Client Losing Speed of Their Fastball? Coaching Families Through Cognitive Change

And we've got an interesting framing for our advisor audience today, and it really zeros in on some interesting research that you came across, Suzanne, about changes that we should be expecting of ourselves, of our clients, as we get older. And everybody, I want you to pay attention, particularly for maybe some insights about ways that we engage first-generation, second-generation clients and perspective clients and ways that we might not have thought about.

But back to the research. Suzanne, what'd you discover?

[00:00:58] Suzanne Schmitt: Yeah, so because I find this stuff super interesting, I've been digging into the research around the extent to which there are very predictable changes as we age, and more specifically three key ages that as we age, really have a significant effect on the brain.

The first one comes up probably a little earlier than any of us would like to hear, and that's age 57. And the key takeaway that researchers,

[00:01:22] Tom West: 57, 57.

[00:01:23] Suzanne Schmitt: 57, my friend, 57 5 7. All right around the corner for a few of us.

[00:01:27] Tom West: That stinks.

[00:01:29] Suzanne Schmitt: Yeah. No, it beats the alternative, as we like to say too.

But the key change that happens at age 57 is basically the white matter, so the portions of your brain that help the brain communicate with different sections that control different functions, the portions of the brain that control fluid intelligence and problem-solving start to decrease.

And what's really interesting is there's been a lot of studies done that find early fifties, your basically your financial acuity peaks. And now what researchers are finding is at 57 that fluid intelligence starts to attrite. Problem solving starts to get a little bit tougher for us. So that's an interesting finding, and I'm just going to go through the three key ages and I know you and I have had some interesting conversations about, "So great. Now that we know this, what do we do with it?"

The second key age where we see significant change is at age 70. And the key takeaway there is memory and executive function starts to decline. So you think about some of the complicated investment conversations or estate planning conversations. Those are the kinds of things that become a little bit tougher for us as we approach that age 70 mark.

And lastly, at age 78, basically the proteins and, still early days, right, and all the cognitive research around Alzheimer's. But at age 78, the proteins that would be conducive to things like Alzheimer's or diminished capacity, starting to take foot and actually manifesting symptoms, those proteins start to spike. And so researchers find there, the key takeaway for doctors, financial advisors, is you've really got to think about how can you not change the frame?

Meaning that is not a great time to introduce a radically different planning software or a radically different investment concept, but rather focusing on how to simplify, deconstruct, and really break it down is always important, but incredibly important for folks as they hit that age 78 threshold and beyond.

So that in a nutshell is hot off the press and I think, again, can be really informative to how we talk about engaging individual clients as we age, but also what are good ways to spur good conversation around intergenerational family financial planning.

[00:03:41] Tom West: So let's set an agenda together on how we're going to break this down for our audience.

And my suggestion would be maybe we go and sequence. Let's talk about the transitions at age 50 first. And while I'm mostly here with this podcast to be serving advisors, trying to find ways to engage their clients better, the first thing that came to mind was, "Hey, I'm in my mid-fifties, and what about me, Suzanne?"

So can you, I remember some of the research that I was doing coming into this was recognizing that around age 54, 55, somewhere in there, there is an inflection point, where neuroplasticity, our ability to make sort of new paths in our brain to learn new stuff, that starts to peak, but it tends to be balanced with crystallized intelligence.

Basically accumulated wisdom for all of our life experiences and whatnot. So I was hoping that peak mid-fifties thing was going to be, I was going to be able to ride that a few more years. But what you're telling me is there's actually some physiological changes in the brain discreet from that neuroplasticity crystallized intelligence thing.

So, refresh my memory, like what's going on in my brain, my client's brain, in the mid-fifties?

[00:05:01] Suzanne Schmitt: Yeah. So in the mid-fifties, the white matter, the stuff that lets those different parts of our brain talk to each other and form those new connections, it starts to decrease. And so what that means is we're not as fast on our feet.

You've used the phrase before, you notice maybe a little speed coming off your fastball. And it isn't like you fall off a cliff. But the processing speed that we have become accustomed to is, as people telling on ourselves in our early fifties, starts to decline. And problem-solving becomes a little bit more challenging for us.

