Ep. 8: Chris Chen of Insight Financial Strategists

Episode Overview

Chris Chen is a certified financial planner with a specialty in retirement income planning and divorce financial planning for professionals and business owners. He helps individuals and families clarify complex situations that include financial planning, tax planning, investment management, risk management and legacy planning.

When it comes to divorce, Chris works with mediators and lawyers as well as clients, as individuals or as a financial neutral for both parties. Chris has worked in litigation, mediation, and collaborative situations for initial divorces, for modifications, and for post-divorce recovery. Chris is the founder of Insight Financial Strategists, the treasurer of the Association of Divorce Financial Planners, and a member of the Financial Planning AssociationThe Divorce Center, and the Massachusetts Council on Family Mediation.

In this episode, you'll hear:

  • How Chris' work helps divorce clients make informed decisions about their futures.
  • The big business mistake that Chris says "keeps haunting me."
  • How founding his own business allowed Chris to focus better on clients' needs.
  • Chris' recommendation for secure cloud-based storage.
  • How divorce clients view money in a way that leads to "suboptimal preferences."
  • How Chris uses informational workshops to inform the public and bring in new business.
  • The challenges of using social media, including which social media platform Chris thinks might be the next place to find clients, and how to get more audience involvement on Twitter.

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Resources Mentioned

Episode Transcript

Rackham:

Welcome to The ADR Initiative. This is the podcast where you'll hear from successful mediators, arbitrators, collaborative law attorneys, coaches, and other alternative dispute resolutions professionals about what they do, how they got here, and valuable lessons they've learned along the way. I'm your host, Rackham Karlsson. Today I'm talking with Chris Chen. Chris is a certified financial planner with a specialty in retirement income planning and divorce financial planning for professionals and business owners. He helps individuals and families clarify complex situations that include financial planning, tax planning, investment management, risk management and legacy planning.

When it comes to divorce, Chris works with mediators and lawyers as well as clients, as individuals or as a financial neutral for both parties. Chris has worked in litigation, mediation, and collaborative situations for initial divorces, for modifications, and for post-divorce recovery. Chris is the founder of Insight Financial Strategists, the treasurer of the Association of Divorce Financial Planners, and a member of the Financial Planning Association, The Divorce Center, and the Massachusetts Council on Family Mediation. Welcome to the show, Chris.

Chris:

Thank you.

Rackham:

It's great to have you. I just want to jump right in here. That intro of course just scratches the surface of what you do. Why don't you talk a little bit more about what you do in your business today?

Chris:

Thanks for asking. We provide a range of financial planning and wealth management services and we have a focus on retirement income planning and divorce financial planning. There are actually two of us who do divorce financial planning services here. It's Tom Seder and myself. We're both certified financial planners and certified divorce financial analysts. It's actually great to have two of us in this business. It allows us to bounce ideas off each other and get feedback as needed. We are fee only. That means that we're different from many other financial services providers. We do not sell products as part of the service we provide and we do not take commissions from anybody.

What we do is that we focus the entire aspect of what a person's financial problems are. That includes not just how to divide the assets, but what the consequences of dividing the assets are. A lot of people, for instance, will want to have asymmetric asset divisions. The typical example that's given is one where one of the parties wants to keep the house and the other one wants to keep the retirement accounts. We can show with analysis and graphs and spreadsheets and stuff what the consequences are, and they usually surprise the clients. Once they know what the consequences are, then they get to make decisions that are informed. We want the clients to make informed decisions, we want them to provide informed consent. A lot of the time the consent they provide is not informed. That is the gap that we fill.

Rackham:

Can you talk a little bit about the CDFA certification, because when we work with people like you in collaborative cases of course we do tend to look for CDFAs. What is it that a CDFA provides?

Chris:

The CDFA is the Certified Divorce Financial Analyst. It's a designation that includes financial planning, tax planning, and some other subjects. The intent of it is to provide a general overview of what all of the aspects of divorce financial planning are. It's an entry-level certification, which means that just having the CDFA may not be enough. However, having the CDFA is often a prerequisite for being professionally competent at this work. It's not necessary per se. There are a lot of people who practice without a CDFA.

Rackham:

You were talking about having an understanding of the full picture. We see that all the time. It's not just, for example, what does the asset division look like at the moment, but what are the tax consequences, and once you take into account people's different incomes for example, what does that look like five, ten, fifteen, twenty years down the road. That work is so tremendously helpful when we're dealing with people trying to make financial decisions in divorce.

