Journal of Financial Planning: April 2017
As our population as a whole continues to age, so do our clients. And aging brings with it many new planning concerns for these clients and their families.
As a planner, you want to help clients organize and analyze these concerns, make certain that all the relevant questions are asked, and that no detail is left unexamined.
You’ve also heard the statistics regarding the high percentage of assets that leave planners and advisers at the death of the first spouse (up to 70 percent in the first year according to some studies) and the even higher percentage that leaves at the death of both spouses.
So how do you create a framework for discussions with your clients and their families as they face the challenges that come with aging, as well as prepare for transitioning from one generation to the next at the appropriate time?
After many conversations with planners and advisers, as well as friends and family members, I believe the needs and concerns that affect seniors and their families fall into six major areas. By approaching them topically, rather than by age, you can help your clients address these concerns based on specific need, whenever that need might occur.
The six areas are: (1) physical; (2) cognitive and psychological; (3) family; (4) financial; (5) legal; and (6) legacy. Let’s look at each one, exploring what it is, offering questions to ask your clients and their families, and suggesting resources you can create (or find) and make available to them.
Physical
First is the physical effect of advancing years on our bodies. Chronic conditions can include hypertension; joint pain and mobility issues; and vision and hearing loss. Typical acute conditions are heart problems, strokes, cancer, as well as accidents caused by loss of balance and physical impairments.
Health and physical problems can lead to concerns about housing and transportation. Clients may wonder about what options they will have if they must leave their homes and how they will get to where they need to go if they can no longer drive.
Questions you can ask:
How long did your parents live, and what health problems did they face?
What do you see as the likely physical impact of aging for you?
How do you plan to address potential health care decisions?
What provisions need to be made to keep up with increasing costs?
What types of housing decisions do you anticipate, and how will you make them?
What types of transportation decisions do you expect to make, and how will you address them?
Checklists or guides you can create (or find publicly available online) and make available to clients and their families include:
What you need to know about Medicare
Suggested resources:
- Getting Started with Medicare from medicare.gov
- 8 Things You Need to Know about Medicare from AARP
Evaluating health care choices
Suggested resource:
- NCQA Health Insurance Plan Ratings 2016–2017 from the National Committee for Quality Assurance
Long-term care funding options
Suggested resource:
- Costs and How to Pay from the U.S. Department of Health and Human Services
Housing and transportation decisions
Suggested resource:
- Staying in Your Home from the U.S. Department of Health and Human Services
Cognitive and Psychological
Most clients approach their retirement years with a sense of anticipation, eagerly looking forward to the opportunity to enjoy travel, recreational activities, community service, and maybe even pursuing a second career or starting a new business.
As time goes by, however, many seniors experience periods of sadness, worry, and depression. They can become more susceptible to scams and fraud. Memory loss plagues many, often accompanied by worry that perhaps they are experiencing early signs of dementia and Alzheimer’s disease.
Questions you can ask:
What are you doing, or will you do, to maximize enjoyment of your retirement years?
How will you and your family address potential psychological concerns?
How will you and your family address potential cognitive decline?
Checklists or guides you can create (or find) and make available:
Enjoying your retirement years
Suggested resource:
- The Retirement Problem: What Will You Do With All That Time? from Knowledge@Wharton
Second career opportunities
Suggested resources:
- Marc Freedman on Encore Careers and Embracing a New Stage of Life from the Journal of Financial Planning
- Encore.org
Avoiding fraud, scams, and identity theft
Suggested resource:
- 10 Things You Can Do to Avoid Fraud from the Federal Trade Commission
How to recognize early signs of dementia and Alzheimer’s
Suggested resource:
- 10 Early Signs and Symptoms of Alzheimer’s from the Alzheimer’s Association
Preparing for diminished capacity
Suggested resource:
- Investor Bulletin and Consumer Advisory: Planning for Diminished Capacity and Illness from the U.S. Securities and Exchange Commission
Family
The last several decades have brought major changes to family relationships, even our understanding of what it means to be a family.
Adult children are just as likely to live across the country or in another part of the world as they are across town from where they grew up or where their parents live. Blended families are no longer the exception. The ability to drop in and check on mom or dad may be difficult or even impossible, let alone to assume a caretaker role.
These changes have had a major impact on family communications and relationships. Families with his, her, and our children, as well as in-laws and extended family members, increase the complexity.
Questions you can ask:
What family relationships or other considerations exist that might impact decision-making?
What geographical and other differences might play a role in how the family functions or might function down the road?
Are family communications a concern, and how might they be improved?
Has a family spokesperson been designated to keep others in the loop?
