An Emotional and Financial MRI: What Are the Challenges?

Journal of Financial Planning: July 2012

Lewis J. Walker, CFP^®, CRC^®, is president of Walker Capital Management Corporation and Life Transitions Advisors LLC. He is a founding shareholder of The Strategic Financial Alliance Inc., an independent broker-dealer in Atlanta, Georgia. (lewis@lifetransitionsadvisors.com)

[Editor’s note: The following is an excerpt from Lewis Walker’s new ebook, Planning for the Challenges of Aging, Healthcare, and Special Needs: Volume 2 of Fiduciary Ethos: Living in a Fiduciary World, an FPA Press title available at Amazon.com, Barnes & Noble.com, and the iBookstore.]

Executive Summary

• Health care and caregiving challenges and costs can have a devastating effect on the finances of client families. Additionally, the dramatic and health-altering emotional and physical effects of caregiving must be considered.
• This article examines the above issues within the framework of the financial planner’s fiduciary responsibility. The applicable methodology and best practices discussed are consistent with the six-step planning process, the FPA Standard of Care, and CFP Board’s Standards of Professional Conduct.
• Sections relate information to CFP Board’s Practice Standards 200 Series, which focuses on Step 2 of the six-step financial planning process: analyze. The Practice Standards 200 Series governs “Determining a Client’s Personal and Financial Goals, Needs, and Priorities.”
• A key to analysis is to go beyond money issues and engage clients in discussions that explore the emotions and beliefs underlying their decisions and attitudes about health, aging, and special needs.

When a physician suspects that a disease or other abnormality may be affecting your nerves, joints, or other delicate parts of the body, often he or she orders a magnetic resonance imaging (MRI) exam or computerized axial tomography (CAT) scan. Doctors use advanced technology to define what is normal and what is abnormal. Technology improves medical procedures by helping to guide accurately the placement of instruments during operations. It also helps to direct treatments, including therapy and the use of drugs and other medicines.

As we ask questions and encourage clients to talk, as we gather and study client data, we should think like physicians and ask, “What really is going on?” What paths of inquiry, what questions will we ask, what data will we request to help guide us in the formulation of actionable plans, the application of products and services, and interaction with family members and allied professionals?

Imagine that you are the head of a medical team and you have just met with a patient with a complex challenge. She shows early signs of a difficult disease that requires coordinated treatment across a number of specialties. Her overall goal is complete recovery, but she has other objectives such as not being a burden on her family and continuing to meet family responsibilities as a wife and mother, continuing to work to support her key contribution to the family budget, and dealing with her fears because her mother suffered and died from the same disease. She is worried about how the long period of treatment will be paid for and what costs not covered by her insurance plan she might encounter.

In a briefing with the members of the medical team, you state clearly the goals and objectives of the patient, in deliberate fashion outlining her hopes and fears. All members of the team are briefed on the objectives and the standards and policies to be followed. All applicable regulations and standards of professional conduct are reviewed—these will be followed during the treatment, recovery, and monitoring phases of the health care process.

CFP Board’s Standards of Professional Conduct: Practice Standards 200 Series outlines “Gathering Client Data.” Practice Standard 200-1: Determining a Client’s Personal and Financial Goals, Needs, and Priorities states: “The financial planning practitioner and the client shall mutually define the client’s personal and financial goals, needs, and priorities that are relevant to the scope of the engagement before any recommendation is made and/or implemented.”

In segments of the financial services industry that emphasize sales over planning, product recommendations are made in a relative vacuum without truly understanding the needs, goals, overall financial posture, and challenges faced by the client. To do so is a clear abrogation of the tenets of fiduciary responsibility.

We know that health care and caregiving challenges and costs can have a devastating effect on the bottom line of the client family. Has a threatening, degenerative, or terminal disease or cognitive impairment been diagnosed or feared as a possibility? How does a current or feared impairment affect personal assumptions regarding career decisions, living arrangements, marriage or divorce, retirement, life expectancy, income and liquidity needs, insurance decisions, risk factors, time horizons, special-needs planning, wills, powers of attorney, trust planning, and estate planning?