Chris:

Yes. A lot of the time, people will not want to pay for that kind of analysis because, as you know, divorce is expensive and there comes a time when they're trying to reduce expense. It is, however, I think critical for them to understand, because without understanding that long-term consequence they end up making bad decisions, and that can be akin to being penny wise and pound foolish.

Rackham:

Absolutely. That's one of the challenges that I face all the time, is explaining to clients I know this is going to cost you money right now, it's money that you don't want to spend, but you're about to make a two hundred thousand, five hundred thousand, one million, ten million dollar decision. It's worth the investment to make sure you're doing it right.

Chris:

I think that's true. People will spend a lot of time, for instance, researching cars and researching vacations and shopping for the best deal on vacations and they will make informed decisions for these things, but they will not make informed decisions for the important ones.

Rackham:

Yeah. Tell me a little bit about how you got to doing this kind of work. What's your background?

Chris:

I came about it from a different path, if you will. I worked in corporate America for a long time. I spent a long time in finance, in international banking in New York City. There I worked with major European clients and I got involved in all kinds of transactions that were interesting. After a few years, I felt I needed to get an MBA, so I went to get that, and I ended up in the tech industry. I was fascinated with the progress that was being made bringing difficult technology into everyday use. I worked there in strategic planning and financial planning and business development. Eventually, I ended up running a couple divisions and then I went into the startup world.

Then I burned out and I figured I would go do financial planning. In financial planning I ran across a number of clients along the way who were getting divorced and this was sort of a different animal for me. I didn't quite get it, so I spent time, I got my CDFA, I spent more time learning about the various intricacies of it, and there I am.

Rackham:

How long have you been doing that now?

Chris:

I've been doing financial planning for a little over ten years at this point and I've been in divorce financial planning for about six years.

Rackham:

That's fantastic. Have you been self-employed the whole time or did you start out in financial planning working for somebody else?

Chris:

Yeah, I ended up working for a brokerage at the beginning. When you work for a brokerage you get a W-2, but honestly you're self-employed there too. After that, I left and I went to a firm that focused on financial planning, and from there I jumped and started my business, Insight Financial Strategists.

Rackham:

That's great. The reason I ask is that so many people who will be listening to this are people who are self-employed, whether they're solos or in small practices, so hearing about people's journeys into self-employment is very interesting.

We all like to talk about our successes and you, from what I understand, have a very successful business right now, but of course some of the biggest lessons that we learn come from our mistakes. Can you share one big business mistake that you make in the course of getting to where you are today?

Chris:

Thank you for asking for just one! I would say that the mistake that keeps haunting me these days is the first one that I'd done while starting Insight Financial Strategists. At the time I made the mistake of listening to my first marketing consultant, so I ended up getting a URL that was way too long, insightfinancialstrategists, with an S at the end, and way too difficult to spell, and it's a real issue, I think. It's a kind of decision that you end up getting stuck with for a while, for a long time. It's something that I'm probably going to change at some point, but it takes a lot of work and planning, and it is better not to make that kind of mistake right up front.

Rackham:

I have to imagine that the reason you got that advice was for some kind of SEO purpose, to make sure that you had financial analyst in your URL.

Chris:

That was sort of interesting. My marketing consultant was actually a good marketing consultant, but I think that she was missing that aspect of marketing which is marketing on the internet. We were going through a number of things about, “What do I do?” I provide insight and I do strategies and this kind of stuff, so eventually it all meshed into that name, and that's really great. I think it's really great if it was just on paper, but if we're going to be marketing on the internet it doesn't work.

Rackham:

I agree. I actually own the domain, I think I still own it, zephyrlegalservices.com, but I never use it. I use zephyrlaw.com just for that exact reason. I want it to be easy for people to access. I want it to just roll off the tongue and for people to be able to type it in very quickly, or as quickly as they can if they know how to spell ‘zephyr’ of course.

Chris:

Right.

Rackham:

On the flip side of that, what would you consider one of your best business decisions to date?

Chris:

There are fewer of those than there are of the bad decisions, by the way. One of the best ones I think was to break out on my own. We talked earlier about how I started at a brokerage before and I was with another financial planning firm. The issue with these large firms is that they don't really understand the divorce financial planning animal. It's sort of hard for them to get that — divorce has sort of a bad reputation out there, and people who get involved in divorce, people wonder whether you and I and others are actually encouraging people to divorce for our own personal gain and so on.

