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Financial Planning > Charitable Giving

What if Financial Planning Was More Like Build-A-Bear?

By Michael E. Kitces

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For most people, financial planning is difficult and complex, which is why they seek out professionals for assistance. Yet while the outcomes of working with a financial planner are positive, the actual experience of going through the planning process is not always pleasant. As one focus group researcher put it, “The financial planning experience is a blend of a dental exam, math class and marriage therapy.” The challenge for growing a financial planning practice continues to become more difficult given an increasing number of financial planning practitioners competing for business, with less and less differentiation from one firm and advisor to the next.

By contrast, the Build-A-Bear Workshop provides an entirely different experience. Build-A-Bear differentiates itself not by the product it sells—teddy bears, a product long since commoditized—but by the experience that customers engage in to get the teddy bear. Children visiting Build-A-Bear literally build the bear from scratch. The entire process turns from a few minutes at a cash register or website into a multi-hour interactive experience. The children have a much deeper buy-in to what they get (as their tagline notes, Build-A-Bear is not where teddy bears are bought, but “Where Best Friends Are Made”), and customers spend twice as much or more to get the same commoditized product at the end.

That raises the question: What if the client financial planning experience was more like a Build-A-Bear experience, where your clients happily pay twice as much for your services and want to spend hours going through the process and the experience of it?

The Build-A-Bear Workshop Experience

The Build-A-Bear Workshop is essentially a store for teddy bears, but what makes it unique (and successful—the company was founded 15 years ago and is now earning approximately $400 million in revenue per year, selling teddy bears in more than 400 stores in over a dozen countries) is that you don’t just buy a teddy bear, you have a teddy-bear-buying experience, from selecting its fur to sewing in its heart, choosing its clothing and accessories, and giving it a name.

Unfortunately, for several years the Build-A-Bear Workshop stock (BBW) has been languishing, generally blamed on overly aggressive expansion after its early successful years, being hammered by the economic recession and weak same-store sales (after all, once you build your best friend, there’s not a lot of reason to go back anytime soon). Nonetheless, the fact remains that the company sells a relatively old and commoditized product at a significant markup, and in a process that not only takes hours to complete, but is prized because it takes hours to complete.

In other words, Build-A-Bear is unique because it was able to turn a low-price, commoditized product purchase into a higher-priced, multi-hour teddy bear experience.

Today’s Financial Planning Experience

While financial advice isn’t exactly a commoditized product like a teddy bear, it’s hard to say much positive about the financial planning experience, either. Yes, the outcomes of the financial planning process are good, delivering both psychological value and, according to recent research, some real financial value, too. But that’s the outcome at the end of the process, not the client’s experience of the process itself.

So what about the experience? At a recent presentation for the FPA Retreat conference, Dr. David Lazenby perhaps summarized it best, based on recent research he had conducted with focus groups of actual financial planning clients. Their conclusion: “The financial planning experience is a combination of a dental exam, math class and marriage therapy.” Ouch.

While such a characterization of the financial planning experience sounds quite harsh, upon further reflection it appears to be sadly accurate. After all, financial planning does involve taking people through a process where they are scrutinized regularly (and often feel guilty about what they know they should be doing but aren’t). It requires people to deal with more math than they may have faced since high school or college (but with higher stakes, as flunking here means failing to understand your financial future). Furthermore, with couples, it often puts clients in the awkward position of being forced to discuss, and sometimes compromise on, long-term goals and current trade-offs that they never considered before.

Simply put, while the outcome of financial planning may be positive, it’s hard to say much positive about the typical experience of going through it.

Envisioning A Better Financial Planning Experience

So what might a better financial planning experience look like? The starting point is to re-envision the financial planning process from the client’s perspective. The reality is, unfortunately, that much of the planning process focuses on the financial planner, even in what is intended to be a client-centric process.

