Client Service

Advisers and Clients Face Difficult, Necessary Discussion about Aging

A new analysis from Pershing argues that, while difficult to start, conversations about aging and passing on wealth can be very fruitful for improving client trust and long-term outcomes. 

By John Manganaro editors@strategic-i.com | September 05, 2017

Research from Pershing, a BNY Mellon company, warns that advisers cannot wait to have difficult conversations about aging and degrading mental capabilities with their clients.

Instead, according to “Serving the Needs of Older Clients,” to be successful in the long term, advisers must encourage clients to frankly discuss their estate plans and other important financial decisions with their children and other stakeholders while they have full mental capacity.

“This allows parents to control and communicate the plan they have designed, and some parents even take the next step—inviting their children to ask questions for further understanding,” the research explains. “Clients often welcome an offer to help facilitate the potentially difficult conversation.”

Naturally, advisers can “gain a better understanding of family dynamics while initiating relationship development and trust with other family members.”

The analysis goes on to warn that, unfortunately, the risk of fraud and abuse is real when it comes to senior investors, and the sad reality is that it is not uncommon for ill-intentioned family, friends or caregivers to be behind the wrongdoing. Advisers, however, can play an important role in helping their older clients identify and respond to scams targeting them. In any scenario, advisers must keep in mind that making recommendations and investment decisions on behalf of clients with cognitive impairments can lead to the possibility of lawsuits or regulatory enforcement, and so the research urges advisers to check frequently with their compliance department to ensure the right actions and authorizations.

As one might expect, the oldest seniors tend to be the most vulnerable to fraud, Pershing says. Prevalent today are fake Internal Revenue Service (IRS) agent telephone scams; email-based scams promoting products that are too good to be true; lottery winnings scams; and even senior online dating scams.  

Important documents an aging client should have in place, whether they are healthy or ill, include proof of power of attorney for finances and general affairs; proof of durable power of attorney for medical and health care decisions; a standard will; a living will and accompanying medical directives; and any additional trust documents that may be appropriate.

The analysis goes on to urge advisers to feel optimistic about serving this client base: “Today’s seniors do not reflect the stereotypes of rocking chairs and compression socks. Instead, they approach retirement as a new beginning or a new chapter. Many are launching new careers or taking up and learning new hobbies … Advisers who are sensitive to these changes as well as how their senior clients perceive themselves and aging have an advantage with communication, meetings and planning strategies.”

The full analysis is available for download here