Danger: You Need To Act Fast When Your Client Seems Cognitively Impaired
This really happened. An advisor was managing a portfolio for a client we’ll call “Janet” with about $5M in assets. She seemed to be “with it” most of the time. But she had become confused in some of their conversations, unable to follow what her advisor was saying. (It was not complicated). She called several times in one week, asking the same questions over and over. She forgot that they had already been answered. She missed two appointments, apologizing that she had been really busy. The advisor didn’t seem to take all this seriously and didn’t do anything differently from how he had always interacted with this client.
Janet had always been a generous person. She liked to help people out. She got drawn into a “friendship” with a stranger, who was very sweet and complimentary to her and it made her feel good to hear all those nice things. He saw her often. And after awhile, he asked her for a loan. She gave it to him. He kept up the frequent calls and visits. Perhaps she was addicted to them. The loans continued. Her advisor was concerned, but he figured it’s her money and she can do what she wants with it. The amounts climbed, first to $100,000 in these “loans” and over three years the amount she had given to this false friend reached over $500,000. Of course he never intended to repay any of it.
The advisor finally seemed to catch on that something was wrong. He contacted Janet’s daughter, and steps were taken right away to stop the drain on her assets, stop the phony friend and stop Janet from making those poor decisions.
The takeaways that every advisor should know are these:
When your clients seem confused, forgets phone conversations and misses two appointments, these are RED FLAGS of diminished capacity. The time to contact the family is right then, not after some disaster happens.
Even if your client has ample assets, it is wrong to simply allow a predator to manipulate her or him out of them. You, the advisor have the obligation to do all things possible to stop financial manipulation. It is not an excuse that “it’s her money and she can do what she wants with it.” That aids and abets elder abuse.
You need advance information in your file when you accept the client into your book. That information must include more than one alternate contact and written permission from your client in a legally sufficient document, to contact the responsible others when you see fit.
An unusual change in your client’s spending pattern, such as Janet’s taking out huge sums to “loan” to this fake friend should be red flags of financial elder abuse for you. Please don’t wait until a thief takes a half a million dollars from someone before you catch on that something is very wrong here and you need to act right away.
If you are not sure about the warning signs of diminished capacity to look for, you can get a free checklist at AgingInvestor.com. Download yours today and you won’t make the same mistake as the anonymous advisor in this case study. If you aren’t sure about the major warning signs of financial elder abuse, we can help you there too, with another free checklist. Get yours right away and keep those aging clients financially safer.
Carolyn Rosenblatt, RN, Elder Law Attorney, AgingInvestor.com
Dr. Mikol Davis and Carolyn Rosenblatt, co-founders of AgingInvestor.com
Carolyn Rosenblatt, RN, Elder Law Attorney offers a wealth of experience with aging to help you create tools so you can skillfully manage your aging clients. You will understand your rights and theirs so you can stay safe and keep them safe too.
Dr. Mikol Davis, Psychologist, Gerontologist offers in depth of knowledge about diminished financial capacity in older adults to help you strategize best practices so you can protect your vulnerable aging clients.
Financial professionals often use the term “financial wellness”, referring to a client’s comfort level with their assets in retirement. That sounds good. But is there any connection between finances and wellness of the body and mind in retirement? Perhaps there is a vague belief that if you’re financially secure, all is well. In reality, how much money you have does not automatically make you physically nor mentally well, nor does it protect anyone against the one thing many people fear most: Alzheimer’s disease. Dementias are no respecters of the wealthy. No one is immune to brain disease.
You may hear the well-worn adage, “Without your health, you have nothing”. OK, that’s not completely true either. Even with declining health related to aging, you may still have excellent quality of life. That is a matter of perspective, and a matter of using assets you have to make the most of life, even with disabling conditions. The one factor that makes for a more secure longevity is what you can afford in terms of care, as aging takes its toll on independence.
Research clearly shows that how we live our lives, our healthy habits or lack of them is responsible for about 70% of how we age. Aging is different for each person, with the other 30% of the picture directed by genetics. Suppose you have a client with longevity running in the family. That may affect your client’s life span but it will not guarantee a great “health span”; i.e., how long one is healthy. What we already see with our aging population is an increase in disabling illnesses in seniors coping with diabetes, heart disease, obesity, high blood pressure and yes, Alzheimer’s disease and other dementias. Genetically predisposed to live long? How fun can it be to live to be 100 if you have a combination of these illnesses, cutting off the things that make life worth living for most of us?
It is extremely unlikely that any financial professional is going to convince a client to lose weight, exercise, stop smoking or cut out junk food so they can enjoy retirement more. That’s not your job. Managing assets is your job and the assurance you can provide is that your client, with a strategically managed investment portfolio, will be able to afford high quality care in old age.
What does high quality care mean for one’s retirement years? It means that if enough assets are available, your client will never have to go to a nursing home. It means that they can afford well trained caregivers at home from high quality agencies, licensed, bonded and insured.
Here’s an example from real life with one of our clients at AgingParents.com, the companion site to AgingInvestor.com. Timothy is 97 years old, living in a lovely home he’s been in since 1960. He is widowed. He needs a walker. He doesn’t cook for himself. He’s very alert but with lung disease, he’s frail. He has a high-end agency providing care management as well as caregivers day and night. He has the means and the right to spend his last days in his own home. Even if his health deteriorates further, he can afford a Registered Nurse to oversee his treatment or give additional skilled care to him at home. Licensed home health agencies can give skilled nursing to anyone at home for a price. A concierge physician can also visit him at home and direct the medical treatment for any illness or chronic condition. That is high quality care, and it comes only at a high quality price.
If you are in the business of managing client assets as they age, don’t just talk about how fun retirement will look at age 90 because they have plenty to spend. That may not be true at all if health is an issue. At that age, declining health is usually problematic. Be truthful. Let your clients know about how you are working to protect them in longevity, no matter what health conditions they may face. That protective spirit feels good to people, knowing you’re watching out for them and that you support the notion of staying in one’s home to the end of life. You have foresight they may lack. And you know the dollars they’ll need for what is likely to become necessary with long life.
If you do not know details of just what dollars those are, the nuts and bolts of how much it actually costs to pay for the numerous kinds of care a person may need, you can quickly find out. It’s laid out for you in our book, Hidden Truths About Retirement & Long Term Care, available at AgingInvestor.com and on Amazon. Increase your expertise! Get your copy today by clicking here
By Carolyn Rosenblatt, RN, Attorney, AgingInvestor.com and AgingParents.com
Tips-Having Calming Conversations With Upset Clients In This Pandemic
The coronavirus-related market turbulence is making a lot of clients nervous. Some are probably calling you demanding answers. Some are highly emotional and the incoming intensity feels intimidating. You didn’t sign up to be a therapist. But you have to do something, say something to try to calm them down. But what? You don’t want to blow it. You don’t want to feel helpless, not knowing how to respond. If this kind of highly emotional stuff is not exactly in your lane, a few tips about what works and doesn’t work are in order.
Here at AgingInvestor.com, we are fortunate to have an experienced psychologist and a nurse-attorney to offer you some guidance. What to do with very emotional clients is definitely in our wheelhouse. Imagine this: the client who is sometimes a problem anyway calls you in a frantic voice. He’s, well, freaking out. Your default setting is to start giving him a logical explanation of the facts. He gets even more emotional when you do that. You feel bad. He hangs up in a huff. Has he lost trust in you over something that’s not your fault? Here is an important thing to understand about those very emotional folks who call you and blast you with it: logic at that moment is lost. Fear makes people go to the automatic “reptile brain” response to fight or flee. At that point, reasonable explanations are useless because the client can’t take them in. What are you to do?
First, listen. Listen without interrupting, with your undivided attention. Speak slowly. Repeat what the client has just said. It sounds like this: “Jack, I hear you saying you think you’re going to lose all your retirement investments and you feel pressure. Did I get that right?” Then you might ask Jack if there is anything else going on right now. Maybe he’ll tell you some of the other things he’s worried about. As he does, you do the same thing, which is to keep listening. The fact that you heard him and communicated that actually has a calming effect. It works. There are a lot of things that are fine at other times that don’t work in this highly tense time of uncertainty. One example, related to logical explanations, is to get out the graphs and charts and attempt to show the client how markets historically have recovered. This can only be effective with some clients, likely those who respond to reason and history lessons. For the ones who are being irrational, that is not an approach that works, at least initially.
Getting the client calm with the way you offer reassurance and emotional support must happen first. Getting to the next point, which may take more than one conversation, you can ask “Jack, can I show you some things about how markets have recovered after multiple crises, over many decades in the past?” If he’s willing, go ahead. If he’s in no mood for a history lesson, save it. You will probably be able to do that later. Learning the art of (virtual) hand-holding is not so complex that you can’t pick up the basics fairly quickly. For most people with your job, these techniques do not come naturally. They are not part of an advisor’s training. You can avoid mistakes and making clients even more upset when you know the right approach.
