October 2017: 10 Questions

Journal of Financial Planning: October 2017


Dave Yeske on Evidence-Based Financial Planning, an Evolving Profession, and the Role of Science


WHO: Dave Yeske, DBA, CFP®

WHAT: Managing director of Yeske Buie; director of the financial planning program at Golden Gate University; 2017 P. Kemp Fain Jr. Award recipient

WHAT'S ON HIS MIND: “Not everything we do can be subjected to scientific inquiry, but I believe that anything that can, should be.”

After nearly three decades serving clients and being an influential thought leader whose efforts have served to advance the financial planning profession, Dave Yeske has been honored with the P. Kemp Fain Jr. Award—FPA’s highest honor for an individual.

The Journal took this occasion to sit down with Yeske (who also serves as our practitioner editor) to learn more about who has inspired him in his career, how he’s evolved as a finanical planner, if he has any regrets in his career, and more.

1. You will be honored at the FPA Annual Conference with the P. Kemp Fain Jr. Award—FPA’s highest honor for an individual who has made outstanding contributions to the profession. What does winning this award mean to you?

It’s incredibly humbling. I went back and looked at the list of previous winners, and to be part of this group is just such an honor.

I spend a lot of my time with my head down, pursuing the things I care about, whether it’s in my practice, or within FPA, or the wider profession, or Golden Gate University. To all of a sudden have sort of a metaphorical tap on the shoulder when someone says, by the way, you’re going to receive this award, it’s just very gratifying. This feels like the ultimate validation that I haven’t wasted my time; that maybe these things I’ve been pursuing are worthwhile.

2. Through your many volunteer roles at FPA and your teaching at Golden Gate University, you have influenced and inspired many next-generation financial planners. Who has inspired you in your planning career?

I have been inspired by many more than I could possibly name, but if I were to name just one, I’d have to say Dick Wagner. I started financial planning in 1990, the very year Dick published “To Think…Like a CFP.” That seminal thought piece transformed my vision of who I was going to be as a financial planner and how I was going to practice. In many ways, it informed everything I’ve done since as a volunteer and as a researcher.

I’ve always been inspired by Dick in terms of how he showed up. He was never less than 100 percent, and he was never going to be done. He had a passion for the profession, for making it better, for deepening our understanding of who we are as professionals and what we do. If you weren’t going to be inspired by that, you needed to find another profession.

3. Is the planning you do today different from the planning of the early 1990s? If so, how?

Yes, it is. I continue to evolve along with the profession as a whole. Unquestionably, I do more stochastic modeling as a financial planner, as I think we all do. That pivot point was when Lynn Hopewell introduced stochastic modeling to our profession in the late ’90s. And yet at the same time, I also have more awareness of the limitations of that.

I’m also much more systematic about addressing the interior, or human dimension, when working with my clients. I think I always cared about who my clients were as human beings, but over time, especially with the advent of the financial life planning movement in the mid ’90s, we started to realize how important it is to not just be aware of but be systematic about incorporating that interior dimension into our work with clients. That’s a process that I don’t think we’re done with by a long shot.

And finally, I think I’m much more focused on the strategic dimension of what we do. Clients shift and change in their needs and their perceptions, and so we have to be thinking strategically. We actually say to clients, we think we’re good people to think with and we want to be your first call, whatever is on your mind. I find that more and more, some of our best work is in developing strategies that incorporate the things we can know and the things we can’t know; this notion of contingency.

4. If you could change anything from your professional career, what would it be?

I was one of those people for whom this was not my first career. So I could wish to have found financial planning sooner, although I’m also one of those people who tends not to wish away things I’ve done in the past. You have to believe that if what you’re doing now and the people who are in your life now are what you want, you may not have been able to get there by any other path than the one you followed. So, I actually don’t think I would change anything. I think all the errors of judgment and all the mistakes were part of what got me to where I am now, and I’m happy with where I am now.

5. Finish this sentence: Financial planning is …. Now explain.

I could answer it in a functional way and say financial planning is a process for helping individuals and families use their human and material resources to transform their lives for the better. But I’d rather make a grander statement: I think financial planning is potentially the most important profession in the world, and certainly the most important profession in the 21st century.

I’ll be echoing Dick Wagner in some ways in explaining this, but we deal with some of the most important forces in people’s lives. Think about the traditional professions of law and medicine, for example, and now look at financial planning. Vastly more people will suffer a bad financial outcome in their lives than will suffer from a dread disease or a perilous legal situation. We’re the ones who have the power to help people care for aging parents, educate their kids, provide for a comfortable retirement—these are the things that everyone strives for. These are also the biggest potential stress points in people’s lives.

A growing body of research is showing that financial problems can lead to negative health outcomes. Therefore, by extension, financial planners wield the power to potentially not only make people’s lives better financially, but even make them better physically. I can’t think of any other profession that is more at the intersection of everything that matters to people and everything that most impacts their lives.

When financial planners are cognizant of the magnitude of what they’re doing and the potential role they’re playing in people’s lives, I think they show up different. It’s a sacred trust that clients place in us because of the importance of this in their lives.

6. What role does science play in financial planning?

I think it should play a central role. Science is about uncovering new understandings based on evidence, and I think you can never have too much evidence. Not everything we do can be subjected to scientific inquiry, but I believe that anything that can, should be. I think we owe that to our clients.

