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Financial Planning > UHNW Client Services > Family Office News

How the Best Advisors Approach Aging Clients

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It’s one more phone call where you, the advisor, have to listen to the same story/complaint/worry/idea (pick one or all).

The meeting lasts far too long as the nomenclature and numbers in the performance report are explained for the umpteenth time to the elderly client.

The relationship deteriorates with one missed call back or minor clerical error by your back office. Sometimes the account is terminated on such trifles.

New state regulations threaten potential litigation if you fail to report elderly abuse.

Family members of your elderly client try to use you as a pawn in the power struggle among ex-wife and grown children, siblings and step-siblings — or worse, see you as the impediment preventing a more rapid receipt of their inheritance.

Your elderly client is desperately lonely and isolated from normal social interaction, with one exception — you and your team are called upon all too frequently.

How should you respond to your elderly clients’ unreasonable demands — more face time, more frequent phone calls, more customized, labor intensive reports? How can you retain assets when your client’s next generation family members view you as irrelevant and as out of touch as their elderly relative? How can you surmount all these challenges while still running your advisory business?

More challenges loom with dramatically increasing longevity and women still living longer than men. No longer will men be the majority of the firm’s clients, and owners of many advisory firms are aging right in step with their clients. Are your succession plans going to work or will aging founders be as burdensome as the elderly clients?

Even baby boomers now recognize that death is no longer an “if” but rather a “when,” which gives you an opportunity as the advisor to be an important catalyst. You need to engage the spouse, the grown children and other key family members, or you risk the abrupt dismissal by surviving family members, who do not know you, much less care about your business. A 2015 survey revealed 66% of grown children fired their parents’ advisor after receiving their inheritance.

Ageism is gaining attention in the media with AARP leading the charge. Nearly two thirds of workers over 55 report being victims of age discrimination, according to a “Forbes” article. With nearly a fifth of the U.S. population over 65 and expanding every second, social security and Medicare are in fiscal crisis. To add fuel to the generational divide, the term “greedy geezers” was coined to describe how the elderly are pushing the rest of the country to the brink of bankruptcy.

Because the majority of wealth still is held by these aging baby boomers, who will live far longer than their parents, the tension between generations will become even more toxic. Baby boomers, who once chanted “don’t trust anyone over 30,” are now outnumbered by millennials, who can view boomers as irrelevant and out of touch.

Perspectives are changing: the adage, “Youth is wasted on the young,” has been replaced by, “Financial resources are wasted on the old.” To engage the younger members of the family requires an advisor to first find ways to connect. That could be increasing the visibility to your clients of younger colleagues or designing events for younger clients.

Adding to the family tension, the declining mental state of the elderly spares few, if anyone. Wall Street Journal columnist Jason Zweig cited research that the cognitive slippery slope begins at age 55! Adding to erratic financial behavior is an attitude of stubborn denial. “I can, too, drive perfectly well!” or “Don’t tell me I need elder care; how ridiculous a notion!” insists your aging client, much to the frustration of both the family and advisor.

Rarely are your elderly clients as honest as this: “These days, I find that so much of the knowledge I acquired in the past is dated at best, obsolete at worst.”

Even more poignant is 90+ year old Roger Angell’s observation, “We elders…have learned a thing or two, including invisibility… When I mention the phenomenon to anyone around my age, I get back nods and smiles. Yes, we’re invisible. Honored, respected, even loved, but not quite worth listening to anymore. You’ve had your turn, Pops, now it’s ours.”

Five ‘Must Do’ Changes

Just as GPS replaced maps and the iPhone replaced the rotary phone, so, too, financial plans will undergo radical transformation.

As I noted in my book, “Wealth Management Unwrapped, Revised and Expanded” (Wiley, 2017), “Your first financial plan [should be done at] at 30 or 40 or even 60… Just as you have your car inspected every year, pasting that sticker in the car windshield, you need to review your financial plan annually.”

Here are five changes, some of which have already been adopted by many of the most successful advisors:

  1. Analyze ownership of assets between husband and wife with planning spelled out in case of incapacitation.

  2. Assess asset location for tax and estate plan outcomes.

  3. Break the silence and have candid conversations about the estate plan, end of life care, durable power of attorney, health care proxy, life expectancy, and trusts.

  4. Annually revisit the decisions made in prior years with a check against what has changed in laws, family circumstances, health, etc.

  5. Assess wellness, peace of mind and happiness of your client and the extended family’s.

How do you, the advisor, handle these emotional discussions? Are you able to spot signs of dementia and Alzheimer’s? This is especially challenging because your client likely is feeling too embarrassed to admit to any mental decline.

Fear and even shame can overwhelm honest self-assessment. Are you responsible for telling the family? Is the family obligated or willing to give you an early warning? These questions are new to us all, and don’t yet have clear answers.

Successful advisors don’t wait for perfect answers, but rather they begin by asking questions like these before it’s too late:

  • What do you wish to happen when you or your spouse develop dementia or Alzheimer’s?

  • What do your children want to happen in that circumstance?

  • What if everyone in the family doesn’t agree? How should decisions be made?

It takes courage on your part to pull away the protective armor of denial that gives comfort to everyone, but if ignored, this denial will soon rip to shreds any family’s harmony and peace.

The impact of an aging population will be felt by every firm. Begin now to address the challenges. Hire young professionals to show your clients and their families how you value diversity of age in the firm’s professional ranks.

Even if your only contact so far has been the patriarch, your role as a trusted advisor within a family is vital to the entire family’s fiscal and emotional well being. Bringing along a younger and/or woman colleague to a client meeting can show your commitment to the family and open up different conversations.

Explain your intention, your goal of engaging all family members in the relationship. While not trying to serve as a family therapist, you can break the silence, begin the dialogue, encourage the timely use of experts in the legal, psychological or medical arenas.

To advisors who already are adept in the more modern, holistic art of financial planning, share your best practices. Offer your possible answers to the thorniest of questions. Serve as the living embodiment of both IQ and EQ (Emotional Quotient) applied to your client relationships. Since you already enjoy a successful financial partnership, our industry can learn from you.

More and more aging clients, and importantly the rest of their family, will gain the benefit of earlier planning, a more careful consideration of all the what-ifs, and achieve a lasting serenity that is based on more than just the money.


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