Here’s Some Practical Help We offer a 22 minute tutorial to guide you on what to say or not say. You can get it here, anytime. We cover the Five Do’s and Five Don’ts for dealing with those highly emotional folks you may encounter in this time of crisis. There is a bonus with it: a quick 10 point summary, you can keep for reference and reminders. You will soon have the skills you need so you can have those calming conversations. CLICK HERE now.
If you have a particularly difficult client you don’t want to lose, and you need some private individual guidance so you can deal with it skillfully, you can get that at AgingInvestor.com too. Your own confidential advice session with us will get you through it smoothly and smartly. Contact Dr. Davis for a consultation: drmikol@aginginvestor.com
About Carolyn Rosenblatt and Dr. Mikol Davis Carolyn Rosenblatt and Dr. Mikol Davis are co-authors of The Family Guide to Aging Parents (www.agingparents.com) and Succeed With Senior Clients: A Financial Advisors Guide To Best Practices. Rosenblatt, a registered nurse and elder law attorney, has more than 45 years combined experience in her professions. She has been quoted in the New York Times, Wall Street Journal, Money magazine and many other publications. Davis, a clinical psychologist and gerontologist, has more than 44 years experience as a mental health provider. In addition to serving his patients, Davis creates online courses and products to assist professionals and the public with understanding aging issues. Rosenblatt and Davis have been married for 38 years.
Advisors talk to clients all the time about the big topic of retirement. The industry inundates the media with advertising among competitors about who can do retirement planning best. You help clients plan for how to reach their goals. You do your research and calculations. You offer sage advice after years of experience. And then there’s your OWN plan: when is it time to schedule your own exit from the burdens of your work?
We often hear “age is only a number” or “age is just a state of mind”. That’s not really true. Age is a process that takes its toll and ignoring it can be costly. We work, we have our self-image of productivity and success. We pass 50, then 60 still going strong. But one day, you forget an important phone number you should know. You quietly ignore it. Until it happens again. You forget names and that’s not really such a big deal, as lots of your age-mate friends laugh about the same thing. But at the back of your mind there is that tiny, creeping doubt: am I starting to “lose it”?? Fear has emerged in the shadows of your consciousness. “How long can I keep going?”
The literature of the financial services industry is replete with advice about advisors’ succession planning. Sounds good, but it never tells you exactly when to move on, to merge your business with one managed by younger folks, or sell the book of business to someone you trust.
Here at AgingInvestor.com, we offer a deep dive into information about aging clients and how to spot signs of trouble. We give you our professional guidance as aging experts on how to understand when your client is demonstrating dangerous signs of diminished capacity. We give you concrete suggestions about what you need to do. We spend a little time on the subject of the impaired advisor too, and how firms can deal with that. But we have not asked you to look within and formulate a plan for your own exit strategy when you, yourself see any warning signs that age is affecting you in your work.
It’s time to do just that. We know that many advisors are still doing fine at 60, 65, 70 and up. However, age statistics don’t lie and loss of sharpness can happen to anyone. Advisors don’t age differently from anyone else in the world. A few firms do have a mandatory retirement age but most don’t. Independent advisors are independent for a good reason. You didn’t want to march to the beat of an institutional drum. That independence has likely led to greater job satisfaction and perhaps even greater financial success. But it leaves you vulnerable when you are on your own, getting on in years and not clear about whether to merge with a firm, sell, or otherwise set a date for realizing your own exit strategy.
Here are five things to ask yourself in considering the question: when is it the right time for me to exit this business?
Am I noticing any changes in my memory such as forgetting appointments or important phone numbers I ought to remember easily?
Am I having any difficulty concentrating on complex financial information that is part of the nuts and bolts of my work?
Has anyone in my life encouraged me to retire, “take it easy” or otherwise modify my work life?
Have I failed to create an exit plan for myself the way I help my clients set their retirement dates?
Am I afraid that if I retire, merge my business or sell my book that I will lose a sense of my own self-worth or identity?
If the answer to the first two questions is “yes”, that’s a signal to attend to rather than ignore. It may be time to quit while you’re ahead. If you have not thought these things through, that’s what needs to happen. As for the last questions, 4 and 5, consider this. Anyone who gives up a long-held identity based on what you do for a living has to face the same challenges. And many people do transition successfully to a different lifestyle, to finding purpose in other pursuits or in removing a major source of stress that can come from your work. The life cycle does not go on forever, despite society’s denial of aging. Kicking the bucket at your desk is not a pretty picture. On the contrary, you can set your glide path out in a graceful way.
The Takeaways:
If you are 65 or above, you really do need an exit strategy. It could take some years to execute it but have a plan. If you do not have one, create one. If you have any small, back-of-your-mind doubt about being as sharp as you once were in a younger day, pay attention to that little doubt. It just might be your internal nudge to make your exit happen. Consider a strategy that allows this at a time when you can make the most of the benefits involved while you’re still at the top of your game. What you have created has value. Take advantage of negotiating with that value at its high point.
Every advisor wants clients to think that he or she is unique, different, better than the competition. Maybe you are. But if your retirement planning with them stops at calculating their planned retirement income and preserving their assets, you’re not extraordinary. It takes more than that to be outstanding.
Standing out among the others means that you are looking at the client’s entire life and relationship to their family members. Acquiring the courage and skill to do that is how you distinguish yourself from the next advisor down the street or anywhere. So how do you do that? Aren’t you just supposed to do a good job managing the money?
Advising about and managing the money is your essential bedrock, and then there is service above and beyond. That’s the unique play, going beyond average. It’s not so hard to do, but it may be outside your usual comfort zone. You assess. You discuss difficult subjects clients may not want to talk about. You take the time. You communicate more often than the next guy or gal. You offer tools. You become a sort of coach, encouraging a retiree or soon-to-be-retired client to do things that will make life easier for everyone around them. Your guidance can help not only your client, but every person whose life is touched by what your client does and fails to do. Most will likely think how wonderfully unusual you are for doing this. The average advisor won’t bother with any of it but not being ordinary, you can shine.
Let’s start with one tool you can use, created at AgingInvestor.com (free download here). In this article, we address the first item on our Ten Step Checklist For Smart Retirees. The first step is:
“Decide whom you want to communicate with about your future. Set a date and sit down together.”
This sounds simple but it’s not. Clients’ families frequently have poor communication about aging, the potential for needing help, and finances. The elders may want secrecy. Everyone may be afraid to talk about end of life. Although wealthier folks usually do better with estate planning than the less wealthy, not everyone takes the time to update their legal documents and your client’s loved ones need to know this. If you, the advisor encourage a family meeting (or friends meeting if there is no family) specifically about basic topics in your client’s future, that can get the ball rolling on communication about other essential matters related to getting older. The communication must address the real risk of becoming impaired with aging. The checklist is a guide for your client, a place to start. If a client does these steps, it will save everyone enormous and avoidable aggravation later.
Our checklist has ten steps in it. We’ll go through all the ten steps and why they are crucial in subsequent posts. Get your copy today and consider having a conversation with every client age 55 and older in your book about the checklist. You hand it out to them and discuss how to use it. You can bring it up at portfolio review, on the client’s birthday or at the time of retirement. If you want to set yourself apart, talking about things besides the client’s income in retirement will indeed set you apart.
At its Senior Protection Conference on November 12, 2019, FINRA took a cell phone poll of broker-dealers. They wanted to find out how many were worried about aging registered representatives at their firms. The result: 65% were worried, according to the report published in Financial Advisor. Yes, aging B-Ds are a problem.
Here at AgingInvestor.com, we’ve been sounding the alarm about this problem since 2016, when we published our book, Succeed With Senior Clients: A Financial Advisor’s Guide to Best Practices. “The Elephant in the Room” chapter dives into how impairment in advisors affects the industry and how that most definitely will affect their work with clients. A B-D or advisor whose memory and judgment are impaired, even in the early stages, can expose the firm to liability for mistakes these folks make. Cognitive decline should not be taken lightly.
The speakers at the conference offered attendees very little concrete advice on how to address the problem of an impaired advisor. What could one expect of them? They have no training nor skill set in identifying diminished capacity themselves. Without expertise, their discussions lack action plans.
As aging experts ourselves (RN, Elder law attorney and geriatric psychologist) and a resource to the industry, we question the suggestion that one should wait for “performance issues” to surface before any firm does anything about an impaired professional in its midst. If there is a “performance issue” visible to management, it is likely that it existed for some time and harm to clients already could have occurred. The notion is reactive, not proactive. Isn’t that contrary to the essential philosophy of financial planning itself to look ahead, strategize and don’t wait for a crisis??
