A behavioural approach to planning

David Kitai  00:00:11 

Hello and welcome to a special episode of WPTV we are celebrating some of WP's 5-Star Advisory Teams from 2024. Today we are lucky to be joined by the leader of one of those teams Shafik Hirani, Senior Investment Advisor at Shafik Hirani's Private Wealth Management of Alliant Capital Partners. Shafik, Welcome to WP TV. 

Shafik Hirani  00:00:31 

Thank you, sir. 

David Kitai  00:00:32 

So should we let's start with maybe a, you know, first off question what makes your team stand out? 

Shafik Hirani  00:00:41 

Yeah, I think we've always tried to differentiate ourselves in terms of our offering to clients and we differentiate ourselves from breaching the normal paradigm of traditional financial planning. Traditional financial planning is, you know, max out your fees paid on your mortgage maxed out your TFSA is our approach is to look a little bit more internally at the client psychology and treat clients more like a corporation. And the team has embraced that. And so along with my own philosophies, at if I were to work for a larger firm, like I used to, for the first 20 years, they would just hire my team for me. And they would say, this is your staff. And so one of the benefits I was able to do is I was able to hire my own team pay for my own team. But it's nice, because we have, you know, MBAs that worked for us, CFAs PhDs, licensed advisors, as well as a really talented group of operations and administrative people and business development managers. And we're all congruent, we're all sort of drinking the Kool Aid. We're all we're all really passionate and believing our approach is different, unique and works.  

David Kitai  00:01:54 

You talked about the difference in your approach. So do you mind laying out in a little more detail how you think your approach is different from traditional financial advice and financial planning, and how you've constructed a team that differs a little bit from how a traditional team may be constructed so you can deliver on that different value proposition. 

Shafik Hirani  00:02:13 

First, your question was, how are we different? I think our model is more towards getting clients from point A to point B. And what that means is we we tend to do more face to face meetings, rather than zoom calls, we tend to do a little bit more feely stuff rather than mathematical analysis. And, you know, clients, I think, in general, in order to make a decision, we have to go through, you know, five, six steps, you know, the first step is where, where's your current psychology? What's your current assets? What's your current liabilities? What's your current net worth? And you know, what's your cash flow and free cash flow, but then after that, you need to project it, you need to you as I have said in the past, you can't build a puzzle without a picture of that box. And so firstly, the uniqueness of our approach starts with that initial sort of approach or paradigm. Secondly, I think the team, it takes years to develop a team with your philosophies, you know, they have to one, they have to understand the process of client from a prospect to a client conversion. And then how do you retain the client and that does take the right influences it does take a focus less on ourselves and less on I and me, and what do we do more on what the clients trying to accomplish what's in their best interest, and that comes with an education, financial literacy. And so we have procedures and processes to ingrain that into our, our team's minds, and you know, over time, it does become second nature. But initially, nobody gets it right in the beginning, you, you have to Unbreak habits before you create new habits.  

David Kitai  00:04:08 

It sounds a lot like some of the great coaches that I've heard talking, you know, then and especially those sort of process oriented coaches, your Pep Guardiola was or whatever it was sort of, they build teams in their own image. And it's really interesting to kind of hear you do that. So what are some kind of common mistakes that you see people making, whether they're other advisors or other team members who are coming over from other firms who maybe have a more traditional way of doing things? In your view? What are some areas where you see, you know, you want to prompt a behavioral change in the team? 

Shafik Hirani  00:04:40 

I think one of the biggest mistakes advisors make at least is they just focus on the current situation of the client. They focus on the now and they focus on their current point A and where the client is right now. teams tend to model the Senior Advisor they tend to follow along with the advisor If you do that you go you have take the client and you've follow some vague paths, like we're like, if we're driving into a fog, we get a little bit blurry. We have no idea where we're going. And we experience anxiety, we experience pain. To remove that pain, we have to communicate in a certain way. And the team needs to be trained on a certain way, the team needs to train be trained on just little things, that makes such a big difference in what the clients hear one, you got to reiterate the past, there are three tenses, you got to really, really reiterate the past, sorry, dude, you have to really focus on the present. But then you also have to speak into the future. And that's really hard. Because most people, they don't really speak into the future. And to speak in the future. I'm not just talking about who, what, when, where, and how and why which they'll always have to be answered. But I'm also talking about leadership, and I'm talking about your staff need to lead, because clients won't follow somebody that doesn't lead them. If the client makes the decisions. If we're going on a trip and the clients driving, they don't need you. So part of making decisions involves speaking into the future so that, you know, you've heard the old saying, People follow leadership's leadership is about vision. Part of building a good team is articulating that vision, clearly to apply it in my opinion 

David Kitai  00:06:29 

One part of your vision that has been interesting to me and came up a little bit when I was doing some background research is the idea of locus of control.  