So said another way, when you're in school, you're learning a lot of new things. You're being exposed to new ideas. You haven't built those neural networks that allow you to hit the easy button and process almost without thinking. Think of it as, when you drive to a place you're familiar with, you're not thinking about how you get there.

You go on autopilot. You magically appear, your brain does in essence the same thing, and the ability to go on autopilot starts to attrite as we hit really specifically age 57. So I think about, as somebody who's got kids who are starting to adult, you're not necessarily at that point thinking you're losing speed off your fastball.

You're not necessarily thinking about having to pull other people into the planning conversations. I'm going to put a question back to you. Now that you know this, if you take your advisor hat off, maybe for a second, how does that change the way you think about what you do and do not share with, for example, your kids?

[00:06:28] Tom West: I'm going to take that. That's a good question because my kids are early twenties, mid-twenties and they're in launch and pre-launch mode right now. So I'm like, I've got one and a half feet into the empty nest chapter. So the two ways I was going to think about it is what am I sharing with my kids?

And this is going to be a proxy for what I'm telling my clients around my same age. My kids are not old enough or mature enough to be able to handle all of this stuff. But even though they're north of 18, and that kind of legal planning doesn't count anymore. I've got to come up with basically a bridge between appropriate levels of stewardship, of wealth, of life, of things like that, that in the event that I'm not here, they've got a package for something.

So I guess my first thought would be, for myself and for our clients is, we've got to come up with a temporary strategy, a bridge strategy if the generation following the 50-somethings isn't quite ready. And we can talk about that a little bit more. But the other way that I'd answer your question, Suzanne, like what it means for me, and this might give our advisors some insight on how to talk to 50-something clients.

I feel like, if I accept the idea that there is a degradation of speed off my fastball in different transitions, then I think that there's an urgency on my part as a thinker, as an advisor to make sure that whatever brain training, ways to think about problems, that is going to be most holistic and most helpful, like the language that I use, the type of resources that I bring into my decision making process.

I think it's really important to build that foundation in your fifties, because I think when you think, you project forward is maybe something different is going to be happening at an age 70 inflection. It seems to be there's a window of opportunity to basically set ourselves up for a good decision-making protocol.

And maybe that's going to be a bridge, Suzanne, to talk about that next chapter in life. If advisors are thinking, listen, folks in their fifties, we probably have a decade-plus run of really building optimum decision-making. The ways that we are situationally aware, the way that we identify the different discrete choices that we have.

How do we make sure we execute on those? How do we make sure that we monitor the effectiveness of our choices? Those sorts of pieces. Advisors, we can probably do a good job with this insight of thinking that maybe, in your mid-fifties, that's your real opportunity to get, think of it like a dashboard for good decision-making, built with your client. But I also think it's important to start sharing with your clients, this is what's happening right now brain-wise, and this is what's likely happening in the future. But I'll put back to you, Suzanne. Tell me a little bit about the transitions that we'd be looking forward to or needing to plan about at that 70 inflection.

[00:09:43] Suzanne Schmitt: Yeah, real quick before we do that. I  think specific to folks in their fifties, this was not pulled out in the research.

It's just hypothesis of one here. But I think the other thing that is happening for most people in their fifties is, they themselves are still sandwiched, right? People are having kids later. So the kinds of just pressure, frankly, on us. Financially, physically, socially, emotionally, they're peaking a little bit later in life.

So said another way, somebody who's 57 is still probably taking care of kids even though they're getting ready to adult, and they're taking care of parents, and they're peak earners. So, I would argue just from a social perspective, part of the reason some of those brain changes are likely happening is we're just tapped out.

And I think for the advisor, the more that, physicians as well, the more that we can simplify things, be really clear about the impact to the individual and to the family unit, that takes some of the decision-making load off the consumer, the client who might be that 50-something person.

And it helps reinforce that you as an advisor get that they're spread thin, they're caring for a bunch of different generations, they're mentally tapped out, and you are adding tremendous value by acknowledging that. Talking about the people that matter to them and simplifying the decision-making framework.