Waiting for a manager to call a special team assigned to address the problem is not the best approach, as we see it. For one thing, most firms don’t have a special team that would serve the purpose of knowing what to do with an impaired advisor. Yes, every firm would be well protected if such a team were formed and that is something we always recommend. However, failing to screen advisors with any in-house tools when impairment is suspected is to ignore the lurking possibility of harm to clients. What do we mean by an in-house tool? Start with a checklist.
On our website is a free downloadable Financial Advisor’s Checklist: 10 Red Flags of Diminished Capacity to help you spot the warning signs in clients. There is no reason any firm could not use relevant parts of the same tool to spot signs of diminished capacity in its own employees. It is not across-the-board applicable to the professional as compared with a client showing red flags but some points do apply to anyone. For example, memory loss, failure to appreciate the consequences of decisions, confusion, loss of ability to process basic concepts are all on the checklist and are universal warning signs.
What Can You Do With An Advisor You Think Is Impaired?
Proactive steps are essential. Here are our recommendations:
First, record your observations of changes in the advisor’s behavior. For example, forgetting appointments, failure to meet on schedule with clients, seeing too many blank stares in your interactions with him or her, becoming withdrawn from interactions can all be signs of trouble a manager must address. They could be associated with cognitive impairment or with other health conditions. Managers need to ask the advisor about what they and other colleagues see that looks like a possible red flag.
Ask about general health issues, which can directly impact how an advisor does the job of handling clients. Is it nosy? Yes. Is client financial safety at stake if you don’t ask? Yes. Take the risk of opening the conversation. That is smart. Waiting for a disaster is not.
Establish an in-house policy for what should be recorded by colleagues and reported to managers about possible signs of cognitive decline and the direction you want to take after signs are identified. The policy should be in writing and distributed.
Have a plan to closely watch the apparently impaired advisor.
Asking the advisor to work with someone to supervise transactions is one option. Reviewing how the advisor is managing his or her work at short intervals is another option. And with obviously impaired folks who do not themselves recognize their own cognitive changes (not an uncommon thing), have a suspension or graceful exit means to stop the impaired person from putting clients at risk. This falls under what those conference speakers vaguely referred to as “other arrangements”. Be specific.
This is uncomfortable territory for managers, compliance officers and for colleagues of older advisors in firms. However, the FINRA poll is telling. If this problem were not rising in our midst, 65% of those polled would not be worried. If you are concerned where you work, get your copy of Succeed With Senior Clients: A Financial Advisor’s Guide to Best Practices, now or get a live or online presentation from us at AgingInvestor.com. Don’t put your firm and your clients at unnecessary risk.
By Carolyn Rosenblatt, RN, Elder law attorney, Consultant, AgingInvestor.com
Attempts to scam money from seniors never stop. And the thieves keep getting better at thinking up ways to extract information from older folks. Here’s another one—a different phony Medicare trick.
People hear ads on TV about genetic testing and how it can predict disease and protect them. They also hear ads that they’re not getting all the Medicare benefits they deserve. Who doesn’t want to get all the benefits they should get? It’s a perfect moment for scammers.
They may call your retirement-aged client and tell them that new genetic testing is available that Medicare will pay for, worth thousands of dollars. Of course, all your client has to do is to give them their Social Security number and the free testing kit, signup papers, or other inducement will be mailed to them immediately.
Let’s be clear: Medicare does not pay for genetic testing as a “new benefit”. If for any reason such testing were needed, a physician would order it and explain why it was needed. Such testing would not be ordered without any discussion with one’s MD.
Your client should never, ever give out a Social Security number or other personal information such as date of birth or address over the phone. Your client must never accept a genetic testing kit not ordered by one’s own doctor. If it is accepted and the cheek swab, DNA test or anything else is given to the sender, your client may be billed directly, potentially incurring a debt for thousands of dollars. It would be a sad day for your client to mail in a claim for reimbursement to Medicare for a fake benefit and realize that the claim is denied. They’re on the hook for the full price.
These kinds of scams are used to get information to commit identity theft and Medicare fraud. No matter how smart your client is, anyone can be caught off guard and tricked.
What Advisors Can Do
Here are some ways to let your client know you care about their financial safety.
Prepare a friendly form letter to send to all clients over age 65 and inform them about this scam. Warn them not to fall for it.
Keep abreast of all the latest scams in over 30 categories at the Federal Trade Commission, which explains what they are and how they work. Keep clients advised.
If identity theft has happened, direct your client to the Federal Trade Commission website for instruction on what to do.
Carolyn Rosenblatt and Dr. Mikol Davis are co-authors of The Family Guide to Aging Parents (www.agingparents.com) and Succeed With Senior Clients: A Financial Advisors Guide To Best Practices. Rosenblatt, a registered nurse and elder law attorney, has more than 45 years combined experience in her professions. She has been quoted in the New York Times, Wall Street Journal, Money magazine and many other publications. Davis, a clinical psychologist and gerontologist, has more than 44 years experience as a mental health provider. In addition to serving his patients, Davis creates online courses and products to assist professionals and the public with understanding aging issues. Rosenblatt and Davis have been married for 34 years.
An Important Question For Your Clients Contemplating Retirement
Longevity is increasing, as millions of Americans are living to 90 years and above, the U.S. Census Bureau reports. Will any of these long-lived folks be the parents of your current clients? Some clients reaching retirement age themselves will be dealing with the challenges of their aging family members, even as they plan their own retirement years.
One critical question perhaps not built into your calculations for retirement income needs should be whether your clients can reasonably expect to have to support their aging parents. As reported by NPR citing the Census Bureau report, nearly 20 percent of 90- to 94-year-olds live in nursing homes. Among those 95-99, about 31 percent are in nursing homes. And in the 100+ population, 38.2 percent live in nursing homes. Who pays for that care?
Most financial advisors have a basic understanding that Medicare benefits are very limited when it comes to nursing home care. Post hospitalization, the maximum benefit is 100 days and most people do not receive even that, due to qualification requirements. For those who have to live in nursing homes long term, rather than for shorter stays involving rehabilitation such as physical therapy, the costs are paid out of pocket. The exception is for the lowest income elders. For them, Medicaid pays the cost of long term nursing home care. For everyone else, a long stay in a nursing home can wipe out an older person’s assets. The financial burden then falls on family who may have the means to prevent the impoverishment of their loved one.
Some adult children will not allow Mom or Dad to live in a nursing home long term. Maybe it was a promise they made to the aging parent. Essentially, it is no one’s first choice of where to go when care is needed. If a family has some assets but does not want to wipe out their own retirement income by paying for nursing home care or even full-time home care, the most cost effective solution is to take in the aging parent.
There is a cost involved in this choice as well, and it extends to many factors beyond money. Every family relationship in the household is impacted. Some adult children are not patient, not willing and not good at caring for an impaired aging parent in declining health. For others it is seen as an honor and a final chance to give back to the parent in gratitude for what the parent did for them over a long lifetime. Individuals vary in their perspectives, ability and willingness to take in an aging loved one.
Some families take in an aging parent and pay for part-time help, providing a significant part of the caregiving themselves. Others pay for assisted living for an aging parent, but that is not suitable for those who need care around the clock. Others allow a parent to spend down their assets until they can qualify for state paid nursing home care. The parent is then placed there somewhat as a last resort.
No matter what choice a client will make about an aging parent, it is important that the financial professional in their lives helps them see the big picture and plan according to anticipated needs for both the client and the elders for whom they feel responsible.
The Takeaways
Longevity is creating an issue for families who are facing years of decline in aging parents who may not have the means to pay for care on their own.
Responsible financial advisors must raise the question with every retiring client: is there someone in your life that you will likely have to support financially during your retirement?
Advisors and families alike must consider and plan for how any essential financial support should be handled by adult children of aging parents. Take in the parent? Supplement the parent’s income by paying for home care or assisted living?
When the means are not available to offer financial support, and the physical needs for care are extensive, it sometimes becomes necessary to allow the aging parent to become impoverished and to qualify for Medicaid. Medicaid does pay for long term nursing home care.
For those with sufficient investment income expected, financial support for aging parents can be part of an overall retirement planning strategy. It is up to the financial professional to help with this process.
If you the financial professional need a clear explanation of the actual costs of long term care, whether at home, in adult day centers, assisted living or skilled nursing, get the facts so you can plan with clients. It’s all laid out for you in Hidden Truths About Retirement & Long Term Care, available now. Click here to get your print, digital, or audio copy.
