Wealthy Clients Supporting Their Elders–How Much Will It Cost?

Wealthy Clients Supporting Their Elders–How Much Will It Cost?

Jan 23, 2017 | elderly, finances for elders, handling money for aging parents, handling money for seniors, long term care

We at AgingInvestor.com met with some forward thinking business owners, all under age 40, expressing their concerns about their aging parents. They weren't sure what should be set aside or what to plan for their loved ones. Any of these business owners could be your HNW clients.

 

Some had purchased long term care insurance for a parent and we were happy to see that good planning.  Others figured they’d have to pay out of pocket when the need arose.

 

The gap between what older people think and expect and what really happens as we age is startling.  And it is likely to throw the burden of paying for it on the financially successful adult children of these elders in denial.  Some of their parents never had much wealth. Others have depleted their assets by outliving them or by other factors.

What about the dollars and cents?  The Genworth Cost of Care Survey is done every year and provides average rates charged by service providers for homemaker services, home health aides, adult day health, assisted living and nursing home care across the country.  And you can also search by state to see the average where a client's parents live.  Even the lowest level of care, someone to come in and help with cooking, shopping, laundry and errands averages $19 per hour, the national median hourly rate.  The national median monthly rate for assisted living is $3500.  And in my state, in urban areas and well populated centers, it is twice that.

 

If your clients must consider paying for long term help for their aging loved ones, it’s planning you need to do with them. It's a special fund or targeted assets to be used for aging parents as needed.

 

Educate yourself first. Figure out how much it may take. According to a colleague who knows long term care insurance benefits, the average time a person with this kind of insurance collects policy benefits is three years or less.  If it’s three years at $43,200 a year for assisted living, not factoring in the 2% annual increase in cost, that’s $129,600.  And that’s under the unlikely scenario that a person who lives into her 90s, say, is going to stay level in what she needs over that three years.  More likely than not, her needs will increase and the facility will charge more every month for more services.  We see clients who are shelling out over $10,000 a month for a parent to be in assisted living.  When parent is infirm and needs a lot of things from the staff, every new thing increases the monthly cost. A few years of that kind of expense can take its toll on your client's retirement planning.

 

Near the end of our fruitful discussion, one of the participants asked “What do the other 99% in our society do when an aging parent needs long term care?”  The answer: they either provide the care themselves at a very high personal cost, or their parent spends what assets he has until they’re gone.  Then he ends up on Medicaid in a shared little rom in a nursing home. No one wants to see that happen if you can help it.

 

Here are the takeaways to share with your HNW clients who may end up supporting aging parents or paying for their care.

  1. Look ahead.  Discuss what needs your client's family, particularly elders may have and what may be required from your client to meet potential obligations created by their family members.
  2.  Consider whether your client should buy long term care insurance for parents if their parents are not wealthy and have health issues. Do this before their parents turn 60 if you can. The elders may become uninsurable or premium cost may become prohibitive later.
  3. Educate your client about the real costs of long term care. If they're under 40 as our audience was, they are probably not thinking about their potential future obligations to parents who are not financially successful. This was an unusual group.

 

Smart planning now can save your client shock and distress later.  If they are responsible folks, help them to expect the long run as their parents age. People in the 85+ age group are the fastest growing segment of our population. Most of these elders are not wealthy and someone will need to care for them.

 

Your client can get a great head start with planning and communicating well with elders in our book, The Family Guide to Aging Parents. It can help YOU too, if you are in the situation of caring for your own aging loved ones. Click here for your copy.

 

Carolyn Rosenblatt, RN, Attorney, AgingInvestor.com and AgingParents.com

What Is The Real Cost of Long Term Care For Aging Clients?

What Is The Real Cost of Long Term Care For Aging Clients?

Jan 16, 2017 | aging, finances for elders, long term care, long term care insurance, medicare

Are you doing retirement planning with your clients? Do you understand the real dollars involved in long term care? It goes way beyond out of pocket medical expenses for Medicare premiums, supplemental insurance and medicines. You need to help them free up enough to pay for it.

We are indeed living longer now 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.

No one wants to talk about the reality 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 94 year old mother in law, Alice, had numerous hospitalizations for a couple of months, for blood pressure issues, the flu and other problems. She simply wasn't safe living independently in her apartment as she recovered. A home care worker came in every day for a cost of $25 per hour, initially for 12 hours a day. 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 illness she needed 24/7 care. The overall out of pocket costs associated with that bout of illness approached $10,000. She's fairly tough and did recover fully. However at her age that is not what usually happens. Home care could be needed indefinitely at a cost even part-time of at least $20,000 per year.

The extra $20,000 a year any less resilient elder could need is for someone who has neither heart disease nor diabetes. Chronic illnesses put a person at even greater risk of needing expensive care. Full time around the clock help can run $250,000 per year and up, depending on geographic area market rates.

Here's the takeaway: Expect that anyone who reaches the age of 80 is 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 making cash available to cover your client's likely needs in his later years. Most of what is usually required is not covered by either Medicare nor supplemental "Medigap" insurance.

By Carolyn Rosenblatt, RN, Attorney, AgingParents.com and AgingInvestor.com

A Lurking Danger You Need To Warn Your Clients About

A Lurking Danger You Need To Warn Your Clients About

Jan 12, 2017 | aging, aging investor, Alzheimer's disease, diminished cognition, elder investor, elderly, finances for elders, financial advisors, financial capacity, financial elder abuse, financial judgement, handling money for seniors, investor, scammers, senior citizen investor, senior investor, seniors finances, wealth transfer

A Lurking Danger You Need To Warn Your Clients About

There is nothing wrong with putting on a dinner or lunch for prospects while you give them a pitch about a product you like. But unfortunately, a free meal brings people out, especially older folks and they become sales targets for unscrupulous people. FINRA, in seeing how these seminars are too often a vehicle for fraud and exaggeration preying on unsuspecting elders, has issued a warning to seniors. You can be the messenger to provide a heads-up for your own clients about this.

Too many unethical people are using the setting of a free lunch to sell inappropriate investments.  The annuity scams are notorious for this. And the scammers love impaired elders who are so easy to fool.

As people age, about a third of them will develop Alzheimer’s Disease. Most of the victims of this insidious disease are women.  When the earliest signs of the disease emerge, research tells us that impairment of financial judgment is already underway. The predators have no trouble talking a senior who lacks the ability to see a scam coming into buying whatever they're selling. It happens every day, not just in the free lunch seminar.

FINRA's alert for investors about “free lunch” investment seminars is specific. Your older clients might not get that alert unless it comes through you. Here’s the gist of what FINRA wants seniors to know.

The FINRA Investor Education Foundation researched people over 40 to find out how many have been solicited with offers for a free meal seminar.  64 percent of respondents had been solicited, which means that the odds are, your clients will be among them. What the research also showed was that half of the sales materials contained claims that were apparently exaggerated, misleading or otherwise unwarranted. 13 percent of these seminars appeared to involve fraud, such as unfounded projections of returns and sales of nonexistent products

Slick and unscrupulous “advisors” and sellers have been at this for years, pitching unsuitable products. They’ve stepped up their game as the population ages. They want every target they can get. An easy way to warn your clients is to give them a one-sheet Client Update we have created for you. Get yours here or by clicking below and send it out to everyone in your book of business. Some of them are older clients and some have aging parents or grandparents who need to know about this.

You'll look good by showing that you care about what happens to your clients and they'll appreciate the message.

You can improve your expertise with your older clients in a book written especially for you, Succeed With Senior Clients, A Financial Advisor's Guide to Best Practices. Get your copy by clicking here.