How much financial horsepower is needed to sustain quality of life for the afflicted and the caregiver(s)? What assumptions will we make regarding personal liquidity, inflation rates, income- and estate-tax rates, investment returns, and market volatility?

The practice standard tells us that we must “explore the client’s values, attitudes, expectations, and time horizons as they affect the client’s goals, needs, and priorities.” What is realistic and what is unrealistic? Such considerations may venture well beyond the norm when a health care, caregiving, or special-needs challenge is present.

For added direction, note Practice Standard 200-2: Obtaining Quantitative

Information and Documents: “The financial planning practitioner shall obtain sufficient quantitative information and documents about a client relevant to the scope of the engagement before any recommendation is made and/or implemented.”

Other than a copy of a durable power of attorney for assets or for health care, or an advance directive, rarely do we have documents that may relate to health care and special needs. Health problems may come up in conversations about living and postmortem estate planning or in discussions about life, disability, health, or long-term-care insurance.

Under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), federal protections were established to safeguard the confidentiality of health care data and information. The HIPAA Privacy Rule is balanced so that it permits the disclosure of personal health information needed for patient care and other important purposes. However, financial advisers are not physicians or health care workers. We must exercise due care with what we discover about client health matters and lean on outside experts for guidance. Much of what we learn will be gleaned from conversations and appreciative inquiry, and confidentiality must be respected.

Information should be shared only with the expressed consent of the client. We may be faced with questions from family members of the client, and we must be intensely circumspect about what we say, reveal, or share. You may detect health challenges in careful readings of wills, trust documents, and insurance policies that indicate lower health ratings. As you begin to consider various alternatives to meet challenges, a grasp of possibilities is called for.

A Planning Pharmacopoeia

Much of our pre-retirement planning rests on a vision of an idyllic life. Television commercials show happy couples walking on a beach, playing golf, or cavorting with cherubic grandchildren and energetic dogs. We know that purpose, attitude, and engagement are components of good health. We may encourage clients, subtly or otherwise, to stop smoking; get annual physicals, mammograms, colonoscopies, and cancer screenings; exercise, engage a personal trainer, and lose weight; and take relaxed vacations. But when health and special needs arise as a component of planning and signal a complex and uncertain future, we need to have an idea of what the client may be up against.

A pharmacopoeia is an authoritative book containing a list of medical drugs with their uses, preparation, dosages, formulas, and so on. In a sense we have to develop a pharmacopoeia, understanding the elements and costs of health care and long-term-care planning as a prelude to evaluating resources, devising potential tactics and strategies, and making specific plans.

The Costs of Care

CBS News correspondent Barry Peterson recalled the night in 2008 when he “stared down suicide” upon losing his wife Jan, only in her late 50s, to Alzheimer’s disease. “Caregivers very often die before the person with the disease because the strain is extraordinary,” Peterson said. “The process of taking care of someone, you get sucked into it. You don’t even realize that the world is shrinking around you.” ¹

For those faced with caregiving responsibilities, the physical and financial toll can be overwhelming. Because 75 percent of caregivers are female², issues related to challenges of aging and caring weigh heavily on the psyches of your female clients. They want to talk about it and want to know you are aware of the issues.

