Nobody Cares About Your Advice and It’s Okay with Tom West & Suzanne Schmitt

Tom, thank you, and I hope likewise.

Thomas West  00:27

Yeah so far so good. And where I'm going to sort of lay up the initial part of the conversation, Suzanne, see you can start framing. There have been so many points in my career where I'm talking to different family members at different stages of transition, and I have attempted to add value with my brilliant financial analysis or market commentary or, you know, economic concepts or whatnot, And the family's just not in a place to listen to care, and a lot of my career path has been in a search of what's the right time to introduce what kind of advice in a way that's most effective. And more importantly, what do I do in those periods of time where there's just no bandwidth or interest on the part of my clients to listen to anything that I have to say from a professional discipline standpoint, that's basically what we're going to talk about today. Suzanne, why don't you give a high-level framing of what it is we're talking about from a consumer and an advisor standpoint?

Suzanne Schmitt  01:42

Yeah, so a lot of interest in the last 5 to 10 years around helping advisors, I think, just like doctors, they're trained to always have an answer, and oftentimes that means filling the space when clients are quiet or clients are a little bit hesitant to engage. And what the research is finding is that some of the best things you can do as advisors are, pardon my choice of language, but, “shut up and listen” and “live with the silence.”

The other thing that we're seeing a lot of in the research is part of that is being driven by something that's commonly called “money scripts.” Money scripts are the notions that are unconscious to us that we grow up with, and they really inform our view of money. And research finds four that I think are really important for advisors to understand about themselves, but also because understanding them at your client’s level starts to unlock why clients may not be ready to take your advice and gives you some insight into the family, which in turn, can potentially create that family connection, which enables you to grow into the household. So script number one is “money avoidance.” And this typically happens with folks that are self-made, but they don't necessarily grow up with money, and there's an underlying belief that they shouldn't have money. And so sometimes, when the advice is investment focused, people that are money avoidant just have trouble moving forward. The second type of script is called “money worship,” and so like the name may imply, these are folks that are very attuned to status, and are going to be oriented to how to mitigate life changes impact on their status. So said another way, if a client might be grappling with a cognitive issue or divorce. Yes, they are concerned about that event, but they are most concerned about how it's going to look and how it's going to affect their outward lifestyle. The third is “money status,” and similar in name to the second type, what this person really grapples with is the belief that their self-worth is their net worth. And so for folks, again, that might be engaging in a life transition, they're going to be really dialed into when those numbers start to decrease. This is a big issue for people. When they go into retirement and shift from accumulation to decumulation, they literally think they're getting smaller as people, they're going away. And the final script type is “money vigilance.” And these are the people that live to save for a rainy day. So when they're quiet, they're really thinking about how, you know, I saved all this money I'm afraid to spend it has too much of my life gone by for me to even enjoy it.

So I start there just to say that I think fundamentally, in those moments of change when your clients are quiet and they're not taking your advice, it can be important to get inside their heads. And I'll offer you one more nugget from research and I think this is really fascinating. 50% of investors believe advisors should be keeping them or helping them, excuse me, to achieve their life's purpose. And that's recent McKinsey work, really interesting body. And hopefully we can come back to that. But I think sometimes, when again, clients are quiet. They're trying to think through to what extent does what you are offering up help them to achieve their life's work and their life's worth. So a very different slant, I would argue, from traditional advice, and hopefully that gives people in this conversation a little fodder for consideration.

Thomas West  04:58

All right, so there's a lot to unpack there. So here's one advisor perspective, and I'd like to think that I'm speaking for at least some percentage of the audience. You know when clients are going through some kind of transition that has financial implications, and because I'm good at my job and I know what the answer is, it's a liquidity problem, it's a tax problem, it's a cash flow problem, it's a sell the house problem, it’s those sorts of things. You know, if we've got this McKinsey study that basically says, you know, my job is being perceived as helping out with my clients' life purpose, and I know the answer that'll get them closer to the life purpose. You know, part of me listening to this podcast, Family Financial Conversation, ostensibly, is to make my life easier and more productive as an advisor. How come I just can't tell them the answer to the question? Why doesn't that work like I'm trying to push a button, and how many times do I have to tell them? Do I use different language? Like, what am I supposed to do when I've got a limited amount of time, I've got other stuff to do. I only can talk to these clients so many minutes in the day. What's your response to that? Like, how do I do the life purpose when I'm trying to push the button of getting the call to action to do the right thing, but they're kind of, whether they're money scripting, or they're panicking about something, or they're dealing with ambiguity, you know, like, translate that for me a little bit. Like, how do we make it from the theoretical to the practical? Because, like, I know the answer, but I'm just trying to, yeah, I don't know, square peg it in. So we can move on to the solution?

