The dynamic between financial advisors and those we advise is broken. As advisors, we want open and honest relationships with our clients. But we also want a sense of purpose in our work that comes from serving, not selling. Yet, traditional wealth management focuses on driving profits, not relationships.
Left unchecked, this tension forces us to become salespeople and destroys the trust we build with our clients. Well, there must be a way advisors can do good and do well, right? There is, and in the new book, Aloha Financial Advising, Stephen Kagawa shares the better approach to advising you’ve been seeking.
Drawing upon personal experience, Stephen shows you how to shift your focus away from products and services and back to those you serve. So, whether you’re new to the industry or a 20-year veteran, the new set of priorities laid out in this book will help you deal with the pressure to sell, help you avoid going astray to chase money and help you create the alignment with clients you’ve been missing.
In today’s podcast, Stephen shares with us how traditional wealth management can do better, why it’s so important to lead from a place of love when it comes to financial advising, as well as five core values that make up what it means to be an Aloha advisor. Enjoy.
Miles Rote: Hey everyone, my name is Miles Rote and I’m excited to be here today with Stephen Kagawa, author of Aloha Financial Advising: Doing Good to Do Better for Your Clients and Yourself. Stephen, I’m excited you’re here, welcome to the Author Hour podcast.
Stephen Kagawa: I’m excited to be here.
Miles Rote: So, Stephen, before we jump into your book, there’s so much to talk about. Tell us a little bit about your background and what inspired you to write this book in the first place?
Stephen Kagawa: Yeah, well, it’s a great question and it seems like my background has always been about being in the financial advising world, whether it be the life insurance side or investments or talking to the advisors who were helping people deal with their plans and to get to wherever they want to get to. But actually, the story of my journey to get there was furthest from being that.
In fact, I didn’t want to be a financial advisor, I was appalled when I learned that my family was selling life insurance to make a living and that journey is what brought me to this book.
Miles Rote: So, you were first appalled by the idea, and then you had tons of experience in that world, and then you come up with this idea for a book that should be focused on being better for your clients and yourself. Tell us a little bit about that path and how you were led to coming to that place.
Stephen Kagawa: Yeah, so it’s full circle for me as you raise that. Because, as I just mentioned, when I found out, and it was in high school that I found out that my family was involved in the life insurance business because I read it in the newspaper. I had no idea because dad and mom never brought it home even though my father was already a second-generation practitioner and had a huge agency.
It was just part of our life and the people that worked with them were my uncles and aunties. I never thought of it until I read, “Hey, this is what we do, what the family does because it’s something my father was involved in.” I guess it comes from the whole stereotype, right?
Even when I was in high school, I was already shaped to believe that the life insurance investment person is a salesman. They were there to go and sell you something that you really didn’t need. I certainly didn’t want to be that person. Why would we be selling life insurance for the living–selling something that people had to die to benefit from?
How do you benefit from something that you have to die to benefit from? It was the ignorance that comes along with the sort of mystique or stereotype that‘s created. Yet, I have the good fortune, being that I’m just a spoiled child that really didn’t understand, and didn’t take the time to understand, or to appreciate what it was that my family dedicated their lives towards, to better other people’s lives.
I didn’t take that moment and that breath to pay attention to what was important, and what was of value, and because of that, I was led to believe that it was a bad thing, because of the reputation that the industry has earned and was displayed out there and reflected in the movies and whatnot.
Miles Rote: Totally.
Stephen Kagawa: For a good fortune fell upon me really quickly as I met a young lady that really slapped me in the face and told me in a very, very elegant way by telling her life’s story, how important life insurance is to families.
You know, was a single parent at the time that I met her. She had lost her husband and her husband argued with her about getting life insurance and he won, and so they got life insurance. She was against the life insurance–she was just like me. They got that life insurance, that cash came and swooped in and ended up being a savior in her life. The people that were knocking on the door, those sales guys that she resented from the beginning became her heroes.
Miles Rote: Right.