Most caregiving is unpaid, and the average time dedicated to caregiving exceeds 35.4 hours a week.³ Caregiving challenges are a drain on family resources. The expense in time, money, and emotional wear and tear will be a factor in your planning for boomer families and aging clients. Anticipate seeing an increase in female clients, especially those faced with local and long-distance caregiving challenges. With the aging of boomers and their parents, grandparents, and other loved ones, along with increased longevity, we see a rapidly growing impact on the family unit. The percentage of adult children providing personal care and/or financial assistance to a parent has more than tripled over the past 15 years. According to the Family Caregiver Alliance, an estimated one out of four U.S. households is involved in caring for a loved one age 50 or older.⁴

The total estimated aggregate lost wages, pension, and Social Security benefits of those caring for parents is nearly $3 trillion. The cost of caregiving for the individual female caregiver in terms of lost wages and Social Security benefits averages $324,044; it is $233,716 for men. Adding in a conservative estimate of the impact on pensions at $50,000, the total tab is $303,880 for the average male or female caregiver age 50-plus who cares for a parent.⁵

Numerous resources are available to you as an adviser if you are trying to estimate potential costs for a client. For example, Genworth annually publishes detailed cost-of-care data by state and local area. Such data is important to a capital needs analysis, identifying liquid capital to be set aside to meet contingencies, and determining benefit levels and cost-of-living (COLA) escalators in long-term-care policies. The capital needs analysis is a critical element in the development of an investment policy statement (IPS) and an asset allocation plan. Regarding investment policies and COLA escalators relative to long-term-care (LTC) planning or income streams, recognize that the costs for services and facilities have been rising faster than the Consumer Price Index. In presenting LTC options, emphasize the various inflation formulas and the cost-benefit trade-offs. The younger the client, the more you should focus on the inflation protection options in the contract. There are not enough facilities or trained personnel to meet boomer health care demands in the future.

Supply-demand curves presage inflation of all health care costs. In considering the cost of care, there are myriad costs you and the client might not think of. In addition to direct costs for medical care and drugs, among the costs you might overlook are housing, rent, utilities; home maintenance and modifications; repairs, yard care; meals, household goods; travel costs; clothing; pet food and veterinarian costs or cost for boarding a pet; and legal and accounting fees. The lower the income and the lower the liquid net worth, the higher the burden on the client family. You also may have to look at the potential burden on boomer client families as they step up to care for a parent, grandparent, or other loved one.

Medicare Is Not Free or Simple

In most cases, clients become eligible for Medicare at age 65, or under age 65 if they have a qualifying disability. Medicare covers people of any age with end-stage renal disease, permanent kidney failure requiring dialysis or a kidney transplant. In 2010, the Social Security Administration added early-onset Alzheimer’s to the “compassionate allowance program” to fast-track benefits.

Many people assume that when they reach age 65 and sign up for Medicare, their medical care will be taken care of by a beneficent government at little or no cost to them. Au contraire! Medicare is not free. It costs more than people realize. And Medicare is not simple. Coverage and costs change yearly. Failure to factor in or monitor the complexities of Medicare relative to retirement planning could be considered a breach of fiduciary duty.

Planning for Medicare should start well before age 65. As full retirement age (FRA) creeps toward age 67, clients might not focus on the age 65 sign-up mandate under Medicare. All clients should contact their local Social Security office at least three months before their 65th birthday to discuss their situation and current enrollment rules and exceptions that apply to them. There are penalties for late enrollment.

Annually the Centers for Medicare and Medicaid Services under the U.S. Department of Health and Human Services publish an official government handbook Medicare and You. The booklet includes state-specific information. Copies are available in print or electronic format, in English, Spanish, braille, audio CD, and large print. Contact the Social Security Administration at (800) 772-1213 for a copy. The handbook explains in detail what Medicare covers under the various plans.

For planning purposes, you and your clients should understand what Medicare does and does not cover! Medicare does not cover long-term care and custodial care; private-duty nursing; nonmedical services such as a private hospital room, hospital telephone, television, fees for canceled or missed appointments, copies of X-rays; routine dental care or dentures; cosmetic surgery; acupuncture; most chiropractic services; hearing aids and exams for fitting hearing aids; eyeglasses; experimental procedures; most care received outside of the United States; housekeeping services to help you stay in your home, such as shopping, meal preparation, and cleaning (unless you are receiving hospice care); and most nonemergency transportation, including ambulette services. An ambulette is a motor vehicle specially equipped to transport people who are convalescing or have a disability.