Suzanne Schmitt  06:45

Absolutely, so I'm going to use something you and I talk about a lot that is mirroring, and mirroring doesn't involve just body language, it involves purpose. And so in that scenario, when you know that the client has to sell the house, that's what has to happen. What about, and I'm certain you do this in your practice, you client told me that staying in your home is the most important thing to you for reasons x, y and z, that is no longer possible. Pivoting to what is the next most important thing to you, and going back to the language of home can mean safety, can mean security, can mean independence. And I think that's a short circuit way, if you would, to get inside the client's head and at least earn the right to keep the conversation going, versus reaching the impasse where, you know, bottom line the client knows on some level that's the right thing to do, but you can't get them over the emotional hump that's causing that impasse or that silence.

Thomas West  07:38

Yeah, that's a good place to start. So, generally speaking, we know about what amounts to be sort of the Fresh Start effect, the idea that people are more likely to start progress towards achieving new goals at the beginning of a new period of time, at the beginning of a new stage. So, you know, when we're getting into some of this active listening, you know, one of the things is trying to be present with the client to define what their new stage looks like. You know, what is true and not true based on, you know, the previous expectations and whatnot. Suzanne to like your story about making sure that you know. And I'm losing my chain of thought because I really want to tell a story that you triggered. There was one particular instance that we had early in my career where the conversation just stopped. I was with a family, an extended family, where dad developed dementia. Mom was not financially literate, and everybody around the table was trying to figure out how to keep a family real estate business in place while accommodating the idea of “we want to stay at home no matter what.” That's what got me going with your thing about staying at home. And my job, I thought, was to do the math on all of this, reflect all the different decision-makers about, you know, what the next practical financial steps going to be to be able to do this? But in the very beginning of the meeting, Mom said something along the lines of, well, when the daughter is able to help out with caregiving and move in, and the adult daughter said, like, I'm not planning on helping out at all. I'm moving to Florida. I've been waiting for the right time to tell everybody, but you can't count on me as being a material caregiver. And I remember two thoughts as an advisor in the room, like, one, this is early in my career, like, am I should I even be in the room? This is, like, super awkward, right? And the second thing is, boy, everything that they thought they knew about their situation just changed. And the idea would be trying to figure out a way to define this new chapter in their life, and then redefine the goals associated with that new chapter, and then move to sort of solve on them. That was probably the first episode in my career where all of my financial advice kind of went out the window, and I had a pretty good mock-up of stuff. Nobody wanted to hear anything that I had to say. But coming back to the title of our podcast, it ended up being okay, because I was present in the reframing of their current reality. And while they are putting together their new hierarchy of important stuff, it enabled me to listen carefully so that at a future time, I was able to mirror, just like you said, their new interpretation of their new responsibilities and whatnot. And eventually they were able to follow my calls to action. But the mirroring and the stay at home, it reminds me of this one particular like the adult daughter, where the cliche was five family members all assumed that she was going to move in and take care of dad, and that was never, never the plan to begin with.

Suzanne Schmitt  07:38

Yes and I guess, I am guessing, every single listener has had at least one similar event happen in their practice, and I'm wondering, Tom from that experience, you know, being young in your career, what did you take away from that in terms of when that reality hit and there was dead silence in the room with that family, what did you learn in that moment, and how did it change the language that you used and the cadence that you approach your conversations with?