Stephen Kagawa: You know, that really put a lot of things into proper perspective and I guess the most important one was, “Hey, you got it all wrong Stephen and you better open your eyes and pay attention because this is an admirable profession and it’s a difficult one, especially the phase of this reality, of this perception, of this reputation that we’ve earned, we’ve got to go up and get through that.”
Advisors need to break through that to help the people that they dedicate their lives to serving, the reputation that has been created by the bad actors in our industry.
Finding Your Path
Miles Rote: Right. You learned that okay, it’s not all bad. It seems like there is a lot of good that can come with this and this can be really important for people. But of course, as you just mentioned, there are still a lot of bad actors out there, or they’re not necessarily focused on doing good first and being good.
But a big theme of your book is–it’s pretty obvious given the title I suppose–doing good and being good is important when it comes to these things. So how did you find your path and trying to bring that goodness into wealth management?
Stephen Kagawa: It’s such a great question, I really appreciate that because it reminds me of my conversation with Cathy. Cathy was the young lady who taught me about her life and immediately I jumped out and said, “Look, I have a life insurance license in Hawaii. I can get one in California.” I kept thinking about her and her children and what happens if she passed away?
These minor children, these wonderful kids that I just got to play with, who are they going to turn to, who’s going to take care of them? How will they finance that care and so on and so forth? I just had a very simple thing in my head, right? Suddenly a mission came and emerged.
That was, “I have to help single mothers by asking them this question and giving them an opportunity to provide for the realities that could hit them in life.” Things happen and so I got started with that. Along the way, what’s really interesting is that when I got started, it was all about–they recruit you in and tell you how much good you do for people and for yourself and all that kind of stuff, but what’s interesting is that all the training programs that I went to, really aimed at selling things.
I get it. You’ve got products that have been sold and earning’s got to be made by the companies that support you. When I got started, I jumped on a company that not only trained you but they train you to help people and in turn, you just sell their products. I was limited to the products and services of that one company, by law. Because at the time, it was restricted by law what I could do as a practitioner.
Miles Rote: Right, you talk about how traditional wealth management can miss the mark both for the advisors and their clients, and part of that problem, which you were just alluding to is how the system isn’t set up to reward people that are actually trying to do good.
Now granted, you can say that it is set up in such a way that if you are making earnings for them, that could be good for both parties, but that’s only one metric. Right now, the way it’s traditionally set up, it’s almost set up in such a way that you can get rewarded for doing the wrong things if you’re an advisor.
So, when you talk about traditional wealth management missing the mark for advisors and clients, what does that look like and what do you suggest doing instead?
Stephen Kagawa: Yeah, I think you hit it on the money, right between the eyes is the fact that as advisors, we go to these training camps and we learn all these techniques. In the United States anyway, we look at perhaps tax consequences and look at the legal structure, we find ways to take advantage to come up with a better bottom line financially on whatever product or service we are looking at and we’re critiquing and considering, “Should this person have it or not have it?”
But what happens along the way is that obviously, we have our own biases. I certainly have mine, I look at my life a certain way and I look at, financial products and whatnot and what they do in different ways, and I can get turned on by something. So much so that I go out and I preach it. I show people how they should jump on this one technique and it may be a fantastic strategy that does amazing things and yet, not be that relevant to the person I’m talking to or the audiences that I’m sharing it with.
From my perspective, it begins very, very innocently. It doesn’t begin because as advisors, we’re trying to hurt somebody. I really don’t believe that. I really believe that almost everyone who gets into this business gets in, really, truly wanting to do good for others.
Along the way, they have to make money for themselves and they get caught up in that and then they kind of get caught up in the excitement or the sex appeal of a certain product trap or financial strategy. This is all around the world. I see it all the time.
The fact that we look at fact-finding as being the key point, and we start to look at someone’s portfolio and we start to criticize that portfolio and how we can do better with that portfolio as an investment advisor is a perfect reflection of that hypocrisy.
Better for what? Better for returns, better for income, better for the time that person needs the money, better for their pocket, better for what? I think, too often, we don’t answer those questions, we’re not really looking at who it’s supposed to be better for, and taking our biases and getting our biases out of the way to help people.
The other part is that we are limited by what we have in our quiver. So, what do we have in terms of our services and our products, what’s our purview? What is accessible to us?