As the age-wave tsunami rolls on, expect more questions from your clients approaching age 65 or older, or from the son, daughter, other loved one, or friend caring for a person eligible for or enrolled in Medicare. Medicare presents the alphabetic equivalent of a corn maze in which clients are easily lost.

In a hierarchy of decision making, the first consideration is to decide how clients wish to get their coverage—through original Medicare or a Medicare Advantage Plan? Original Medicare starts with Part A Hospital Insurance. Usually individuals do not pay a monthly premium for Part A if they or their spouse paid Medicare taxes while working. This is where the illusion of “free” comes in. However, copayments, coinsurance, and deductibles may apply for each service.

If one keeps working beyond age 65 and is covered under a qualified employer-sponsored health plan, Part A generally is secondary to the primary plan. Depending on the coverage from your employer plan, you may not need other parts of Medicare. Similar considerations may apply for retirees who continue to be covered in retirement under private health plans. Do not assume anything! Your clients should always check with the Social Security Administration to ensure compliance and to avoid late enrollment penalties that apply to the various facets of Medicare.

Original Medicare includes both Part A Hospital Insurance and/or Part B Medical Insurance. A premium is paid for Part B, usually deducted from a beneficiary’s Social Security check. The premium paid for Part B is determined by modified adjusted gross income (MAGI). In calculating Medicare MAGI, the Social Security Administration looks at one’s tax return from two years ago. Drawn from IRS Form 1040, MAGI is adjusted gross income (Line 37) plus tax-exempt interest (Line 8b).

MAGI is calculated using five tiers or “cliff brackets,” which are fixed through

2019. For Medicare Part B, Tier 1 covers MAGI less than $85,000 for singles, less than $170,000 married filing jointly, for which the premium is zero. For the other four tiers greater than $107,000 single and $214,000 couple, monthly premiums can range from $96.50 to $353.60 per month, or $1,156 to as high as $4,243 per year. Costs are based on 2011 data and are subject to change.⁶ What your clients will pay is based on a progressive scale.

Planning note: because the Social Security Administration will examine your client’s tax return of two years ago, if income has dropped in the interim, an application may be made for a change of circumstance: he or she was married, divorced, or widowed; stopped working or reduced work hours; lost income property in a disaster; or was affected by an employer pension plan reduction or employer base settlement because of bankruptcy.

In addition to a tiered progressive premium scale, Part B participants are subject to copayments, coinsurance, and deductibles, adding to cost exposure. Beyond the Part A and Part B decision, the next step in original Medicare is to decide if one wants Part D Prescription Drug Coverage. Part D plans are run by private companies approved by Medicare. If this benefit is selected, you must join a Medicare Prescription Drug Plan, for which you pay a monthly premium.

Part D costs average approximately $564 per year or $47 per month, but premiums vary by insurance company. Participants have to contend with the coverage gap, the infamous donut hole. For 2012, your client, Widow Jones, will pay the first $320 of her drug costs. After Ms. Jones’s medication costs equal (and her plan spends) $2,930, she is in the donut hole. She may qualify for certain discounts on drugs, but she still pays partially out of pocket until she spends $4,700 between copays and out-of-pocket expenses. Her coverage gap ends and she pays only a small copayment for the balance of the year.⁷ The issue of the donut hole was addressed in the Patient Protection and Affordable Care Act of 2010—which began incremental closure of the drug coverage gap January 1, 2011, on a timetable to close the hole completely in 2020.⁸

Medigap Options and Other Decisions

Beyond Parts A, B, and D under original Medicare, you must decide if you want Medicare Supplement Coverage, also known as Medigap coverage. Sold by private companies, Medigap plans cover some of the costs Medicare does not pay—copayments, coinsurance, deductibles, the first three pints of blood, and foreign emergency travel, for example.

