The One Behavioral Finance Truth All Firm Owners Should Know

“Every dream has a price.”

Want to take a guess at where that quote is from? We’ll get to that later, but for now, I want to position that behavioral finance is all about planning towards what’s important to someone. When you deeply understand what a client values and wants most, you can serve as a trusted guide ensuring their financial plan lands them right where they want to be. When you understand where they want to go you can help get them there, honestly and effectively.  

Every dream certainly does come along with a very real price. To achieve big things, with our finances or otherwise, we often have to sacrifice other things that we value less. The trick is truly understanding what you value in order to make the right calls and provide you with a clear picture of what it is you are working towards in order to stay motivated and inspired through the ups and downs. 

The illuminating truth that behavioral finance offers to advisors is that entrepreneurship is exactly the same: in order for you to meaningfully succeed as a firm owner, you need to be intrinsically motivated by the idea that you are building a business that aligns with what you value most in life. Advisors choose entrepreneurship because they want something they currently don’t have, like being able to serve the clients they want and having the life that they dream of. Intrinsic motivation means you are much more committed through the good times and bad—because there will be challenges.

In my day to day, I work with a lot of firm owners and see both the struggles and successes. The advisors who find radical success (however they define that for themselves) are the ones who have intentionality about what it is they want to accomplish through their firm, who they want to serve, and exactly why they are doing what they are doing. 

Your success in entrepreneurship and starting your own firm depends on you first highlighting what is most important to you—success is not one size fits all. This is the basic idea behind behavioral finance that applies directly to you and your journey as a firm owner. Entrepreneurship has to be what you want for your firm and career in order for it to be a successful venture. 

As I mentioned, I see this tenant play out in my real life, and I've crossed paths with a few advisors over the years whose stories are about taking the leap of entrepreneurship. Through high levels of intentionality, each of these three advisors are running firms that will go the long haul and enable them to live their best lives in all aspects. Each has found success because they are all unmistaken in knowing what it is they want success to look like and possess deep-rooted motivation stemming from their “whys” of being advisors.

Three Intentional Advisors

Advisor #1

When I was having a conversation with an advisor in Atlanta about his firm and how things were going, I could tell that he had so much on his plate as a business owner with a thriving business. However, when we spoke about the ability to structure his days how he’d like, it was wildly apparent that he loved the life that he was building through his firm. He discussed how his days were filled with doing what he loved most and how he has embraced outsourcing activities that he doesn’t feel a passion for or have the time for, without having to grow his firm employee-wise and increase his management workload.

Something he said that really stuck out to me was that on that Thursday, he was stepping away from work to spend time with his family, go to a golf class, and catch up on things in his personal life. It was obvious to me how purposeful he was with his practice and his time. He was able to run a successful, thriving firm because he is intentional about his time and dedicates it to a variety of things that he values in his life rather than drowning himself as a busy advisor. Through maintaining intentionality in all areas of life, this advisor has found what personal success means to him. 

Advisor #2 

I had the great pleasure of taking a training program with an advisor in Texas. She had been in the industry for years and was finally taking the jump to start her own firm. She is in an earlier stage in having her own firm than the first example, but I have no fear that she will be extremely successful. In our time together, you could tell she had a burning passion for helping the niche that she currently works with. 

Of all the advisors I have worked with over the years, I have seen few that were as prepared as she was for this journey. She would light up with enthusiasm and energy when she spoke of starting her own firm and helping the niche she was passionate about. This advisor’s story illustrates that passion leads to preparedness, and understanding your “why” is the most impactful first step you can take on your journey of firm ownership. 

Advisor #3

The last advisor I’ll name because it’s likely you’ve already heard of them—Carl Richards is another advisor that’s built his life and career intentionally. I have discussed this sentiment before with many of the advisors in the Network because I think Carl stated this extremely well. When Carl was having a discussion with XYPN Co-Founder Michael Kitces on Episode 67 of the Kitces & Carl podcast, he mentioned a conversation he had with an advisor he met while on the ski lift at his home ski mountain near his office. I have linked the article and podcast for you to listen to or view. 

The discussion was about how Carl viewed his firm vs. how the other advisors measured his firm. When the advisor said he was on vacation, Carl went on to say, "Let me just be clear about something. You're on vacation—this is just Tuesday for me." This quote embodies how focusing on what is important to you allows you to optimize your firm, your life, and your goals for what is enough. Carl picked the structure that worked for him and optimized his career for what is enough—there’s no pressure for him to work on any given Tuesday. He didn’t want that. 

Taking the Leap

When deciding to start your own firm or continuing down the path of being a firm owner, having the life you envision is what is most important, and for your firm to support that. Yes, there is more to the decision to be a firm owner than this, and it takes preparation, but how you want your life to look should be a guiding light. What is most important to you? Why did you get into the financial planning profession? What are you measuring?

“Every dream has a price”; therefore, the decision to start your own business or join an early-stage firm is a large decision, and the timeliness does need to be optimal. However, you will know when the time is right because many great entrepreneurs have started businesses when people have said, “this is not a good time.” I am here to be a resource for you and open those deep conversations about being purposeful with YOUR life and your firm. 

P.S. If you kept reading to figure out where the quote is attributed to from the beginning, it's the tagline for the great 1987 movie directed by Oliver Stone, Wall Street. Blue Horseshoe loves Anacott Steel would have given it away.

About the Author

Jordan Hutchison is XYPN's Director of Partnerships. His favorite part about his job is finding partners perfectly positioned to help XYPN members build and scale the firms they have always wanted. When he's not exploring partnerships, Jordan loves basketball, reading, watching movies, and spending time with his wife and two kids. He also stays busy continuing his education—he'll have his doctorate completed soon to show for it! (If you want to talk about flow theory and financial planning, reach out because he does, too.)