Getting into my own business allowed me to develop that business without regard to a pre-existing company structure and a pre-existing company environment and to focus actually on the needs of the clients.

Rackham:

It's funny, I'm seeing a bit of a parallel there between your experience and something that many lawyers experience, which is that you're at a firm, it's a litigation firm. Litigation is very profitable, lots of hours, and you start getting interested in ADR, mediation, collaborative law, and the partners might be sort of scratching their heads and saying is this something that really makes sense for our business model, because the cases are a little bit smaller and why would we put money or devote time to that? I think that's a little bit similar. I was speaking with another CDFA in the area who I had lunch with and she was saying that she can't ... She works for another firm and she can't do the divorce work. She's having to treat that as essentially a side business because she can't do it within her firm.

Chris:

Yeah, I think that's one of the things that drove me to my own business. When you work at these large companies they make you do what is called an outside business activity, which they still want to supervise and be a part of, but they are trying to pretend that it is separate. They're trying to insulate themselves from the liability of that thing. At some of the larger brokerages, those that we call warehouses in this business ... Think of the names of the larger ones that you know, they are actually not able to bill separately for a divorce financial plan. They cannot bill for financial plans, so as a result the only way they get compensated is through the purchase of something or another. If you are a client getting divorced, the only way they will get compensated is if you move assets to them and buy their products.

Rackham:

Oh boy, that seems like a pretty big conflict of interest, if you're trying to help people make the best decisions for their money and maybe that product isn't the best decision for their money.

Chris:

It may or may not, but it certainly gives a conflict of interest.

Rackham:

Yeah. Interesting. What's one tool in your computer, in your office, on your mobile phone or iPad that you think every professional should be using?

Chris:

I like cloud storage actually. I'm a fan of cloud storage from a technical standpoint. It's really great. It allows you to back up your files and to have them stored there in the big great clouds and not have to worry about them at all. I'm in a regulated industry where I need to have a business continuity plan and one of the questions that happens is what happens to your files? It's in the cloud, which means I can access them wherever I am. Here in Massachusetts or if I go to California or if I go to Europe on vacation or something I can always access them.

The cloud storage that I prefer is the cloud storage from Swiss companies. The technology is the same. It's the same as everything else. What makes them different is Swiss privacy laws. They are much stronger than what we have here. There is basically no legal way for the Swiss government to access the files and the Swiss government will not allow the US government to access those files, so I would say go for Swiss storage companies.

Rackham:

That's interesting. I didn't know that about the Swiss companies. Do you mind sharing the name of the one that you use?

Chris:

There are a few of them. One of them is Tresorit, T-R-E-S-O-R-I-T. There's another one called Woelkli. There are several of them. If you Google Swiss cloud storage companies, there's a whole bunch that come up.

Rackham:

That's interesting. I use Box, mainly for the encryption features. They provide encryption at rest, which some of the others don't. I'll have to look into those Swiss services. That's really interesting.

Chris:

Right. Along that same vein, there is a Swiss email company called Proton, and Proton has the same benefit, is that the US government cannot access it.

Rackham:

That's really good to know. Going a little bit more low tech now, what's one book that you think is essential reading for anybody providing ADR services or related services that every professional should read?

Chris:

I like Dan Ariely's book, Predictably Irrational. It's an introduction to behavioral finance. That is a relatively new field that was launched into the world when Dan Kahneman got a Nobel Prize for researching that field. I think that Predictably Irrational, that's the title of the book, describes most, if not all, divorce clients. Under stress, people will revert to psychological reflexes, by the way that they look at money and it leads them to sub-optimal preferences. Dan Ariely does a good job of describing the whole list of behaviors that are sub-optimal in that way.

The work that we do as financial planners, whether it is actually in divorce or outside, in mediation or outside, is for people, so those people will tend to make decisions that are not best for them, and it's helpful to understand how they work around those decisions so that we can recognize it and bring it up and influence them back to the right path.

Rackham:

That's so true. We see it all the time. You'll see somebody says I just want to make this go away. I'll liquidate this retirement account, or I'll do this or I'll do that, and you're looking at the tax consequences of that and you're saying, “This is a really bad decision. I know you want to be done quickly, but let's slow down a little bit and consider the options.”