Then, what are the consequences once I access those opportunities and that’s limited because I’m only one person, I can only do so much? The insurance company or investment firm that hires me they’ve got their limitations.
The industry itself and the way it’s set up can be limiting. It is limiting, certainly, in the way it is today for the most part. It’s limited to a geographical area–it’s limited to an area of specialization. I think we need to do better in opening that up to ensure that we do have the opportunities so that all of our clients really get what they want in their lives and to live fulfilled lives.
That means that I’m going to have to break the mold, I have to do things a little differently and align myself differently with professionals.
A Trusting Relationship
Miles Rote: Yeah and it sounds like part of the journey to do that is really building trust with the clients that you have. So, having a trusting good relationship between the financial advisors and clients. That’s also a theme in your book and how important that is. It makes sense, given the fact that you’re handling somebody’s money, it could be their life’s savings.
What do you recommend that financial advisors do to really help foster a trusting relationship with their clients?
Stephen Kagawa: That’s a great question, it’s the whole essence of the book really when you get down to it. I guess in a nutshell, it’s really to remember that we’re blessed with the opportunity to sit in front of somebody–to listen to their lives and listen to what they want to have happen and to help them get there.
Step one is to get out of the way. You know, it’s very, very counterintuitive when I first realized how much I was getting in the way of my own client’s happiness. Because I was carving them into, “They’re all like this and they should have this and that,” and so on and so forth.
I realized they don’t need to have anything. That it’s about what they want and in order to get to understand what people want, as advisors, we need to learn that first, that’s the most important thing. It doesn’t matter what they have. At least, not in the beginning.
The most important thing is what they want to have happen with whatever they got. To whoever they care about. And that has to be the starting point. What a great opportunity that is to meet a person. In real terms, to really understand and appreciate somebody for who they are and what they want.
I think that to me, for me, that’s really the essence of engagement anyway. You know, how do we engage effectively in a meaningful manner if we really don’t understand and appreciate one another.
They don’t need to understand and appreciate me. I’m the advisor, I need to understand and appreciate them for who they are relative to what they have and where they want to get to.
That’s the starting point. I think, if you don’t have that, number one, what are you advising to? You’re advising now based on a performance of a product or something within a portfolio or criticizing someone else’s work? Another advisor, whatever they advise?
I think all that is not important. The most important thing is, where do you want to go, and are they aligned with the right stuff that they’re able to access and they’re able to do and wanting to do.
It is as simple as that and that as a starting point would resolve a whole lot but it is only the starting point.
Miles Rote: Right. Again, they’re trusting you because it is such a big life decision for them that in some ways, you’re almost their life guide, and if you don’t establish that sense of trust and if they’re not seen as a person–you have a line in your book that I really like, “It’s the people, not the products.”
If they’re not seen as a person and instead, they’re just seen as a product or a number that you are trying to balance as an advisor to make you a little bit extra money or something, then how are they going to really open up to share what it is that they want and how are you going to even know if you can serve them?
So, it sounds like it’s really getting back to focusing on the person and their needs, and not just trying to sell them on the best tactic you’ve recently learned.
Stephen Kagawa: Yes, and you just hit on a word that makes me smile because you said it’s that person and their needs and I would say, no it’s that person and their wants. It’s a person and what they want, it’s not what they need.
The key point, that they need to get what they want, that’s what I do. If I’m really an advisor of salt, of worth, I will have good ideas, I’ll have the right team of other advisors that can help me to help articulate what they might do and finding different ways of doing things to get to where they want to get to, but we have to start with what they want. This need, want thing is a big pet peeve of mine because we do talk about, “Here, you need this.”
We do say those things and I always wondered if, when I say those things, why do they need–they don’t need anything. They don’t need to follow us, they don’t need to listen to us, they don’t need to do anything. It’s up to them, right? But if they really want something to happen and they want it differently, they’re going to have to do different things. They’re going to need different ways to get there and that’s what I need to do. I need to give them alternatives.
Alternatives to what they’re doing today to get to where they want to get to, and hopefully alternatives that are better ways.
