Aging Client’s and End of Life Issues: Impact on the Adviser's Practice

RIIA® Research CommitteeMay 6, 2015

GDC Research and Practical Perspectives

An Aging America

Sources: U.S. Census Bureau, Population Estimates and Projections

2

In M

illio

ns

Increasing Focus for Advisors

Sources: Retirement Income Insights 2014 – Using Products and Providers 3

1%

26%

60%

13%

2%

28%

60%

11%

2%

28%

58%

11%

0% 20% 40% 60% 80%

Decreased Modestly/Significantly

No Net Change

Increased Modestly

Increased Significantly

2011

2012

2013

Net Change in Retirement Income Clients Served

The First Half

When to RetireWhen to Retire

Creating a Vision of Retirement

Identify Income Needs and Wants

Lifestyle in Retirement

Building and Managing Income Portfolio

But What About The Second Half? 4

What Will Support Needs Be In The Next 15, 20 or 30 Years?

5Sources: U.S. Census Bureau, Population Estimates and Projections

In M

illio

ns

Practice Impact of Aging Clients and End of Life Issues

• Greater volume of aging clients

• Client demand for more support, but difficult to discuss

• Broader skills and services

• Understanding family dynamics and working with the client’s children and heirs

• Aligning the advisors’ value proposition to assist clients through retirement and after they’re gone

• Will require more time and effort, and is difficult to monetize

• Will require a more formal process and an upfront plan to mitigate problems and issues

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Benefits of Addressing End of Life Issues

• Differentiated service

• Higher client satisfaction

• Greater asset retention

• Higher likelihood of retaining the heirs

• Faster and fewer problems in settling the estate

• Business development opportunity

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The Second Half

Clients in the Second Half

•Often starts in late 70’s or early 80’s

•Slowing down

•Minor and major health issues

•Assisted living

•Hospice and death

•Can be spread over 5 to 10 year period

Support in the Second Half

•Broader in Scope

•Less Focus on Managing Assets

•Estate Planning & Wills

•Focus on Non-Traditional Support

•Health Care & Elder Care

•Funeral Arrangements

•Settlement of the Estate

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The Foundation for Addressing End of Life Issues Starts With Step 1

Source: GDC Research and Practical Perspectives

Key Steps in Developing an Effective Retirement Income Practice Steps

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Discovery and Planning – For the Second Half

Introduce issues related to end of life

Address estate planning and gifting Financial and Non-financial

Updating Wills and related legal documents Health care, Power of Attorney, etc.

Discuss family dynamics Include the children/extended family in

the process, if possible

Discussion can be conducted over time Discuss need and approach to issues

at the initial discovery Detailed discussions can take place

over time But before health or mental issues

arise

Discovery/Planning Checklist Family Dynamics - Topics

Any problem children?

Who do they rely on?

Who would be a potential caregiver?

Who would have the Power of Attorney?

Who lives the closest?

Any long-term dependents?

Who will be the Executor of the estate?

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Client Reviews and Monitoring

Personal Circumstances

Changes to personal situation including health, family, and living situation for client and spouse/partners

Financial Circumstances

Changes to financial situation including assets, sources of income, and major obligations

Spending Behavior & Needs

Review of recent spending patterns and any changes anticipated in the coming period

Plan Targets & Action Steps

Review of plan targets, action steps, and tracking of client to these agreed upon objectives and milestones

Risk Assessment

Discussion of key risks and measures in place to manage these challenges

• Accessibility of your office and your location

– Wheelchair accessible, parking,

etc.

• Provide good lighting

• Use larger font type for paperwork

• Take a little extra time to review materials

• Have furniture and chairs that are easy to sit down in and get out of

• Offer to make house calls

– Especially if mobility is an issue

– Observe the client and how well

they are doing at home

Meeting with Aging Clients

Source: GDC Research and Practical Perspectives 11

Monitoring Client Physical and Mental Health

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Hearing

Vision

PersonalityChangeMood

Swings

Frequent Injuries

Memory Loss/Confusion

Poor Judgment

Unhealthy Weight Loss

ClientAppearance

Lack of House Cleaning

Failing Routines

Lower Attention Span

Look for Look for SignsSigns

Source: GDC Research and Practical Perspectives

Be Prepared to Advise, Guide Recommend, and Refer

13Source: GDC Research and Practical Perspectives

Settling the Estate & Avoiding Conflict

• Minimize any surprises

• Make sure the Will is up-to-date and all legal paperwork

• Develop a detailed estate plan– Financial assets

– Real estate/property

– Cars, Boats, etc.

• Personal items– Artwork, jewelry, pot and pans,

furniture, pictures, etc.

– Sentimental items are often a source of conflict

– Very emotional and potential conflict can disrupt the entire process

• Transparency is key to minimizing conflict

– Involve the heirs in the planning process of the client

– Have key items appraised

• Suggest client’s inventory sentimental items

– Create list of items and who will inherit them

– Ask heirs what they would like

– Settle upfront any top items sought by multiple heirs

– To make sure its as equitable as possible

• Giving while living

– Passing on wealth and personal items while client is still living

• Include an estate appraisal service as part of the estate settlement

– Appraisal of furniture and other household items

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Closing Comments

• Greater volume of aging clients and demand for end of life guidance and support

• Need a more formal process and upfront planning for aging clients and addressing end of life support

• Will require better understanding of family dynamics and involvement with the children and heirs

• Leads to greater client satisfaction, asset retention, greater likelihood of retaining the heirs, and a smoother settlement of the estate

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Business Development Opportunity

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• Most clients are grappling with health care, elder care, and end of life issues with their parents or relatives

• Strong topics for client appreciation events and seminars

Dennis Gallant, PresidentGDC Research(781) 314-0606 office(508) 397-9296 mobilegallant@gdcresearch.comwww.gdcresearch.com

Contact Information

Howard SchneiderPractical Perspectives (978) 590-7290howard.schneider@practicalperspectives.comwww.practicalperspectives.com

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