About Carolyn Rosenblatt and Dr. Mikol Davis
Carolyn Rosenblatt and Dr. Mikol Davis are co-authors of The Family Guide to Aging Parents (www.agingparents.com) and Succeed With Senior Clients: A Financial Advisors Guide To Best Practices. Rosenblatt, a registered nurse and elder law attorney, has more than 45 years combined experience in her professions. She has been quoted in the New York Times, Wall Street Journal, Money magazine and many other publications. Davis, a clinical psychologist and gerontologist, has more than 44 years experience as a mental health provider. In addition to serving his patients, Davis creates online courses and products to assist professionals and the public with understanding aging issues. Rosenblatt and Davis have been married for 34 years.
The Senior Safe Act allows you to hold transactions when you suspect financial abuse of a client. The Act is designed, at least in theory, to allow time for the trusted contacts you have on file to take appropriate action. Many of those victimized by predators or manipulated by unscrupulous family have dementia and have lost their judgment about what makes sense financially. The Act urges you to get trusted contacts and provides that you are not breaking privacy rules to contact them in the reasonable belief that your client is being financially abused. The length of time you can hold a requested transaction can be as long as a month. This is where the Senior Safe Act has missed the mark.
Let’s look at the reality of impaired elders who are in charge of their wealth on the family trust. The trust is in order, and if the elder recognizes that he or she is experiencing decline in mental ability, that trustee may choose to resign. Simple. But that is not what happens in too many cases. For many persons who have cognitive decline and dementia, the elder does not recognize that he is impaired at all. “I feel fine!” he tells his worried family. When asked to resign as trustee, having total control over (theoretically) millions of dollars in a trust, the elder flatly and stubbornly refuses. Meanwhile, financial abuse by predatory people can continue unabated.
When an older person experiences cognitive decline, it typically has a very slow onset. Short-term memory loss does not raise enough red flags for those closest to the elder to take any action. “She’s just getting old” they say dismissively. But memory loss is often the first and earliest warning sign of Alzheimer’s disease, the most common form of dementia. The odds of having Alzheimer’s disease by age 85 are at least one in three. Think about your own older clients. Some live well beyond age 85. The risk of dementia rises with age. Short-term memory loss interfering with daily life is not a normal part of aging. Financial abuse and cognitive impairment often go together.
When financial abuse reaches a visible level, the advisor may do what the law allows and call the trusted contact person, usually an adult child. The advisor hopes that the call will somehow trigger something and the abuse will be stopped. But here is a reality check: The family can’t accomplish anything needed in two weeks or even a month if you hold transactions then. Here is a real case example of just such a situation, showing how long it really did take.
In our work with a family at AgingParents.com we saw rampant financial abuse of an elder by a family member. The elder had dementia but had not been formally diagnosed by his doctor. Over 70% of his income was going to the predator. He was asked to resign as trustee by his two adult children, who were reasonably worried that he was going to give away all his cash and further encumber his home. The dad, whom we’ll call Gene, had been developing dementia for at least two years. He felt obligated to the predator and was totally powerless in resisting her demands for money. He just kept writing checks, draining his own resources. It was clearly a case of financial manipulation.
We were involved in working to persuade Gene to allow what his family trust provided: to have his daughter, Jennie, become the successor trustee. He agreed, then reneged. He accepted the logic and then refused to accept it. The kids had no choice but to use the law to take over control. Their father was too stubborn to resign as trustee when asked, even with the entire family presenting a united front, asking and respectfully begging.
The trust, like many such documents provided that Gene could be removed as trustee by his appointed successor, his daughter, after two physicians had declared him to be incapacitated for handling his own finances. A court decision was not required. However, getting him to two doctors willing to assess him and put their observations in writing was a challenge that took months to accomplish. The total time spent getting the change of trustees accomplished according to the terms of Gene’s trust was eight months.
His children were the trusted contacts in the advisor’s file. They knew about the abuse and were in agreement with the advisor that Gene had to stop being the trustee. The adult children had to hire consultants (AgingParents.com), have meetings, hire an attorney, and try various methods to get the job done. Their time energy and thousands of dollars were expended to prevent an even worse outcome, which was being left to support their aging father if he were to totally deplete his own funds.
The takeaways:
Though well intended, we do not expect that the Senior Safe Act will do much to stop financial abuse because of the short time allowed for a financial professional to hold transactions. In Gene’s case, the predator would have been happy to wait a mere two weeks or a month before resuming the financial manipulation of Gene.
Know that any older impaired client may not understand that he or she is cognitively impaired and will ignore pleas to resign as trustee with total control over any family trust.
If you see that an older client is showing signs of cognitive decline, do not wait until it gets worse. Reach out at the time of your first suspicions of trouble. The family or other trusted persons may well have a better opportunity to persuade an elder to transfer power over finances to the appointed successor before complete loss of capacity. Expect this to take time.
In the case described above as a result of ongoing financial abuse, nearly all of Gene’s cash was depleted during the eight months of effort on the part of his adult children to have him removed. The advisor did the right thing but too much of Gene’s cash was depleted in the period when the abuser could keep manipulating him for those months of effort by family to have him removed as trustee.
If you are seeing abuse and feel lost about how to stop it, contact us at AgingInvestor.com for a confidential consultation with our nurse-lawyer, geriatric psychologist team so you can do everything possible to protect your vulnerable client.
As an advisor, you hope that your clients trust you and will stay on with you for life. You may be doing well in managing their finances. You may never hear any complaints about your fees. But unseen forces can be at work and any one of them can prompt your client to think he or she needs to go somewhere else. Lures of lower fees, better returns or a younger family member urging them to give up your management can undermine the trust you thought you had. How do you maintain the relationship? What can you do besides your essential job of skilled management to keep clients?
Consider that everyone appreciates being thought of and attended to one way or another. If you look at marketing efforts from another industry, real estate, you note that brokers and agents send lots of mailings and notices to prospects over time, just in hope of keeping themselves, top of mind. They may not even know you but they send mailings to your address or email anyway. If they do know you, you may even read what you receive. It makes sense to find reasons to contact clients regularly even if there is no need to update them on the performance of their portfolios. One way is to send them something as a courtesy, to let them know you want to be helpful.
You may know that financial abuse of elders is a massive problem in our country. In fact, research shows that it costs elders over $36B a year. Most aging clients have heard of abuse or scams, but may think warnings would not apply to them. But of course no one is immune. At AgingInvestor.com, where we focus on advisor education and training about age-related issues, we urge every advisor to keep retirement-age clients informed of scams and fraud. There are two important reasons for this. First, you may actually prevent a client from getting ripped off by educating them. And second, sending regularly scheduled communications about these issues and more can strengthen your relationship with the client.
If you don’t have time to write or look up what to send clients, we make it easy for you. Go to AgingInvestor.com and get started. Send your clients the AARP tip sheet on avoiding scams you’ll find HERE. They can learn about common scams and what to watch for. We even created a brief suggested cover letter or email you can send with it. You can use this one or create a letter that works for you. We have a series of free things we assembled so you can use them to maintain the best, warmest communication with your aging clients. It will deepen your client relationship and they’ll appreciate you even more!
Clients Without Family: Financial Planning With “Elder Orphans”
Every financial advisor will eventually come across an aging client who is essentially alone in the world. The elder may be single, widowed, or otherwise without a partner. Some are members of the LGBTQ community and never had children. Others were childless, or have lost children and significant others in their long lifetimes. The end result is that the usual support systems that exist for others are not available to these clients when they may need support the most.
Some refer to these elders who are alone with no family as “elder orphans”.
Heidi is an example. She has a financial advisor who has worked with her over decades. He referred her for advice, which she wanted and I visited her at home. She is 90 and lives alone in her own house, which she owns outright. She has a modest portfolio and is comfortable. She was widowed 20 years ago and she has no children, nor any relatives in the U.S. She relies on her best friend and neighbor when she needs help. This need is increasing now that her vision is impaired. When I spoke with Heidi I asked her about her one best friend. She mentioned that this neighbor is 86, but is “doing pretty well”. Heidi had recently fallen twice in her home, but fortunately escaped serious injury from those falls.
Heidi has a will and a trust, power of attorney and healthcare directive. The appointed person on those documents is her cousin who lives in another country. If an emergency occurs, it is not at all clear who would be available to assist her.
This situation is a disaster waiting to happen. The risk of another fall, vision problems that will likely prevent her from driving, and the age-related risks to her friend the 86 year old who could also become disabled or unavailable are all looming. I ask if her financial advisor has discussed the future with her, possible other living arrangements, a local person for a healthcare agent and what to do when she can no longer drive. “No” she replies, “we’ve never gotten into that”.
I urged Heidi to contact her financial advisor right away so plans could be made and her safety assured. She also needed to speak with her estate planning attorney to update her documents, ensuring that an appointed local person had authority to assist in any crisis or if Heidi loses independence. She is close to needing help now.