Carolyn Rosenblatt, RN, Elder Law Attorney, AgingInvestor.com and AgingParents.com

Great handout: client update on the Free Lunch Investment Seminar

Click HERE To Download

Aging Clients and Secrecy About Finances

Aging Clients and Secrecy About Finances

Jan 5, 2017 | aging, aging investor, diminished cognition, elder investor, finances for elders, power of attorney, senior investor, seniors finances

Have you ever had a stubborn older client who told you he'd never talk about his assets with anyone but you? He doesn't think he'll ever need help in his life and he wants to be in charge. When you suggest a family meeting to let someone else know what to do in case he ever became ill and unable to communicate, he shuts you down.   This is all too common.

A consistent obstacle to communication we see in our work is the resistance of the older person to discuss finances with anyone, including their adult children or other heirs. The Great Depression led to secrecy about finances for many, as fortunes were lost sometimes overnight and once proud people became impoverished. Talking openly about money was just not done for those who grew up in this time of widespread devastating and sometimes life-ending financial losses. To this segment of our population, openly discussing money was considered rude, unseemly. Some of these Depression-era survivors remain reluctant to tell anyone in their families where their accounts are, what their assets are and what they want done with their assets in the event of incapacity.

Presumably when you have a long-term relationship with your client, she trusts you and trusts your judgment. That gives you leverage. You may know more about her finances than her family, her friends or anyone in her life. You are charged with the task of long range planning and you look ahead. In doing so, it is up to you to urge your client, gently, repeatedly and with ongoing persistence that she find someone she can trust to appoint to protect her if she has an accident, falls ill, or can't speak for herself.

Sometimes persistence pays. The power of your relationship is a tool to persuade your client to come around. This is not a situation to ignore just because your client resists. The older she is, the more there is at risk. Anything can happen to her health at any time.

If your client resists, we encourage you to repeat your requesting a week or a month. Do it in a tactful way and paint a verbal picture for her of what would happen if she were no longer able to speak for herself. Tell her how frustrating it would be to have to refer her account to your legal department for a decision about getting a court involved if she could no longer communicate. Tell her how upset that would make you feel. Express your own concerns and make it your problem.

We hope that every single person in your book of business has an appointed trusted other for you to contact. You may well need that and it can be up to you to urge your client to take care of that most important piece of legal business, the Durable Power of Attorney, if she has not done this. Diminished capacity can sneak up on your client and you'll need help.

It's a new role you have with the oldest clients. They are living longer than they thought they would and with longevity come the risks of impairment in all ways.

If you'd like to take a little deeper dive into managing clients with diminished capacity, you can get a lot of expertise in a one hour online course by clicking here.

By Carolyn Rosenblatt, RN, Elder Law Attorney

AgingParents.com and AgingInvestor.com

Will Your Senior Clients Be Harmed When Obamacare Is Repealed?

Will Your Senior Clients Be Harmed When Obamacare Is Repealed?

Dec 21, 2016 | aging, elderly, finances for elders, handling money for aging parents, long term care, Obama care

The short answer is "yes", unless every one of them is high net worth. For those who are very wealthy, there will be no effect as they will pay out of pocket. However for any client who lives long enough to spend down everything and to get low on funds the effect will be palpable. Though neither party is talking about what happens to seniors of modest means with the repeal of the Affordable Care Act here's the hidden truth.

Low income seniors who could not afford the high cost of long term care had no choice when they ran out of money except a nursing home. Until Congress passed legislation called Community First Choice (CFC), that is. This is a bipartisan supported program that is optional for states. It gives seniors and disabled people a choice to remain at home and supports family caregivers. If a state adopts CFC, it receives extra federal funding (6%) to pay for personal attendant services. This funding is critical. States who want CFC must make the initial investment in home and community-based services before they see savings over the long run.

According to the National Council on Aging, eight states have adopted it so far and at least four more are applying for it or are considering applying. With our growing senior population it is right to give elders a choice of not having to go to a nursing home, a fate many dread and fear.

Even though care at home is normally cheaper and better than nursing home care, there is still a bias in our Federal law that compels states to pay for nursing home care, but not home care. It makes no sense. The CFC is an effort to eliminate the bias in the law favoring nursing home care and promote doing what is better for our elders: allowing them a way to pay for home care using family to provide it with financial support.

Repealing the ACA will de-fund this successful CFC program.

The Republican Platform states: "Our aging population must have access to safe and affordable care. Because most seniors desire to age at home, we will make homecare a priority in public policy and will implement programs to protect against elder abuse."

Really? If this is a priority, how has a helpful program for seniors been ignored in the dialog about the necessity repeal Obamacare? And what about the millions of people ages 55-64 who need health insurance and can't afford it? Expanded Medicaid and subsidies help them now. Those programs are on the chopping block in the oncoming rush to "cut government spending".

The elder and disabled adults who need Community First Choice funding and all community based efforts to keep them out of nursing homes are not marching in the streets. They need total care or help to maintain themselves at home. They are not in the news. They are a population without a voice except by aging organizations who fought for CFC in the first place. Any client who spends a fortune on long term care over years and depletes her assets could end up needing Medicaid. Those are the most at risk folks. No matter how skilled you are no one can make money last forever for those who are less than high net worth.

Do not be fooled into thinking that those who relish the idea of quickly trashing Obamacare really are concerned about what happens to low income seniors. These seniors comprise a significant part of our population. The elders with modest means and modest savings who need long term care can't pay for it. They are the ones being forced to go to a place they don't want to be.

The Money Follows the Person Program, which assists states in making home and community-based services more widely available expired in October 2016. If Congress is throwing out all things related to the Affordable Care Act, what are the chances of renewing this program?

If you have aging clients who might live long enough to run out of funds, this will directly affect what happens with them. If you are planning for them for lifelong financial safety, consider that much of what formerly was in place to keep them out of nursing homes will likely be gone should they live to be 100 and are no longer wealthy. Be sure to keep in mind that nursing homes are about three times the cost of staying at home with care in place there.

By Carolyn Rosenblatt, RN, Elder Law Attorney, Dr. Mikol Davis, Geriatric Psychologist, AgingInvestor.com

What Happens When Obamacare Gets Repealed?

What Happens When Obamacare Gets Repealed?

Dec 14, 2016 | aging, elderly, finances for elders, handling money for aging parents, medicare, seniors finances

Promises to repeal Obamacare (the Affordable Care Act) abound but "replacement" still appears very murky. Many agree that repealing it is warranted (though many disagree) but few can agree on what replacement would entail. Here is a look at some of the real life effects of repeal, focused on the minimum wage worker. The articulated plans for replacement miss these workers who are most likely to lose health insurance coverage altogether when mandates are repealed.

According to the Bureau of Labor Statistics, In 2014 there were 77.2 million workers in the United States paid at hourly rates, representing 58.7 percent of all wage and salary workers. Among those paid by the hour, 1.3 million earned exactly the prevailing federal minimum wage of $7.25 per hour. About 1.7 million had wages below the federal minimum. The average American worker got paid $24.57 per hour, or $850.12 per week. And averages can be deceiving. They lump together those who may be educated with those who have less education and value in the workplace. For this discussion, we focus on those who work full time, at the low end of the wage scales.

Repeal will immediately remove the employer mandate which means that employers who do not care to undertake the expense of insurance coverage for their groups of employees would simply stop covering them. Millions of workers would lose coverage, and be expected to pay for it themselves with so called "health savings accounts" or tax credits.

Those who have announced their positions on this, particularly those most likely to influence what happens after repeal believe that health savings accounts are the answer and that everyone without insurance will then be motivated to save their money and buy coverage themselves.

Reality check: the lowest income workers do not have any money to save. It is not about motivation. It is about living at the edge of poverty. These workers spend every penny of that minimum or low end wage on food, clothing and shelter and there is nothing left to pay for insurance without the existing subsidies. The myth of health savings accounts is that there is, in fact, money available to save so you can pay for insurance yourself. Repeal will mean no health insurance subsidies, which are a controversial feature of Obamacare and one of its main pillars.