Checklists or guides you can create (or find) and make available:
Understanding generational differences
Suggested resource:
- The Magic and Madness of Multigenerational Families from Psychology Today
Enhancing family communications
Suggested resource:
- Can We Talk? A Financial Guide for Baby Boomers Assisting Their Elderly Parents by Bob Mauterstock, CFP®, CLU®, ChFC®
Conducting a family meeting
Suggested resource:
- 10 Tips for Holding a Family Meeting from Psychology Today
Estate planning considerations for blended families
Suggested resource:
- Till Death Do Us Part (Again): Estate Planning for Second Marriages from The American Bar Association
Selecting your personal representative, successor trustee, or attorney-in-fact for general and medical decisions
Suggested resources:
- Advance Care Planning Tips from the National Institute on Aging from the U.S. Department of Health and Human Services
- Advance Directive: Creating a Living Will and Health Care Power of Attorney from AARP
Financial
Although seniors may have financial concerns in several areas, the first is usually about preserving assets and growing their income to meet the challenges of inflation and potentially many years of life after retirement.
Many are concerned about making good decisions regarding Social Security and pension plan options and retirement plan distribution strategies. At some point, aging clients may lose interest or even the ability to manage their various investment accounts, or they may become confused when trying to make even simple decisions.
Managing expenses can also be a concern. Rising health care costs, minimizing taxes, and preparing for potential long-term care needs can be major challenges. But handling everyday tasks such as managing general living expenses and paying bills on time can also become a problem.
Questions you can ask:
How do you want to manage, preserve, and grow your assets so you don’t outlive your resources?
What do you need to help you plan for maintaining and growing income?
What if you reach the point where you are no longer willing or able to manage your investments or make investment decisions?
What if you are no longer willing or able to manage your expenditures or bill-paying?
Checklists or guides you can create (or find) and make available:
How to determine your best options for claiming Social Security benefits
Suggested resource:
- Retirement Planner: When to Start Your Benefits from the U.S. Social Security Administration
Asset titling and beneficiary designation options
Suggested resource:
- Help Clients Avoid 10 Common Estate Planning Mistakes from the Journal of Financial Planning
Additional subjects for checklists or guides for the finacial area may include:
- Optimizing income and managing expenses during retirement
- Retirement plan distribution strategies
Legal
Fortunately, legal documents can be created and put in place prior to the time when seniors may begin to lose their ability to make good decisions and manage on their own. These documents can cover areas such as health care and end-of-life decisions; general decision-making authority for finances and other matters; and distribution of assets and personal property after death.
Questions you can ask:
How have you or will you determine who should act on your behalf?
How have you or will you prepare for potential diminished capacity or incapacity?
How have you or will you provide for health care and end-of-life decision-making?
How have you or will you plan for distribution of your estate?
Checklists or guides you can create (or find) and make available:
Preparing for potential diminished capacity or incapacity
(See the suggested resources under the “Cognitive and Psychological” section.)
Estate planning considerations
Suggested resource:
- Getting Your Affairs In Order from the National Institute on Aging
Selecting your attorney-in-fact, successor trustee, or personal representative
Suggested resource:
- Power of Attorney from the American Bar Association
Responsibilities of your attorney-in-fact, successor trustee, or personal representative
(See suggested resources under the “Family” section.)
Legacy
How do your clients want to be remembered? Because their legacy may not be something your clients are accustomed to thinking about, your guidance in this area can be extremely impactful.
Most people think of legacy in terms of bequests—the assets and personal items they may want to leave to their immediate family. You can help them explore other people and entities they may have overlooked, such as special friends and extended family members, as well as community and charitable organizations they care about.
Legacy can also take the form of communication—sharing one’s life experiences, personal and spiritual values, and family history. Clients can be encouraged to write or record their biography with all the details and memories that their own children may not know. Photo albums and scrapbooks, both physical and electronic, are other ways to preserve their story for many years to come.
Questions you can ask:
How do you want to be remembered and by whom?
What are the most important personal items, photos, and other memorabilia that you want to pass along to them?
Which organizations are important to you, and to which you would like to provide lasting gifts?
Checklists or guides you can create (or find) and make available:
Writing your personal or family story
Suggested resources:
- The Secret to Writing a Compelling Family History from Geneology.com
- Writing your Personal History from Family History Quick Start
Organizing and preserving photos and other memorabilia
Suggested resource:
- How to Preserve Family Papers and Photographs from the National Archives
As you consider how you can best help your aging clients and their families, think about other resources you can create (or find) and provide, such as a family guide to aging, and first-year and on-your-own guides for widows and other family members.
Providing your own branded checklists, guides, and other resources enables you to demonstrate your knowledge and experience in this area as well as market your practice as the go-to place in your community for family wealth and transition planning help.
Susan Kornegay, CFP®, is founding partner of Pathfinder Strategic Solutions, a practice management consulting and coaching firm. Having spent most of her 30-plus-year career in the field as a financial adviser and branch manager, she specializes in the client-facing side of the business.
Learn More
Join Susan Kornegay, CFP®, and other eldercare experts on April 26, 2017 at 2 p.m., Eastern for a Journal in the Round virtual roundtable discussion. Register HERE.
Interested in learning more about how you can help your clients and their families better prepare for their family transitions? Send Susan an email, and she'll forward to you her new e-book, A Family Guide to Aging.