Thomas West  11:49

That's a good question. So at least in my case, and I think all advisors have this different blend of skills and talents and passions that they're able to apply in the way that they serve their clients. What I learned is I've got a particular skill or talent where I'm able to move fluidly between informal, more emotionally sensitive conversation to real, technical, nerd stuff that is able to show off some analytical chops. What I learned was, it was a, it was very important to be able to shift quickly in that particular situation. And the lesson that I learned, and it was, it was a, it was a little bit of an accident. I was dumbfounded. I had no idea what to say. I thought I shouldn't even be in the room like I was. I was watching, you know, grandma and grandpa's face drop. I was watching all of the older brothers, like, come to terms with the fact, like, Oh crap. I thought sister was going to take care of this, and now I've got different responsibilities, and the sister being kind of annoyed that she was some combination taken advantage of or stereotyped in this role that she had no intention on. So the back end lesson that I didn't expect was I defaulted into the right behavior, which was not talking, which is not my nature. Suzanne, here I am on the podcast, making sure that I can listen to my voice in real-time and play it back to myself because I find myself so interesting. I was so dumbfounded. I had no idea what to say, and because, like I think, that my antenna were up, it gave me all of the information I needed to mirror back to all of these individual stakeholders at a future time to be able to make sure that they knew I heard where they were coming from, and they knew that I was balancing, sort of the analytical and the emotional in terms of their search for the right outcomes, but like I didn't arrive at “Hey, Tom Shut up” naturally, because that's not where I come from. That was probably the biggest lesson that I learned.

Suzanne Schmitt  14:03

Interesting and makes a ton of sense. And if I could ask one more follow on to that. You know, when you think about education for advisors, where do you think, and I don't mean to lead the witness here, not that you would let me lead you, but where do you think the role of kind of advisor bedside manner should come in in ways that are different than what you had exposure to and what you continue to be exposed to through things like CE?

Thomas West  14:28

Yeah, that's a good question. Let's start with the biggest, biggest frameworks for the whole podcast. All right, our job is to help advisors pay attention to retention of clients, organic growth, and second-generation retention, right? Like that. That is why we're doing this podcast. I think the approach to answer the question the advisor's role is we need to start paying attention to the signals on what the market is telling us it wants, like it doesn't, to some degree, Suzanne, like it doesn't have anything to do with the advisor. Like the market is going to want a more emotionally intelligent present experience in their advisory relationship, and they're going to get it if it means transitioning away from advisors that don't get it, for lack of a better way to put it, I think that the advisor's role is shifting in the sense that not only do advisors need to be more situationally aware of where the clients are coming from and what obstacles they face with being able to articulate you know, what's important to them, and the transition the rest of it. But advisors, like, I think it's the advisor's responsibility, if you're paying attention to, for example, second-generation retention, if that's important to you, like, if net flows are important to you, it's kind of your responsibility of looking at, sort of the macro environment if you're not developing the skills needed to navigate these family financial conversations. I think that some of those you know, very financial advisor business, KPI, things like, I think that you're going to be suffering. So if nothing else, for those advisors who I'm really sympathetic with, like, listen, you know, my job is to tweak portfolios. It's not to hug it out with my clients that are going through, you know, some challenging, you know, health situation. You have to recognize that this is a variable, and if it's not, you then get them to the aligned, you know, collegial professional that is able to serve that changing client needs that change in client demand. So you can keep your client that's, I think, where the responsibility really falls. How does that sound?

Suzanne Schmitt  16:50

I think that sounds spot on. And I think it also sounds easier said than done. So for the folks that are struggling. And you know, again, I'm drawing on your practice and some best practices and this notion that the advisory role is changing fundamentally. Where do you begin?