Chris:

Sure. The issue about it going away I think is really important for a lot of people. Divorce is a very unpleasant thing, especially when it's contemptuous, and people just don't want to have it last. They just want to have it go away a lot of the time, and the decision that they make there can be really, really bad. For instance, for what you described there where you have a 401k that you liquidate because of a divorce, there are a lot of consequences for that. Not only does it come with taxes, and if you're under fifty-nine and a half with additional penalties, it also removes income in the future that you have no way of replacing.

In that particular case, a client taking money out of a 401k will pay thirty to forty percent taxes more or less, so it's very expensive to start with, but for every dollar that they take out there is a penalty later on. If they take it out at fifty, for instance, the rule of thumb that I use is that you take a dollar out at fifty from a 401k, first of all you get sixty cents; you don't get a dollar. Second of all is that you lose five dollars of retirement income. Once you show them that, they say that's not what I thought.

Rackham:

Yeah. That's huge. When you say it's five dollars, are you taking into account the cost of living adjustments or inflation? That five dollars might not be worth the same twenty years down the road.

Chris:

It may not. I think there are a lot of factors. I think there is inflation. There is also the factor that for most people in taxes when you're retired, there's quite a bit less in taxes than when you're employed. There's a whole lot of factors, but just the stark difference between the two I think makes people think twice.

Rackham:

Yeah. That's such valuable information. A lot of times the challenge is just to get people to slow down enough to look at that information, to let us get it in front of them and give them a chance to make that informed decision and not be making a decision just from their lizard brain.

Chris:

That's right.

Rackham:

We talked about marketing earlier. For those people either starting out a practice or looking to grow a practice, what have you found to be the absolute best way to bring in new clients?

Chris:

I think there's still nothing that beats face-to-face marketing, so workshops I think are the best way. When people come to a workshop that you offer on the topic like divorce or something related, they see you there for an hour or two, for three hours. After they're done listening to you, they are more informed, and more importantly from a marketing standpoint there are very few other people that they can go to, so they will tend to go to you, the presenter.

I offer that every other month through the Divorce Center and my partner, Tom Seder, does it the even month and I do the odd month. We do that in cooperation with other professionals: mediators, lawyers, and planners. It brings together all the key professionals that someone going through a divorce really should come in contact with. We don't sell anything. It's just completely informational. A lot of other lawyers and mediators will send prospects or early clients to these workshops and they go back way better informed. It's a public service, and it's a public service that works well to feed the need for getting more clients also.

Rackham:

I think that's great. It relies on some of the same principles that we see in online marketing as well, that if you put out free information, if you make yourself a useful resource that people can come to and not have to give you anything, but just get useful information from you, then when the time comes for them to need a service or a product they're going to think of you, because you're the one that was already helpful to them.

Chris:

Sure. I think for web marketing, I think that's what we all try to do. A lot of the time it's difficult to see where the results are coming from, it takes a long time, where for workshop marketing it's sort of different. You see who are the prospects coming. Typically you don't have a lot per workshop because divorce is not a pleasant kind of thing. It's not something that people want to go to. On the other hand, when they get to go to the workshop they are primed, they are ready, they are ready to do something and they are doing something. They're getting themselves educated, so it works really well for that.

Rackham:

They're primed. They're what you might all a qualified lead. You already know that they're interested in the product. It's funny, what you mentioned about the delay in results in online marketing. I have an article that I wrote about prenuptial agreements that I wrote years ago, but people are still finding me because of it. I love the idea that you do a workshop and you're not only bringing people in the door, but you're already seeing their face, so when they come back to you, you recognize that face. That's great.

Chris:

Some of the time actually it doesn't ... It takes a long time for workshops also. I have people who have come more than a year after the workshop. The difference with the online marketing is they feel that they have a personal connection and that's why they do it, that's why they contact you.

Rackham:

I have noticed that you're active on social media. How have you found social media to be for your business?

Chris:

I think it's very frustrating. Social media is the way that a lot of marketing is going and is going to go, so that's the key reason to be involved in that. It's very frustrating because it's hard to figure what the results from that thing is. It's little bit like having a website. What is the result of having a website? It's hard to know. There's traffic on your website. So what? What it is, is that the website to a large extent functions line a brochure used to in pre-history, in the twentieth century. You have to have a website in order for people to go check you out. Sometimes when they check you out they will contact you, and sometimes they won't. That's normal. It's just like a brochure.

