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

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.

Financial Advice Your Boomer Clients May Need

Financial Advice Your Boomer Clients May Need

Aug 9, 2016 | aging, aging investor, finances for elders, handling money for aging parents, handling money for seniors, senior citizen investor, senior investor, seniors finances

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.

Can Brain Images Tell You If Your Aging Client Can’t Handle Money Any More?

Can Brain Images Tell You If Your Aging Client Can’t Handle Money Any More?

Aug 3, 2016 | aging, aging investor, diminished cognition, elder investor, elderly, finances for elders, financial capacity, handling money for aging parents, handling money for seniors, senior citizen investor, senior investor, seniors finances

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.