Think about your book of business and whether you have any “elder orphans” in it. If so, there are things any responsible advisor should address with such clients. Here are three essentials for every advisor’s discussion.
First, the legal documents. The advisor can get permission from the client to contact the estate planning attorney and find out what plans exist for an appointed person to step in and take over the reins when or if the client becomes impaired. a local appointee is critical. Someone has to be able to make financial decisions if the client loses the ability to make them independently.
Next, alternative living arrangements. A 90 year old with impaired vision who has fallen at home may need to consider options of where to live with help available onsite. The financial advisor knows what assets are available to pay for a choice such as assisted living. The advisor should bring this up and ask the client about what he or she wants.
The need for a local appointed person to be not only the advisor’s trusted contact, but your client’s person to reach in the event of an emergency. An appointee in another country is not going to be of immediate help. Explore other choices.
The advisor needs to expand the limits of the usual role of simply managing the money with elder clients who do not have any family. To keep you on track and aware of the special planning these aging investors need, get your free checklist of points to address at AgingInvestor.com. With it, you can be sure of what you need to cover in your planning conversations with you “elder orphan” clients. Download Your Advisor’s Seven Point Checklist— Best Planning For Aging Clients With No Family now so you can excel in appropriate future planning.
In a conversation with a prominent retired financial advisor from a large institution, I heard the following:
“Financial advisors are not interested in retired people. They’re taking money out. The advisors are interested in investors who are putting money in, not the other way around.”
Just hearing this generalization, whether true or not, gave me a kind of sick feeling in the pit of my stomach. Millions of Boomers fall into this category of retired. If their advisors lose interest in them when they are no longer increasing their investments, where does that leave the retired person in need of advice? The generalization sounded like age discrimination.
As a professional devoted to the well-being, financial safety and quality of life of older adults, I can only hope the statements I heard about lack of interest are untrue. I have met plenty of financial advisors who are indeed interested in maintaining their relationships with their oldest clients, not just based on whether the portfolio is increasing. They actually do care about the clients. For them, it’s not just an empty advertising slogan. I hope this is the majority!
Millions of clients served by advisors will retire soon enough or these clients are already in that phase of their lives. Competent financial advisors who have the ethics they hold themselves out as having will increase their skills in planning for lifespans for some of their clients who will live into their 90s and beyond. No logarithm nor mathematical table will do a complete job of this.
Here are some of the areas involved in longevity planning that the best advisors will fully understand by their increased training and preparation:
Social Security, and how to maximize the benefit.
Particularly with married couples, this requires specialized knowledge in order to give appropriate advice. When I asked my own long time B-D at our financial institution about it, he was very vague and couldn’t even refer me to anyone who could answer questions my husband and I raised. We fired him. We found an independent advisor who was very knowledgeable about Social Security. We referred three other people to this new advisor in the meantime and all became his clients. Take heed. Word spreads.
Long term care planning.
Telling a client who is reluctant to purchase long term care insurance that self-insuring is a choice is fine, but the longevity advisor understands how to address the risk of needing long term care and has actual figures at hand to spell this out for the client. If this is not your area of expertise, you can get a clear understanding of the costs of all types of long term care in my book, Hidden Truths About Retirement & Long Term Care. About 70% of people will need some long term care at some point. Know what it costs.
The nexus between financial planning and estate planning.
It never fails to surprise me about the disconnect between the financial advisor and the client’s estate planning attorney. Both should be working together to ensure that the client’s later years are financially safe. Successor trustees should be known by both the advisor and the lawyer, so that if a client begins to show cognitive decline, they can coordinate efforts to have the named successor take over decision making at the appropriate time. If you are worried about confidentiality of protected information, get the client’s permission in advance of any impairments, to communicate with the attorney involved. In other words, do this at the time of retirement.
Targeting relationship building with the next generation.
A loss of interest in a retired client deprives the advisor of a huge opportunity. That is, to establish a connection to and trust with your retired client’s heirs. Have you even spoken with any of them at the point of the aging investor’s retirement? If not, you have an explanation for the reason why about 80% of the heirs move their inherited assets to someone else after the patriarch or matriarch dies. The heirs can get to know you well in advance if you invite them, with your client’s permission of course, into the planning conversations. Don’t lose that chance.
In a nutshell, the older client needs the skill the financial advisor has and retirement should not change the advisor’s interest level. Keeping clients for life takes an understanding of longevity. Make it your business to do just that.
The financial services industry often refers to retirement planning for the future with aging clients in terms of “housing choices”. This reflects some degree of misperception about what happens as we age. For healthy people of retirement age, there is little interest in planning for the need for care and planning for loss of independence. People usually resist talking about it. We don’t choose to lose our independence. It happens. It is up to the advisor to raise it if you want to advise for longevity. The subject is emotional and can be difficult.
Where we need to get help when we can’t be independent any longer is really a choice about care, rather than housing. This is not house shopping. Does a client want to pay for care in her own home when that time comes? Most would say yes, they want to remain at home. They then must calculate what a home care worker costs and whether that is the best way to receive the help they are likely to need one day with their activities. Can the resources be available to enable that choice of where care will be given?
If an elderly client is living alone and can’t manage at home anymore without assistance, there are indeed choices, often driven by the degree of care needed and the cost of getting it. Elders may not be interested any longer in maintaining a house, cooking, shopping, and other necessary chores. For them, assisted living may be desirable because their daily lives will be different and free from the burden of the household that has become unmanageable. The choice to go to assisted living is usually not one a client is going to make because of wanting to downsize into an apartment for its own sake. Rather that is the price of going to the place where assistance is on hand. Again it is to receive care, not because they love the idea of not having their home any longer. For many elders, downsizing from a house to an assisted living apartment is a difficult adjustment, required because of physical or mental changes of aging. From that perspective it is a choice forced upon them.
A factor every advisor should know is that the likelihood of living alone increases with age. Almost half of women age 75+ lived alone in 2010, according to the Institute on Aging. The “choice” of a different living arrangement is brought on by safety and care concerns, often raised by their adult children.
It will be good for every advisor who wants to help clients plan for longevity to consider that their role is to introduce the issue of possibly needing care in the future, as about 70% of us will one day. If your client has you in her life, she already has housing. Planning for “housing” is a misnomer. Focus on places and choices where care can be delivered. Having no care plan can be disastrous, as sudden health crises can force decisions without considering the cost of care in advance.
In helping to educate your client about where he or she can receive care, the costs of all the offerings available in most areas are spelled out in detail in our book, Hidden Truths About Retirement & Long Term Care. You can develop quick expertise on the subject there. Skilled advice about longevity for your aging clients requires knowing your numbers, what care options are available where they live and how much they can expect to spend for that care. Smart advisors gather the data before a crisis happens and urge clients to look at it with them.
Your clients are getting ready for retirement. You’ve done the calculations, balanced the portfolio and advised them of what income to expect. You’ve discussed how much spending is ok. You used your program and your analysis was thorough. You’ve done your job, right?
Not exactly. There is probably no algorithm nor program that will calculate your client’s individual profile of health risks that will likely lead to the expense of long term care. That can be a whopper. Maybe you’ve suggested long term care insurance. Most people don’t choose to buy it. For those who do, the benefits are limited and the “elimination period” (deductible) is thousands of dollars. There go your careful calculations. At least 90% of folks don’t have that coverage. Now what?
But how can you predict what’s going to happen to anyone’s health in retirement, you ask. You can’t be precise, but you surely can make some rational observations and give advice accordingly. Those observations consist of two parts: what you can see with your own eyes and what you can glean by asking a few basic questions. If you think asking any client about their health conditions is too nosy or not your job, consider that if the client needs long term care and runs out of money because of it, they’re not going to think much of you. And the cost can wipe out their security.
Asking about health issues is not nosy at all. Rather, it’s what any smart advisor planning for longevity must do. Let’s not keep pretending that everyone stays the same physically and mentally from the start of retirement to end of life. Our bodies go through wear and tear and things break down. Cognitive decline affects at least a third of people who reach the age of 85. The risk of Alzheimer’s disease keeps climbing after that. Now, what was that life expectancy you were using in your calculation? Was it age 99?
Let’s start with what you can see in your client with your own eyes. (If they’re not in front of you, perhaps Skype is an option). Is your client obese, as about 40% of the U.S. population is? This leads to heart disease, stroke, and diabetes, among other diseases and conditions. The medical care people receive in many cases will save them from dying but they then live with disabilities. And yes, they will be very likely to need expensive long term care. Neither health insurance nor Medicare will cover long term care. Such help as a part time caregiver at home is how most folks start out with long term care. Your client pays out of pocket most of the time. Did you calculate how much it costs as well as how long they will likely need it? If they have multiple medical conditions, and have started long term care, they’ll probably continue to need some form of it for all their remaining years.
