Whether they retire early or work well into their elder years, senior clients need objective information they can use to manage their finances in the way that best meets their current and future needs.

It’s important to consider their financial literacy to help them face the physical, emotional and mental changes that occur as they age. If they experience the loss of a spouse, isolation, declining health or failing memory, they may have more difficulty reading and understanding conversations about their finances.

When faced with complicated forms laden with technical language and professional jargon, some seniors may be less able to understand what’s being presented to them. It’s your responsibility to ensure the investments chosen are suitable for the client. Here are some tips to help you communicate clearly.

  • Put important information in bulleted point form. It increases the likelihood that it will be seen and read.
  • Speak in plain language. Don’t use acronyms and technical terms without explaining them.
  • Organize your information in a logical order so it’s easier to understand and remember.
  • Pause and ask the client if they understand what you’ve said along the way. It gives them an opportunity to ask questions and express any concerns they may have.
  • Listen with your eyes as well as your ears. Facial expressions, body posture and an unwillingness to look directly at you can tell you how well they’ve understood what you’ve shared and allows you to detect emotional stress. Maintaining eye contact also tells the client that you’re interested in them — not what’s on the paper in front of you or your computer screen.
  • Meet with them annually to ensure that their situation hasn’t changed dramatically.

Gaps in their financial skills may have made some older Canadians vulnerable to problems like outliving their savings, falling victim to fraud and financial abuse. There are many resources available to use with clients, or help you host a seniors’ seminar to teach them how to protect themselves and make the most of their money in retirement.

Frequently asked questions – working with seniors

Q1: Roughly 50% of complaints received from the MFDA are from or about seniors and are often flagged for enhanced review by regulators. As an advisor, how can I protect myself?

A – Look for opportunities to build a relationship with a spouse or adult child as part of your customer service activities. If the family knows you and knows that you’ve focused on the best interests of their spouse/parent, they’re less likely to be surprised by investment decisions made or feel a complaint is warranted.

Q2: What are the benefits of trying to involve other family members, where possible, in discussions of a senior’s portfolio?

A – Aside from building trust, if other family members are present, they may become aware that their spouse or parent is beginning to experience lapses in memory or symptoms of diminished capacity. This could help open the door to a power of attorney discussion that the client may be more inclined to proceed with.

Q3: Are there any specific risks related to seniors with joint accounts?

A – If one spouse has diminishing capacity leading to transactions not in line with the long term objectives of the account, it could become depleted prematurely, leaving the other spouse vulnerable to out-living their assets. Where an account is held jointly with a child (or the child is a power of attorney), the account could be managed in a way that isn’t in the best interests of the senior client.

Q4: How can I ensure the portfolio of a senior client continues to be suitable?

A – Annual meetings with older clients are essential. Many changes could occur in a year that may impact the client’s portfolio in terms of tax and estate planning status, time horizon, risk tolerance or the need for liquidity (due to health issues).

Q5: When the client signs forms including such things as risk disclosure, does that mean they’re responsible for the suitability of the investments chosen?

A – No, you’re accountable for ensuring that investments chosen are suitable. This responsibility can’t be avoided or transferred to the client.

Q6: What are best practices with respect to servicing accounts of seniors?

A – Meet at least annually, fully document investment discussions, ensure any material provided is plain language and clearly labelled as “for illustration only.” Take notes and follow up if there are large withdrawals, accounts are closed or you’re unable to contact the client. If irregularities occur and you suspect your client is:

  • being financially abused or scammed, contact the police.
  • menatally diminished, contact a family member.

Q7: What constitutes mental capacity?

A – The ability to understand information relevant to making a decision, AND the ability to appreciate the consequences of the decision – i.e. able to provide meaningful, informed consent. Poor choices or eccentricity aren’t evidence of incapacity.

Q8: What should I do if I notice memory lapses or behaviour changes that could indicate a client is experiencing diminished capacity?

A – As you’re not qualified to make such a judgment, you might suggest they bring a spouse, child, other trusted family member, accountant or lawyer who knows your client well, to your next meeting where these individuals may observe the same things you’ve noticed and take the appropriate action.

Q9: What are some red flags that may indicate my client is vulnerable to undue influence?

A – Signals that there’s some potential for external influence behind a client’s decision include:

  • If a client seems unwilling or unable to communicate their reasons for transactions.
  • Their behaviour is combined with glowing mention of a new friend or caregiver.
  • There’s a third party at each meeting that seems forced.

Q10: What are the factors that make seniors more vulnerable?

A – Here are a few factors that could make a senior more financially vulnerable.

  • The senior’s tendency to trust may be a barrier to asking questions.
  • If they’re socially isolated, they may have less opportunity to discuss options or learn from peers.
  • Their shorter time horizon may cause them to consider aggressive growth options without giving sufficient weight to the risks.
  • Seniors are often on a fixed income which magnifies the impact of any losses.

Many senior women may not have worked outside the home or been in control of finances. They may need more time to understand the issues and make a decision.

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