high school or college. And when he was performing the high jump, the normal high jump stance was to jump and not only leave the ground from your feet, but also leave the land on your feet. And so you were trying to get your whole body over the high jump bar feet first. And Dick Fosbury was not good at that. So he, instead of continuing to do it that way, he took some physics classes and figured out that you could lower your center of gravity by, instead of going over feet first, going over head first. And it also made it easier because your feet were the last thing to clear the bar and you could see your feet. So you could see if you were about to disqualify yourself by touching any part of the bar with your body. He actually ended up winning a gold medal in the high jump in 1968 in the Olympics. And to this day, all high jumpers use his style of high jump, which has come to be known as the Fosbury Flop. And so if you are a track and field person, you will know the Fosbury Flop. And it's just an interesting take and an interesting piece of history, I think, to go back to somebody who looked at the way things that were being done and said, "I don't want to do it that way. I think there's a better way." And he did it, and we still do it today. And I think that's a little bit about what we try to do at Signature, what Chip Munn did create with Signature Wealth and the Signature Life Plan. And that's kind of what we're here to talk about every week is how to bring that to more people and incorporate it into daily life, right?

Yeah. And what I think is one of the benefits of folks listening in on this conversation is a lot of our topics come from things that we talk about with one another as a result of conversations that we've had with clients, whether that is somebody has asked us a question we find particularly interesting or fascinating, or we run into some just observations. I often tell clients and prospective clients that whatever they're dealing with, they're hoping that they're going to deal with it one time. You only retire once, you only get married once, you only get divorced one. I mean, it's a first time, everything's a new experience. But for us, having worked with hundreds, if not thousands of clients now in total, most things aren't our first time. And so sometimes we just see some interesting observations of the nature of how people think and make decisions. And one of the things, Zach, that you brought up to John and I in a conversation that we were having is the concept of how money can really act as a magnifying glass for people. Talk a little bit about that. Yeah.

So essentially a magnifying glass makes an object appear larger than it is. And the old saying, kind of, you know, what's down in the well comes up in the bucket, and a magnifying glass kind of helps put that 100x perspective. So the idea of money being a magnifying glass for everyone, advisors ourselves included, our habits, our beliefs, our thought processes towards money, generational ideas on how it was viewed, how it was valued is all inside of us. And a lot of times those are positive things, but for everyone, there's also some negatives that come along with it. And so, I think a lot of what we do, obviously, managing clients' finances, the physical aspect of it, but also the emotional component of it is what we've been talking a lot about lately. And so, helping our clients understand kind of their beliefs, their values on money, how they could be magnified as we go through this journey with them and hopefully help them build more and what will that bring to light and magnify down the road?

I've never heard that saying, what's down in the well comes up in the bucket. And that is a big part of what we do is first help people identify what's in the well, right? Because we're not talking about the dollars at this point. We're talking about not how much money's in the well, but really what's the water made of? What are we dealing with in terms of when we start to create plans? One of the keys to that is that the best plan is one you actually implement or execute, and there there are plenty of things that can impede that or at least have to be factored in, John, psychologically in terms of just the way that we look at the world. What's part of our makeup, our biases? What have we learned?

Yeah.

When we have a client in the office and we are talking with them and asking them questions and discovering more about them, where they came from, who they are as people, we can sometimes use our experiences to pick up on some of these maybe unconscious biases that people have that can distort our thinking or influence our beliefs one way or another, or even sway our decisions that we would make. And some of these are good to have. Sometimes we can identify what makes us uncomfortable and then sometimes do that thing for our own betterment, but then Sometimes some of these biases can be bad, you know, like using hindsight bias, random events, we think they're predictable when they're not, or making decisions based on keeping things the way they are, keeping the status quo instead of perhaps changing something that would take work. Now, change is never easy, but changing something that can make things going forward better, sometimes helping people identify some of these biases and help them figure out ways to overcome them, that's part of what we do, it doesn't have anything to do with, like you said, dollars and cents, but it can sometimes help our clients make better decisions going forward. And that's part of what we do for people.