Here the corn-maze alphabet game gets complicated, opening the door to value-added consulting services for aging clients and/or their caregivers. Insurance companies may sell only a standardized plan identified by a series of letters—A through G, and K through N. Plan F comes in two varieties, including a high-deductible plan. Plans E, H, J, and I are no longer sold, but if a client has one of those plans, he or she may elect to keep it. As a further complication, in some states a client may buy another type of Medigap policy called Medicare SELECT. This policy requires one to use specific hospitals and, in some cases, specific doctors or other health care providers to get full coverage.

The Centers for Medicare and Medicaid Services publish a grid outlining the various features of each plan. Plan A is the most bare bones, and Plan F has the most features. Note, however, different insurance companies may charge different premiums for exactly the same plan. It is important that clients shop for their coverage, not just initially, but as often as yearly.

Every fall, there is an open enrollment period for Medicare that allows one to join or switch plans. The enrollment period dates may change from year to year, so clients and advisers need to be on their toes.

Consider this scenario. Allison comes to you, her mother’s planner. The 80-year-old, widowed mother is upset because she went to the MegaMart and at a health care plan display a salesperson told her that she has the wrong Medigap plan. Plus, she has been getting mailers from insurance companies and associations representing senior citizens touting their plan as the absolute best. Mom has less than three months to make a decision. Allison says, “You are mom’s adviser. What plan is best for her?”

Looking at the alphabet soup of up to 16 options, all of the letters plus a possible Medigap SELECT option, how will you provide advice in the best interest of your client? Even if you have mastered the complexities of original Medicare, you are not done. The decision tree has another trunk with added branches. Should your client eschew original Medicare and enroll instead in a Medicare Advantage Plan?

A Medicare Advantage Plan, like an HMO or PPO, is known as Part C and includes Part A Hospital Insurance and Part B Medical Insurance. Private insurance companies provide the coverage. Costs, extra coverage, and rules vary by plan. In addition to the Part B premium based on MAGI, other premiums, copays, and coinsurance for covered services may apply.

The client then must decide whether he or she wants Part D Prescription Drug Coverage, which may or may not be covered under the Medicare Advantage Plan. Some plans do not offer drug coverage, and if not, the client may elect to join a Medicare Prescription Drug Plan. The Medicare corn maze grows larger and more confusing.

Increasingly, clients will look to you, as a fiduciary adviser, for answers. You, in turn, need to find an expert who specializes in health insurance and Medicare matters. A local expert who can meet with your clients and serve as a resource to you and other advisers in your practice is a key addition to your advisory team. Add to your resource team an eldercare attorney well versed in Social Security, Medicare, and Medicaid matters, along with veterans’ benefits. Eligibility for most veterans’ health care benefits is based solely on active military service, with a discharge other than dishonorable. Benefits may be available to caregivers of an eligible veteran as well.⁹

Kiplinger’s reported that a study of 25,000 Medicare beneficiaries found that fewer than 7 percent of participants were enrolled in the plan with the lowest total out-of-pocket costs for their medications. Fewer than 10 percent were in the Advantage plan with the lowest out-of-pocket costs.¹⁰ These disparities open the door to value-added counseling for clients and their caregivers.

Katy Votava provides a plethora of resources on her website, www.goodcare.com. GOODCARE is a national independent consulting firm that specializes in the economics of health care. It provides expert assistance to advisers and people at all stages of their lives to help them understand and select from various health insurance plans, including the best options under Medicare.

Nationwide Financial offers a personal health assessment through the Nationwide Institute website, under retirement income tools. Based on information provided by the client relative to his or her retirement situation and health history, the report will estimate the savings required to meet potential health care costs.¹¹ Fidelity produces an annual retiree health care cost estimate useful in making projections and assumptions even for relatively healthy pre-retirees and retirees. It is estimated that a 65-year-old couple who retired in 2010 will need more than $250,000 per person to cover health care costs, roughly $6,250 per person per year.