Workers who only have coverage through employers who then drop coverage would return to being uninsured. When they get sick or injured, they will not receive treatment, or they will go bankrupt with medical bills they cannot pay. Essential preventive care will not be available as it is now in all insurance policies and minor problems become major health issues, some resulting in death.

Another premise of the as yet undefined replacement plan is that offering tax credits will also motivate people to buy their own insurance when subsidies and the individual mandate, now also main pillars of Obamacare, are gone. As with health savings accounts, the same incorrect assumption applies. Low wage workers do not have enough money to advance for monthly insurance premiums to attain a tax credit at year end. Simply put they can't afford it at all and a benefit at year end does not create a higher monthly salary for them. The politicians and appointees who want to use health savings accounts and tax credits as replacements for health care insurance subsidies are the same people who vehemently oppose raising the minimum wage. The majority in power will succeed in that.

Ask any minimum wage worker: Do you have extra money left after you pay for your rent, transportation, kids' needs and groceries each month? They will say no. Anything left buys a child a pair of shoes, not health insurance. They will take a chance on never getting sick, never being in an accident and never having a family member who has a chronic or life threatening health condition. How realistic is that?

Anyone who is working full time and is not quite poor enough to qualify for Medicaid is not in the world of the cabinet picks and advisors who created the fantasy of how it is supposed to be with tax credits and health savings accounts. Perhaps the bureaucrats cannot imagine what it is like to have zero in the bank account after the most essential costs of everyday life are paid from one's paycheck. Amid that and the force that will keep wages low for the lowest on the wage ladder, where are we leaving so many who work every day but will have no health insurance?

Replacement needs to be thought out in terms of the millions of workers who stand to lose coverage altogether when the law that now helps them buy health insurance is repealed. Keeping coverage for those with pre-existing conditions sounds fine, if you can pay for the insurance premium that is. If you lose your coverage, it matters not whether the insurer would take you with a pre-existing condition. You have to be able to pay for coverage whether there is a pre-existing condition or not. And keeping coverage in place for one's children until age 26 also sounds fine, but only if you, the worker are covered and can pay for the insurance yourself or you are lucky enough to get it through your employer.

The ACA also expanded Medicaid for those living at and below the poverty line. If Medicaid is shrunk, as some politicians want, so as to "cut government spending" it will destroy the only means the least fortunate have to get any coverage at all. Must we let them die in the streets? No charity in existence buys health insurance for anyone. That is the very reason why Medicaid exists--to cover the poorest among us. As flawed as Obamacare is, that is all there is for over 21 million previously uninsured people. My hope is that better solutions can be found than completely obliterating coverage for so many. Note to politicians: get with it and figure it out!

Carolyn Rosenblatt, RN, Attorney, AgingParents.com and AgingInvestor.com

3 Ways To Talk With Aging Parents About Finances

3 Ways To Talk With Aging Parents About Finances

Dec 2, 2016 | aging, elder investor, handling money for aging parents, handling money for seniors, senior citizen investor, senior investor, seniors finances

3 Ways To Talk With Aging Parents About Finances

One benefit of the increasing life expectancies for Americans is that more people have bonus years for enjoying the company of their aging parents.

But all is not rosy. Those extended years also boost the odds that parents could go broke or suffer from dementia and be unable to make financial decisions for themselves.

That can leave adult children perplexed about when and whether they should step in and find out what’s happening with their parents’ money, says Carolyn Rosenblatt, a registered nurse and elder law attorney.

“Unfortunately, it’s not always easy to have those conversations,” says Rosenblatt, co-author with her husband, Dr. Mikol Davis, of The Family Guide to Aging Parents (www.agingparents.com) and Succeed With Senior Clients: A Financial Advisors Guide To Best Practices.

“Some stubborn parents just refuse to talk about their money. No matter what their adult children say to them, they put it off, change the subject or tell their children it’s none of their business.”

Of course, many adult children aren’t in any particular hurry to broach the subject either, says Davis, a clinical psychologist and gerontologist.

“They have their own discomfort about it and procrastinate,” he says. “Then a crisis comes up and no one has any idea what the parents have or where to find important documents.”

But Rosenblatt and Davis say it’s critical that these conversations take place so that the offspring can gather information about such subjects as the parent’s income and expenses, where legal documents are kept, and what kind of medical or long-term-care insurance the parent might have.

The success of these conversations often comes down to how you approach the subject, Rosenblatt and Davis say. They offer a few tips:

  • End the procrastination by picking a date for the talk. Make an appointment with yourself to bring up the subject at a specific time. An opportune time to schedule this is after a birthday, a family event or a holiday where other family members are together who may share in the responsibility for the aging parents in the future.
  • Show respect. Tell your parents you understand and respect their reluctance to discuss their finances. You can even make the conversation about yourself rather than about them. Say that you’re concerned that if something went wrong, you would be completely lost as to how to help them.
  • Address their fears head-on. Let them know you understand they are worried that if they talk about their finances their independence might be taken away. You might add that you want them to maintain their independence as long as possible and you’re willing to help accomplish that, but you can’t do it without the correct information.

“Getting past an aging parent’s fear about talking about finances can be daunting,” Rosenblatt says. “But a well-planned strategy for approaching the subject will give you your best chance.”

 

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.

 

Proving Value to Retired Clients: Creating a Financial & Personal Checklist

Proving Value to Retired Clients: Creating a Financial & Personal Checklist

Oct 28, 2016 | aging, aging investor, elder investor, elderly, finances for elders, financial advisors, handling money for seniors, investor, senior investor, seniors finances

Proving Value to Retired Clients: Creating a Financial Checklist

Many of us in this society have a very negative image about aging in general. We don't want to be "old". It is fueled by advertising on TV, movies, print media and other outlets with a consistent message: aging is bad, being younger and turning back the clock is good.  We are a work ethic driven culture. When we are older and no longer "productive" we are generally seen as less valuable.

Then there is the fear and denial about dying and death.  Our culture has been called the only one in the world that thinks of death as something optional.  Note how we talk about it to family--"in case anything ever happens to me... Besides it being a fantasy that maybe something" won't happen to us, it keeps us from planning, from preparing our loved ones and from being responsible about our older years, possible declining health and the burden ignoring these things can put on our families.  Reaching retirement age is a time to do planning about more than money.

Financial advisors are in the planning business.  You look ahead, analyze, budget and calculate. But your clients may not be on the same page in your view of the future.  They are busy being in denial that they may ever get ill and die.  You can help them.  In doing so, it may also make your job of talking about such issues as long term care, budgeting and spending easier.

Most people do not want to burden their loved ones. Most of them do not want to trouble adult children unnecessarily as they age. That is your best selling point for bringing up the personal matters.  These include how every senior and every retiree needs to plan for things in their own lives that go beyond how much money they've saved and how it will be spent having a great retirement.

Here at AgingInvestor.com we see the messes people leave behind when they nurture the Great American Fantasy that losing independence won't happen to them and that they will live happily to age 100 and die peacefully in their sleep.  Family members can spend years cleaning up the disaster their older loved ones leave because of failure to plan and take care of business.  It is truly not fair to anyone.  It leads to anger, resentment, family conflicts and sometimes to loss of wealth through ignorance. We've heard it and seen it countless times.  We put a checklist together to help people avoid these disasters created by the fantasy.

What Can You Do About It?

