How IQ + EQ = Real Financial Planning with Scott Frank [Ep65]

Welcome to episode 65 of The Innovating Advice Show. 

I’m joined by Scott Frank who is the Founder of Stone Steps Financial in California.

In this episode, Scott talks about an equation he’s been working on — that IQ + EQ = Real financial planning and how the got there, including inspiration from Elizabeth Jetton’s four key competencies, George Kinder’s three questions and fellow financial planner PJ Wallin’s illustrative star.

Scott also gives us a full look into his business, from how it’s evolved over the years to the process he now uses that gets clients to take action on his recommendations and finding time to work ON the business and not IN the business.

Finally, Scott shares an easy and free SEO hack to boost your results on Google.


Guest Bio

Scott founded Stone Steps Financial in 2015, a financial planning and investment management firm located in Encinitas, CA.

Scott holds the designations of Chartered Financial Analyst (CFA), Certified Financial Planner (CFP), and Registered Life Planner (RLP). Scott earned a Bachelor of Science in Business Administration with an emphasis in Finance at the University of Colorado at Boulder.

Scott believes strongly in giving back to the community as well as his profession. Scott co-hosts a weekly podcast, Real Personal Finance, in which one personal finance question is answered by real financial planners in plain english. Scott currently serves on the Leadership Development Committee for The National Association Of Personal Financial Advisors.

Scott was named to Investment News 40 under 40 in 2019. He has also been contributed to numerous articles on personal finance for the Los Angeles Time, CNBC, the Washington Post, and USA Today.

Scott lives in Cardiff, California with his wife and two boys.


00:30 - Introducing Scott Frank

01:55 - What Stone Steps Financial looks like

02:35 - IQ + EQ = Real financial planning

05:15 - The EVOKE methodology

06:42 - Where to start if you want to become an advisor

09:30 - What IQ only equals

12:07 - What self-knowledge looks like

14:05 - Learning the skills for starting a successful business

16:05 - Traditional planning vs. Helping clients with the new method

18:52 - The EVOKE methodology (cont.)

22:42 - Modular-style financial planning

25:05 - Scott’s clientele

25:56 - Stone Steps’ fee model

27:40 - Working in the business and on the business

29:41 - Where Scott’s clients come from and a great SEO hack

32:16 - Working with other advisors

34:41 - The Real Personal Finance Podcast


Kate: Hi, Scott. Welcome to the show.

Scott: Hi. Thank you for having me.

Kate: So Scott, you are the founder of Stone Steps Financial, which you started about five years ago. So let's start with an overview of what it looks like at Stone Steps.

Scott: Yeah. So thank you. Started Stone Steps  five years ago and we do financial life planning here. So, and what I mean by that is we focus on, not just the money, but truly what's essential to clients in life. And once we know that we use that as a lens to help clients optimize their time, money, energy, and talent. That's what we do in a nutshell.

Kate: Yeah. And I think one of the ways you do that, you say that it's IQ plus EQ equals real financial planning. So talk us through that equation.

Scott: Yeah. So that's an equation I've been working on for a little while and  I think where it starts is the concept of, let's just start with IQ.  So most of us as financial planners. Cause that's what your podcast is focused on. most of us are going to go focus on technical expertise.  So like when I came out of undergrad, I went and earned a couple of credentials. I earned the CFA designation, and I also earned the CFP certificate. So I think of the CFA, a friend of mine described a long time ago as a, a mile deep and a foot wide. Right. It's just all investments all the time. And you know, it's a global designation, so your, your listeners will appreciate that.

Scott: And then the CFP is kind of more of a foot deep and a mile wide, right. It's more of like generalist knowledge on everything. And it was, especially when I was younger, I always wanted to focus on technical expertise to help people. And I think we all need technical expertise. But the key thing that I ran into with, with clients was I would go give them the things they need to do, and then they wouldn't necessarily follow through. Right. And you're nodding your head.

Kate: Oh yeah. I mean, we all know that, we've been there!

Scott: Because everyone's been there, right. We've all had that happen. And I think that the key  thing that hit me was I used to think that people not following through meant they were bad clients. And what I've come to realize is it really means that I'm not a very good planner, because my technical expertise alone will not solve people's problems. Right. Our job at the core of it,  there's a, Elizabeth Jetton, are you familiar with Elizabeth?

Kate: Yep.

Scott: So she she'll say that like, our role is a helping profession.

Kate: Right.