That figure includes the cost of insurance premiums for Medicare Part B coverage and Part D prescription benefits, plus out-of-pocket expenses for copays, deductibles, and miscellaneous home-care costs. The estimate does not include additional costs for treatment of chronic conditions such as heart disease, arthritis, diabetes, stroke, and so forth. It does not include the cost of a nursing home or long-term-care facility.¹² Since Fidelity started tracking data in 2002, estimated costs have risen by 56 percent. At the same rate of inflation, eight years from now the estimated cost would be $390,000 or $9,750 per person annually. Inflation and longevity risk represent substantial unknowns as you develop investment policy statements for aging clients.

Analysis and Observation

In periodic reviews with a client family involved in caregiving challenges, be cognizant of alterations in behavior that will affect the future of the family and potentially change planning assumptions and asset allocation decisions. Beyond costs, there are dramatic and health-altering emotional and physical effects of caregiving. Has the caregiver started or increased a potentially destructive habit such as smoking, alcohol abuse, prescription drug misuse; developed new or worsening health problems; become unable to set up or go to personal medical or dental appointments; had trouble sleeping; felt depressed or hopeless; gained or lost weight; and/or experienced increased stress or anxiety?¹³

Each year the Financial Life Planning Institute gathers information on which life transitions and events are of greatest concern to advisory clients. The clients may select from more than 60 possible life transitions and concerns that may affect them over their lifetimes. Consistently, for a growing number of years, the number one issue has been “concern for an aging parent.”¹⁴ With the trailing edge of boomers turning 48 in 2012 and the leading edge reaching age 66, support for aging parents and loved ones is a rapidly growing concern and, in many cases, already an actuality. It is an issue for which clients and many advisers are woefully unprepared.

Modern science increasingly will extend life for those who battle tough diseases and injuries, good news for those with a strong will to live. The downside is a prolonged burden on caregivers and strained finances, increasing the odds that a survivor, a widow or widower, could run out of money.

Although 96 percent of the 5.4 million people with Alzheimer’s disease are age 65 or older, dementia at younger ages is on the increase. Of Americans age 65 and older, one in eight has Alzheimer’s, and nearly half of those age 85 and older have the disease. Two-thirds of those with the disease—3.4 million—are women.¹⁵

Alzheimer’s patients survive an average of four to eight years after a diagnosis, but some may live as long as 20 years. On average, 40 percent of a person’s years with Alzheimer’s are spent in the most severe stage of the disease—longer than any other stage. Four percent of the general population will be admitted to a nursing home by age 80. For those with Alzheimer’s, 75 percent will be admitted to a nursing home by age 80.¹⁶

As the U.S. workforce ages, dementia in various forms creates challenges to employers. Because cognitive impairment is considered a disability, workers may be protected under the Americans with Disabilities Act. Elder-law and other attorneys are litigating cases to protect workers. If you have a client in such a situation, or you are affected as an employer, become familiar with the appropriate legal resources.

Questions and Potential Actions

In application of Practice Standard 200-2 we are instructed: “The practitioner shall obtain sufficient and relevant information and documents from the client pertaining to the client’s financial resources, obligations, and personal situation.”

When health care, caregiving, and special needs enter the picture, “resources” may go beyond the financial to sources of support, treatment, and comfort. Using appreciative inquiry, planners may use personal observations of body language, emotional factors, and responsiveness to form opinions as to client needs.

For advisers already dealing with situations in which a client or the spouse of a client is in an early stage or a more advanced stage of Alzheimer’s or some other form of cognitive impairment, analysis should be far deeper than otherwise. Are legal directives in order? Do the appropriate people have authority to step in? Do you have up-to-date copies of authorizing documents in your files? Is a revocable living trust appropriate to the management of and disposition of important assets, including fee-simple real estate or business interests?