For instance, look at the data gathering process. Most people don’t have their lives in perfect order. If they did, they probably wouldn’t be hiring a financial planner. Yet many planner firms will not proceed until clients provide all the necessary data and documents, even though, as just noted, most people don’t exactly have this information at their fingertips. As planners, we insist that we have this information first, in order to do our work and so we don’t waste our time working with incomplete data, yet that sets up an unpleasant and awkward experience for clients. Not only do they have to do the real work of getting organized up front and actually gathering data, but they also likely feel guilty and ashamed of the fact that they don’t have the information ready and available for the planner.

What if the process of getting organized was actually part of the financial planning experience, where clients came in with all their disorganized and scattered information and we as planners gave them the experience of becoming organized during the meeting? What if the client “discovery” process of personal goals and issues was not just some notes a planner scribbles on a yellow pad, but an interactive mind map that the planner and clients build collaboratively?

Similarly, look at the process of delivering a plan and getting clients to buy in to the recommendations. Right now, plans are still often delivered as giant tomes, even though we collectively acknowledge that virtually no one reads them. Despite this, we not only continue to provide them, but insist on updating them every time the client has a question or wants to try out a small adjustment. The planner provides a plan in the meeting, the client asks about the impact of retiring two years later, the planner re-runs the plan and sends it out a week later, the client asks about the impact of saving more money instead of retiring later, the planner re-runs the plan again and sends out another version another week later, the client asks about the impact of saving more money and retiring later, the planner re-runs the plan yet another time and sends out yet another version yet another week later—a miserable and unproductive process, to say the least.

Imagine the results if the plan is simply live software on a giant screen in the planner’s office that can be updated interactively with the client. Instead of a slow, tedious, back-and-forth process that may literally take weeks, the client gets to test drive the financial plan in minutes and come to a conclusion that the client helped create, which improves buy-in to the plan and implementation of the recommendations to boot. (Of course, the caveat to this is that we also need some better financial planning software to help facilitate this process.)

Why The Client Experience Matters

I can imagine some people are thinking, “My clients are happy and they refer me already; why does all this matter?” The answer is three-fold.

First, most financial planning firms don’t generate nearly as many referrals as they should given the significance of what we do to help people. In other words, planning firms grow by referrals despite how ineffective and uncomfortable the experience is. Can you imagine how many more referrals could be generated if clients left your office after having a great financial planning experience? Not a lot of clients say, “Wow, what a meeting with my planner today. My husband and I left mentally exhausted, slightly confused and barely speaking to each other after a fight about when we should retire. But hey, at least we can go back in three weeks and find out how much we’ll need to cut our spending to retire.” Not many referrals come from sharing that experience. By contrast, imagine if the outcome was, “Wow, what a meeting with my planner today! We walked into that office with a giant box of scattered envelopes and papers because we never seem to have the time to keep up with it all. We left with a perfectly sorted box of file folders with everything where it needs to be. I’ve never felt so organized in my life!” That’s an experience they will be excited to share and refer, and those who hear it will actually want to contact you and do business to get the same experience and immediate, tangible, positive outcome.

The second reason the client experience matters is that as more and more people become CFP certificants and deliver comprehensive financial planning, the results of financial planning are becoming more readily available. The simple reality is that “customized, individualized personal financial advice delivered by a professional with extensive education and experience” just isn’t much of a differentiator anymore, but having a fantastic client experience is. Although we’re likely a long way from financial planning services becoming fully commoditized, there is nonetheless a rising challenge to maintain differentiation.

The third reason the client experience matters is simply your ability to price your services and earn a profit from them to run a successful business. People will pay a lot more to an experience-based business that charges them for the feelings they get from engaging than they will to a business that sells stuff or charges for services rendered. That’s why Build-A-Bear sells teddy bears for more than Amazon, and why we’ll pay more for family tickets to a two-hour movie experience at the theater than we will to buy the movie on DVD once and own it for life. This phenomenon has been dubbed “The Experience Economy” (after an article and later a book by Joseph Pine and James Gilmore) and represents an emerging new trend for businesses.

Can you imagine how successful your financial planning business would be if your clients happily paid twice as much for your services and wanted to spend hours going through the process and the experience of it, just like families do with Build-A-Bear? How many referrals do you think you would generate if you gave your clients a Build-A-Bear-style financial planning experience?

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