When we give a piece of advice to our clients, they have a right to ask: how do you know that this is the best advice for me? If what you say is, it’s received wisdom; it’s what I was taught; it’s what everybody does, I think that’s a very unsatisfactory answer. Where possible, I think you should be able to say this was tested and this advice I’m giving you proved to be the most effective for the issue at hand.

We have a responsibility as CFP® professionals, if nothing else. One of the obligations under the CFP® code of ethics and professional responsibility is that you not give advice in any area in which you’re not competent to do so. I think it’s a very small stretch to move that on to say, you should not give any advice for which you don’t have a reasonable basis. And if there’s science available, that’s as reasonable a basis I think as you can possibly get.

I wouldn’t suggest that every financial planner needs to be a scientist, or that every financial planner needs to have the formal training to be able to conduct scientific, academic research. But I do think there is a related responsibility to have enough of an understanding of science and the scientific method to be a good consumer of research-based writing and have the skill set to read it critically and evaluate it and determine whether it’s compelling. And then if it is compelling, understand how to incorporate it into your practice.

7. You are a proponent of evidence-based financial planning. What common belief in financial planning would you like to see empirically tested?

There are many things, but the one that’s top of my mind is not so much a belief as it is resolving some competing beliefs.

I’ve done survey work, attempting to determine how my financial planner colleagues approach their work with clients in terms of their emphasis on the quantitative or the data-driven realm, versus the qualitative or more human or life planning realm. What I found is that financial planners tend to have a comfort zone; they migrate to one or the other.

When I’ve looked at this in the past, I’ve illustrated it with histograms. You get these bars where a significant number of planners will be skewed way over on the data-driven side, and others are skewed way over on the qualitative side. What surprised me was how little balance I saw between those two.

I would love to see some research done to try and resolve what balance is actually most effective when working with clients. There are a number of ways of testing this. One is to look at measures of client trust and relationship commitment, which has become a dependent variable in a lot of financial planning research.

Prior research by [Carol] Anderson and [Deanna] Sharpe and others has shown that higher levels of client trust and relationship commitment are associated with several things that are actually associated with more successful financial planning engagements. I’d like to know more about the best strategic balance so I can maybe say to the people on the quantitative side and on the qualitative side: you’ve only got half the answer; there’s a different mix you need to strive for.

8. Your doctoral dissertation, which was adapted into the Journal article, “Finding the Planning in Financial Planning” argued that there was no overarching framework for testing the strategy-making activities of planners. That was seven years ago. Have we made progress?

Yes. I think there’s a greater understanding of the planning dimension of financial planning as a thing unto itself, distinct from the subsets. That’s not to say that we don’t have a long way to go. There’s a growing body of research in our profession that is less about discreet techniques, like how to deal with the latest changes in the tax law, and more about how to think about the broader context in which planners are engaging with their clients.

A lot of this has emerged from the financial life planning area, which started in the mid ’90s as this notion that we needed to be looking in the interior. It was just intuition and experience that was leading to this dialogue, but more recently, formal research has come into play. These days, you see a lot of good science, like the work Sarah Asebedo of Texas Tech to translate the insights of positive psychology into new ways of structuring the planner-client relationship, and John Grable of UGA where at the Financial Planning Performance Lab they’re doing research all the time, trying to better understand the broader context in which clients and planners engage and what leads to better outcomes.

There’s been also more of a focus on policy-based financial planning, and that’s also very much about strategy and the planning dimension of planning. So we have seen progress, and there’s so much farther to go, but it’s gratifying to see what’s been happening.

9. We hear the phrase “the art and science of financial planning” a lot in the professional literature, including within the pages of the Journal. Is there anything wrong with this phrase?

I think there is, in the way the word “art” has historically been construed. Over the last 20 years or so, the “art” part was conceived as work on the interior realm—client communication and facilitation and understanding client psychology. Whereas the “science” was our understanding of modern portfolio theory and stochastic modeling.

I would argue that all of those things that were being referred to with the word “art” actually have good science attached to them through the fields of psychology, positive psychology, communication theory, neuroscience, and behavioral finance.

In my ideal world, we would talk about “art” in the context of the artful application of the best available science in both the exterior and the interior realms.

10. You wrote in a 2015 Journal article about the critical importance of creating a richer conversation between the communities of practice and research. Have we made progress connecting planners and academics, and what role can FPA play to help facilitate this?

I feel like it’s getting better on a couple different fronts. I think a growing number of career academics out there have experience as practitioners, and they’re automatically bringing those insights as practitioners into their work as academics. I also think that, collectively, the leaders of various organizations have done a good job of starting to integrate academic and practitioner interests.

The deeper integration between the Academy of Financial Services and FPA, and the fact that Financial Services Review, the official publication of the Academy of Financial Services, is available on the Journal of Financial Planning website to FPA members is fantastic. I don’t think enough FPA members are aware of it, so I’m glad to be mentioning it here.

And the way in which the Academy of Financial Services has been integrated into FPA’s Annual Conference is another acknowledgement that the interests and the research of academics should be connected to and of interest to practitioners. And it’s another opportunity for the academics and practitioners to rub shoulders and hopefully engage in rich dialogue.

FPA has promulgated Knowledge Circles specifically intended to bring together academics and practitioners. Academics, by virtue of their training in their profession, have the formal training to conduct research, but they don’t necessarily know what the pressing questions of the day are. Financial planners understand what those questions are. So when you can bring those together, that’s very powerful.

Carly Schulaka is editor of the Journal. Contact her HERE

General Financial Planning Principles