Things as simple that, I know you do this really well in your practice, as de-jargoning and helping people think about some of the scenarios that are likely going to crop up for them in the next few years.

[00:11:10] Tom West: Yeah.

[00:11:11] Suzanne Schmitt: But specifically to your question, as we think about folks moving into the 70 range, right?

Where, again, critical thinking skills continue to decline. Memory and executive function, so the things that allow us to make good, well-informed decisions, start to become harder for us to do.

I wonder, and again, it's something you do really well in your practice, how do you start to engage clients around, "That's a key inflection point. What's your Plan A going to look like for the next 10 years? So what is it that is most critical to you as a client?" That could be staying at home, that could be providing down payments for the kids. It could be funding college for the grandkids.

But, really helping clients, as an ally who is on their side of the table, think about what their Plan A is as a way also to inject, "Okay. So now that we've articulated what you really want to happen, what's the alternative? What's the backup plan?" And I'd just be curious: How do you approach those conversations where you don't want to take agency or autonomy away from clients? There's no reason they can't make decisions independently, but you know what's coming in all likelihood.

How do you preserve that allyship, if you would?

[00:12:22] Tom West: Well, I think for each of these different ages, like for folks in their fifties, I think that the idea of may be talking openly. Like, my parents are still alive, your parents are still alive. Talking openly about it. Most people when they're planning for retirement in their fifties, they don't think about, my parents are still alive, and that's going to be maybe a big variable of the life that I'm going to lead. And I like the idea of sandwich generation.

And then for folks that are solo agers, open face sandwich generation. Maybe it's one side, not the other side.

But I think that, when we get from what I'm doing for folks in their mid-fifties through 70. I think I used two general techniques. The first one is, What are the teachable moments in your life experience, Mr. Client, Miss Client, that can inform the way that we want to plan ahead? We want to be sure that our Plan A is working. The most important thing, of course, when you're trying to be on the same side of the table, you're trying to be an ally with your client.

You've got to engage. And I really would encourage every advisor in the audience to steal this idea, Plan A, Option A. That really works. It's usually around that 70 bend where there starts to be very natural anxiety on the part of folks, which is, "I'm moving into a chapter in my life where I might not be the captain of my own ship as much as I want, whether it's changes in health, changes in decision-making ability, if I'm becoming financially dependent on another generation because I didn't do enough saving and whatnot."

I think that when you're talking about developing a Plan A, I always find a whole lot of benefit in expressing, What are the things that you're most hopeful for? And audience, remember, people really clam up when you start telling them all the bad things that might happen. They shut down when folks are pressured to give up some control or sense of control because they're in some kind of danger.

That is not the way to engage. The way to engage is wherever anybody is at their particular point in life, figure out what are the things that they're most hopeful for. What are the plans that we might want to make and rally around? And do everything that we can to meet our clients around those particular priorities.

And then, and only after you establish consensus on what those priorities are, then you pivot to. What happens if something goes left, if there's a change in health or there's a financial catastrophe or something like that? So the sequencing, Suzanne, is I think, really important. Always lock in on the things that folks are most hopeful for.

Try to get as concrete of a visualization of a positive future state as possible. We've had present-self/future-self conversations in previous podcasts. This is an opportunity, I think, to really imagine with us, with your client, what that positive future state might be. And recall that's hard for people to do.

There's also one other little hack that I use when I'm communicating with clients that works. If you can't imagine yourself in this positive future state, imagine your kid. Imagine your grandkid. Imagine your child retiring successfully. Imagine your grandchild having their first job or their first serious relationship or moving into a house and zeroing in on what are the positive attributes about that particular scenario, and then asking the question like, What are the things that we could do right now to give that vision the best chance of success? Again, drill into that and then pivot backward. Let's figure out what happens in case those opportunities are taken away.

But that's usually what I'm doing at around the 70 bend. Hopefully, that's helpful.

[00:16:39] Suzanne Schmitt: Certainly helpful to me. And I'm curious, Tom, is there any particular way that you've introduced that? So you've got a client who's 70, they're coming in, they've been an existing client, you know you need to start helping them map out the Plan A. Just if you could, for our, especially for the listenership, Could you really walk us through how do you initiate that conversation and are there specific turns of phrase that you use?