Thomas West  17:11

Well, you know, Suzanne, I think in some of this is going to come back to you from an institutional and a programmatic perspective. I'd like to say, like, when you say, you know, Tom given all this stuff, where do you begin? I'd like to ask, like, Who are you asking the question of, are you asking the question of the advisory business? Are you asking the question of the industry writ large? You asking the question of the individual advisor? Yes, I think there's only so many things the individual advisor can do. Meaning, okay, I've got to be sensitive. I've got to know when to shut up. I know that the idea of being more in, you know, emotionally present when clients are reassembling their priorities in order to get to the new situation, that I can then make better advice on using mirroring and whatnot. But I also think that that we need to as individual advisors kind of accept some of the limitations that our firm, our practice, our staff is sort of, you know, put on us, like there's only so many things that you can do. So to some degree, you start with you as an advisor. Your existing framework, like, how do I go through a discovery process with a new client? A brand new client? Well, I would say the place to start is, anytime your clients are going through changes, treat them as a brand new client. You're not introducing a new process, but these are new clients, new decision-making, new priorities, new successors that have a voice. So I would say advisors should start at treating every single one of their clients in transition as a brand new discovery, that I think is probably the easiest place to start. I think beyond that for an individual advisor, I think let's pay attention to where the demographics are going the likelihood of like, remember, we talked Suzanne about advisors need to understand their age-weighted revenue in their practice. And, you know, I remember, I think I reported back to you my age-weighted revenue average in my practice is 72 years old. That means half of all of my revenue is driven by head of households older than 72 years old. So the second thing that I think advisors can do is become very situationally aware in their individual practice about like, Okay, how much of a problem is this? And I would offer like, for example, this is what I did. In the next five years, I'm going to have a huge percentage of my clients, at an accelerating rate, go into chapters in their lives where this sort of stuff happens. So I'm kind of backed into like, Oh crap. I you know, if not me, then somebody else has to be good at what all my clients are going through. But I think from an. Advisor standpoint, that's, I think, what I would what I would do. I think it's an interesting question. When you say, where would you start? This is what I want to put back to you. Yeah, if I'm a firm, and I know all my advisors are going to be going through this, and I recognize that the overall book writ large has age-weighted, revenue problems and organic growth, and G2 and all that other stuff. Suzanne, if I'm a firm, where would I start? What would I do to support my advisors that can only do so much given limited resources and training?

Suzanne Schmitt  20:34

Exactly. You know, three things immediately come to mind. You know, one is starting with the data. The data tells the story, and I think firms are making headway. They can always do more to really help advisors understand the demographic and psychographic nature of their book. So go right back to the age-weighted revenue, looking at gender-weighted revenue. Those are all things practice management tools that I think firms can give advisors to help them really dial into the health of their book and see around the corner, meaning, where is the health of the book going? Because it does come back to organic growth and net flow. So doing more with the data that firms have, to me, is one of the first things that needs to be done.

Secondly, it is not, I think, an accident that we are seeing growth in this notion of the psychology of money. There are people now who are achieving designations as financial counselors. You know, two resources that I would highlight, who are currently working with some big label firms. You know, what is Brad Klontz, who wrote Mind Over Money, which is a, I think, a great starter book for somebody who just wants to get their feet wet, but Brad does a lot of work with firms and with consumers to really understand the money mindset that script that we talked about at the top of the podcast. But more importantly, he offers practice management tools that firms, in my opinion, could invest in to help advisors better understand their clients without taking time during the meeting.

The third resource I would put out there, again, this is something that the firms are doing, and I could argue do more with is investing in advisors to grow their soft skills. So the resource I want to highlight is Brian Portnoy's Shaping Wealth. So Brian comes at the notion of psychology and purpose, in essence, that all money is an enabler to fund your contentment. Maybe that sounds a little woo-woo, but he's having tremendous success helping advisors really understand why they do the work they do, what's important to them, and all of those skills are transferring to their client conversations, so to kind of come full circle, helping with the data, enabling consumers to better understand where they're coming from through tools like money scripts and money mindset, and lastly, giving advisors tools so that they can be more efficient in their practice and, frankly, happier in their own personal lives and finances. I think those are all things that you know. I'll say HQs can do and are currently making investments in.

