The senior market in America represents a prime target for financial planners and insurance agents for many reasons. Long-term care, estate planning, and asset management are just some of the lucrative services needed by the elderly, and a growing number of financial planning professionals and firms are able to specialize exclusively in this segment of the population.
Working with senior citizens involves special considerations that planners must be prepared for, both in order to protect themselves and to adequately service their customers. This article will examine some of those considerations and the measures that planners can take to make sure that they are taking the best possible care of their clients—and themselves. (See also: Common Concerns for Retirees.)
One of the key issues that planners can face with elderly clients is mental competence. Establishing and maintaining written, current proof that your client is mentally competent can prevent future headaches and legal wrangling in the event that this issue comes into question.
Even younger seniors who still lead active lives should consider the possibility of Alzheimer's or dementia, and planners should likewise ensure that their clients have taken adequate steps to prepare for this type of contingency. Planners who work with the elderly would be wise to require, or at least request, that clients produce a letter from a doctor certifying that they are mentally sound. This letter should be kept in clients' files and regularly updated on a quarterly or annual basis. (See also: and Talking to Aging Parents About Money.)
Having clients complete paperwork in their own hand may be less convenient for them, but it will provide greater protection in court for planners who may need to prove that their clients knew what they were signing. Planners should also take special precautions with clients who do not have an estate plan or formal durable power of attorney document in place. These clients should sign a document giving the planner permission to notify a family member or other trusted friend or contact and allowing that person to act on the client's behalf in the event of incapacity. (See also: The Importance of Estate and Contingency Planning.)
Maintaining detailed, accurate written records of each communication should also be par for the course. Ideally, the client should sign an acknowledgment every time he or she refuses to follow the planner's recommendations. This strategy can also serve as a possible line of defense against relatives or other associates who may seek to gain control over the client via emotional manipulation or other means of persuasion. Ultimately, there is no way a planner can fully prevent a client from allowing an unscrupulous third party to gain control over their lives or assets. However, planners can help to protect themselves from future liability in these cases by writing a document of protest signed by the client that outlines the planner's concerns.
There are several designations available that planners who wish to focus on retirees can earn in order to augment their credibility. However, while these designations will provide the planner with increased knowledge and training, planners should be aware of the gap in education required between this type of designation and more mainline credentials such as the Certified Financial Planner (CFP) and Certified Public Accountant (CPA). For example, the Certified Retirement Financial Advisor and Certified Senior Adviser designations require just a few days of classwork, while CFP candidates must complete coursework before sitting for a rigorous six-hour board exam. (See also: Certified Senior Designations Under Scrutiny.)
Planners should also be aware of the controversy that surrounds some of these retirement-oriented designations, such as the Certified Senior Advisor (CSA) designation, which is facing increasing scrutiny from both state and federal regulators. Another source of education available for advisors can be found online, where courses on Medicare and Medicaid are available at no charge. If you need additional information on elder care, see the Financial Planning Association's website. (See also: What's the Difference Between Medicare and Medicaid? and Failing Health Could Drain Your Retirement Savings.)
Planners should not hesitate to refer their clients to other elder care experts or networks in order to ensure their clients' peace of mind and well-being. The American Association of Retired Persons (AARP) and other similar organizations for seniors offer many elder care-related services and programs that fall outside the planner's jurisdiction. But planners who use these resources for their clients will generate a new level of trust that helps to build lifelong relationships. Planners should make a point of networking with other elder care professionals in different fields, such as health care, assisted living and long-term care facilities in order to keep abreast of the demographic trends and developments in their locales.
Planners who are knowledgeable about such things as which nursing homes to avoid and the basic health-related issues pertaining to Medicare are able to provide substantial value to clients; in most cases, these value-added services cannot be matched by professionals who are strictly trained in finance. In fact, planners who specialize in the senior market should probably create their own eldercare network, thus allowing them to provide their clients with an avenue for their other needs as they arise. Care should be taken as to who is allowed into this network; planners should take the time to do due diligence and tour the facilities of those with whom they network, and do background checks on them as well if possible. That said, a planner that has a safe, reliable group of associates to refer to can come to be viewed as an important resource within the local retirement community.
The Bottom Line
The elder market presents tremendous opportunity for planners who specialize in this area, but it also presents a special set of risks and issues that must be properly addressed. Success can be difficult in this arena without a basic understanding of the health and geriatric issues faced by the aging population. Planners who are able to help their elderly clients with issues that lie outside their areas of expertise can expect to reap substantial rewards.