I've certainly heard things like giving you permission to spend on X, Y, Z. But are there specific hooks or language that you use that you found to be really helpful?

[00:17:14] Tom West: Well, a lot of times, the consumer population views us first as portfolio managers. And I don't think that the industry has done a very good job of talking about the holistic impact that we make on families lives. The whole idea of, if I can just keep you from making the one fatal mistake, just because of our service model or our communication or our trust or whatnot, I don't think that we do a good job of talking about the impact of the advice and the planning. Sometimes it's quantitative, the tax alpha and all those sorts of things. But I don't think that the qualitative stuff is quite as easily understood. Knowing that in advance, part of what I try to do is launching off from a portfolio management standpoint, is I usually express. an advanced version of the fiduciary standard kind of this way. We're fiduciaries and a lot of our listeners are fiduciaries the way they serve clients. And, Suzanne is my client.

I would say something like, "Of course we're fiduciaries. We're going to act in your best interest. We're going to disclose and avoid conflicts of interest and all of those sorts of pieces." But, truly what we think an elevated fiduciary standard is, I want to have a consensus with you about what the job of the money is. Like, knowing really specifically, How we want to make these dollars perform to be able to achieve, qualitative and quantitative goals that we have? So I want to zero in on, How come you want to be a 60/40 investor exactly? How come you want to be an 80/20 investor exactly? I try to sell away from, I'd probably say "broker dealer 10 question risk tolerance" questions, because, we know that it's perfectly appropriate for some clients in their late seventies and early eighties to have a very aggressive investor posture that, particularly if you've got timeframes for multiple generations. So, I usually zero in on stuff like, you want me as an advisor to do a great job, not just in terms of outperformance in your portfolio, but making sure that we're aiming at the right bullseye.

So that usually gives me an opportunity to introduce concepts around more sophisticated financial planning, which is, "Tell me exactly how much money we might need at different inflection points. What if there's, what if there's a financial situation, a change in health? You want to move? If a kid needs to be bailed out?”

And what I try to do is, I try to introduce as many plausible scenarios as possible, or prompt them in their life experience, "What have you seen with parents, with relatives, with friends that have knocked the Plan As of other people off stride?" I want to build some scenarios in the financial plan that ultimately can pull back to what the allocation decision is in the portfolio.

And I'm using the front of technical portfolio management and tax alpha and whatnot to be able to get into some of these other things. Like a good example would be, “If we have a change in health, what do we want to do?” And we talk a little bit about that, and we introduce the idea of extended care or dementia or something like that.

And then I'll remind them, most of those expenses are deductible on your taxes, and that'll probably mean that we need to change around our assumptions about liquidity. About, why do we need municipal bonds in the portfolio if you don't owe any taxes, if you're paying for dementia care.

Like those sorts of pieces. So I always try to pull back early in our relationship with a client to the technical portfolio stuff, but candidly, I'm using it to drive better engagement, to drive better trust, to work clients through, a better visualization of the best-case and the worst-case scenarios in the future.

And in my experience, like being able to have an exchange of present state, possible future state, those sorts of things, I can usually pull out a lot more insights about their emotional connection to their priorities, and that gives me good jumping off points for when clients get even a little bit older, maybe to that 78, 80, age 80, where I always try to build somebody's story with them. And you're going to tell me a little bit about changes in a second at that age 78 bend.

But what I'm trying to do through folks' seventies is create a narrative. This is, you're a character in your own book, your character's characteristics are "da da da da." The way we make decisions is these things. The way that we handle adversity is these things. The people we care the most about are these people. The more that I can establish that narrative and be able to have people visualize themselves and supporting characters in their own story, I think I can set them up for better decision-making in their late seventies, and also come full circle back to that younger generation, integrating them into the story as well.

[00:22:33] Suzanne Schmitt: Exactly. No, thank you for walking us through that. And I think what's helpful particularly about that story is you're not launching a, What's your plan? You're not literally asking your client, What's your Plan A? You're walking them through the process of key decisions relative to changes in the financial plans.