Thomas West  22:57

Yeah, that's helpful and again, I'm hoping there are institutional listeners, because from the seat of this particular advisor, I think advisors are still doing way too much, making this stuff up and discovering it on their own in the wild with live fire client transitions without the requisite amount of training, like I'm waiting for more to trickle down for us in the advisor seat. I think the one other piece that also to close with, with this idea for our advisor audience, I think it's important to know when you're in these client transition conversations when you know they don't care about your advice, and it's okay to try to identify in this discovery process that you're using, where exactly your clients are there when people are in transition, they're still trying to move through accepting their new circumstance, or are they in some stage of denial or I don't have all the information or there isn't consensus. So I want to remind everybody, if they're not accepting the reality that they're in right now, if they're holding on to past hopes that might have changed given a new set of circumstances. Recognize, you know, advisor, guys and ladies in the audience, like your clients, aren't making decisions about anything right now, right that they're still processing. They're still contemplating. They're considering the before and the after and all of the embedded anxiety and grief and all that other stuff makes them not able to make decisions and respond to your call to action in the moment, but they are able to communicate, and they are able to share with you what their values are, what they're hopeful for in terms of this new chapter so you can serve them better later, which. Why I want you to really zero in on new discovery. There's another chapter, which is you accept your situation, and you're starting to evaluate your choices. This is really important for advisors, even if all of the choices that the families are facing are not financial, they're all health-driven, or where am I going to live? Driven, or how do I deal with my kid? Driven? When you starting to evaluate these choices, this is where advisors can make a huge impact in helping out life purpose of clients, as you said earlier, by being able to mirror back the priorities that they expressed during transition and to express that you're not a bystander in their situation. You're doing active listening and being a support, knowing where they are. And if you're like the, you know, the adult son that's trying to help but is on the other coast, and is, you know, like you can recognize him as a particular in him as just one random family member, what his particular motivations are, so you can speak directly to him, because you were present in the early chapter like you heard the stuff that they were bringing to the table. When you're evaluating these different choices with your clients, maybe that's when you start folding in the financial implications, you know, the idea of if we go that way, then we might need to think about this with money. If we go that way, we might need to think about this with money. Very important, though, to let the healthcare and the family stuff be the dog that drives the financial tail. Do not, as a general rule, start prescribing tactical financial moves while families are still settling what their new situation is and what their choices are. And then finally, advisors, when you're trying to execute some of these things, and you move and execute on some of these choices, they respond to calls to action and whatnot. Go all the way back to the beginning. Make sure that you're mirroring back. The reason that we did this was all the way back when all the circumstances were shifting, sands were moving under people's feet, and making sure that there is a direct line from the action that we were able to do together now had its roots all the way back to when those changes happen. Being present like that and being able to reflect that back to families, is how you engage the second generation for G2 retention in a way that shows your shoulder to shoulder, with trying to serve a mom or a dad transition without directly soliciting them, without trying to be sort of the creepy salesperson after somebody dies. That's kind of the way to do it, in a way that can be sort of very successful. So that's, I think, sort of my closing thoughts on advisors and what they might be able to do. So back to you, Suzanne, one last framework that you want to give us before we sort of wrap up any other sort of big thoughts as we're thinking about the topic: Nobody Cares About Your Advice, and That's Okay.

Suzanne Schmitt  28:02

Less a framework, more an observation, personal and from the data. And that is, when people are in transition, they literally are thinking slower. So as you engage your clients who are going through transition, and maybe you're wondering why they're not moving forward, giving them more in writing, giving them more if you would work to do outside of the meeting can be really helpful because it lets the client process on their own terms and on their own time, and really acknowledges, I think, you understand, they've got, literally, a lot on their mind which is preventing them from taking that next step.

Thomas West  28:34

Yeah that's helpful. That actually reminds me of one practical step we do in the practice of, you know, we do follow-ups, even in these meetings where everything changes, and I don't really have a role at all, just relaying back to them what I heard that is a value. It's not specifically a value of I'm letting you know that I'm listening. It's just by having a third party reflect back what was said helps people process during periods of stress and ambiguity. So anyway, thank you everybody for joining us on this chapter of The Family Financial Conversation. Thank you, as always, Suzanne for bringing some big thinking, some resources to our discussion. Please forward the link advisors to folks that you think could benefit from this. I hope there are institutions listening. I think that really advisors could use more stuff coming from home office support, but appreciate your attention everybody. Thanks, and we'll see you next time.