Social media is similar. The theory behind it is that people will contact you after a while if they feel that there is a match, but honestly I think it's very hard to figure a good return on it.

Rackham:

Yeah. For me at least the key has been finding the right social media channels. Twitter for example ... I'm on Twitter, but there doesn't seem to be a whole lot of ... I'm not getting a whole lot of traction on Twitter, whereas when I post on LinkedIn, in the LinkedIn groups, there are a lot of people there, and this took me by surprise when I started posting on LinkedIn, who are very interested in what I'm writing and the information that I'm providing. If you're a baker, then that's going to be completely different; you want to be on Pinterest. It's a question of finding the right social media outlets to really engage with your audience.

Chris:

Sure. I think you're point is right, is that regardless of the channel, I get a lot more feedback from professionals than I do from end users, if you will. What I'm told actually is that Instagram may be the place to be. It seems that Instagram is the place to be for ... It seems that the audience on Pinterest is younger than Instagram on average, I don't understand why exactly, and that Instagram is a little closer to what you and I might be looking for.

Rackham:

That's interesting. I'll have to look into that. I don't have an Instagram ... Well, I have an Instagram account, but I haven't been using it for business.

Chris:

Neither have I. The other problem with social media is that it's really a time sink.

Rackham:

Yeah. You can spend a lot of time on it, especially on Twitter. Twitter is really drinking from the firehose and you have to be kind of okay with just dipping in and not trying to consume all of it, because you can't. You cannot consume all of it and you will waste hours of your day trying to just ... Even if you have just a handful of people who you follow, it can still be a lot of information to absorb at once.

Chris:

Honesty I don't read any of it. I publish and a lot of what I publish is scheduled, so it's scheduled over a period of time. I don't even know when it exactly goes out. Every now and then I'm on it, so I'm posting a bunch of stuff when I happen to be on it, but I hardly ever read anything.

Rackham:

What do you use for scheduling?

Chris:

I use Hootsuite and I have used Social Oomph for a long time, so I use them slightly differently, but it's basically the same thing.

Rackham:

I know a lot of people use Hootsuite, also Buffer. Lately I'm really enjoying a service called CoSchedule, which lets you create templates for your social media campaigns, so if I have a new blog post for example, I just plug everything into the template and it schedules everything out the day of publishing, once more on Twitter the day after, a week after, a month after that. It has all the templates there, so it really takes minimal effort for me to set up those campaigns. It's been fantastic.

Chris:

Sure. I think that's really a great way to do it. The thing about Twitter in particular, but true also with Facebook and LinkedIn, is that your audience is not actually going to be there all simultaneously and so you have to sort of plan for your tweets and posts to be spread over time so that you can catch as many people as possible.

Rackham:

Yeah. I forget who it was ... It was ConvertKit or one of the social media publishing platforms, did a study where they found that if you publish on Twitter, I think it was once versus three times, that you double the number of clicks. You publish twice the first day, once in the morning and once in the afternoon. You publish again the next day and then once again a week after, and you don't get the same number of clicks each time, but overall you double your clicks by publishing multiple times.

Chris:

Sure. One other way to get good traffic from Twitter is to use of their other features such as the polling, so use that every now and then. For instance, recently I got an article that said that Goldman Sachs thinks we're going to get a ten percent correction in the next three months, so I put a survey up and said, “Goldman Sachs thinks that. What do you think?” There's two answers: Goldman Sachs is right; Goldman Sachs is wrong. It's almost nonsensical, if you will, but people respond to that.

Rackham:

Yeah. It's a way for people to engage and not just be passive consumers.

Chris:

Sure.

Rackham:

Well, Chris, thank you so much for your time today. Before we go, what's the best way for someone interested in your services to reach you?

Chris:

The website. We talked about it earlier. It's insightfinancialstrategists, with an S at the end .com, or the phone, which is 781-489-3994. You can call or you can text 489-3994.

Rackham:

Perfect. Thank you again Chris.

Chris:

Thanks Rackham. It's good to talk to you.

Rackham:

That's today's show. Thanks for listening. If you enjoyed the show, please leave a review on iTunes. You can find show notes for this episode, including links to any books and other resources mentioned, at zephyrlaw.com/initiative. I have some more great guests lined up, so be sure to join me next time for another edition of The ADR Initiative.

*Affiliate link to Amazon.com.