You're giving them good anchors as you build that conversation out and giving them time to think about it and process with you in the moment. Which again, I think is super helpful because not all clients are going to expect an advisor to get into the wants and wishes stuff right out of the gate.

So it's a great hook to the conversation. So let's go ahead and talk about 78, and by no means will this apply to everybody, but those proteins that are conducive to cognitive decline frankly, things like diminished capacity, dementia, Alzheimer's, et cetera, start to build as we get closer to 78.

And the net impact is really it's just harder for people at that age to process really complicated information. It can be harder to absorb, like I said earlier, moving to a new planning system or introducing complex new investment structure or schema. So from the advisor's perspective, if I go back to that conversation that you just articulated around age 70.

What are some things that you are currently doing in your practice to really break it down, keep it simple? And I would also say keep it consistent because the older we get, the harder major changes, from a cognitive perspective, it's just harder for us to process major changes. So how do you simplify without being potentially insulting to the client and what are some of the red threads, the things that you do consistently with your clients as they age, both individually and in terms of how you talk to their family, their loved ones?

[00:24:17] Tom West: I think that the, one of the things that has been repeated back to me that myself, and my team, do really is, I tend to add in a whole lot of attaboys, attagirls at regular intervals. Be proud of how much you've accomplished. You're in a pretty good position right now.

We're recording this in the first quarter of 2025, when certainly the news cycle is putting pressure on everybody in terms of anxiety about what comes next. And giving people some relative confidence of, "You're not in this category of folks that have different kinds of concerns. You've put yourself in a position to at least have choices and options and might actually be able to extend like a halo of safety across maybe not just your own household, but the household of other family members." So the first thing that I do is, I try to talk, which is much encouraging atta boy, atta girl as possible.

The second thing is I do a really good job of mirroring and repeating back to them the things that they say. It's an underappreciated tactical skill. Some people call it a selling skill. I don't particularly think it's a selling skill. I think it's a way that people can feel understood and seen. And remember, from that book, Never Split the Difference. I really like that book. It's a great recommendation for a read. Chris Voss wrote it. But the concept of repeating somebody back to them, remember that they can't hear their own words repeated back to them as easily as you can mimic them. So they're understanding you repeating them back as this person really understands me and is listening carefully.

So I would encourage a lot of mirroring. Particularly as folks are getting older. And I think the mirroring, not for nothing, makes it genuine. How do you incorporate the spirit of what your client is telling you into the messages, into the calls to action that you're putting in front of them?

I always like, Suzanne, to ask questions about if there are unwelcome choices, forced choices, we've talked about that before. I always like to bring my clients back to previous chapters of their life where they had to make hard decisions before. And, did you make the right decision? Do you have any regrets about the decision?

How did you make that, that your instinct was correct? How did you know? And usually, I will find something in that previous story that is similar in some way to the current challenge that they might be going through. And I think it's really important to make people feel as much as possible that this is another chapter in the same book.

This isn't a new book. You're the same character. You're doing the same thing. And I really like to strive continuity and consistency and sometimes that I will relay that back to their strength of character, the strength of the family that they've got. Like, the Smith family always finds a way and they do it this particular way.

Those are the kinds of things that I usually try to do in those later stages of retirement. I think the other piece, too, is that's a way that we can find a bridge into conversations of second-generation successor decision-makers. I'll be engaging the successor decision-makers, like, "Give me a story about how your dad, my client, helped you out in a tough situation, or gave you some wisdom at an inflection point in your life." And what can I take from those particular stories that makes the current situation similar? This is a way that you can mirror back or reciprocate the impact that they made on your life by doing the same thing back to them.

Whether it's, finding an objective third party, or just being quiet and being present or not telling them what to do, trusting their agency. Those are the kinds of things that I try to do with some degrees of success. But particularly in those later stages of retirement, continuity, continuity, continuity is part of my message. Even if, practically speaking, the sets of choices that these families are making, they're, encountering for the first time.

[00:29:01] Suzanne Schmitt: Really helpful. And I think said another way, as people age, there's a tendency for families oftentimes to take the role of the antagonist.