Shafik Hirani  00:06:37 

Yeah.  

David Kitai  00:06:38 

Can you talk a little bit about how you sort of conceive of the idea of locus of control, and how that time plays a role in your clients financial picture? 

Shafik Hirani  00:06:48 

Really glad you asked this David, because this predominantly boils down to our decision making, and our own psychology. And this is a psychological adaptation that's been around about 25 years. And unfortunately, our Locus of Control tends to be externally in this industry, we tend to look at what are the macroeconomic conditions, you know, the people tend to have lots of conversation about the US being $33 trillion in debt, or the fiscal deficit, or the geopolitical concerns between Russia or the Middle East, or what's going on in China, we tend to point the finger externally. And that can be detrimental when everybody's talking about what the price of oil is going to be, what interest rates are going to do. And I'm not saying that it's not wise to look at the geopolitical concerns or the macroeconomic conditions about, you know, what inflation and what costs are. And I think there's a lot of information on that. I think, the locus of control, especially when it comes to investing in money must point the finger internally. And that's a really hard thing to do. Instead of looking at the further telescope winning, we have to bring up this microscope. And we have to look at the impediments towards my attainment of my financial goals. Could I be my own enemy? 

David Kitai  00:08:08 

Well, I mean, it is fascinating how much we want to talk about, you know, interest rates, for example, it's, there isn't a day goes by when I don't have some kind of story or pitch crosses my desk, about interest rates, they're going up, they're going down, they're cutting holding there. And that is maybe an encapsulation of what you're saying in terms of like, we would love to just put it all on Macklem and Powell and say, That's why we have problems right now. Or blame Trudeau or Biden or Trump or COVID, or whatever. Yeah, it's, I think it is a harder thing to go to look inwards into force ourselves to look inwards. And, and but it's, it's it's a fascinating kind of, kind of area, and one that I think, you know, where advisors can also show a lot of value, and where, at least in my experience talking to advisors, I've seen them show a lot about.  

Shafik Hirani  00:08:55 

Yeah, yeah. Sorry, I didn't mean to interrupt. Oh, no,what I was gonna say is I agree with you, and not only that, if you look at the research, the TV, every single internet, every single social media post is about looking externally. And the amount and the ratio of research into behavioral psychology, the amount of research into decision making processes and why I get left brain paralysis by analysis, why I have to boil everything down to GIC rates, that is so rare, and unfortunately, it is a new paradigm in investing. But I have found that the affluent mind tends to make decisions, more right brained, more based on our psychological impacts. And I think that model is going to grow over the next few years. It'll gain market share. 

David Kitai  00:09:48 

As you look at growth areas in the next few years. I mean, what are some areas of opportunity you now see for financial advisors? What are whether that's a differentiation and approach the way you take or just new market areas or new approaches? Or, you know, what? Where would you see opportunities? And how can advisors take those opportunities?  