I think one of the tough things is when you have these biases and they compound on one another. And so you take an assumption that maybe comes from hindsight and then you get some confirmation because for a lot of people, we tend to listen to very similar opinions to ours or people who have kind of birds of a feather and you hear, continuation of that. And then the interesting thing, if you guys have ever bought a new car, you notice very quickly that if you bought a, a red Saturn, or John, in your case, probably a red convertible Mustang, all of a sudden you start to notice like everybody bought a red convertible Mustang, like they're everywhere. And that's one of the cool words that I learned is the reticular activating system. And that's that part of your brain that recognizes things that are familiar. And I think that's another bias that can kind of compound on some of those others where all of a sudden you start to see out in the world other people who, at least it appears, believe and see things the same way that you do. And so it can be kind of a compounding thing. So, Zach, what are some of the ways that when you're doing planning for clients that we can help to identify and maybe remove some of these biases that we're talking about?

Yeah, I think it's important to obviously try to get to know your clients as best as possible on a personal level. And that's where a lot of these things start to identify themselves. A client typically not going to share a lot about themselves personally with you until a good relationship is formed. But then it's on us to obviously try to find good questions and structure, but to be attentive and focused on our clients when we are having conversations with them. A lot of these things will come up naturally in a client meeting when you're talking about traditional investment allocation, things like that. But if you're actively listening to the client and paying attention to what they say, how they respond when you talk about risk, things like that, that's kind of the surface level obvious thing. But then as you dive a little deeper, I think we talk about where they've worked in the past, what their parents did, do they have kids, where do they go to school? And as you're kind of building out this mind map of this client, where they've been and where they're going, a lot of these things start to identify themselves. But ultimately, it comes back to us to actively listen, to be attentive, and to hone in on what they're saying and the way that they're saying it, and then dissect that and kind of help diagnose what they're telling us.

John, what are your thoughts?

Well, my first thought is that the reticular activating system is what brings the top down on my red Mustang, but I don't know if that's actually true or not, just sounded like it. One of the things that we do on a daily basis is we do seek out multiple perspectives. When we are giving advice or providing advice to people, it is not just coming from one source. You know, we don't just look to— while Raymond James is a good source for information, we don't just look there. We don't stop there. We look at other perspectives and try to get together some of the best minds, not only within Signature but in other firms that we share research with. And we try to get as many perspectives together to share with our clients at one time as we can. And I do think that that helps us help them overcome some of the decisions that they're struggling with, whether it be where to save or how to save or how to get control of a budget that perhaps has gotten out of control or how to think about risk as it pertains to how much they take on and how much growth they need to have in the portfolio. So we try to get all of these things together to help remove some of the biases that Chip and Zach talked about from the decision-making process and help clients get over hurdles that they might be struggling with. Chip, what are some hurdles that you've helped clients get over that you can think of?

So one of them is, am I going to have enough money to retire? Can I retire earlier than I thought? That's a big question for a lot of people, and it's typically rooted in— and John, I think I've said this to you before— it's either most people determine their potential retirement date by when their parents retired or when their friends are going to retire. And neither of those things has any real-world impact on when the optimal time for you is. And I think, John, you mentioned earlier looking at multiple perspectives. One of the cool things, and I touched on this earlier, of having worked with hundreds of people is we've seen a lot of these things done in hundreds of different ways, and being able to bring some additional perspective. I don't think that any of the three of us, or any of our advisors in general, take it as our position to tell people what to do with their life or with their money. It's really just to offer lots of perspectives. But I think another one, John, hurdles-wise, and this is more recent, is all my kids need to go to college. And people now have lots of varying opinions on the state of education. Both my brother and my sister-in-law are Professors, my mom and I were both teachers at one time, so big proponent of education. There are a lot of people who have some questions about 4-year schools and that becomes a hurdle for them. My kid doesn't want to go to school, but it should. In fact, in a lot of cases, I've stopped calling it a college fund and started calling it an education fund because for some people the idea of saving up for college is a hurdle, but the idea that you can use money as an educational tool whether that's to help them start a business or to go to Harvard or Clemson or North Carolina, John, it's a subtle shift, but all of a sudden you take away that cognitive bias of I've got this particular opinion, and that really can be a hurdle for people in doing things that they want to do, but mentally they have a hard time kind of getting past some of the internal stuff.