They're the ones that are talking about the deficits, the shortcomings, the changes. And what you just played back to me reinforces how you keep yourself on the same side of the table as the client. You show up as an ally, and you're there as an objective witness who understands what the lient's Plan A is, and the fallback position for Plan B.

And you are then showing up as an advocate for the client if there are differences of opinion with the family.

[00:29:36] Tom West: Yeah. I'll tell you a story. This was a client meeting last week and, you have to, I think as an advisor that sees a lot of different family stories. You have to afford your families a little bit of grace when they're a little thread bare with their situation.

And the vignette was, we had an 85-year-old mom who was a longstanding client of mine who had moved into an assisted living community and wasn't socializing at all and had started to show some signs of depression, had shown some signs of withdrawal. And the adult daughter, my age, was extremely frustrated and, maybe was speaking to the mom that she used to know, and they got into their track of not always functional disagreements. But the daughter was coming from a genuine place of, "I'm really worried about you being alone," and what the call to action was.

"Can you move to a different level of assisted living, in a way that you can just be more socialized and you don't have to take proactive steps to be out and, have people that know your name and all that stuff?" And what I found myself in the room is, I wasn't exactly a referee, but I think what I was able to identify, and I'm not a therapist, but I've done it a handful of times. I was able to identify an impasse is, mom just wasn't going to do it if daughter said, "you got to do it."

And daughter was beside herself because she was worried and anxious and frustrated with mom. But she was arguing with symptoms of cognitive impairment and depression, and she wasn't arguing with her mom. She was arguing with an 85-year-old that was somewhat diminished. What got us over the hump was me giving mom a whole lot of atta girls and going all the way back to when she was married, vignettes that I remember being part of with her husband about having money, affording options, making sure that you're asking for help, and going back and finding parts of her story where she was able to reach out, she was able to benefit from having her world expand just a little bit. And, without having to shush the daughter any more than I needed to, what I could tell was her body language, mom's body language was changing.

The idea of being hopeful for having meals with other folks, like, the idea of transitioning to, what are the things that you're most hopeful for or excited about at age 85 and atta girl at age 85. That temperament, that sort of rah-rah that I was giving, that relaxed her a little bit to get her to agree to get somebody, not her daughter, to be able to show her around for the other assisted living piece. And I did have a, one quick aside with a daughter on the way out, and she was beside herself upset. But I wanted to give the daughter sort of an atta girl too, which is you're concerned about mom. You don't want her to be alone.

You don't want her to be afraid or disaffected. And that's really heartfelt and I see it. What I want for you out of all of this is not to have to be the hammer, the bad guy, the policeman, the naysayer. Like, I'm trying to get you in a position where you can be the quiet, present, loving daughter with positive exchanges.

So, we've got to have somebody else take mom over the threshold, over the next decisions. Because you're not being as effective as you want to be. And I think that, when I was telling the adult daughter, having her envision for the balance of mom's life, maybe a different role or a different future for her herself.

Like, I saw her and she promised and she did self-regulate a little bit about the way that she was interacting with mom. Took a half a step back. Now this doesn't always work, but I'm using this as an example of, how do you find consistency of story? How do you emphasize hope?

How do you atta boy, atta girl along the way? And I was able to bring it back, believe it or not, all the way to the portfolio, which is look at the way you and your husband set up your portfolio 10 years ago with me to give you the option to move to a place that you can have more people around where you don't have to try so hard.

And being able to have that thread go all the way through. I think she experienced a lot differently than, "I'm being forced to do something that I don't want to do." And, maybe there's a nugget in there of that vignette that's going to be helpful to underscore our point.

[00:34:29] Suzanne Schmitt: Super helpful and it reminds me of just very practically there's an emergence of something called a cognitive change plan that some advisors are adopting, and the premise is basically how do I as an advisor negotiate with you or your family, where you as the client, get to tell me when X happens, that's when I want to start to shift the conversation and maybe enable more people to take on some of the decision making support, adopt some new technologies, et cetera. So a lot of advisors that I've spoken to as I've been out in the field say, they'll agree with the client on, “Hey, if I double pay a bill, or if I miss a bill, that's going to be the trigger for us to have a different kind of a conversation around some of the changes that may be happening.”