Shafik Hirani  00:10:08 

Yeah, you know, when I started 30 years ago, the predominant approach was for an advisor to join a big institution, a big bank, and be trained by that bank and be trained by the banks, trainers who, unfortunately are, run everything through a bunch of lawyers who are regulated by a bunch of lawyers. And so what they do is they manage by the lowest common denominator, and then you end up learning to, to tell clients to fill out a questionnaire to impose their suitability, and then ensuring their portfolio, their asset allocation is in line with that suitability, you their security selection is in line with that with that questionnaire, so that they're suitable. And, you know, I get it, you have to match where the lowest common denominator so that nobody screws up so that we have no litigation so that we have no clients complaining, no clients are damaged. I think the initial approach and there has been a real big saturation on that markets where people have come into the financial services, industry and drones, attempting to model what people with larger books of assets have built. I think the challenge they face is that conditioning, and that conditioning is becoming less pervasive. And I think the new conditioning because that conditioning was, you work for a bank, you sell it, or sorry, I don't mean a bank, but in a larger institution. And you work in a contract called a master serving contract, which means it's a bad name for an employee employer. And so you are influenced by somebody else, to give advice like a mutual fund, for example, which which could do this thing called embedding fees, where clients don't even see a two or 3% management fee. I think the trend for advisors that have the right self employment is to break away from that conditioning, that master servant model, and build their own multifamily office, like like we did here, or like to work in what they call a principal agent model, where you have autonomy, you have independence, you're have objective advice, rather than what you've been told to. Now, that being said, of course, you have to color within the box, just like the regulator's deem that we have to, however, we can focus on things that have helped differentiate clients and do help play like an actual financial plan. Like the right asset allocation, like the right behavioral psychology.  

David Kitai  00:12:38 

It's funny the way you talk about that, because it speaks to so many trends you see going on, and, you know, not just in financial services, you see it in restaurants, you see it in music, you see it in the way that, that we go about our lives and consistency, and the need to make sure that nobody's disappointed results in some pretty mediocre experiences. In my own experience, that's talking about eating out, I'm not I just don't want to, you know, I won't name any restaurants, but you know, so So, but it's really interesting to talk about, you know, taking maybe some of the risks of a little bit of bravery, a little bit of, of, you know, again, offering a different approach, and, you know, seeing how that plays out for clients and how it will connect with them. And maybe some of them, it doesn't connect, I don't know, not trying to, you know, paint a picture here. But for others, it will make a meaningful difference. And it's refreshing to hear that kind of a tip.  

Shafik Hirani  00:13:37 

Yeah, you know, you know, I've been doing this about 30 years, and for the last 20, I would deliver a lot of seminars, on to advisors, and to individual investors on our psychology. And I find it's very refreshing. And it is a new paradigm, but it does resonate with people. And it does resonate a little bit more with the affluent than it does the masses, and the masses will always be there. In fact, they will grow. And there will always be the impediments and the finger pointing externally, and the process by analysis, but if you can build the right team, and that team can have a shared common goal with differences within the team, then you can tend to help people tremendously attain their goals. I mean, the amount of you know, I hate pretentiousness. So I don't want to really brag but our approach has helped. Our practice grows tremendously with 95% retention, you know, with a lot of gratitude both between me towards my clients and my clients towards us too  

David Kitai  00:14:43 

By way of final question. What are a few best practices just just one or two kind of nuggets of knowledge that you think other advisors should follow as they try to build their teams to succeed and to grow in, in what seems to be a shifting sort of landscape for financial advice. 

Shafik Hirani  00:15:03 

You know, I think the best practices involve in posing certain habitual patterns, you know, sometimes when advisors have autonomy, they tend to not have a structured schedule. Sometimes we get up at six, sometimes we get up at eight, sometimes we leave during the day, I have found a structured schedule is helps not just in terms of waking up and when I eat lunch, but also the quantity and quality of appointments and the preparation that our staff put in advance of like the meetings, you know, I have eight files that are ready for our appointments, that that pattern will improve. If you're putting 300 times you're going to eventually get good at planning. And so the habitual patterns can be either one of apathy and one of mediocracy or improvement. And I think the best practice I can recommend is an approach towards continuous improvement, continuous improvement in your calling meetings, continuous improvements in your individual education, continuous improvement in your client servicing, offering continuous improvement in your training and your staff development. 

David Kitai  00:16:16 

That's an excellent note to end on. It's a powerful message continuous improvement is great. All I can say is you've never seen my golf game because 300 bucks improve anything for me, but we keep that in mind. Yeah, keep putting keep putting. That is unfortunately all the time we had today. So should be thank you for a great conversation and for sharing your insights with me today. 

Shafik Hirani  00:16:41 

It's my honor mind for me and my team. Thank you too David. I really appreciate this. 

David Kitai  00:16:46 

It's our pleasure and thank you to all of our viewers as well. For WP TV. I have been David Kitai, Have a great rest of your day.