As you help your clients plan for retirement, there are multiple challenges that can threaten their ability to reach their financial goals. The expense of raising children certainly ranks near the top, but when caring for aging parents is added to the mix, clients who are juggling the responsibilities of careers, college-bound teenagers, and parents in their 70s and 80s can feel like they’re bearing the weight of the world on their shoulders. It’s no wonder they’re called the “sandwich generation.” It’s a confluence of events that can be immensely draining—both emotionally and financially.
For financial advisors, this presents a unique opportunity to help everyone involved. By lending a hand during this challenging time, you can help your existing clients preserve and protect their hard-earned retirement savings. At the same time, you can help the older generation manage the details of their estate to help ensure their own assets last for the rest of their lives and ease the transfer of wealth to their children after death. Here are five steps to help expand your practice across generations:
1. Offer emotional support.
Growing older is inevitable, but it can be difficult to accept the fact that parents are aging. They may feel sad, helpless, and overwhelmed by the responsibilities of caring for Mom and Dad. Because this added burden often comes just as couples are becoming empty-nesters, they may also feel some level of guilt for not wanting to have to take on this added responsibility. Talk though these feelings and be willing to share your experiences with your own parents. Assure your clients that whatever feelings may come up are normal—and that planning for the inevitable can help ease the road ahead.
2. Introduce the need for multi-generational planning.
Open the door to the idea of multi-generational planning by asking clients if they’ve spoken to their parents about the legal, medical, and financial issues that come with aging. Discuss how a lack of planning on their parents’ part can impact their own plans for the future. Walk through some basic scenarios, including what would happen to their long-term financial security if their parents fail to plan for the inevitable. Suggest that your clients broach the topic with their parents and offer the guide Your aging parents and you to support the conversation.
3. Become a valuable resource to the whole family.
Not all of the challenges of aging are financial, but nearly all of them have the power to impact the finances of the entire family. Rather than focusing solely on dollars and cents, offer to help your clients and their parents understand how to plan for the future. Suggest sitting down with their parents for an hour at no charge to explore what plans are in place and identify what tasks need to be handled next. Walk through housing options and costs, healthcare expenses and payment strategies, and the importance of having a Durable Power of Attorney and Healthcare Power of Attorney in place before an event occurs that requires either one. Lastly, share how a lack of planning can create emotional stress and the potential for financial difficulties for their adult children in the future.
4. Suggest a formal financial planning relationship.
If the parents do need additional help, talk to them about how your financial planning services can make a difference—even at this late stage. For most seniors, outliving their assets is their biggest fear, and yet many don’t have a clear retirement income strategy or a plan to tax-efficiently transfer their wealth to their children and grandchildren. Discuss how careful planning can help address both challenges, and offer to work together with both generations to create a clear plan that includes income planning, legacy planning, beneficiary designations, estate planning, long-term care planning, and asset management.
5. Prepare to “serve two masters.”
Once your new client relationship is in place, you will inevitably be faced with serving two masters: your younger clients and their parents. Until the time that a Durable Power of Attorney is executed, confidentiality is key, and you will need to walk this line carefully. To serve both generations to the best of your abilities while also honoring your confidentiality agreements with each party, be clear about which details can be shared—and have that permission granted in writing. To facilitate decisions that will impact everyone involved, suggest family planning meetings. This approach can help you offer valuable guidance without putting either client relationship at risk.
As your clients’ trusted advisor, protecting their wealth is your primary responsibility. For clients in the sandwich generation, this can be a unique challenge. By offering to help your clients’ parents take control of their own finances, you can help reduce the financial and emotional impact of aging for the whole family. Not only can this approach help you build even greater client trust, but it can also expand your reach across generations and, perhaps most importantly, ensure that the wealth of the whole family is protected and under your care for years to come.
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Disclosure: The information and opinions herein are for general information use only. The opinions reflect those of the writers but not necessarily those of New York Life Investment Management LLC (NYLIM). NYLIM does not guarantee their accuracy or completeness, nor does New York Life Investment Management LLC assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice and are not intended as an offer or solicitation with respect to the purchase or sale of any security or as personalized investment advice.
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