Know Your Senior, Serve Your Client

As Steve Summerlin, a financial advisor with Financial Advisors Inc., Gainesville, Fla., puts it, “compounding interest can be an enemy or an ally. The determining factor is time. If you start saving at 49, 50 or 51 as opposed to 39, 40 or 41, you have chopped a lot of money off of the back end by procrastination.”

To illustrate, Summerlin recounts a couple in their late 50s who met with him in anticipation of retirement at age 62.

“I waited for the big number,” he says, but none came. The couples one major asset is the house. A decision was made that they would work until they were 70 and save as much as they could, he adds.

But, he continues, “people dont understand the time value of money.” That is why, Summerlin adds, a financial plan is important. It shows and “there is nothing better than seeing with your eyes.”

Meeting with clients is important because you can actually show them with visuals as well as words, says Howard Brachfeld, a producer with Wealth Advisory Group of Guardian Life Insurance Company, New City, N.Y.

It is easy to visualize a man or woman at work, but it is also possible to think of money or capital at work, according to Brachfeld. For instance, he asks if living longer means that money has to work longer or harder.

Making dollars work harder should complement efforts to make sure hard earned dollars are not lost to illness.

For clients with children, according to Brachfeld, the realization starts when the children reach adulthood. The mindset changes from “what will happen to them” to “what will happen to us and how can we avoid being a burden on them,” he adds.

That is accomplished in two ways, according to Van Echols, a certified financial planner with MML Investors Services, Lubbock, Texas.

One way is determining the withdrawal rate on retirement assets once retirement starts so that it is sufficient to last the length of an individuals life, he explains.

There is a “delicate balance” that needs to be achieved between providing for current and future income, he continues.

For those clients who might not have sufficient assets to take them through retirement, there are certain steps that can be taken, Echols says.

In such cases, it is important to establish a steady stream of base income by using immediate annuities that guarantee a life income, Echols adds.

The second component, according to Echols, is long term care issues and threat to wealth. “And thats what LTC is,” he adds.

LTC was an issue raised by all the advisors contacted. Crifasi suggested clients consider prepaying premiums when possible, so the contract is more affordable, and also buying policies for children if the client can afford it.

He tells his own story to make the point: His daughter had an accident that left her in a hospital bed for six months before she recovered. This experience convinced him, he said, to purchase policies for both his daughters and their spouses.

The story ended happily for Crifasis family but these planners agreed that failure to include LTCI in a retirement strategy can not only scuttle carefully laid out plans but more importantly, can lower seniors quality of life.

Reproduced from National Underwriter Life & Health/Financial Services Edition, July 15, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.