And I'm just curious if you'll indulge me in my last question for you. What are you doing in your practice to negotiate incrementally those specific triggers, if you would, those behavioral changes that you and your client are agreeing on as an opening to advance the conversation and take it in a slightly different direction?

[00:35:37] Tom West: I'd probably say two things. The first one is, I'm happy to say in my mid-fifties that I am still learning. I haven't, I don't think I've peaked. Maybe I'm in denial. But I am still learning. And I think that our approach to this particular question, Suzanne, continues to evolve. The way that I approach that cognitive piece is, let's go back to the framing from the very beginning of the podcast.

I want everybody to imagine their book of business and their age cohorts and okay, you got, mid-50-something. Then you move into the sort of the heart of sort of the boomers in that 70 bend. Maybe the polls of that 70 bend are Suzanne's inflection points of 70 to 78 to 80. And I always think of it from a practice standpoint is.

Where's the age-weighted revenue? How much revenue is going to be dropping off in terms of my 80 plus that if I don't retain it, in terms of my second generation. It's going to impact the value of my practice and whatnot. I then am overlaying in real time when we're preparing for this podcast.

Okay. That means that this part of my book of business, which is the 50-somethings, they're all encountering this sort of stuff. And then seventies are encountering this sort of stuff. And then at age 80 plus are encountering this sort of stuff. And I start attributing the portions of revenue that those sort of blocks of experiences are being subjected to.

I start with that because I tend to think from my practice systemically first and then tactically second. So the first thing that I do when I'm thinking of this cognitive piece is like, How much is it worth to my practice to be able to go narrower and deeper in something that might not be immediately monetizable?

Because I always want to think I'd like to think I'm a big-hearted person. I do a lot of charity work, but at the same time, I'm trying to run a business, and I can't be a social worker and give out all the hugs for free under all circumstances. That framing has helped me think of this cognitive issue.

If I can have a better experience from a first and Gen one and Gen two through all of this cognitive thing, I have a much higher likelihood of being able to retain that second generation, and that's a huge financial variable for my practice.

So given all of that background, the next thing that I try to do tactically is, I want to recognize that most folks, when they're thinking about an expression that makes them more vulnerable. Like I'm just thinking, I'm putting myself in the position. I've now wrote three bum checks, or I've had the second time that I've been defrauded on something that I should have caught. Most people are going to be like, "They're going take control away from me. I'm not independent anymore." And that by itself for a lot of people, that's more terrifying than writing a bum check.

So the most important thing when you're having these conversations about cognitive triggers is to genuinely describe the course of action after something like that happens and spend a lot of time on making sure that people are comfortable, we are not taking control away.

You are the person that is preparing to bring in more resources to make sure that you stay independent as compared to we're taking it away from you. That continuity of agency is hugely critical. And again, if you're tracking this and correlating it a little bit with age. The reason I'm doing that is I'm also playing these client stories back to them in that conversation.

Just like you had a particular protocol and some success handling hard decisions in the past, this will be another one. Let's think about ways that we can make the best decision then, so that future generations can look back and say, "Listen, when mom was slipping a little bit, she knew when to hit the Plan B button."

Have conversations, bring in other resources, put some safeguards in place. But that's typically the way that I do it. I start from a system standpoint. Figure out oh yeah, this is extremely important. If I don't do this, then my second-generation retention is going to be like industry averages, which is terrible.

But could I use this conversation among others to be able to foster better client conversations, express more about what's really important to them. Try to find ways that it always comes back, practically and tactically, to the portfolio management. But so far, at least, many of these methods that I'm using have been pretty successful.

And I appreciate the question. Happy to share any of my learnings as far as it'll go.

[00:40:45] Suzanne Schmitt: No, that's super helpful. and so just to play back, because I know you and I talk about age-weighted revenue, I've introduced that concept as I've been out in the field and not everyone gets it. So just to walk us back, define for us what age-weighted revenue is in just a second.

And then I would just say, Tom, I think the premise is if we know that certain changes are happening writ large across populations, what you're saying is basically take that view, apply it to your book, and know that you've got tranches of people who are moving through these similar changes that are not just affecting them, right?

