Keep elderly clients in mind

By Ken McNaughton | December 1, 2009 | Last updated on December 1, 2009
5 min read

I’ve been doing retirement planning for the last 25 years. I started off as an insurance agent and am old enough to remember when there was no such thing as a retirement industry.

In 1985, specializing in retirement planning and all the issues related to seniors was decidedly un-sexy. In fact, some of the people I worked with couldn’t even wrap their heads around the idea of RRSPs – they just kept telling their clients, “Buy more whole life insurance and everything would work out just fine.” Everyone knew if you wanted to get ahead in the insurance business, you had to be aggressively in the business market.

There was only one problem: I didn’t like it.

I’d rather spend the afternoon with one or two elderly clients reviewing their retirement and estate plans than run from pillar to post trying to convince harried business owners of the merits of funding their buy-sell agreements with life insurance. Besides, my elderly clients were never too busy to see me, never stood me up, and their cheques never bounced. I loved seniors then, and I love seniors now!

Elder Shift

But recently, there have been two dramatic changes: the baby boomers are aging visibly; and their parents living much longer than they ever envisioned, and often in poor health.

These days, we’re constantly reminded by the media, banks, insurance companies and investment firms that retirement will be a pretty grim experience if we don’t have enough saved up for that long rainy day. The retirement industry is in full bloom, and in a way we could not have imagined a couple of decades ago.

Now various professions have elder planning and eldercare divisions. We have designations for financial planners that denote their level of expertise in dealing with the elderly, and the financial companies have produced some highly innovative products designed to provide both flexibility and guaranteed income during retirement.

Issues of elder abuse are also now part of the dialogue surrounding senior care. And long-term-care needs are now being addressed by the wider public as the issue starts hitting close to home. All of this is good, but has been a long time coming.

I always wince when I hear about the so called trillion-dollar transfer of wealth that will soon reach the next generation. It’s almost as though the financial planners and advisors will have done everything right if we safely shepherd the money from mom’s bank account to those of the grieving but grateful boomers. After all they really need it now that the recession has wiped out so much of their personal net worth.

An Open Letter

But still, I have something to say to the heirs and beneficiaries of all of my senior clients: “YOU are not my clients.”

Frankly, I don’t care whether you ever pay off your mortgage, manage to retire in the style you deserve, or put your children through university. Your mothers and fathers are my clients, and I will be exactly as concerned about your needs, issues and wellbeing as your parents are – no more, no less. Rest assured, mom and dad and I have talked about you, your siblings, your assorted spouses, children, stepchildren, ex-spouses, nieces and nephews. I know how proud they are of you; how disappointed they are in you; why they want to leave you some money; or why they don’t. I’ve asked them every question under the sun about you, and they have told me pretty much everything over the last 20 or so years.

After the first five years as my client, there aren’t too many rocks left to uncover, and I have an annoying habit during my regular reviews of asking about the family. I also haven’t hesitated to tell mom and dad exactly how any planned gift or inheritance for their family will affect their own lifestyle and future income.

Having said that, I can also assure you I’ve used absolutely every tool at my disposal to ensure, as much as possible, that they’ve been able to meet their financial goals and treat you fairly (if not always equally). I’ve never missed an opportunity during our planning sessions to suggest a strategy that might benefit their families, as long as it did not undermine their planning for themselves.

When they expressed an interest in leaving a large sum to a hospital foundation, we set up a joint, last-to-die insurance policy and named the foundation as owner and beneficiary. When they expressed concerns about the rising costs of long-term care, and worried they might be a burden to their families, we set up a long-term-care policy, enabling them to receive care both in their home or in a facility, as needs dictated.

And, when they expressed concerns about your disadvantaged sister, I helped them establish a private and confidential fund that will never be disclosed in the will, never form part of the estate, and will only be revealed to those who need to know, exactly as they requested.

Because mom and dad are my clients, their welfare and wishes always come first. I know some of their children may not like how things were set up, and thus may not reward me by becoming my clients after they pass on, especially if they didn’t get everything they were expecting. But I don’t lose sleep over this. I know what my job is, and I know who my clients are.

Frankly, a lot of my new clients are the children of my original clients, who thought mom and dad were absolutely brilliant the way they had things arranged. So it’s no surprise they would like the same type of planning for themselves.

  • Ken McNaughton is a financial planner in the Victoria office of ZLC Financial Group. He has been in the insurance and investment industry since 1985 and specializes in retirement income and estate planning for those nearing retirement, and income preservation strategies for those already in retirement.
  • Ken McNaughton