Find out what you may not know from simply observing your client’s appearance by asking questions. You can make your own list or get a health care provider to help you with a few targeted questions. You will need to educate your client as to the reason why you need this information. It’s to help them plan for how much to save in their retirement years.
Here are some examples of basic questions that can help you predict the need for possible long term care:
How’s your health these days? Has a doctor told you that you have any long term conditions?
Are you taking medications? What are they for?
Do you smoke?
Are you concerned at all about any health issues you have at this time?
Do you recall your parents’ ages when they died?Your aging clients will not be eager to talk about the potential need for long term care. When you told them about what to expect for “out of pocket medical costs in retirement”, you did not give them a figure that included long term care. Long term care is not “medical” according to Medicare. Rather, it is called “custodial care”. The client probably will not bring it up, so you must do this.
When you have done your observations and gotten answers to your health-risk related questions at least there is a place to start a meaningful conversation. You can give them figures as to the cost of typical kinds of care, such as a non-medical home care worker. We at AgingInvestor.com recommend starting your projections at age 80 as to when a person might need physical help. Many of us know someone who did require help with at least some part of his or her life at that age. Then you can talk about how any condition your client identifies for you, such as high blood pressure, diabetes, etc. as shortening normal life expectancy and increasing the risk for needing help. If your client already has difficulty with some normal daily activity such as walking or bathing, they are definitely at high risk for needing paid help sooner than a person without these problems.
Clients may be completely unaware of such things as the hourly cost of a home care worker, what assisted living costs each month and what home modifications cost if they are able to remain in their own home. You can find a thorough discussion of these and many other parts of long term care in our book, Hidden Truths About Retirement & Long Term Care, written specifically for financial advisors like you.
Every conscientious advisor needs to wake up to the reality that your retirement income calculator omits the reality check of health problems. We’re not talking about nursing homes, but every other kind of care and help most people will need as they age. If you do want to help clients who are reaching retirement age to plan realistically, include the health risks you can see or learn about by asking.
Everyone is going to have someone in your book, sooner or later, who has cognitive decline. Studies tell us that the average advisor has at least 7 clients with some form of cognitive impairment now. We’d bet that when you became an advisor, your education did not give you guidance about what to do when you see the warning signs of decline in a client’s mental function. With increasing longevity, we have a problem like never before.
What are you supposed to do about it? Isn’t this the family’s problem? In truth, it’s not just the family’s issue—it’s an issue for everyone in an elder’s life, including the financial advisor. There are three essentials everyone should be doing to keep yourself and your client safer.
For openers, you, the advisor must be familiar with the warning signs of cognitive impairment. At AgingInvestor.com, we offer a free downloadable checklist of these red flags, so you can keep it and use it as a guide. Please do. You can’t ignore these signs, as they are very likely to worsen over time. When your client is too “out of it” to make decisions, you are in trouble.
Have two or three trusted contacts in your client’s file. If you have never asked for even one, now is the time. Make it part of your office policy, your task at a portfolio review, or what you decide to do this week because you are a smart, plan-ahead person. Why two or three? Because family members are often named first and family, unfortunately, are the ones who steal from aging folks most often. One of the contacts should be outside the family.
Get written permission from your client to speak to their estate planning attorney, their accountant and any other professional involved in managing their affairs. This can be extremely helpful to you as a client begins to show those red flags. All of the professionals can act together to protect the client, get an appointed surrogate decision maker in place or otherwise reduce the risks of financial fraud and abuse. All it takes to give permission is a letter from your client, a simple but very important step you must take. Draft it for the client, ask him or her to sign and do it.
The point of this action is to protect a vulnerable client from getting ripped off, from failing to attend to financial business, and from the neglect of basics that often accompanies this kind of mental impairment. You don’t need to be a hero. You do need to be a professional in the way you treat these older clients. And remember that if the client is “losing his marbles” and money gets drained by predators, decimating the portfolio, the family may look to you if you failed altogether to act. Remember, their inheritance could be at stake.
Dr. Mikol Davis and Carolyn Rosenblatt, co-founders of AgingInvestor.com
Carolyn Rosenblatt, RN, Elder Law Attorney offers a wealth of experience with aging to help you create tools so you can skillfully manage your aging clients. You will understand your rights and theirs so you can stay safe and keep them safe too.
Dr. Mikol Davis, Psychologist, Gerontologist offers in depth of knowledge about diminished financial capacity in older adults to help you strategize best practices so you can protect your vulnerable aging clients.
You may have heard of the fake calls from thieves pretending to be from the IRS. It can be a threatening robocall. Or it can be a male with an aggressive manner telling the recipient of the call that they will be arrested for owing back taxes if they don’t pay immediately. These criminals carefully select older people and anyone they consider vulnerable to their fake pressure. Your aging clients could be a target and scammers want to terrify them.
How do they get the names of our aging parents? They buy them. Information is for sale, from lottery entry forms, contests, magazine subscriptions and from hacking whatever can be hacked. Identity information can even be purchased on the black market. “Information brokers” have been around for decades and so have these telephone scams. Supposedly, the entities that sell the names don’t care what the buyer does with them. There are likely millions of names and telephone numbers available to the scammers, given the nationwide nature of their ripoff efforts. Apparently, names and numbers are very easy for them to get.
Here’s how it works: The caller catches the unsuspecting older person off guard. The call is official sounding: “This is Officer James with the Internal Revenue Service and I am calling about an urgent matter! Do not hang up!” Sometimes they are even able to secure a fake caller ID that says “IRS” or looks like a legitimate government entity to those with caller ID. There were also reported cases when they used the name and email address of a CFPB employee.
They then tell the stunned elder that they or their spouse has an overdue debt to the IRS and if it is not paid immediately they will be arrested. Of course, they want the elder to use a wire transfer or a prepaid debit card so the thief can’t be traced. The frightened person will hurriedly comply and realize only later that it was a scam. In the moment of reacting to the threat, they are not thinking clearly. They are moved by fear–just what the thief was hoping for.
No matter how many public service announcements are sent out, and no matter how many Federal Trade Commission, AARP or National Center on Elder Abuse warnings are posted, the scam is still working. We at AgingParents.com think the best way to keep our aging loved ones financially safer is to personally warn them yourself about these scams. They will probably listen to family more readily than they would seek information from the internet or official sources trying to spread the word. Of course, the IRS will never, under any circumstances call someone and demand payment of a debt. Their official communications about taxes are by snail mail.
If these evil scammers were not successful, they would stop doing this. But sadly, it works and they are relentless. My neighbors, many elders, have reported that they have gotten these calls this week. Beware. Please take the time to alert your loved ones to this problem. And don’t think your mentally alert aging loved one is too smart to fall for this. No one is immune from being shocked and intimidated by a sudden call. It can happen to anyone.
We at AgingInvestor.com think the best way to keep your older clients financially safer is to personally warn them yourself about these scams. They will probably listen to family more readily than they would seek information from the internet or official sources trying to spread the word. Of course, the IRS would never, under any circumstances call someone and demand payment of a debt. Their official communications about taxes are by snail mail and that is not likely to change anytime soon.
If these evil scammers were not successful, they would stop doing this. But sadly, it works and they are relentless. My own neighbors, many elders, have reported that they have gotten these calls this week. Beware. Please take the time to alert your clients to this problem. And don’t think your ever so sharp client is too smart to fall for this. No one is immune from being shocked and intimidated by a sudden call. It can happen to anyone.
If you want to send a friendly letter to your clients about this scam and don’t have time to put it together, we make it easy for you. Just go to this link and download a free pre-made letterto send out.
Revise it with your name or firm name and you’ll look good by showing that you do care about their financial safety. You’ll never regret doing your part to thwart thieves and prevent financial elder abuse.
Dr. Mikol Davis and Carolyn Rosenblatt, co-founders of AgingInvestor.com
Carolyn Rosenblatt, RN, Elder Law Attorney offers a wealth of experience with aging to help you create tools so you can skillfully manage your aging clients. You will understand your rights and theirs so you can stay safe and keep them safe too.
Dr. Mikol Davis, Psychologist, Gerontologist offers in depth of knowledge about diminished financial capacity in older adults to help you strategize best practices so you can protect your vulnerable aging clients.
Lots of sellers of products are trolling for new clients, new prospects and older investors with substantial assets. They use a proven technique that could trap your client. You can educate your clients early and often about the technique, which is the “free meal educational seminar”. These seminars are not, by themselves, a bad thing. Perhaps you’ve even put one on yourself, or considered doing so. But too many unethical people are using these to sell inappropriate investments to older people. The annuity scams are notorious for this checker informative hints.