You can give your clients this checklist next time you sit with them and review the portfolio.  You can gently urge them to do what the list says is needed. We've broken down the essentials into 10 points, a "to do" list if you will. You can encourage them to take care of the items on the list, if they haven't already.  In general, the to do list includes updating the estate plan, having critical documents in the right hands, providing necessary financial, computer and account information to trusted family and having a family meeting to educate one's heirs about the older person's affairs. This is how your client gets a family ready. This is how they avoid unduly burdening anyone. This is how they free their loved ones from distress and unnecessary work when they have to take action as an aging parent declines and passes away.

Some of your clients will brush off your suggestion. They love that Great American Fantasy and aren't about to give it up. Others will thank you as they have thanked us and will go forward.  Their families will be forever grateful.  You'll look like the caring, smart and responsible planner that you are.

Get your free Ebook and the Financial & Personal Checklist For Smart Retirees, click HERE.

By Carolyn Rosenblatt, RN, Elder Law Attorney, AgingInvestor.comclick-here

The Hidden Truth About Adult Protective Services

The Hidden Truth About Adult Protective Services

Oct 28, 2016 | aging, elderly, finances for elders, handling money for seniors, seniors finances, Uncategorized

In all the proposed rules by Finra and the SEC to address financial exploitation of seniors, advisors are urged to report suspected abuse to the local Adult Protective Services or to call the police. Unfortunately that is not always a solution. There seems to be a lack of clarity about how things work.  Here's a typical scenario that illustrates an issue.

Myra is 87 and her daughter, Lexie has been taking advantage of her for years.  Myra feels sorry for her daughter because she can't seem to hold a job.  Never mind she has a drug habit. Myra has means and she often gives Lexie "loans" that are never repaid.

Lexie gets a power of attorney from Myra, goes with Myra to her financial advisor and tells the advisor that Myra needs $80,000 for a trip they are going to take. Myra is disabled and never travels.  The advisor knows this. Advisor decides after seeing several of these demands for withdrawing Myra's funds under suspicious circumstances that Lexie is abusing Myra. The total amount withdrawn at Myra's request is over $150,000 in six months, which is highly unusual.

Advisor calls the police. They refer her to Adult Protective Services.  APS takes a report over the phone, asks questions and then asks Advisor to fill out a report form. She fills it out and reports the recent questionable $80K demand and withdrawal and she lists the total taken of $150K.  She puts Lexie's name on it as the person suspected of financially abusing Myra.

APS sends a social worker out to investigate the complaint and to visit Myra at home.  Myra finds the worker to be very nice and they chat.  "Has your daughter ever pressured you to give her money?" the worker asks. "No", says Myra. "Do you remember giving her gifts or loans totaling $150K this year?" the worker asks.  "I don't think I did that" Myra says. The worker asks if she is in the habit of giving money gifts to Lexie and Myra says yes, that Lexie is her daughter and she needs some help sometimes. The worker concludes that giving money to Lexie is what Myra wants and the case does not go any further.  No one has tested Myra to see if she is competent to understand the consequences of giving her assets to Lexie, particularly since she has two other adult children.

In this case the facts are not clear enough to prove that a crime was committed. APS will not recommend that Lexie be prosecuted because even though giving away money is not in Myra's best interests, she is assumed to be competent to do so.  In this case APS is not solving any problem and takes no further action.  If Myra did not want the funds to be given to Lexie it would be different and elder abuse could be proven perhaps.  As is there is too much doubt about Myra agreeing to be taken advantage of by Lexie, no prosecutor could meet its burden of proof.

The Other Option

Lexie's other two siblings were not initially aware of the abuse by Lexie.  Their potential inheritance is directly affected by their sister's actions and when they find out they call APS also. The case is closed and they get nowhere.  They are furious.

They consider another option. If there is no crime here that can be proven, there may be a civil case. They contact an attorney who handles civil cases of elder financial abuse.   The attorney does an investigation and finds out that Lexie has bought a condo with the money taken from Myra. The attorney successfully proves that Myra was duped by Lexie and the matter is settled by Lexie's attorney agreeing to sell the condo and give the proceeds back to a fund set up for Myra in case she needs more cash as she ages.  And the settlement agreement says that Lexie will inherit no part of the fund.  Further, the power of attorney Lexie got is torn up and Myra appoints a more responsible agent, another daughter who now oversees all of Myra's finances.

With a misunderstanding of how law enforcement works, there is a belief that all one must do is report to APS and somehow, financial abuse will be stopped.  But when APS finds insufficient proof, or a wiling victim like Myra, they do not intervene. They are essentially an arm of law enforcement. A civil case is outside their sphere and a civil attorney must be consulted to explore whether one can pursue that possible way of recovering an elder's assets that have been wrongfully taken.

The Takeaway

The important thing to know here is that APS is limited in what it can do. A criminal case of any kind has to be proven "beyond a reasonable doubt." Any advisor who wants to keep senior clients safer needs to understand that a willing victim will pretty well destroy a criminal case of abuse.  A civil case is a possibility as long as there is an asset (in Lexie's case, a condo) to get.  One should know a competent elder abuse attorney to consult and find out if your client has that choice in taking legal action of if her heirs do.

By Carolyn Rosenblatt, RN, Elder law attorney, AgingInvestor.com

Two Things Professionals Can Do About Elder Financial Abuse

Two Things Professionals Can Do About Elder Financial Abuse

Oct 7, 2016 | aging, aging investor, diminished cognition, elder investor, elderly, finances for elders, financial advisors, financial elder abuse, handling money for seniors, investor, NASAA, senior investor, seniors finances

Two Things Professionals Can Do About Elder Financial Abuse

It's vicious and pervasive. It's growing. It has been called "the crime of the century". Elder financial abuse, according to a study by True Link Financial, costs seniors in the U.S. over $36B a year. But can financial professionals do anything about it? We say definitely yes.

Most of us have encountered this kind of opportunistic crime at some point, among family, neighbors or friends. When we at AgingInvestor.com present to groups of professionals we ask how many have had witnessed this kind of abuse with anyone known to them. Almost every hand goes up. The question is, what can you do about it?

Many professionals are either hesitant to get involved because they think privacy concerns should stop them, or they want to take action but are unsure about what to do. Let's clear away those concerns now.

First, remember that when your client gets ripped off and cash is drained out of the account you manage, you are losing fees for those AUM. If that isn't incentive enough to be involved note that NASAA has already developed model rules which will require that you report abuse to authorities. Those are likely to become mandates soon enough.

Let's look at two basic steps any professional can take now to improve your response and protect your clients from financial abuse.

Get third party contacts on file

One, you need to get from your retirement-age clients the names of several trusted others whom you can call in the event that you see red flags that abuse could be going on. Remember that family members are the most frequent abusers of aging folks. Perhaps that favorite one, Sonny Boy is taking advantage of a vulnerable parent or other relative. Be sure one of the contacts you get from your clients is not a family member, but a trusted friend, colleague or professional. Age makes all of us more vulnerable to financial manipulation for many reasons. Next time you review an older client's portfolio, get this necessary information about whom to call if you get concerned and keep it on record.

Get permission from your client to call the third parties under certain circumstances

Two, you need not consider privacy rules a barrier if you have your client's permission to contact the designated third parties he has identified. A legally sufficient privacy document will help you. This is an area where both legal and compliance departments should assist you to get the right paperwork in order. At AgingInvestor.com, we developed just such a model document, a product we offer to overcome the confidentiality barrier to taking action. It's part of a senior-specific policy. And you can do it in-house on your own too with legal input. Get one done for every aging client. It resolves the question of giving private information to the designated third party. You will have the ok to act when you need to.

Caution: we do not recommend that you use an informal letter to for your client to give up the right to privacy. Consider that in our society, we use things like a durable power of attorney to give up the right to solely manage one's finances, and an advance healthcare directive to give up the right to make end of life or care decisions alone. We don't use mere letters for these things. You need papers that are standardized, formal and that will stand up to scrutiny should anyone question them.