Scott: Right. And a helping profession, the way that she would kind of define it is someone's showing up, because they don't know, or they don't have the means or ability to take the next step. Something is lacking. They don't quite know what to do next to go execute. And it's like, yeah, we can show up and show people what to do, but what matters more so than that is actually helping them step into doing it. And you can't do that with just knowledge with thought. Right. Yeah.

Kate: So do you give them stepping stones?

Scott: Yeah, because the firm name is Stone Steps, just turned out that way. So what we do is we actually, so for financial life planning, there's a few methodologies that you can utilize. I've been trained in, through the Kinder Institute Of Life Planning in what's called the EVOKE methodology. and so what we do is we go through a process rather than just go focus initially on what people should do and how they should do it, which is what traditional planning is. We take a few moments. If nothing's urgent to go look at what really matters to people first. Cause if we know what really matters to them and we can help them see that, and we see that, then we can utilize that lens to help figure out how we should optimize their time, their money, their energy, and their talent, and help them look at the next steps they can take to step into that life.

Scott: But the key is what you're doing there is you're not using thought, thought is instantaneous. It's an electrical impulse. what you're doing instead is, you're starting to play in the realm of feelings and emotions.

Scott: And  the key issue that comes up there,  the kind of the revelation is you start to look at the work of like Daniel Kahneman and other people  in psychology and in physiology and how our, how we operate. And you start to understand that the majority of our brain is working in a state of emotion and feeling, not in a state of thought. 

Kate: Yep. So thinking about people that are early in their career, whether they're career changers or coming out of university and where they should go.  As we're thinking about the future of financial planning, the future of the profession, we're just seeing more and more all over the world, this move towards life planning, and it's got different terminologies, but that's sort of the gist of it. Where would you recommend people start? Would it be going that CFA route to get the mile-deep?Would it be CFP to get the mile wide? Would it be the life planning to help fill in that box?

Scott: Yeah, that's a great question. So I actually, I would go back to the four competencies that Elizabeth Jetton thinks about with helping professions. So when I was younger and I thought about all the IQ stuff, the IQ stuff, and just focusing on that kind of made me the hero, the expert, the professional, where I'm going to go solve everyone's problem. When you take IQ and EQ together, and you start doing what I would think of as real financial planning, what you do is you kind of flipped the hero on its head. I'm no longer the hero, I'm the guide. And my job is to help guide my clients. They're the hero in their own journey to their best version of life. And we're going to use the resources that they have. Right. But I can never, I can't inject extra stuff for them, but the four key competencies that, Elizabeth would talk about are technical expertise, which would be IQ, interpersonal skills, which would be EQ, process skills, which is essentially looking at how do we efficiently run a business and how do you reduce frictions for people to take the next step.

Scott: And then the fourth component would be self knowledge on your own challenges.  So to answer your question, the answer is you need, in my opinion, I would still start with technical knowledge because especially when you want to enter the industry, you're probably going to go work in a paraplanning role in an associate advisor role, where you need to have technical knowledge to get your foot in the door. To me, the CFP makes more sense there than the CFA. if I had to choose between the two. But from there you do, I would be looking at how do you deepen your knowledge based on what are considered soft skills and where can you go learn about that. And there are a number of places to go learn. There are certificates you can earn through universities. There are master's programs now in financial planning. There's obviously Kinder through the Kinder Institute. There's  the money quotient is an interesting program as well out of the Northwest. So there's a lot of places you can go look, you just have to figure out what do you want, but ultimately I think you need both, but I would still start with the technical.

Kate: So as I'm looking at the equation and I'm thinking about it, I'm like having maths flashbacks from elementary school. So if we take out the EQ then IQ no longer equals real financial planning. So if it's IQ only, what would you say that equals?

Scott: Yeah, so I Q only to me means a couple of things. It means that clients aren't going to follow through. I already know that. And then there was actually a study, that was done. It was in Financial Advisor Magazine in 2019 by Russ Alan Prince, looking at of the people,  I think it's surveyed around 140 advisors and it went and looked at  of the people that you give these plans, what percentage actually follow through with the recommendations. And the answer was that 30% of the clients who follow through only follow through with 20% or more. So the vast majority don't follow through. So, so it seems clear there's a disconnect.

Kate: Did it look at what the client engagement process was?  So keeping with this equation, did it in, the majority of those situations only have the IQ portion and was it missing the EQ portion?