But they don’t need to follow it, it’s up to them. They don’t need to meet the goal that they have. That’s up to them, and at the same time, there are different consequences depending upon what alternative path they take.
Again, I am not there to judge that, I am there to provide some different ways. There’s a whole lot of different ways to get from here to there. For example, a simple thing like we’re in Southern California and you want to get to Disneyland. I mean it depends on where you’re coming from. There’s a whole lot of ways to get there.
It is infinite, and I always have to remember that as an advisor there are so many different ways to help somebody get somewhere. They don’t need to do it the way that I say, but they do need to do something different to get to where they want to go. I, as an advisor, need to be keenly focused on what they want and how they might get there better. That to me is hugely different than what and how I’m trained in the industry today.
Making the World a Little Bit Better
Miles Rote: What you do and how you do it is so different, and of course, the title of your book really alludes to that with Aloha Financial Advising. So, you have taken a really different approach, and one of my favorite things about your book is you list out five core values based on five different Hawaiian words.
So, I’ll take a stab at saying these words and then you can maybe walk us through what each one means and how it pertains to your core values when it comes to being an advisor. The first one is Mahalo and then Aloha, Ohana, Pono, and then Imua. Tell us a little bit about why you chose these words and how it relates to advising?
Stephen Kagawa: Thank you for asking that question, it’s a great question. I’ve always been an entrepreneur by heart, meaning that I have this idea that the world could be a little bit better and I could be a part of that. Maybe a very, very small part, but that’s what I want to happen and so I never looked at my work as work.
I looked around me and I saw other people, I never thought about building a business and yet, I have been doing that forever. You still have this employer-employee relationship and I saw people struggle with their lives as they sought jobs and I realized that’s got to be a really hard way. We have this whole life to live. Shouldn’t we live our lives the way that we see fit?
Whether it be in our business, in our careers, in our personal lives, in everything else, just to make things easier, so that you don’t look at the time you have to be in the office or slaving away at something as slaving away, so much as being a part of the whole of your life. You know what it is that helps me stay that way?
I realized that I needed to articulate my values. I needed to tell and remind myself each and every day what’s important to me, what makes me happy. You know, not happy just for the moment but truly happy. I realized that it was reflected in those five Hawaiian words. I grew up in Hawaii and I am not of Hawaiian blood, and I, with all due respect to the beauty of that language, I defined it my own way.
So, Aloha, as an example–Aloha means love. As it reflects in my business, and in my life, I want to treat others with love. I know that how they define love and who they love is going to be different than me and being with love allows me to keep my heart open to people of differences because we’re not the same and we’re unique and those differences make us fascinating.
That leads me quickly to Mahalo and Mahalo is about gratitude. You hear people say this all the time, “Living a life of gratitude,” and they say it’s cliché. No, I think it’s essential. We’re so blessed to live this life, to have this opportunity to do whatever it is in our physical state that we’re in, on the ground here on this planet earth and to shape whatever we want to shape, however you want to shape it. I am blessed to meet people that I want to be able to love on my life’s journey and as I start to articulate these things, Aloha, Mahalo, Mahalo-gratitude, Aloha being love, that starts to inform how I do my business and how I want to approach my business.
Then I realized that I do want to approach it with Pono and Pono is righteousness–to do things for the right reasons not because it is easy to do, not because it’s easy to say, not because it helps you make some more money, but because it’s the right thing to do. So, Pono is, “Let’s do things for the right reasons and the right way.”
Then Imua. You know I love Imua because Imua is really about learning, about growing, about taking the next steps. It is about having the courage to confront the world. I never thought of writing a book, or to be on a podcast, or sharing my values and yet this is so important to me because I watched so many people fall out of the business and be miserable in the business. I love this business and why I love it is because I am always learning, and I am always growing, and I am always getting the opportunity to do better.
Live life with even more Pono and share more at the same time, to give love–Aloha. And to share gratitude as well and all of this for me, this all comes from my Ohana, my family. Thank goodness for Disney and Lilo and Stitch and movies like that. You know that word Ohana, that Ohana does mean family and no one gets left behind and it’s very true.