Are you considering the issue of Boomers having to care for their aging loved ones in retirement? You’ve probably done a good job with helping clients be ready for retirement age, but every financial professional needs to consider a massive problem we now face. Our oldest old are living longer than anyone expected and they can run out of resources. Their adult children might have to care for, pay for or take in their aging parents.
Years before, the parent probably extracted a vow from the adult child your client, (typically a daughter) “promise you’ll never put me in one of those homes”. And the daughter, without much thought replied, “Of course Mom. I’d never do that”. How time changes things.
The concept of “being put in a home” is vague, based on largely outdated notions our elders have of ugly warehouses for the poor, something conjured not just out of an English novel, but out of the way things once actually were in some places, long before Medicare and Medicaid existed to ensure at least some care for our elders. We did neglect older impoverished people and place them in poorly regulated homes.
Things are supposed to be better now, with the rise of public benefits, and government regulations over skilled nursing facilities, all designed to keep residents safe and in a somewhat dignified existence. The intended outcome of these regulations does not always meet reality. The cost of caregiving for all but the lowest income in our society is borne by the elders themselves if they have the funds or by their families if the parent has limited means. .
Advisors may discuss with retirement-age clients that Medicare doesn’t cover all the costs of medical treatment that clients themselves may need as they age. But few advisors have the foresight to ask their clients if they anticipate also having to pay the cost of care and out of pocket medical expenses for their parents too.
We have a 94 year old mother in law. She’s in decent health, and has the means to cover what she needs now and in the future. We’re among the fortunate ones. Years ago, we and my husband’s parents made a joint investment that pays enough income for her, now widowed, to live on. She can cover health emergencies, home care, expensive medications and whatever downturns her health may bring. She has savings as well. This is not how it works for the average person in our country. Perhaps your clients are wealthy but their parents might not be.
Some folks solve the issue of what to do by bringing the aging parent into their homes and providing or paying for care themselves. This multi-generation household approach is a cost effective way to house an aging parent with limited resources and cover many expenses that would otherwise have to be borne by the elder who just might be low income by the time they reach the age of 94, like she did in my family.
Bringing in the aging parent to live with you is not a solution for everyone, but one worth considering. If you broach the subject with your Boomer clients, you can get them thinking about this. Longevity is increasing steadily and it is going to affect those whose parents live longer than anyone thought they would. The takeaway here is for you, the financial professional to ask them about it.
Here are some basic questions you should ask:
“Do you anticipate having to pay for support for anyone else during your retirement years? Are your parents living? How is their health these days? What would you do if they got low on funds and needed care? Have you thought about what it would cost to care for them?”
Learn more about how your clients need to discuss finances with their own aging family members at AgingInvestor.com in Succeed With Senior Clients, A Financial Advisor’s Guide to Best Practices. You’ll be doing a great service and prudent planning when you initiate the discussion they need to have.
The National Institute on Aging reports that scientists are using magnetic resonance imaging (MRI) of the brain to explore the parts associated with money managing abilities. Can we actually see a picture of this?
The report cites neuropsychologist and lawyer, Dr. Marson. “It’s the $18.1 trillion problem,” said Daniel Marson, J.D., Ph.D., professor of neurology at the University of Alabama at Birmingham, citing an estimate of household wealth held by U.S. adults age 65 and older. “That money is at risk in part because of the cognitive disorders of aging.”
We don’t have a way to pinpoint an exact spot in the brain that would tell us that a person is or is not competent with finances, but the report describes novel efforts using MRIs to find out more than ever about the brain and financial capacity. Changes in certain parts of the brain are linked to loss of financial capacity.
New techniques are providing intriguing data on why older adults—even those who were previously quite savvy about finances—may lose their money-managing abilities,” said Nina Silverberg, Ph.D., program director of the Alzheimer’s Disease Centers at NIA’s Division of Neuroscience.
What does this mean for you and your aging client? It may be one more objective way to verify what you already suspect: that an older client is not savvy anymore when it comes to handling finances. The trick would be persuading a client to get this brain image if you and the family suspect that the client is in cognitive decline. We don’t have the MRI techniques nailed down to verify loss of money making decisions, but that seems to be on the horizon.
Meanwhile, every advisor needs to be aware of the subtle signs of impairment in your client. An aging client who is in the earliest stages of Alzheimer’s for example, is already moderately impaired for making safe money decisions. That means that you, a responsible advisor have in place a clear path to bringing in a surrogate decision maker to help that client. Part of that $1.8 trillion Dr. Marson mentions as being at risk is what is paying your fees. Take prudent steps to protect it.
Learn fast about spotting diminished capacity with our downloadable free checklist at AgingInvestor.com.
Dr. Mikol Davis and Carolyn Rosenblatt, co-founders of AgingInvestor.com
Carolyn Rosenblatt, RN, Elder Law Attorney offers a wealth of experience with aging to help you create tools so you can skillfully manage your aging clients. You will understand your rights and theirs so you can stay safe and keep them safe too.
Dr. Mikol Davis, Psychologist, Gerontologist offers depth of knowledge about diminished financial capacity in older adults to help you strategize best practices so you can protect your vulnerable aging clients.
AgingInvestors.com offers accredited cutting edge on-line continuing education courses for financial professionals wanting to expand their expertise in best practices for their aging clients. To learn more about our courses click HERE
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Carolyn L. Rosenblatt, is a nurse and elder law attorney, along with blogging for Forbes.com and author of 4 books on aging. She is a co-founder of AgingInvestor.com and AgingParents.com
The Fraud Watch Network sent out a press release detailing a new and fast moving telephone scam targeting taxpayers across the country. As many of us are aware, our aging loved ones are quick to fall for these phone scams. Thousands of victims have already lost more than $1million. Please caution your aging parents and others as well.
Here’s how it works:
Fake IRS agents call taxpayers, claim they owe taxes, and pressure them with demands for payment using a prepaid debit card or a wire transfer. They threaten their targets with arrest, deportation or loss of a business or driver’s license, said J. Russell George, Treasury inspector general for tax administration.
The fake agents mask their caller ID, making it look like the call is coming from the IRS. In some cases, even more frightening, fake agents know the last four digits of Social Security numbers. They go so far as to follow up their targets with official-looking emails.
The reports about the scam describe how immigrants were targeted first, and threats of deportation were very effective. It has since spread to thousands of other victims in most states.
Imagine your aging parent getting one of these calls. Unsuspecting, intimidated and wanting to comply. You, as the adult child with more of a fraud antenna might wonder why a supposed IRS agent would call you, as the IRS always communicates with a taxpayer via mail. Your aging loved one might not think of that. When a second call comes in, once again with caller ID masked and faked to look like the police department or the Department of Motor Vehicles, it looks even more like the threat of consequences for not paying is real.
What if your parent really does owe back taxes? They can call the IRS directly at 1-800-829-1040 and get the truth. The IRS never demands wire transfers or debit card payments nor do they use license suspension or deportation as a threat.
Most of us understand that when someone demands payment over the phone by wire transfer or debit card that you should simply hang up. But not everyone knows this, particularly the 20,000 or so people who have been tricked so far with just this scheme.
So, keep your loved ones safe, especially your elderly family members. Warn them about this latest scam and follow up with questions as to whether they have gotten any calls like the ones described here, from anyone posing as an IRS agent. These scams escalate around tax time.
In consulting with families who have elderly loved ones as we do here at AgingParents.com, we often find that adult children want to believe that their parents are still competent and that such a thing could never happen to them because their parents are intelligent, or well educated, or they had work experience in finance, etc. But these clever scum with the fake IRS calls can probably fool even a smart, well educated person because the scheme gets past “filters” like caller ID and knowing the last digits of a person’s Social Security number. This is too scary to ignore.
Not only am I going to warn my 91 year old mother in law about this, but I’m going to ask her to tell all her friends at the seniors’ community where she lives. I’ll let my own adult kids know about this scam too. I hope you will do the same.
Most of us probably think we know what to look for in an aging client who has diminished capacity. But have you every studied the subtle signs that should serve as red flags for you? Now is the time to learn more. Too many older clients are among us to ignore the probability that some of them will be too impaired to do business safely.
Indicators of diminished capacity will not always be so obvious to you, particularly if you are interacting with a an aging client and you as a professional are doing most of the talking. You are probably directing the conversation with that client If you have specific questions about a transaction, whether it involves a real estate matter, a legal transaction or case or accounting matter. You could miss the signs that your client is beginning to develop cognitive problems. If you are asking your client, “Do you understand?” and he says “yes” that is not a way to test whether he really did understand or not. You will need to do more if any warning sign pops up when you interact with your client.