Scott: Yeah, so they didn't really tie in necessarily to that directly, but they did kind of tie into the traditional, here's the hundred page. Here's the 80 things you need to go do versus turning it into a process, right. If you start to think that our job is to help optimize people's four resources, time, money, energy, and talent. And then you also start to realize that we have no idea what the future holds. Then we need to meet with our clients a couple of times a year and help them optimize those things and little changes that we make along the way we'll probably make big impacts for them. Right. That's how I would view it. I also think that IQ alone, is going to be commoditized.

Kate: Yes.

Scott: The technical skill, we celebrate  technical skill at universities, right. Especially, like my grandparents' generation. It was like, if you were a mathematician or a physicist, Whoa. Right. But now more and more, and not nothing against those professions or any profession that's technical, but those technical abilities, more and more ofcomputer and automation and machine learning is going to take over a lot of that technical ability. But what's still going to matter is helping people move on execution. It'sone thing to know what you need to do. It's a completely nother thing to actually go do it.

Kate: Yup. Yeah. I love that. So circling back to that last piece. Oh, I guess the last two. So go to the last one first on the self knowledge that Elizabeth talks about, what does that look like?

Scott: Yeah. So, and you know, there's a number of ways you can go about that. I mean, one is you can obviously go reflect on what you actually want out of your own life. That's when you start thinking about system one and system two, and the way our brain functions, you have a lot of things going on in your subconscious all the time for just what's normal. And so that's where like I love all kinds of music, but the song, live like you're dying by Tim McGraw really hits home here. Yeah. Right. Because if you ever listened to that song, what it's all about is a guy in their forties finds out that they have cancer. And rather than just living life as is, they go and they start looking at well, what really is essential to me, what really matters.

Scott: And that's really what you're learning, how to do with financial life planning and it's, and it's any form, whether it's through Kinder or money quotient or learning on your own is you're really helping people look at what should I do.

Scott: The self assessment you can absolutely do. But it's much easier to do these assessments if you have a guide. And the reason why is because of the way that we're wired. So when I write something down that matters to me, I will think it, that's an electrical impulse, but if I give you my words and you read them back to me, I will literally feel them because our auditory system runs through our reptilian brain system one. And that's where we feel things. So you start to see what matters most to you.

Kate: Awesome. And Scott, I work really hard to have active listening at all times, especially when I'm doing the podcast, but now I've got that Tim McGraw  like you're dying song stuck in my head.

Scott: I'm so sorry, it's a good, I like it. It's a good song. I hope you like it too.

Kate: Yeah, I do. I do like it. And then that, that third piece that Elizabeth Jetton talks about is the process, the business. So you founded Stone Steps Financial five years ago. So where did you learn the skills for starting and building a successful business?

Scott: It's never ending, right. It's lifelong learning, but I did join XY planning network initially, which was very helpful because that just cut the chase. I didn't have to go search every single vendor. You know, I had like, here's a tool set to go use and it's good enough go use it, which was really helpful. that was great. And now that I have that, it's kind of looking at it all over again. Now that the business is established and, and looking at well, what systems, of all the things that we have, what's working really well and what can we improve upon and taking those one at a time to improve upon it.

Kate: And I always love knowing what was the catalyst to going out on your own? Cause that's a, that can be a terrifying step to make.

Scott: Yeah, it was terrifying, a bit.  When I went out on my own it was, it was kind of the traditional I'd been at firm  path to what's the growth going to be at the firm and how are you going to step into it. And is that ever going to come to fruition and I just got to a point where I, I knew I wanted to go build something different. I wanted the ability to do it on my own and have that ability to make the choices of what, what systems do we use and what clients do we work with. So I just leaped and went and started it. I will say there's no way it would have been possible for me without my wife, because without her and, and her career, we wouldn't have been able to do it as a household.

Kate: Yeah. That's great. It's always, always good to have those partners, whatever they look like, but having those people in your life that support you emotionally, financially, mentally, IQ and EQ.

Scott: Absolutely. Yes.

Kate: So before you took the leap, were you doing this real financial planning, the life planning in the prior organization?

Scott: No, not at all. we weren't.  At our firm at the time, I think we were, it was probably a pretty standard scenario. Our primary focus kind of the high net worth, probably one to 4 million in net worth type client and our, in our area. And I think that the primary focus was they were retired. And so it was investment management with planning, projections, and the like, and things like that. Right. So it was, it wasn't the financial life planning that we do today. No.

Kate: So when you started Stone Steps, did you start with doing the life planning from the get go?

Scott: I did not. So I started doing traditional planning and that's where I ran into the issue. Right. Cause I would do traditional planning and I would be like, you're here, literally just go do these things and you'll be good. And clients wouldn't follow through as often as I thought they would. And I wanted to know why, and that's where that equation came from. For me, it was trying to solve that.