Surely you do not want predators to take advantage of your clients, particularly when they suffer from any cognitive decline. That increases their vulnerability. And the integrity of their portfolios is enhanced by your own vigilance over them as they get older.

Take a deeper dive into the elder abuse subject in our book Succeed With Senior Clients: A Financial Advisor's Guide to Best Practices. We offer you a handy checklist with the 7 warning signs of financial elder abuse, more practical tips and some true stories of how a financial professional did or didn't get involved at the right time.

The most forward thinking financial advisors will be early adopters of these means to keep clients financially safer. Be one of those leaders!

by Carolyn Rosenblatt, RN, Elder law attorney, AgingInvestor.com

The Emotional Impact of Financial Elder Abuse

The Emotional Impact of Financial Elder Abuse

Oct 4, 2016 | aging, diminished cognition, elderly, finances for elders, financial elder abuse, handling money for seniors, scammers, seniors finances

The Emotional Impact of Financial Elder Abuse
When older persons are deceived financially by hose they trust the most, the emotional effects can be devastating. The problem of financial elder abuse costs our older population over $36 billion per year in the U.S. alone. The reasons for this rampant problem some call  “the crime of the century” are  complex. Many victims cognitively impaired in some way, and are therefore subject to the undue influence of greedy relatives, caregivers, professionals, or criminal  predators who strategically seek out  older victims. However, not all seniors who fall victim to financial abuse are affected by cognitive decline. Some competent people are seduced by unscrupulous sales pitches promising  big  rewards. Some are cheated by the Bernie Madoffs of the world and their cohorts who take advantage of  seniors  who  are  worried  about  having enough  money. These victims see the pitch or offer as a  way  to alleviate their money insecurity and they  give up  their  cash  to  those who  want  nothing more than  to take  it  and  run. Sometimes, the senior  may want to  get something  for  nothing  or  get  a  “great  deal’  with  very little  perceived risk.

Abusers are not always shady characters or unscrupulous family members. Sometimes they are legitimate organizations that simply find an opportunity to take advantage of someone with whom they already have a relationship. Using a relationship of trust to manipulate an older adult is called undue influence. The laws protecting them from being victimized by undue  influence  vary  considerably  from state to  state,  with  some defining it  so  vaguely  that enforcement  is  difficult. However, whether the law is used to convict  abusers  of this crime or not, the effect on an aging  person is  devastating.  It is hard enough to realize that one has been duped by a stranger.  When one understands that the manipulator is a trusted relative, friend, an organization in which  a  person  truly  believes  or  contributes to,  the  pain  is  even  worse.

Wanda’s  Case

Wanda was eighty-nine years old at the time her daughter, Janis, contacted an attorney. Janis reported that Wanda had been a member of her large church all her life and had been an active participant in the congregation. She had always made modest contributions to the church and trusted all of the other members. But over time, Wanda’s memory began to decline and she got confused easily.The church began a fundraising campaign for new construction. Wanda was asked for a donation, which she gave. Then another request came and Wanda once again complied. Wanda gave larger and larger donations to the church over the next year, with the checks totaling over $100, 000.  Janis grew increasingly alarmed, because her mother clearly  was  in  need  of  help.  Wanda was found lost and wandering near the church after one day. The church itself had recorded the incident and a church worker had taken  Wanda  home. Janis was concerned that Wanda would run out of?money. She was physically ok, but her mental condition was becoming  a  serious enough  problem  that Janis believed  she  should no longer  live  alone.  And Wanda trusted the church, to the point that she did not believe that anyone  there  would  do  anything  wrong. This was a case of the church using its position of influence over an  impaired  member  to  elicit  larger  and  larger  financial  contributions  from  her. They took advantage of an older adult who had become lost and confused after church, and they knew it. Wanda could not perceive that she needed care, which was going to be expensive, and that she could all  her  reserves  by  these overly  generous  donations.  She was not able to act in her own best interests.  She ?believed  that  she  could  not  possibly  run out  of money. When her daughter, Janis, tried to explain that she had to stop giving to the building fund,  Wanda  was incredulous. She simply could not process the reality that she was going to lose all her savings if she kept up the contributions.? She became angry with her daughter for even suggesting that her actions were not  right and that  the  church was  out  of line  doing  what  it  did.

Wanda’s emotional response to the abuse was to be in denial about it. She likely not able to fully process what had happened and felt that Janis was  being disloyal  to  the  church. The matter did get resolved. When the church was contacted  to  meet  and  discuss  the  pattern  of  solicitations they  had  sent  to  Wanda  and  their  record  of  her being  lost  after church  services,  they  immediately contacted  an  attorney  who put  a  stop  to  their  actions. Janis was able to watch over Wanda  after  that  and  she  did obtain  help  for  her. Wanda’s anger at Janis was an unfortunate effect of stopping the abuse. Wanda would likely have been angry at the church had she been able to perceive that she was being manipulated.  However, she was cognitively impaired and did not see?the full  picture.

The Emotional Impact of Abuse

Undue influence is not the only means of taking advantage of seniors. Any kind of elder abuse can be devastating. Denial is common after older victims discover financial abuse. When a scam is underway, they tend to keep  up  hope  and  continue engaging  with  the  scammer. Despite warnings from family, friends, and advice from knowledgeable  others,  they  continue to  believe that  the  big  payoff  is  coming. Or they are unable to embrace that  they  have  made  a mistake  and  trusted an  untrustworthy  person. Sometimes, even after the evidence of fraud mounts, the  victim  continues  to  give money  to  the  predator. They have put their trust in someone whom they very much want to believe  was trustworthy. When the payoff does not come, or nothing that  was  promised  materializes,  they  eventually  realize they  were duped. The effect is sometimes intense shame and embarrassment.  Living with this shame often leads to depression.

Suicides resulting from financial abuse have been reported.  Some never recover emotionally  from  the feeling  of  horror  that  they  were  “so  dumb”  as  to  fall for  a  scam  that  in  retrospect  looks a  lot  more  obvious.  It damages a person’s sense of self, and sense of being able to  trust  one’s  own  judgment.  It can go to the core of a  person’s  self-esteem,  leaving  the  victim with  a  belief  that  he  can  no longer  trust  himself with anything  financial. When a senior loses most or all of her assets and is left impoverished, it becomes a constant reminder of the  shame  of being  duped  by  someone  else. Losing a home can force the person to live somewhere he does not choose to be. That can be with relatives if available,  but  it  can  also  land  him in  a  Medicaid  bed  in a nursing  home  where  few  would  ever  want  to live  out their  last  years.

Prevention Strategies

No one is totally immune from fraud and financial abuse.  Anyone can be victimized. Many a sad tale is told by an adult child of a victimized aging parent that  “I trusted my father and didn’t want to question him.”  Or,  “I thought since my mom was a CPA, she would never fall for  that.”  Part of the problem is the perception adult children and even some professionals have that certain  folks  are  never going to  be  abused  financially  because  they  are  smart,  or experienced with money  matters. It is simply not true that education or experience protects everyone.  Working with older adults puts professionals in a position to  be  vigilant,  to  educate  about  the  risks of  abuse  out there,  and  mainly  to  pay  attention.

Using Resources to Help Victimized Clients

While the criminal justice system prosecutes the relatively small number of abusers who are reported to authorities, it does not  do  much  to  help the victims of abuse. Money stolen from older people is often long gone by the  time a predator is brought to justice. When a criminal is prosecuted successfully, the  court will  order  that  he  make  restitution  of stolen  monies  to the  victim,  but  enforcement of  restitution  orders  can be  problematic.