There are so many scams popping up in our world, it’s hard to keep track of them. The scammers target specific groups, such as older people or people who speak Spanish or anyone they hope to fool. Every professional can be instrumental in helping stop the scammers.
The Department of Justice and the Federal Trade Commission have joined forces to help educate the public. They’ve put out these four tips to pass on to every client, whether you believe they are in a vulnerable targeted group or not. (more…)
A judge agreed with Fireman’s Fund insurance company’s retirees who sued the employer for introducing them to “financial education seminars”. They attended, followed the advice given and lost everything. Maybe you thought this only happened to naive older folks preyed on by slick salesmen outside the workplace. But no. It happened to 34 long time employees and retirees of Fireman’s Fund who lost most or all of their retirement savings by being misled into risky investments.
Doesn’t every professional want to stand out from the crowd? Be better at delivering services? Somehow get a reputation as a cut above the average guy or gal in the biz?
It’s hard to sell the idea that you give better service when you are doing essentially what your competitors do in the same space. The secret is in offering a different service from the others in your field, besides the usual expertise in your field clients have a right to expect use the best essay editor source.
What will that different service be? If you want to focus on senior safety, that can be it. We don’t mean that you know about the things seniors need to know about, such as retirement strategy, estate planning, moving, wealth preservation, tax planning and all that. It will be about specifically protecting them from abuse.To do that, you’ll need a senior-specific policy that spells out how you can protect a client. (more…)
Your elderly clients are exactly what professional thieves are looking for. They know, from the massive success they’ve had in stealing from elders, that age is the biggest risk elders have that can affect their money judgment.
But as a professional, is it really your business to keep them safe from outside predators? It’s one thing if the person taking advantage is in your own organization or office. That puts an obvious burden on you to act. But it’s the subtle things that you learn from your client about losing money to someone that should get your attention too.
Have you ever found yourself in a situation with an older client who can’t seem to remember anything anymore. You may have known the client over a number of years and feel responsible. But you are at a loss now. What are you supposed to do with this client? He’s pleasant and just loves you. But you are worried.
You are pretty sure your client is experiencing a slow, but steady cognitive decline. He has a daughter in another state but maybe she isn’t paying attention to what is going on. He has a son she’s not close to, though he lives in the same area she does. You asked him once if he had someone to be his agent, his power of attorney. He hadn’t gotten around to that yet.
No one acts. No one insists that your client choose a relative or friend and sign the Durable Power of Attorney document. He says he doesn’t want to talk about it and you just back off and never mention it again. You suspect he may have Alzheimer’s disease, from your experience with your own family member.
Here is what can happen to your client.
He steadily loses judgment about what is a good thing to spend money on or invest in; therefore, bad decisions happen. We have observed clients who were once financially comfortable start falling for obvious scams. They buy worthless coins or stamps or fly-by-night property investments that take their money and disappear. Perhaps no one knows because the elder is in the secrecy habit. Time passes and the client’s cognitive ability declines even more. There is no stopping dementia caused by Alzheimer’s disease. The predators find an easy mark. As long as there is cash to spend or credit cards to run up, the elder keeps getting into deeper and deeper trouble. Unquestionably, financial decimation can result.
These situations are real. We have talked to the families of elders who have probably been impaired for years, hearing them say they wished someone had done something sooner. No one but the financial professional knew what the client had nor where his money was going. The family thought the elder’s finances were fine. Now, with too much drained out by excessive giving, the family may well end up having to support their aging relative just at the time when extensive care is needed and the expense of it skyrockets.
How do you prevent the worst? By engaging in discussion with your client’s family or appointed other early in your relationship. If you have an ongoing connection with that trusted person in your client’s life, you stand a better chance of protecting her from dumb and destructive decisions if her mind starts to go, later on in life. Even if you can’t imagine how a perfectly alert, intelligent person could get dementia, it happens to millions of people as they live longer. The risk rises with age.
If you have never had conversations with your older clients’ families now is the time to start. You need to educate your client about the importance of having someone else named by her for you to reach out to if she gets sick or has an accident.
You need to develop the skill of conducting family meetings while each client is fully competent. Even if a client has a few memory lapses now it is not too late to have a meeting with family to figure out the path forward in case of trouble ahead. This is a “soft skill” every advisor needs. If you want to learn how to conduct a family meeting or get better at this, you can learn the techniques in an hour.
Have you ever had an older client who didn’t want anyone, not even family, to know what his assets were? Did you find this secrecy about money to be a problem with a few of these older folks? It’s not so rare.
Everyone is entitled to privacy, of course, and the rules mandate that you not share a person’s private financial information. But what if your client begins to decline in his health? What if he starts to appear as if he’s “losing it”? Then are you supposed to just let him make mistakes and feel constrained that you can’t call a family member or anyone about his health? It does seem that most advisors do nothing until things reach a crisis point.
As aging experts, we think things should be handled differently. When you open every client file, you are not required to get the name of someone to call in case of emergency or in case of need. That is precisely what needs to change. Let’s consider common sense. If people are living longer than ever, their chances of developing cognitive impairment are consequently greater. With impairment, people lose their financial judgment. If you have a client’s trusted contact in the file, you may need it. And you can’t wait until your client is really, obviously impaired. If you do, she probably won’t want to give you anything. That puts you in a bad position. Your client is vulnerable to big mistakes and even to financial abuse. You don’t know what to do. You can’t call anyone and you wouldn’t know who to call even if you could.
Here’s the sensible solution: get the names and contact information of two trusted others for your client when you open any file. And with existing clients, ask them for the contact for two trusted people in their lives at the next portfolio review. Do it across the board for every single client. That way, when any one of them goes on to develop cognitive impairment, or dementia or has a stroke or anything disabling, you are not caught flat. And how do you ask that secretive client for the names and for permission to call when, in your judgment, the need arises? You start by making it your problem. You let the client know that it is now office policy. You politely insist and you get it done.
Not every single client will immediately cooperate. Some will need your patient persuasion and tact to coax them to do this. That is one of those “soft skills‘ you absolutely need with your older clients. A few may refuse your request and you can’t force it on them. But for most clients, the encouragement from you to look to the future may be considered part of your job.
Some people assume that we’re all living longer so it must be because we’re healthier, right? We are indeed living longer than ever due to advances in medicine and technology but what is the condition we’re in with longevity? It’s not true that we’re living healthier than the prior generation.
If you help clients plan for retirement, consider that things like obesity, in 30-35% of Boomers, are going to affect whether they need to pay for lots of things Medicare does not cover. Obesity is frequently associated with significantly greater risk for heart disease, strokes and diabetes. Boomers have the highest rates of obesity of any age group in the U.S. If you want to pick conditions that are most likely to result in the need for long term care, all of these are among them.
Retirement planning can be very tricky when it comes to considering the cost of long term care. Most people don’t want to have a conversation about what would happen if they became disabled. Most would rather change the subject quickly if the issue of possible diminished capacity is raised. “That’s not going to happen to me!” is the expected response. But the risk is real, and there are plenty of statistics to support an analysis of what it costs to care for a person with disabling health conditions.
According to the Genworth Cost of Care Survey, which comes out annually, 70% of people over the age of 65 will need some kind of long term support as they age. At AgingInvestor.com, we recommend that every financial professional have the latest study on hand and that you share it with your clients when you do retirement planning. Chances are they are not as healthy as their parents were. And what kind of care will they need?
Most people want to stay at home as they age. Many will use home care services to be able to stay at home. Here’s an example. My now 93 year old mother in law, Alice, has had numerous hospitalizations of late, for blood pressure issues, the flu and other problems. She simply isn’t safe living independently at home as she recovers and a home care worker is coming in every day for now at a cost of $25 per hour. That cost is not paid by Medicare.
She’s a good example of how we can need care with advanced age even if we do things right. She has always taken good care of herself, doesn’t smoke, doesn’t abuse alcohol, exercises regularly and keeps her weight in normal range. And yet, after this recent bout of illness she needs 24/7 care for a time. We hope she stabilizes with all efforts but there are no guarantees. Home care could be needed indefinitely at a cost even part-time of at least $20,000 per year.
The extra $20,000 she may need is for someone who has neither heart disease nor diabetes. Those put a person at even greater risk of needing expensive care. So for the financial advisor, the takeaway message is this:
Expect that anyone who reaches the age of 80 will be much more likely than not to need cash to pay for help of some kind. If your client is overweight or obese, the risk is very high. Ditto if your client smokes. Be sure to plan for assets that will be liquid enough to cover what your client may need in those later years. It’s up to you to educate that client to be realistic about future financial needs.
Revise it with your name or firm name and you’ll look good by showing that you do care about their financial safety. You’ll never regret doing your part to thwart thieves and prevent financial elder abuse.