Kate: And so was it, was it that traditional, here's an 80 page document and client, go forth and conquer?

Scott: I never did the 80 page documents. They were maybe 12 to 15 initially with a lot of, to do check a big to do checklist on the end. the way that we do it now is once we know what a client truly wants  we look at what could possibly get in the way, and then we build, an initial plan. But the initial planfor the client, we try to have down to maybe two or three pages, very high level, what matters most to you. Almost an executive summary, right. We're using software like eMoney to do the planning projections and, and figure out the investment and we'll figure out the investment allocations and do all those things. But it's truly looking high level. Here's what, we know what matters most to you. We know the lens to look through to help you affect change in your life.

Scott: Now let's using that lens. Let's go look at all of the components of your financial life that matter to you and let's prioritize them. And so when we prioritize them, we prioritize them in two ways. One is just simply what are the things that matter most to them to help them get those as quickly as possible. Right And the second is we're always looking for resiliency. So what are the issues going on in their financial life that can completely blow them up? So if you're young and you have kids and all of your assets are you not yet on a balance sheet, you need to go look at life insurance right away, or an estate plan right away. So it's just dependent upon the client. We're looking at what matters most to them.

Kate: So you've mentioned a few times that initial process of really figuring out what matters most to the clients. So if I came to you and I signed up to be a client today, walk us through what that process looks like.

Scott: Yeah. So that's the process that I've learned is, any advisor can learn, it's through the Kinder Institute of life planning, it's called EVOKE. EVOKE  stands for exploration, vision, obstacles, knowledge, and execution, and explorations like a prospect meeting. So it's, it's a meeting of, an expansive meeting of what brings you here today, right And why are you here and if it's you and your spouse together we want to hear from both of you, right Because your idea of a great life might be different than that, of your husband. And there's nothing wrong with that, right It would actually be quite boring if, if you had the exact same goals. but once, once you know that it's truly a chance for you to bring out all the things that matter to you to be truly heard.

Scott: And then from there you go look at,   we invite you to look at some inspirational work for you to prioritize what matters most to you. And that's where, so with George Kinder, it's, Kinder's three questions. and if you're not familiar with them, the first question is: Kate, you wake up tomorrow morning and you check your bank account and you have more money in it than you need for all of your needs now and in the future. So you're set, you do not have to work tomorrow if you don't want to. And the question is, what would you do with your life?

Kate: Woohoo.

Scott: Yeah. Right. Woohoo. That's great. But if that's what was given to you, what would you do? Right. And take the time to answer that fully. Don't leave anything out, right. It's not a time to go like, Oh, that one thing doesn't matter. Like no, put it in because there's no reason it can't be there in that question.

Scott: And then the second question you go answer is you go see your doctor and sadly, they give you tough news. They tell you, you have a terminal illness. So you have five to 10 years to live. and I'm so sorry for that. And the good news is you'll never feel sick for the time that remains. And the bad news is you'll have no notice of the final day.

Scott: And if that's what was given to you, what would you do with the time you have remaining? Would you change your life and how would you do it? You don't get unlimited resources there.

Kate: You get what you've got now and just a few more years.

Scott: That's right. And then, and then the final question is you go to the same  doctor, but this time they just give it to you straight sadly  and they tell you the time's up.

Kate: Time's up now?

Scott: Time's up. You have one day left, but it's not about the day that you have left, right. It's about what are you going to do You know, when it hits you, it's not about what am I going to do on my last day Like, we could all think of beautiful things to do on our last day to say goodbye to loved ones, or maybe do something on a bucket list or something like that. But it's like, when it really hits you that Whoa, time is up. Just ask yourself, what did I not get to do? And what did I miss? Who did I not get to be? And what did I not get to do?

Kate: And it can also be an opportunity to be extra grateful. I would imagine for the things you do have.

Scott: Absolutely. Yeah. Some people, you can cause, and there's two people. We'll often frame that in two ways. Sometimes they'll think like, Oh, you mean regrets. It's like, well sure it could mean some regrets. Maybe there's something there that is undone that you'd like to clean up or fix or, or what have you. But it's also just about untapped potential. Like what, who have you not stepped being yet that you've meant to be?

Kate: Yeah. I like those. So everything you're talking about here, you haven't yet mentioned, Hey, we want to know how much money the clients make or the amount in their bank accounts or any of that stuff. These are all those bigger EQ focused life questions.