What is almost entirely lacking is any resource to help a victim of financial abuse manage the emotional effects of the crime.  We simply do not fund this in our justice system.  If victimized seniors wish to get emotional support or mental health help to recover from the impact  of  financial  abuse,  they  would  have to  do  so  on  their  own. The cost is clearly a barrier, though Medicare does provide for  psychological  services.  However, the benefit has limitations. A diagnosis is required for  the  provider  to  get  payment.  And many people attach a stigma to getting mental health help, which is an unfortunate perception that stops some from obtaining the needed  psychological  support  for  recovering. If there is a civil case of elder abuse with a successful outcome, and financial damages are actually awarded to the victim as a result, the award may include expenses for psychological treatment for the victim. Therapy is one means a victimized person  can learn  to  cope with  the  emotional distress, shame, and? humiliation of being taken advantage  of by any financial abuser. There is little doubt that those who receive supportive services after victimization  cope  better  and have  a  better  chance  of healing from  the  trauma.

Professionals’ Roles with Abuse Victims

Professionals who work with aging adults in any capacity will likely encounter someone who has been victimized or is in the process of  being taken  advantage of by  another.  It is important to know their own community resources to provide information to anyone who may need help. Understand how difficult it must be for the person who has been victimized, and offer a respectful referral  to  a  local  resource. Local mental health providers can be found through the American Psychological Association, Psychologist Locator, community service agencies such as Jewish Family  Service Agency  (serving people of all faiths), the  Alzheimer’s Association, or senior centers throughout the U.S. Most offer information and referral to local providers in the  senior’s  county.

Warning  Signs

When suspecting financial elder abuse, those working with them  should be  aware  of these warning  signs:

1.  The presence of a new “friend” in a client’s life who has an inordinate interest in the older person’s accounts  or  assets,  and who  gains access  to any  of them.
2.  Sudden change in a Durable Power of Attorney document.
3.  Isolation of the older adult from friends, family, and others close to them.
4.  Large gifts to strangers or people they don’t know well.
5.  Complaints about having reached maximums on credit cards when this has never happened  before.
6.  Frequent email or telephone contact with any stranger who establishes a relationship  with  the senior  that  seems  addictive.

With the effort of those in the community surrounding older adults, we can all  take  steps  to  intervene  and  prevent  or  stop  abuse. If something seems odd to you, speak up, ask questions, step  in  where  you can. You just might be the key to keeping a senior financially safe.  And if you learn of abuse in the  course of  doing  business  with  a  senior  client,  a  kindly  approach  in  offering emotional  health  resources  lifts both  you and  the  victim.

BY CAROLYN ROSENBLATT, RN, ELDER LAW ATTORNEY
Carolyn Rosenblatt has over forty-five  years of  experience in  her combined professions  of nursing  and  legal  practice. She is co-founder of AgingParents.com, a resource  for families, and Aginglnvestor.com, offering educational training and products. She can be contacted at  (415)  459-0413,  carolyn@aginginvestor.com.

REFERENCES
Journal of Accountancy.  2015.  “Emotional harm of elder financial abuse outweighs  its financial  damage."  www.journalofaccountancy.com/news/2015/jun/elderfinancial-abuse-201512535.html.  Accessed January 2016.
MetLife Study on Elder Abuse, www.metlife.com/assets/cao/mmi/publications/studies/2011/mmi-elder-financial-abuse.pdf.  Accessed January 2016.
Rosenblatt, Carolyn. 2015. “Protecting Our Aging Parents from Abuse."  In The Family Guide  to  Aging  Parents:  Answers  to Your  Legal,  Financial  and  Healthcare  Questions.  Sanger, CA:  Familius, 284-296.,  2015.
“Common Elder Specific Issues." In Working With Aging Clients: A Guide for Legal, Business and Financial Professionals.  Chicago:  American Bar Association,  71-76.

This article was originally published in the CSA JOURNAL 66  / VOL.  2, 2016  / SOCIETY OF CERTIFIED  SENIOR  ADVISORS  /  WWW.CSA.US

The Inner Workings of Clients’ Financial Decision-Making Ability

The Inner Workings of Clients’ Financial Decision-Making Ability

Sep 28, 2016 | aging, aging investor, Alzheimer's disease, diminished cognition, elder investor, elderly, finances for elders, financial advisors, financial capacity, handling money for aging parents, handling money for seniors, senior citizen investor, senior investor, seniors finances

The Inner Workings of Clients' Financial Decision-Making Ability

Whether you have a lot of older clients or just an occasional one, it's critical for every financial professional to understand whether a client can safely make decisions about money. It might seem straightforward when your client is able to carry on a conversation, talk about current events or make a joke. You assume she's fine, but it's not that simple. Conversational ability can mask a true disabling brain condition we call dementia. It does not reveal itself easily, particularly at the earliest stage.

The insidious onset of Alzheimer's disease or other dementia can sneak up on a client and affect the ability to exercise judgment about finances. To help your clients, you need to know the red flags of diminished capacity, a basic skill anyone can learn. You can get a free checklist to help your do that at AgingInvestor.com. But beyond that, it is critical to understand just how complex our capacity to make safe financial decisions is.

Research shows us that with the most common form of dementia, Alzheimer's disease, financial capacity is moderately impaired even at the very beginning of the disease process. By the time a client gets to the middle stage when symptoms are more obvious she is already severely impaired in her financial capacity. No one should be making independent decisions about finances with severe impairment of this capacity.

This financial ability is defined as "the capacity to manage money and financial assets in ways that meet a person's needs and which are consistent with his/her values and self interest." It is broken down into nine areas or "domains". These include cash management, basic money skills, bill payment, and financial conceptual knowledge. The ones an advisor is most likely to see and assess are knowledge of personal assets and estate and investment decision-making.

You may not discuss with your client whether he understands what a money market is but you will be ethically obligated to discuss the pros and cons of various suggested investments and the effect they will have on your client's overall financial picture. This is the area where older clients with impairment will not be able to process the information you are offering them. When they are affected by brain disease like Alzheimer's (over 5.5 million people are diagnosed now, with that number expected to rise dramatically) they will not be able to "get it". You are on dangerous ground if you proceed to recommend or sell any financial product in the face of serious doubt about a client's financial capacity.

Granted, many financial products are complicated and the average person may not grasp all the nuances. But when you believe your client is probably impaired and cannot understand any carefully worded explanation you give, you are exposing yourself to liability by going ahead with transactions for that person.

How could this get you in trouble? All of the regulatory agencies want you to keep your older clients safer and they have issued guidelines for how to do that. All of them want you to know the red flags of diminished capacity. Financial capacity is the most complex of the kinds of capacity a person can have. If you do not involve a third party to assist the client with financial decisions, you risk a bad outcome and regulatory prosecution. You also risk the heirs coming after you in civil lawsuits, charging that you should have known what everyone else knew at the time, that their mother/father was impaired and you should never have sold that, done that or caused the bad outcome.

This is a very real problem among financial professionals-- the failure to recognize and act on the warning signs of diminished capacity. If you are managing a retirement account for that client, beware even more. Acting in the client's best interest means that you need to understand when the client's financial decision-making capacity is going downhill.

This article just touches on the complexity of financial capacity. Everyone deserves to have a deeper understanding so you can avoid prosecution or questionable accusations about your recommendations or the client's investments. When the investment an impaired client went for at your suggestion loses money, you can bet someone will blame you if they can. Don't set yourself up. Don't make it easy for them to attack you.

The way around this risk of working with an impaired client is to have your client's permission to involve a trusted third party as a surrogate decision maker for all financial transactions. How you get that permission is the subject of another article and it needs discussion. In the meantime, take a deeper dive into the nuts and bolts of financial capacity in Succeed With Senior Clients: A Financial Advisor's Guide to Best Practices, available here. Chapter Two explains all you need to understand about the components of financial capacity. And the privacy question and how to get that trusted other involved is answered in the book too.

