An expert weighs in on the three most critical health and financial planning needs
With the pandemic heightening health concerns for many older clients, now may be an excellent time to focus on sharpening skills and developing programs that build up EQ—or emotional quotient—to serve investors’ needs in the current environment.
For asset managers, this means developing or refocusing advisor practice management programs, offering thought leadership on emerging trends, and providing in-depth marketing resources to help advisors skillfully lead conversations on health and aging.
To get some perspective on how to do this, I recently spoke with Carolyn McClanahan, M.D., CFP®, founder of Life Planning Partners, Inc.
Dr. McClanahan specializes in helping investors manage the intersection between health and personal finances. She’s written extensively on these topics, and she shared the three most important discussions investment professionals should have with clients right now on aging and finances.
Winning Trust by Leading Crucial Conversations
Asset managers and advisors who effectively address uncomfortable, yet absolutely essential, aging topics—particularly before health or cognitive issues arise—have an opportunity to establish themselves as indispensable financial partners to investors and their families.
And with Cerulli Associates estimating as much as $68 trillion will be passed down to heirs in the next 25 years, providing this much-needed support to investors may carry significant financial rewards.
What Are the Three Most Important Conversations?
Dr. McClanahan emphasizes that advisors should begin these conversations when clients are healthy and sound.
“Many cognitive issues can arise for people as soon as their late 50s,” she points out. Here are the critical conversations she suggested starting before those risks increase.
1. Prepare a financial caretaking plan. As our ability to make complex financial decisions diminishes, we can become vulnerable to fraud and abuse. Financial professionals may actually be in the unique, though highly delicate, position to help families recognize when an aging loved one’s cognitive state has become fragile. Here’s where more in-depth training for advisors can really pay off.
What’s needed: Document important decisions—Who will manage their finances should they become unable to do so? Under what circumstances will that responsibility begin? Establish communication with key members of the client’s financial team—an estate attorney, for example. And advisors should probably revisit financial caretaking plans periodically with the client, as well as the person they’ve chosen to take control of their money.
2. Discuss living arrangements.
Help clients consider where they plan to live and when to make that move. These decisions have become more complicated now, in light of COVID-19. People who can afford alternatives will likely avoid nursing homes until there’s evidence that those facilities are once again safe.
What’s needed: Document the client’s decisions, and include loved ones so they know their relative’s wishes and can help out when the time arrives. Keep in mind, timing may be determined less by the client’s age and more by other indicators, such as when home maintenance becomes unmanageable or when the client is no longer able to drive.
The post-pandemic reality may cause many advisors and asset managers to adjust how they work with clients on these decisions. This may mean helping clients shift savings away from other goals to cover increased living costs, for those who want private care at home.
3. Make an advance directive plan.
It may be hard for many, but making important decisions ahead of time on quality-of-life issues can save investors and their families significant stress and emotional strain later on. Helping advisors conduct challenging conversations can benefit your business, and provide significant value to clients.
What’s needed: Discuss and document quality-of-life decisions. This means encouraging investors to have specific, heartfelt conversations with loved ones—as well as executing a power of attorney—on what’s most important to them. For some, this means instructing family members not to take extraordinary lifesaving measures once they can no longer recognize the people closest to them. Other clients may feel the opposite. The key is to discuss, decide, and document before such time arrives.
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