As life expectancy continues to increase, Americans are living longer than ever before, and boomers are steadily moving into retirement. Yet, no matter how much we advance in medical science, exercise daily, and eat right, our bodies still age and some of our physical and cognitive skills deteriorate. This happens to everyone, regardless of how smart or physically fit they were when they were younger.
Our job as advisors is to work closely with seniors and help them stay as financially fit and secure as we can. In addition, we must work within legislation and regulations that most states, including California, put in place to protect the senior population. While these efforts are laudable, no one piece of legislation can solve all the problems. It is up to our own integrity and ingenuity to find ways to help our clients deal with a variety of challenges in retirement income planning.
California producers are required by the state of California to provide disclosure forms when:
- Potential clients on the sale of an annuity are aged 65 and older
- Selling a fixed annuity
- Potential clients on the sale of a life insurance policy are aged 65 and older
- Assets are being sold to fund a new life insurance policy or annuity
There are other state-specific examples of times when disclosure forms need to be handed out, that include but not limited to such topics as health, privacy, business continuation, Patriot Act, and money laundering.
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While it’s required to provide these forms to potential senior clients, it’s even more critical to explain the forms and ensure that the client has a strong understanding of any actions, products, or services that are recommended. My practice is based on a collaborative, team-based approach where we strive to ensure that clients have financial strategies to last a lifetime and into future generations. In fact, our long-term growth is based on the philosophy of building an intergenerational practice.
At least once a year, we discuss with all our clients, particularly those who are seniors over 60 or the children of seniors, how important it is for the children to be informed about their parents’ assets and wishes. We recommend and encourage parents to inform the children about what their assets are, their sources of income, savings, pension plans, and current insurance policies. While we understand that this can be awkward or uncomfortable for some families, we try to act as a catalyst for opening up this dialogue because it makes planning and organizing later on much easier for everyone.
In California, if an advisor visits the client’s or potential client’s home, it’s required that an invitation of who will be at that visit and the rights that they have to terminate the visit be sent in advance. We have found it much more effective to hold all our client meetings in our office. Clients seem to prefer this environment of professionalism and they appreciate the fact that they can leave at any time they wish. With their permission, we also invite the family members to meet in our conference room, and we prepare the clients in advance for how the meeting will be conducted and what we’ll be covering. In essence, we position ourselves as a resource to answer questions about what they currently have. The parent, mom and/or dad, conduct the meeting to share with the children what their wishes are. This approach makes senior clients feel much more in control and lessens any awkwardness they might have about sharing their financial situation with their children.
We cover many topics and focus on having the family talk about what they want to happen in the event of certain circumstances. For example, what if mom and dad need long term care? What do they want to happen? What are their wishes? If appropriate, we discuss any steps that have been taken so far to achieve their goals. We discuss if they’ve purchased a long term care insurance policy or if they expect to pay for assisted living, in-home assistance, or nursing home care out of current assets. We share where monies are held, how they are managed, and by whom. We review who has been named as beneficiaries to make sure that those decisions continue to be relevant as life situations change. It also helps us to learn more about the family and how each person is affected by the financial situation.