Scott: Yeah. So, so the first three meetings you're really focused more on the big life essentials. Like what drives you. What's happening in the background with my associate advisor and client service associate is they're bringing in all of the financial stuff with the client. They're doing a get organized meeting and linking up all the accounts on  eMoney and doing all of those things. And that makes it so that when we get to a knowledge meeting, the initial financial plan meeting, we can start with the knowing what's most important. You hear the next things that we're going to go do for you, right And then we just break it out. So we break it out into, more of modular style planning with clients. So rather than give them the Hey, cause if you think of a friend of mine, PJ Wallin, he once drew for me a star and I've used it ever since about how to explain financial planning to people.

Scott: And so if you draw a little star for yourself on a sheet of paper at the top are investments, so you have your retirement plans, stock comp, and your real estate, if it's investment real estate. And then over on one point of the star, you have your insurances, right So you have your healthcare and your property and casualty and your life and disability. And then on another, the other point of that star is your estate planning. So are you titling everything properly? Do you have an estate plan in place?

Scott: And then on the bottom of the story, you have two sections, you have cashflow and balance sheet, right I like all those things. And then you have taxes and my God is that a lot of stuff like, and we speak finance on a regular basis. Right. So, but if you go push that on people, it's just too much too soon. So we break it into modules initially and we worked through it. And then once we're through it, we meet with clients twice a year thereafter. So that we're always working on those things throughout the year for clients, but we're talking to them twice a year about it.

Kate: And I'm going to guess you have had much greater action and follow through from clients using that process.

Scott: Yes! People actually get life insurance. No one wants to deal with death and no one wants to get an estate plan. They actually go get them now. It's unbelievable. Yeah. You help people see what matters most to them and get them to drive towards it and they start taking action. And it's amazing to see.

Kate: Yeah. So as you have evolved your process, your methodology, as you've grown the business, have you also changed who your clientele is over the years?

Scott: It has changed over time. So when I, when I started, I thought Oh, I want to focus on helping  a bit of the millennials and some of my gen Xers. So I'm 40's, so I'm kind of like on that cusp of the end of the gen Xer and, yeah, as I was drawing it, I, I was really focused. I thought I was going to do subscriptions and all of those things, but what I ended up finding was that I really enjoy working with clients who have a lot of complexity and they have complexity around things like stock compensation.

Kate: Yeah. So what is your fee model?

Scott: So the fee model now is a it's based as a baseline of, there's a minimum fee for, if they need it. But what it really floats to very quickly is it it's a percentage of investible assets. So if you have one and a half million dollars of investible assets, I don't care where the assets are. It's just a matter of that pegs the fee and the fee will set for two years and then we'll just reset it every two years. So if you have a million and a half of investible assets, it'll be $15,000 a year. and the reason that I love this model is I don't necessarily care to have money on a custodial platform, especially if it's not advantageous for the client. Right.

Kate: Right. Yeah.

Scott: So like an as an example, a young doctors at  some of the places that they can work around here can do things like participate in a 403(b) and a 457 and do after-tax mega backdoor Roth contributions. So as far as their retirement savings is concerned, we can really optimize things, but it won't necessarily be on a custodial platform with me putting money in an account at Schwab or TD Ameritrade or somewhere like that. So to me, it's all about how do we help them optimize their balance sheet and their cash flow, that star, with the lens of what matters most to them. And so the way we set pricing as a investible assets.

Kate: Yeah. And so for everyone outside the US the 403(b), 457, mega backdoor Roth IRAs, those are all versions of retirement accounts.

Scott: Yes. Yes. So thank you for reminding me that we're talking to a global audience.

Kate: So, okay. Scott, how do you balance working on the business and in the business? Because we've talked about a lot of changes you've made over the last five years.

Scott: So I'm getting better at it. One of the things that I I try to do now is I try to schedule, I need to have a better name for it, but I just call it ROI time on my schedule. So I block it off and that time is to work on the business, not in the business. So whatever the main drivers are that I feel are going to help move us to the next level. Those are the things I need to be working on during that time. And I will try to work at least once a week for two hours a week. but then once a month I have a whole day devoted to that.

Kate: That's great, But like you said, it's hard to actually get that, but it is important to not only block it off, but keep it blocked off. Honor the block.

Scott: Yes, yes, absolutely. That's, it's a work in progress for sure.

Kate: Yeah. Well, good for you. And in trying to do that, all business owners know that that's not easy. There are a million other things that can always fill that time, but I think you're, you're a testament to the ROI that you do get from doing that.