By Carolyn Rosenblatt, RN, Attorney, AgingInvestor.com

Attention Financial Advisors: Do You Have A Colleague With Cognitive Impairment ?

Attention Financial Advisors: Do You Have A Colleague With Cognitive Impairment ?

Sep 22, 2016 | aging investor, elder investor, finances for elders, financial advisors, handling money for aging parents, handling money for seniors, investor, senior citizen investor, senior investor, seniors finances

Attention Financial Advisors:Do You Have A Colleague With Cognitive Impairment?

The financial services industry frequently shows concern about the problems of longevity and aging clients. Cognitive impairment, diminished capacity and dementia get air time with various solutions, mostly vague, offered by industry insiders. But one problem is not being addressed: the professional herself with cognitive impairment.

It's time to look at this as a real risk, not some unlikely possibility that can easily be taken care of by a succession plan for the professional's business. Dementia is a complicated disease. It sneaks up on people, with the early warning signs of short-term memory loss, followed by increasing difficulty with reasoning and judgment. If we had not witnessed this at AgingInvestor.com with impaired professionals ourselves, we might be fooled into thinking that professionals had figured out how to address it. Simply put, they haven't.

Let's look at the notion that all you need is a succession plan for your business and there will be no problem if you develop cognitive impairment yourself, or someone in your organization does. What's the flaw in this? It is that many people with early Alzheimer's or other dementia do not recognize that they are impaired. This phenomenon is called anosagnosia, an inability or refusal to recognize a defect or disorder that is clinically evident. Ironically, the part of the brain that reasons and analyzes is so affected by the disease that it is not able to process the information about one's own impairment.

How this plays out is that as a person ages and becomes more at risk for dementia, some will surely fall victim to brain disease. The odds are at least one in three by the time we reach age 85. The risk doubles about every 5 years starting at age 65. So some financial professionals are going to develop dementia and some will not know that they have any impairment. So they keep working. Others around them are afraid to raise the topic when alarming signs first appear. No protocol exists to ease a person out of the role to which they are accustomed, particularly when they tell you they're feeling just fine, thank you.

Busting The Myths

Myths exist. The first is that a financial professional, whether managing money for clients, selling products or addressing their taxes and accounting, will know that he or she needs to retire when the time comes. This is not what occurs. Many folks who have a good book of business and enjoy what they do will not look to retire by a certain age. They keep working, and consequently when they are impaired they put every client at risk.

Another myth is that somehow the doctor, the family or someone else will advise you when you have dementia and you will of course agree with their assessment. Denial is a frequent component of cognitive impairment, rooted deeply in fear of losing control over one's life. Even those who start to see and fear their own early difficulties with memory will cover it up, avoid facing it and carry on as if everything is fine. Even an annual physical checkup with the doctor is very unlikely to reveal the early warning signs of dementia unless the patient mentions cognitive problems to the examining doctor.

What Can Professionals Do?

As described in detail in Succeed With Senior Clients: A Financial Advisor's Guide to Best Practices, every organization needs a protocol to address the risk of diminished capacity in an impaired colleague. Few firms have a mandatory retirement age, but this option exists.

A protocol for advisors and others can look similar to the protocol every professional needs for aging clients. First, one needs a standardized way to spot the red flags of diminished capacity. Next, these must be regularly documented and contact with the potentially impaired client must increase. Third, a standard way to escalate the issue to knowledgeable others in the firm should exist. For clients who demonstrate the red flags, the organization must have a next step, which means contacting an appointed third party to become a surrogate decision maker. For professionals, a mandatory way to ease the person out of the job on a specific timeline should be in place, and this should become office policy.

It is time for every professional to look at the reality of the risk we all face with impaired cognition. It can happen to anyone. Your professional skill does not protect you from dementia. Wise planning for how you or your colleague would exit your job when you can't see why you need to must be on everyone's agenda.

By Carolyn Rosenblatt, RN, Attorney,  & Dr. Mikol Davis Geriatric Psychologist

AgingInvestor.com

Three Tips For Talking To Your Older Clients About Long Term Care

Three Tips For Talking To Your Older Clients About Long Term Care

Sep 20, 2016 | aging, aging investor, diminished cognition, elder investor, elderly, finances for elders, financial advisors, financial capacity, handling money for aging parents, handling money for seniors, investor, log term care, long term care insurance, senior citizen investor, senior investor, seniors finances

Three Tips For Talking To Your Older Clients About Long Term Care

When you look at an older client's portfolio, the biggest concern is probably about whether they have enough to last to the end.  You calculate the drawdown, the earnings, and you spend time on those figures.  But what about long term care?

This is the conversation the client doesn't want to have.  No one wants to think about being disabled or losing independence.

Of course, this is not realistic.  You, the planner may not want to bring up the subject because of your own discomfort, or because you aren't sure what to say, or perhaps because your client dismisses it if you do bring it up. But a competent planner and advisor must do so.

Consider this realistic typical scenario:

A health crisis happens to your client. It can be a fall, a stroke or heart attack, anything that is unexpected. First, there is a hospitalization.  OK, Medicare covers that, together with supplemental insurance. A rehab facility is next with therapy and nursing care.  Medicare covers that but only to a point. When the elder is ready for discharge, the client and family are told, sometimes a day or two beforehand, that they will have to get help for the aging loved one at home.  ”Doesn’t Medicare cover that?” they ask. Unfortunately, no, they are told.

The Cost 

So the family members and the client start scrambling to provide help at home. In some parts of the country the cost is about $30 per hour.  According to the Genworth 2015 Cost of Care study, the national median price for someone to provide help with bathing, dressing and walking or other hands-on home help is $20/hour.

When you do the math, you realize that even if your client needs just twenty hours a week at the average cost, it will add up to nearly $20,000 a year.  That is on top of other, non-covered medical expenses, such as physical therapy when Medicare stops paying, hearing aids, and many medications. And that is just the beginning.  Limited hours of home care often stretch into full time care as people  who have disabling conditions age.

Some people figure they can spend their assets and give things away so they can qualify for Medicaid.  I would not recommend Medicaid as the best way to get quality care.  First, one must be really destitute to qualify for it. And the state looks back at all financial transactions for a five year period in most states prior to the application to see what was going on, what transfers were made and if they were honestly done. Second, the care one receives under Medicaid is the most basic, may be of the lowest quality and typically is not what anyone really wants.

If you can prevent that choice, you will.  Your client could spend her last days in a three bed room in a dingy nursing home if she or anyone in her life thinks Medicaid is a fine way to pay for care.

The cost for quality care at home can be staggering.  In my own prosperous county, with a very high elder population, the cost of 24/7 care at home from non-nursing providers (home care workers) exceeds $200,000 per year.  That is on top of the ordinary costs of living a senior has, regardless of care. And she will still be paying her out of pocket costs for other things Medicare does not cover: many medications, other non-covered services, Medicare premiums, etc.