Family doesn’t mean that we always say just lovely things to each other. We sometimes have to correct. Sometimes we have to remind ourselves to do things better. That we should be at our best, which also goes back to Imua again.
So, these five words for me inform not only the way I live my personal life but the way I live my business life. I brought that to the surface to attach to our bag of principles at our company because everybody here that works with me, is an extension of whatever it is that we are promoting as an organization, and of course as a leader, it comes with my intentions.
You know I realized, “Wow if every single person here is not only holding hands but is the extension of me, a better extension of me, each of them is better than I am in whatever they do. Well, you know they got to be living life and working with others with those same values and if they’re not, they’re probably not a valued member of the team in terms of promoting what we’re about.” So, it’s also about alignment.
It is also about our cultural expectations and then all of the deliverables that come out of our organization are then shaped by those values, but it certainly does come back down to the advising. Who I’m helping, what I’m doing within the context of that help and that assistance, and each and every day in whatever we do.
A Symbiotic Relationship
Miles Rote: I think it’s so beautiful in the sense of calling your book Aloha Financial Advising and then really setting out to help create Aloha Advisors, which is as you mentioned, Aloha to you means love. So, being able to financially lead others through that place I think is so different than where, traditionally, wealth management has lived. So, I think this book is so important in that respect, and thank you for writing this book.
Congratulations on doing it because writing a book is no joke. So, Stephen, if readers could take away one or two things from your book, what might they be?
Stephen Kagawa: I guess if you’re a financial advisor, I hope you’ll rethink and reconsider or at least take a look at what we’re doing, and what you’re doing. Is it aligned with what you believe in? Does it convey who you are? Is it just a part of the whole of your life? I mean, I don’t think of Monday, Tuesday, Wednesday, Thursday, Friday, Saturday, Sunday kind of thing. I think of what I’m doing to help people or what I’m doing within the context of my days.
I am not scrambling to do something for somebody else because I know that those values are mine and I want to live that way. So, really ask yourself if you’re a financial advisor, “Am I doing what I promised to do when I first signed that contract to serve others? Am I doing it the way that I would like to be served, not because someone has told me I need to serve this way?” Is it really the way that you’d want to be served? Is it the way that you know that you’re going to be providing value?
If you are not a financial advisor and you’re somebody that seeks that advice and counsel, ask yourself if your advisor is giving you this stuff and are they listening to you? Are they looking at what’s important to you and in your life or are they selling you stuff that they’ve got? Are they open and willing to bring in other counsel and other advisors to help you?
Are they really looking at what’s important to you? Or are they trying to press you down paths to buy something that they think is of value or they’re excited about? Is that relationship between yourself and your advisor the way it should be? Looking at who you are and what you want, what you care for, what you care about, and helping you live that life, and if it’s not, maybe you want to give them the book.
Because I do think it’s a symbiotic relationship. It is a relationship that’s a two-way street. Advisors need to earn the trust of those who we advise but at the same time if earned, those that are seeking advice and counsel need to rely on that trust, need to open up and share what things are most important to them, and that takes us to a place of vulnerability, and sometimes we fear that but if you really trust in that relationship and you know that the values of the person in front of you reflect your own, then have at it. I think you’re going to secure a much better set of plans of action, you’re going to have more honesty and transparency in your relationship and you’re just going to have a better dynamic and better outcomes because of it.
Miles Rote: I totally agree and Stephen, thank you for really trying to change the way that people look at and then interact with wealth management in general and really trying to break that traditional old way of doing it, and instead help build a system that positively rewards both advisors and their clients for doing the good thing and building those relationships. It is so important and it’s such a unique idea and so thank you for writing this book.
This has been such a pleasure and I’m excited for other people to check it out. Everyone, the book is called, Aloha Financial Advising: Doing Good to do Better for Your Clients and Yourself. You can find it on Amazon. Stephen besides checking out the book, where can people find you?
Stephen Kagawa: Well, you can find me at pacificbridgecompanies.com.
Miles Rote: Perfect. Stephen, this has been such a pleasure. Thank you so much and everyone, make sure you review the book and let Stephen know how much you enjoyed it.