Beneficiary designations on insurance policies, annuities, and retirement plans may need to be reworked if the named beneficiary currently or potentially is incapable of receiving and managing assets. Trust planning may be called for.

Is the impaired or potentially impaired client a trustee in a living or testamentary trust, and should he or she be removed? Is a responsible party receiving bills and premium notices so insurance coverage does not lapse? Does a responsible person have key codes and passwords so accounts and data can be accessed?

Ultimately, helping clients tackle health care and elder care issues is challenging, but as a financial planning fiduciary, your efforts in this area will further your clients’ well-being and fulfill your aspirations to be of real service to others.

Endnotes

1. Hargadon, Sean. 2011. “The Long Goodbye.” Northwestern (Fall). 36.
2. Evercare and National Alliance for Caregiving. 2007. Family Caregivers—What They Spend, What They Sacrifice (November).
3. Ibid.
4. www.caregiver.org.
5. MetLife. 2011. Caregiving Costs to Working Caregivers—Double Jeopardy for Baby Boomers and Their Parents (June). http://www.caregiving.org/.
6. www.goodcare.com.
7. Centers for Medicare and Medicaid Services. 2012. Medicare and You 2012. Washington, D.C.: U.S. Department of Health and Human Services.
8. Summary of the Affordable Care Act Medicare drug discounts: www.healthcare.gov/law/features/65-older/drug-discounts/index.html.
9. www.va.gov/healtheligibility.
10. Lankford, Kimberly. 2011. “Season for Medicare Open Enrollment.” Kiplinger’s Retirement Report (October).
11. www.nationwide.com/service-support-for-advisors.jsp.
12. Fidelity. 2010. “Get Ready for Higher Health Care Costs.” Fidelity Viewpoints (July 1).
13. Genworth. 2011 Cost of Care Survey. http://www.genworth.com/.
14. Anthony, Mitch. 2007. “Boomer Interrupted.” Financial Advisor (November).
15. Alzheimer’s Association, www.alz.org.
16. Ibid.

Sidebar

A Fiduciary’s Checklist: Analyze

1. As a fiduciary adviser, you have analyzed and organized all relevant hard and soft data. You have collected, reviewed, and analyzed all documents as well as notes taken in the course of deep conversations with the client, family members, and allied professionals participating in the development of a plan.
2. You have used appreciative inquiry to gather soft data and form conclusions as to possible options.
3. You have executed a written and signed client agreement. The client agreement details the scope of the engagement, time frames, duties to be performed, areas of planning to be covered, compensation, and any material conflicts of interest. A copy has been provided to the clients, and a copy is retained in your file. Copies have been placed in appropriate files to comply with broker-dealer, FINRA, SEC, or state compliance mandates as applicable.
4. You have produced a written values and vision statement that reflects the guiding principles that drive the client, and perhaps, the family at large. The document sets forth the goals and objectives of the clients, the challenges they face, and their concerns.
5. You have provided the client the values and vision statement, and he or she has affirmed that all relevant goals and objectives have been identified.
6. Your initial analysis has established the client’s long-term strategic goals and objectives and pinpointed any short-term tactical moves that should be made in a timely manner.
7. You are assured that you possess the requisite competence to provide the services required by the client, and you have referral capability to other appropriate professionals for assistance where needed.
8. You have identified outside allied professionals who will be involved in the planning process, and you have determined the scope of their involvement. You have secured written permission from the client to share information and coordinate with allied professionals.
9. All full-disclosure information has been provided, including but not limited to your written client agreement, Form ADV as required by the SEC or state regulator, privacy notice, and compliance documentation required by your employer, or a broker-dealer, as applicable.
10. You have completed appropriate paperwork required by state and federal regulators. You are fully aware of and have satisfied all compliance and disclosure mandates, including regulations related to “know your client rules,” client suitability, bank secrecy and anti-money-laundering regulations, and ERISA guidelines if retirement plans are involved.