 Taking On The Long Term Care Discussion: Three things you should do

  1. You need to create a plan for how to pay for long term care in the future as part of your job of financial planning and retirement planning.  Your client is not likely to ask you about it. Do not wait to have these discussions. Cash for the unexpected need for care could be a major expense. Your client needs to know the facts and figures.  Most people grossly underestimate the costs. We have even seen financial industry publications naively state "Medicare pays for most things". It doesn't pay for what most people need to stay at home after any disabling condition arises.
  1. Educate your client about the likelihood of this need for future care.About 70% of people will need long term care in some form in their futures.  Failure to plan for it can bankrupt a person or leave them in serious debt toward the end of life. Or some investments could make cash inaccessible when needed.
  1.  Use resources to help yourself understand the real costs of home care, assisted living, and nursing home care.  In order to educate your client, you need to educate yourself first. The Genworth Cost of Care study is a good resource. Here at AgingInvestor.com, we also offer tools[1] to help you.  Be sure you have something to hand to and to discuss with your client.  The need is now for any retiree.

by Carolyn Rosenblatt, RN, Elder Law Attorney & Dr. Mikol Davis, Geriatric Psychologist

AgingInvestor.com

[1] The Family Guide to Aging Parents: Answers to Your Legal, Healthcare and Financial Questions, and Succeed With Senior Clients: A Financial Advisor's Guide To Best Practices and Working With Aging Clients, A Guide for Legal, Business and Financial Professionals. All 3 books are available at AgingInvestor.com and Amazon.com

 

Why Professionals Cannot Ignore The Aging Client Issue

Why Professionals Cannot Ignore The Aging Client Issue

Sep 13, 2016 | aging, aging investor, diminished cognition, elder investor, finances for elders, financial advisors, financial capacity, handling money for aging parents, handling money for seniors, senior citizen investor, senior investor, seniors finances

Do you consider yourself to be pretty good at managing your older clients?

Most of us may be overestimating what we know and underestimating what we need to know. By the year 2020 nearly one in six Americans will be sixty years old or older. And 10,000 people a day are turning seventy.

If you're thinking "so what?" consider this: the risk of dementia and Alzheimer's disease rises with age and the risk doubles about every five years once a person hits sixty-five. So you the advisor, the financial professional with responsibility about another's finances will have to deal with the risk. Some of your clients are impaired now whether you recognize it or not, and many of you have several clients with some cognitive impairment.

Do you know what to look for with your older investors? Do you know the red flags? And if you spot those red flags, do you know what to do about them? There can be a long list of signs showing that a person is beginning a downhill slide with her thinking and understanding. Let's just start with one sign most of us can recognize: short term memory loss.

The First Red Flag

Researchers who study these issues tell us that this is one of the very first signs other people see when the older client (or anyone) is starting to lose the capacity to make safe financial decisions. The client may entirely forget a conversation he had with you last week or even the same day. The client may forget her appointment with you or that she had a question she needed answered. By the time you get back to her with the answer, she doesn't recall asking it. There are innumerable examples of this in our lives, as grandparents, other older relatives and friends start becoming forgetful. When it happens with clients, it is a red flag that warns you something is happening that needs your attention. Why?

The signs of forgetfulness can indicate that you need to track your client more closely than before. That means increasing the frequency of contact, especially in person if possible. Memory loss may lead to dementia, though this is not true in every case. However, memory loss is listed by the Alzheimer's Association as an early warning sign of Alzheimer's disease. Clients who have this disease should not be making financial decisions without the assistance of a trusted other. It is far too dangerous for them, as their judgment is impaired.

Documentation

No one will know what you see in your client unless you keep good records of your client contact and your observations. You need to label the changes you see in a uniform way, as should everyone else in your office. Call things by the same terms so everyone understands what is going on. "Short term memory loss" is a good example. This is a term that is in widespread use and typically understood by just about anyone. If you document that, and then see a client six months later, noting that the problem is worse than at the prior contact, you and those who may advise you about what to do will have something solid to work with in making decisions about that client. When you document, give specific examples, such as "client called repeatedly the same day asking the same questions". And comment that he appeared to forget the previous conversations about that subject.

Then What?

After you have spotted such red flags as memory loss, you need a plan for escalation of the matter to someone who knows more about elder issues than you do. That needs to be a firm-wide or office policy. The decision-makers on the subject of what to do to keep an impaired client safer need to have a solid working knowledge of what steps they can take with you to help your client and protect your organization from costly mistakes.

Red flags of diminishing capacity are things every financial professional must learn and understand. We don't cover the topic deeply in this article of course, but we do take a deeper dive in the book, Succeed With Senior Clients: A Financial Advisor's Guide to Best Practices. You'll find all you need to know in the chapter entitled "Know the Client Red Flags". It comes with a checklist you can use as a guide on what to look for and the right terminology to document your observations correctly. If you want a "cheat sheet" with the red flags on it, just go to AgingInvestor.com and download your free checklist any time. You can get the book by clicking here.

By Carolyn Rosenblatt, RN, Attorney, & Dr. Mikol Davis, AgingInvestor.com

 

 

Are Advisors Miscalculating Retirement Medical Costs?

Are Advisors Miscalculating Retirement Medical Costs?

Aug 31, 2016 | aging, Alzheimer's disease, elder investor, elderly, finances for elders, financial advisors, handling money for aging parents, handling money for seniors

Are Advisors Miscalculating Retirement Medical Costs?

According to CNN Money, a 65-year-old, healthy couple can expect to spend $266,600 on out of pocket costs for Medicare premiums in retirement. If that's the advice you give clients about what needs to be set aside for medical expenses you're missing some major facts.

Medicare premiums are a relatively small part of what it can cost when health issues arise as people age. No one likes to discuss the subject of possible cognitive impairment, but it has to be done. We see it as the financial advisor's responsibility to bring it up, include medical expenses in the overall financial plan and get the truth out on the table.

According to a Wealth Management article on August 30, 2016, Fidelity Investments did a survey of over 350 advisors and found that 96 percent felt unprepared to help clients who had Alzheimer's disease. This is in contrast to the reality that a person's chances of developing the disease are at least one in three from age 85 and above. And we are living longer than ever in history. More centenarians, more Alzheimer's.

What is the real cost of caring for a person with Alzheimer's? I interviewed a high end home care agency owner about this question. Many HNW people do not have long term care insurance as they plan to pay for whatever they need out of pocket. Most are not aware of the cost of best quality 24/7 care they could need with their own longevity. In our work at AgingInvestor.com, we have encountered this scenario and have seen what best quality care looks like. It's not your average home care agency.

The cost for caring for one person at home with Alzheimer's from that agency is $300,000 per year. The workers are specially trained and well supervised. A care manager develops a plan and the workers take their shifts, prepared to deal with all manner of difficult dementia-related behavior, including violent acts and words, wandering out the door, refusing to bathe as well as those who are unable to express themselves verbally any longer. Non-specialty home care agencies do not accept this degree of client behavioral difficulty out of fear of their workers being harmed.

The ultra HNW client can pay for these costs but for everyone else, the expenses incurred with care for a progressive disease that escalates in difficulty over time could be devastating. The cost of home care is in the category "long term care" an often poorly understood subject among those outside the health care and insurance fields.

If you have clients who are at retirement age or are retired, it is a necessity that you educate them about these risks to their savings. When you work with them on their plans, you need to include the possibility, very real, that one or the other of a retired couple could develop dementia and need expensive home care. If you think they should just go onto Medicaid, think again. Every state has different rules but in all states a person can't have much left in the way of assets and savings in order to qualify for Medicaid. And most importantly, people typically want to stay at home as they age. The quality of care they are likely to receive on Medicaid for long term Alzheimer's care is low, and likely to be in a nursing home. No one wants that!

The takeaways

  1. In developing retirement plans for clients consider the risk that your client may develop Alzheimer's disease or related dementia. Bring it up and talk about it.
  1. Plan for significant savings to be set aside in case care is needed, not just for Alzheimer's but for any long term condition or disabling illness requiring help. Use real numbers, not vague assumptions.
  1. Do not underestimate the real costs of caring for a person with this kind of dementia. It can last as long as 20 years. Do the math for your clients and show them what they would need to be cared for at home with a long term expensive illness like Alzheimer's.

The responsibility to know about long term care costs is yours. To learn more about Alzheimer's and how to spot the warning signs, get a free checklist to get you started at AgingInvestor.com.