Right. And Zach, I'm sure you've seen clients that you deal with struggle with certain decisions. You have anything to add on that? Any ways that you found that help people?

When it comes to this whole process of unpacking their decisions or their thoughts and why they have them, I mean, a good starting place for me is always to talk about the difference between a goal and a plan. You know, a goal is an objective, something you aim at, but it's just a singular fixed object in the future. And a plan is a strategy, the detailed intentionality along the way. And that's kind of how we step in. And so we talked about money as a magnifier earlier. So if we know that money potentially magnifies positive, negative attributes of someone, and we know that we need a plan, not just a goal, then there's kind of two thoughts that I have. One is to ask the client to ask themselves or ask their money a few questions. What are you here to teach me? What positive and negative beliefs do I have about you? And then, how do I approach you? That's what they ask to money. And then, for themselves internally, they say, what beliefs do I have of money? How does that shape my happiness? And then, did I inherit any ideas about money, positive or negative, that are still in me? And so, that's kind of conversationally, and we work through that and kind of figure out what some of those ideas are and how their view of it is all shaped. And then, from there, we can kind of unpack it. So, if we think of ourselves like a doctor and a patient walks into a doctor's office, and says, "I'm hurting." If we don't know if you're hurting from a broken toe or chest pains, it's tough to diagnose. So this is kind of like the series of tests, these questions, this relationship that we build so that we can figure out what's wrong. And I don't know about you, but when I go to the doctor, if it's heartburn that I'm having, instead of taking a pill for it and it being a one-time fix, I would prefer that doctor diagnose and figure out, "Oh, it's because you eat pizza every single night. That's why you're having heartburn. So let's attack the problem there. Let's cut that out." and now the problem goes away. But really, until we kind of figure out what their view on money is, what their past that's kind of been instilled in them about how to view money, it's really hard to diagnose what the problem may be. But I think all that comes through knowing your clients, having a good relationship where they feel comfortable and where they can be vulnerable and open up to you about some of these things. Because for a lot of folks, you know, there's some traumas and some very positive biases that they've been passed down generationally from their parents. Or other people around them on how they view money. So it can be very sensitive to talk about that. So I think it's on us to make sure we've always got that relationship built where they feel comfortable opening up so that we can actually diagnose and create this plan for them.

That's absolutely true, John. I don't know if you've ever talked to your money, but I do. I talk to my money all the time. And the only thing unfortunately that it says to me is goodbye sucker. But I think Zach's exactly right. And again, it's an interesting way to look at it. This is again, not that spreadsheet world, but really, you know, the truth is you have to be in integrity with yourself. Any plan is only as good as its inputs. And the surest way to get off on the right track is to understand what you believe and how you would actually potentially execute something.

And it is tax season. So usually at this time of the year, I'm just yelling at my money, wait, come back. That's usually what I'm yelling out loud. But if you think of us, the financial advisor, as a guide and we're leading our clients perhaps through the jungle, we're the ones at the front with a machete hacking away at all of the different vegetative growth around us, getting us over rocks, under trees, you know, around potentially hazardous snakes and alligators, whatever it is. All we can do is guide. We can provide a trail for them to follow. If we come to a fork in the road, as Yogi Berra would say, we take it. But our job as the guide is to provide a path forward and help them make the right choice on which path they follow. Sometimes those paths can be circuitous, sometimes they don't lead in a straight line, and sometimes they're not the most efficient. But it is our job to get our clients from point A to point B, and hopefully by asking the right questions, by helping them overcome some of these inherent biases that they've accumulated over their lifetime, we can help them make the best decisions, not only for them and their own financial freedom, but in some cases their family's financial freedom as well, and the flexibility to make the right choice at the right time.

And to your point, it doesn't make any difference for you to have the right answers if you've answered the wrong questions. And a big part of playing that role as guide is to try to help make sure that we're asking the right questions. Zach, great to have you back. Looking forward to letting you punch another notch on your jacket card. Hopefully you'll come back and be with us again soon.

I appreciate it.

Thanks for having me, John. Until next week.

Until next Friday.

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