Practice Management: Advisors Help Seniors With Health, Housing
November 6, 2007 By Kristen McNamara A Dow Jones Newswires Column
NEW YORK (Dow Jones) -- In some ways, financial advisors are only as good as the experts they can tap. The circle of experts advisors need to access is growing. They've long known they need to form relationships with specialists in areas such as estate planning and charitable giving.
But increasingly, advisors are expanding their networks to include people experienced in working with senior citizens, such as gerontologists, elder law attorneys and even moving companies.
Some large brokerage firms are providing resources to help their advisors address the needs of older investors, including housing and health care. These interconnected topics have significant implications for the financial plans of both seniors and their adult children.
Lack of communication within families and a reluctance to address the physical and mental declines associated with aging keep many investors from planning ahead. Meanwhile, longer life spans, far-flung families and a confusing array of housing and insurance options have made planning for old age a more complicated endeavor than in the past. "So many people are in denial," says Esther Koch, gerontologist and founder of San Mateo, Calif.-based Encore Management, which provides services and seminars for adult children caring for aging parents. "They don't want to talk about aging. Financial advisors have a greater responsibility to get people beyond denial."
Advisors can ask new clients about their health, their parents' health and whether they expect to provide care or financial support to a parent, child or other family member at some point. Advisors can return to this subject at subsequent meetings.
Karen Schaeffer, president of Schaeffer Financial in Rockville, MD., asks clients how they learn how their parents are doing financially and physically. She asks whether clients have siblings living near their parents, whether parents have support networks in their communities and whether one parent could care for the other in the event of illness or accident.
Such conversations can also get clients thinking about their own situations. Maureen Mohyde, director of gerontology at the Hartford Financial Services Group Inc. (HIG), says the caregivers in families know who they are. Advisors can suggest the caregivers-to-be ask their parents about their health care wishes before problems arise: Does the parent want care only from a family member? Would he or she prefer home health care? How would the parent feel about moving in with an adult child?
These discussions can lead to financial ones, including those covering how much money is available and from what sources. Advisors can help clients crunch the numbers and examine their options.
Advisors need to be familiar with housing and health care options for seniors, such as what Medicare and Medicaid are, what they do and don't cover, and where to turn for additional information.
Some brokerage firms offer their advisors assistance. Merrill Lynch & Co. (MER) held a symposium for some of its New York advisors and clients Tuesday called "Roles Reversed: The Impact of Aging on Two Generations." Outside speakers addressed topics such as communication, caregiving, medical care and legal considerations. Organizers are hoping other Merrill offices around the country will replicate this event.
Citigroup Inc.'s (C) Smith Barney has resources to help its financial advisors advise clients on long-term care issues such as housing, insurance and health care.
Outside experts such as elder-care attorneys and geriatric care managers, who coordinate a wide range of services for seniors and their families, can be valuable resources, advisors say.
Insurance specialists inside and outside advisors' firms can help with long-term care needs. Connecting caregivers with support groups in their areas, or even alerting them to the existence of such groups, is also helpful.
"Your Rolodex has to be thick," says Tom Henske, partner at Lenox Advisors Inc. in New York. Getting clients to consider their housing needs as they or their parents age can be difficult. Housing is a fraught topic as it involves clients' independence, memories and ties to family and community.
"This is a financial and emotional issue," Mohyde says. "You're not just dealing with a commodity when talking about somebody's home."
Many investors still have substantial mortgages as they approach retirement. That's due in large part to people moving frequently and into larger, more expensive homes.
Schaeffer talks to such clients about working longer to pay down their mortgages and build a reverse to cover fixed costs such as taxes and maintenance. Tasks clients are able to do on their own, such as mowing the lawn, may become difficult as they age and require outside assistance, incurring additional costs.
Advisors can help clients think about the suitability of their homes as they age or contemplate bringing in a parent: Does the location require the homeowners to drive everywhere? Is there a first-floor bedroom? Are floor surfaces slippery? Do bathrooms have grab bars?
Advisors can also raise these issues with clients who are moving or are remodeling their homes. Advisors can also be alert to cues from their clients. When clients ask about reverse mortgages, advisors should probe further to find out why they need money. Moving is often a better long-term solution, though resistance can be strong.
Conversations about moving and other age-related issues can span years. The types and costs of housing for seniors beyond private homes vary widely. The offerings include assisted-living facilities for people who need some support, nursing homes for people with medical needs, and continuing-care communities that allow people to move as their needs change.
Schaeffer has directories with resources for seniors and checklists on topics such as evaluating assisted-living facilities.
Advisors can also be alert to clients' unspoken concerns. Those who find it increasingly difficult to walk and climb stairs might be overwhelmed at the thought of cleaning out their basement in anticipation of a move.
Schaeffer has put such clients in touch with moving companies and church groups that can help seniors organize and cull their belongings. She also knows contractors experienced with so-called universal design, which focuses on functional and attractive home design.
Advisors can't stop clients from aging, of course, but they can help investors feel more in control. Those who learn about clients' lifestyles, health and family dynamics, in addition to their finances, can help them make informed decisions.
"There's tremendous value in planning ahead," says Dan Moisand, principal at advisory firm Spraker Fitzgerald Tamayo & Moisand LLC in Melbourne, Fla. "That's what financial planning is about - giving people the ability to adapt to whatever uncertainties the future presents."
(Kristen McNamara writes about business issues facing financial advisors.) -By Kristen McNamara, Dow Jones Newswires; 201-938-5392; firstname.lastname@example.org (TALK BACK: We invite readers to send us comments on this or other financial news topics. Please email us at TalkbackAmericas@dowjones.com. Readers should include their full names, work or home addresses and telephone numbers for verification purposes. We reserve the right to edit and publish your comments along with your name; we reserve the right to publish reader comments.)