Michael Kitces: The Model Has to Change Again

Our guest on this week's podcast is Michael Kitces. Michael is a partner and the director of wealth management for Pinnacle Advisory Group, a Columbia, Maryland-based wealth management firm that advises on about $1.8 billion of assets. In addition, he is a co-founder of the XY Planning Network. As the host of the Financial Advisor Success podcast and the publisher of the popular financial planning industry blog Nerd's Eye View, Michael has established himself as one of the most prolific and insightful commentators on the financial advice business. A fixture on the speaking circuit and in the media, Michael often addresses key trends and innovations in the way advisors serve their clients; our interview with him focused on the future of the financial advice business.

Show Notes and References

Background and Professional Development
Michael’s formative years: “The only thing I really think I figured out by the end of college was … that I didn’t want to do psychology, theater, or medicine” (0:59-2:51)

• Michael’s bio
• Pinnacle Advisory Group
• XY Planning Network
• Financial Advisor Success podcast
• Nerd’s Eye View blog

Dad’s old life insurance policy: How a wedding gift led Michael down a path to a career in the financial services industry (2:52-4:21)

• Michael’s background and entry-path into finance

“He was just a really different guy than everybody else”: Michael’s recounts his breakthrough realization that he wanted to be a financial planner (4:22-6:07) ·

• Certified financial planner designation

How Michael used his pre-med training to overcome a crisis of confidence that he didn’t know what he was doing: “I probably shouldn’t be giving them advice; I’m going to hurt someone” (6:08-7:31)

• Hippocratic oath

Going deep to differentiate: “I’m going to get really good at these annuity benefit riders” (7:32-8:45)

• Leveraging a Mini-Specialization to Gain Experience and Get More Client Referrals” by Michael Kitces (Aug. 16, 2018; Nerd’s Eye View blog)
• Variable universal life insurance—a short explainer
• The Advisor’s Guide to Annuities (5th Edition) by Michael E. Kitces and John L. Olsen

Behavioral Finance in Practice
Where behavioral finance falls short: Practicality (8:46-11:40)

• Recency bias: A brief explainer

Persuasion: Using psychology and coaching to help clients overcome their biases (11:41-13:01)

• “Why Evolutionary Psychology May Be Better Than Behavioral Finance Research to Understand Financial Behaviors” by Dr. Derek Tharp, lead researcher for Kitces.com (Jan. 16, 2019; Nerd’s Eye View blog)
• Influence: Science and Practice (5th Edition) by Robert Cialdini