The Flipside of Multigenerational Planning: 6 Things Your Clients Need to Do to Protect Their Aging Parents

The Flipside of Multigenerational Planning: 6 Things Your Clients Need to Do to Protect Their Aging Parents

Written by: Matthew Paine

For many advisors, a client meeting about multigenerational issues has been focused on transferring wealth to the next generation or helping them begin saving for their futures. Now, many of your clients face the opposite generational issue: how to help their parents get their finances in order to ensure independence and security in their retirement years.

If you haven’t gone down this road yourself (yet), you should talk to the many of us who have. You think your parents have made all the right moves from a planning perspective, saving diligently and investing wisely to be on track for a successful retirement. But no amount of traditional financial planning prepares you for the gut-wrenching issues of aging parents with debilitating illnesses like dementia or cancer.

It’s not easy, and a planning session means a lot more than drafting a trust or writing a check to cover unplanned expenses. For me, it has included a host of things I never thought I’d have to deal with like educating my parents on “elder scams,” unravelling a lifetime of complex finances, and researching care options. And every step of the way, you can’t help but think: If only we’d planned for all of this a decade ago, it would be so much easier on all of us.

That’s precisely why many of your clients need your help, and it’s why it’s important to start the conversation now—before it’s too late.

How can you help your clients plan for the inevitable? The first step is to help your clients initiate what can be a difficult conversation with their parents. Family dynamics, role reversals, and denial are just a few of the reasons families avoid talking about next steps when it comes to aging. But it’s inevitable that older parents will need help from their children.

Give them a way to ease into the conversation with their parents by doing something simple: let them blame you. “My advisor asked me to gather some information, and I need your help.” Then give your clients the tools they need to be successful. Arm them with clear talking points and a list of documents and other information to ask for, including:

1. What health insurance coverage do your parents have? Is it covering their current expenses?

As healthcare costs rise, Medicaid and Medicare often aren’t sufficient, which means out-of-pocket expenses rise. It’s important to evaluate insurance coverage now, as well as to project into the future as health declines.

Keep in mind that Medicaid and Medicare plans change every year, as do your parents’ healthcare costs. Be sure they understand the differences between the plans and are choosing the most appropriate option—including prescription coverage.

2. What is your parents’ cash flow today? Are their expenses aligned with their savings?

Many people (of all ages) don’t track monthly expenses. For retirees on a fixed income, aligning cash flow with resources is particularly important to ensure they don’t outlive their assets. If your parents’ assets are dwindling too quickly, it’s time to take action now to avoid worse problems down the road. It’s important to look at volatility in their investments, their risk tolerance levels, and changes in their tax levels to be sure they have enough assets to cover what may be a longer life than they’ve planned.

3. Have you talked about alternative housing if your parents can’t stay in their own home?

It’s seems to be a mantra with aging seniors: “I’m never leaving my home! I’m going to live here until the day I die!” That might be great in theory, but it often becomes an impossibility when poor health changes the rules.

Talk about what situation would warrant a move and, if it’s needed, where your parents would prefer to live. Independent and assisted living facilities are common, but many have multi-year waiting lists. If “aging in place” is a realistic option, look at the costs of in-home care versus a similar level of care in a facility. Lastly, discuss a plan to be sure neither parent becomes a “prisoner in their own home,” unable to live a healthy, happy life because they can’t leave their ill spouse unattended.

4. Are both parents aware of and involved in financial decision-making? Are there “checks and balances”?

In many relationships, one spouse is responsible for most or all of the financial decision-making. Since no one knows whose health will fail or who will die first, it’s vital that both parents understand how much money they have, where it’s going, and how their investments are being managed. See if you can get them to agree to hand over the task of financial management if one or both of them begin to show signs of dementia or failing health.

5. May I see copies of your wills, trusts, and life insurance statements?

For many seniors, the administration of planning documents is overwhelming. They may have a will, but it may be outdated or incomplete. If they have a trust, is it an irrevocable trust? A charitable trust?

If they have life insurance, do they really need it at this point, or are they paying expensive premiums for a policy that simply doesn’t make sense? Options such as selling life insurance policies in the secondary market have uncovered assets many seniors never knew existed. Details matter, and understanding what’s in place today can help you advise them about making important changes if they’re needed.

6. Where do your parents store all their documents, accounts, and important papers?

It used to be simple: most people had a nicely organized file drawer of important documents, locked with a key. Today, important documents can be anywhere on the Internet, which means documents and even complete accounts risk being lost forever unless they’re carefully tracked and organized. Ask where they keep hard copy documents, as well as for a list of all bank, investment, and other accounts, including user names and passwords.

Set up a shared folder in Google Docs or Dropbox to be sure you always have the most current versions of their important documents. Many banks and investment firms offer “online safe deposit boxes” that make online storage even more secure. Whatever method you choose, help them create an “online file cabinet”—and get the key!

As an advisor, multi-generational planning is nothing new. If you’re doing it right, you have smart plans in place to wisely and tax-efficiently transfer your clients’ wealth to the next generation. Now is the time to add the flip side of multi-generation planning, by helping your clients plan for the physical, financial, and emotional care of their aging parents.