There's those knock on effects to the second generation, and what you're really talking about doing is systematizing an approach, as an advisor, to how do you help these folks who are navigating similar challenges do so with dignity and at the same time care for the generation who is coming up behind them, who are feeling some of the impacts of those changes.

[00:41:41] Tom West: So at least to the point on age-rated revenue, like what the definition is. I'm breaking down, by age cohort, what my top-of-the-line revenue is coming in from different age bands. So I know, for example, that 21% of all of my practice revenues comes from households with heads of household 80 or older.

So what this is basically telling me is, I've got 20% of revenue that has a higher than likely chance of dropping off just because of mortality in the foreseeable future. There's an age-weighted revenue average, like if you are going to weight the revenue per household by age, my age-weighted median is 72, which is about four years older than the industry, which is about 68. So, if this practical measure of an advisor's practice, this is new to some listeners, I would kick this up to the institution chain and, because this is something that, it's an opportunity and a threat.

If you don't know that most, or a significant percentage of your practice revenue is coming from an age demographic that's about to transition for illness or mortality, you should probably know that. So that's part of the metrics that I use pretty regularly. So hopefully that's helpful and addresses that. Yeah.

[00:43:13] Suzanne Schmitt: Thank you for, doing that. I think that replay, if you would, or that retrench is going to be helpful for listeners. So, you raised best practices, and I promise this really is my last question for you. What are some other things that you have taken away as best practices using, for example, age-weighted revenue in terms of how you engage your clients that would be great tips, if you would, for listeners?

[00:43:38] Tom West: I will share with you like a project that is being formed in real time right now, with you I might add. The idea of looking at the population of my practice. And recognizing that everybody's aging and living at the same time and the same rates and what population of my clients are they coming into, like. If most of my new clients are age 65, for example, then I need to have my onboarding process be very catered to age 65 stuff.

If I have onboarding for folks where people are hiring me because maybe they're not as independent as they used to be, and I've got some differentiated expertise there, then all of that onboarding experience should be trying to find somebody's story and anticipating that their executive function, like you said, might not be the same.

But candidly, anybody that's coming in at around age 80, this is overwhelmingly a second generation onboarding approach. It's, without taking anything away from my 80-year-old client, I am actively looking to figure out what the client priorities are there and make sure that every one of the successor decision-makers is aligned on what those priorities are.

Keeping myself as an ally and a confederate with my 80+ client, like that's something that I'm doing regularly. Those best practices I think can be systematized. I think our industry does not do a really good job of being able to cater and curate different kinds of engagement strategies, by age or by age/ability.

There's that framing of, the go-go years of retirement, the slow-go, and the no-go, that correlates to age. It's not perfect, but since we know so much of retention is not just engagement, but engagement that matters, those are the practices that I'm trying to do more systemically.

And to be able to, if we're able to do that, it gives us the ability to help clients see around corners. Anticipate blind spots, know the things that are going to be important to them. Not now, but right around the corner. They might not be ready for me to tell them what's going to be important to them at the next inflection point.

But being able to provide ready resources at any of those moments of transition, that's something that we work pretty hard on, and at least through The Family Financial Conversation, being able to project them out to hopefully an advisor group that recognizes our need to elevate our standard of care.

[00:46:33] Suzanne Schmitt: Yes, exactly. Thank you. That was really a helpful playback, if you would, of the bridge and how you're treating age-weighted revenue, and how we're together thinking about it a little bit differently on a go-forward basis.

[00:46:47] Tom West: This has been a good exploration. I appreciate some of the questions you made me think about what I'm doing and not doing and how I need to be doing it a little bit better.

For everybody in the audience, Suzanne and I are going to keep working on trying to refine this message. How do we really approach portions of our practices where everybody's aging and encountering different transitions? I think that if we stay on the priority of understanding the most important things for our clients and always being able to bounce that back from our bread and butter, how we're managing portfolios,

I think we can do even a better job in the years ahead. But appreciate everybody listening. click on the link below to subscribe. And thanks again for tuning into The Family Financial Conversation on Advisorpedia. Thank you.