By tackling these issues before it’s too late, you have an opportunity to not only do the right thing for your clients, but also to strengthen and expand your client relationships, and take the concept of client service to a whole new level.

Matthew Paine is Senior Vice President, Head of Key Accounts and Appointed Agent Sales at GWG Holdings.  Mr. Paine started his financial services career with AXA Advisors, developing marketing strategies for the North Central Region and building his personal practice. Since 2008, he has lead sales teams in raising capital in various assets classes ranging from the Life Insurance Secondary Market, Multi-Family Real Estate, Conservation Easements, and MBS Hedge Funds/Fund of Funds. Mr. Paine has a BA in Marketing/Management from the University of St. Thomas in St. Paul, MN and holds FINRA Series 7 and Series 63 licenses through Emerson Equity, LLC. Member FINRA/SIPC.

GWG Holdings, Inc.
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Cyborgs Are the Future for Advisors

Cyborgs Are the Future for Advisors

Becoming cyborgs is the way to go for financial advisers…blending robotics and humans into one organism.

You see, I am convinced that robo-advice models will succeed and prosper.

I am also convinced that human advisers will succeed and prosper.

I am further convinced that some of each will fail entirely and die, but in Darwinian fashion the most adaptable will survive and prosper. Smart financial advisers will work out how to become cyborgs and build an offering which is a blend of human and machine – or at least their practice will.

Despite the fear-mongering when it comes to robo’s the reality is that there are many great arguments for automated transaction systems, or robotic product delivery.  Cost reduction for the consumer, cost reduction for the practitioner….efficiency, speed, convenience for all….elimination of the frustrating and time consuming service model supplied by the industry to low value transactional customers….and let’s be bluntly honest: some people DO just need a product solution at some stages of their life, and DO NOT need holistic advice at some points.

Robo-advice makes sense commercially, and it can meet a need in life stages planning for many consumers.  It also happens to appeal to a segment of society who are happy to make their own decisions and transact from the comfort of their pyjamas during the ads in their evening television program, and who are unlikely to engage in full advice.  It is worth remembering that this last type of consumer segment is growing at the expense of the traditional intermediated product delivery systems of distribution.

However, machines do not “manage” relationships and behaviour – humans manage humans.  Humans tend to rebel against the concept (or slightest inference actually) that they are being manipulated or are at the mercy of computers and machines.  Machines and automated systems exist for our convenience, don’t they?  Nobody wants a “SkyNet”.

……So the human adviser remains in the equation……

When we strip out all the industry jargon and hyperbole the primary function of a financial adviser is to manage clients behaviour.  We don’t really manage their money – other people do the actual money management. We don’t supply products….we source them from a supplier.   What we do is manage their behaviour and expectations.  We coach them.  Machines don’t do that yet….and when they are able to (and they will be), most consumers will shy away from being managed by a machine.

But we cannot escape those arguments supporting robo-offerings as they make too much sense for clients and for us. In fact I suspect robo-advice will be a very good thing for smart adviser practices.

Believe it or not, I believe robo-offerings can help us get clients.

For most consumers there is a period early in life when their financial advice needs are fairly basic, and also there is a period later in life where all the planning has been done and consumers are moving into “drawdown” territory.  In between those times, life gets somewhat busier and complexity increases substantially.

Advice delivered by humans should be focussed upon the complexity phase.  Apart from the fact that this is the period of a consumers life when there are the most variables to consider in their planning needs, it is also the phase where behaviour management is a distinct help to the achievement of the consumers goals and objectives.  Generally people will only do uncomfortable or new things if they have a high degree of trust and confidence in the person guiding them to do so, and establishing that level of trust – or the bond between two people – is where robo-offerings will struggle to compete.

However, when it comes to identifying a fairly simple need which has a product solution then robo’s will certainly be able to deliver a solution more cost effectively and faster than the human adviser can, who is bound by increasing complexity of their own called “compliance” every time they have to interact with another human being.

The smart adviser will identify those areas of their clients lives and those product solutions which work well for those times and find a transactional solution for their clients to access.  They will build that transactional, no-advice, solution into the service offering that their practice puts into the market.  In other words they will embrace and incorporate robo-offerings into their business model.


Not just because consumers want them or need them, and not just because it is cost effective to do so.  Not even because we’d like to have a commercial revenue stream which sidesteps the more time-consuming (and therefore labour intensive and expensive) compliance requirements.

The reason smart advisers will do it is because it will help gather the next generation of clients for the firm before the complexity triggers drive them to seek advice elsewhere.

The robo-advice solution caters to those who have an identifiable need for financial services of one sort or another, but who do not yet need holistic bespoke planning.  It is an entry point for consumers to become customers of the firm, and for the firm to then work upon converting those transactional customers into advised clients for the future.

Robotics are a part of our world and our future.  We need to figure out how to make them a part of our business too, but in such a way that our business uses the robo’s, rather than being used by them.  Humans and robo’s integrated into the same service business in order to deliver they type of solutions and assistance that consumers and customers and clients want at different stages of their life.

The future for the financial advisory practice is cyborgs.

Tony Vidler
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Tony Vidler is the expert in professional services on creating strong personal branding and target marketing positioning. Tony has been in financial services since 1990, ... Click for full bio