September 3, 2013 / 11:50 AM / 6 years ago

Financial advisers shift strategy to serve older clients

TORONTO (Reuters) - Canadian financial adviser Leony deGraaf decided to specialize in elder care after watching her father help seniors in his own practice, and she’s never looked back - grateful for the life lessons her clients teach her as she manages their investments.

“It doesn’t seem like a lot of advisers take the time to sit down and really explain everything, but it’s really rewarding. They’ve really taught me a lot over the years - lessons from their generation, starting with ‘Save before you spend,’” said deGraaf, 42, who completed the Elder Planning Counselor (EPC) designation nearly 10 years ago.

With some 1,200 Canadians turning 65 every day for the next 20 years, financial advisers are turning their attention to serving this huge and growing market.

But advisers face a big shift in taking on older clients heading into retirement. A change in investment strategy is the obvious first step for advisers who have more experience accumulating assets than dispersing them. But adjusting more practical aspects of their practice is also a must, as elderly clients require different communication, aid, and involvement.

Debbie Gilbert, a consultant on aging who advises families and financial advisers through her company Generations, said advisers need to take a much more holistic approach with older clients, who may need them for more than investment advice.

By focusing on their relationships with both current baby boomers and more elderly clients, financial advisers are on the front line to spot mental and physical health concerns, neglect or financial abuse.

“I often tell advisers, ‘Ask simple questions.’ ‘How are things? How is your health? Are there any changes you are concerned about?’” said Gilbert, noting that advisers may not want to intrude or cause embarrassment, leaving an obvious change in health the elephant in the room.


Financial adviser Peter Wouters, a faculty chair at the Canadian Initiative for Elder Planning Studies, said advisers may not be prepared for the huge shift in strategy needed when clients move from an accumulation phase to drawing income from their portfolio.

Timing becomes critical, since clients may no longer have enough time to recoup a downturn in the market. He recommends diversifying not just assets, but products and income streams.

“Asset diversification, product diversification and income diversification will give them some downside protection and some upside potential so they can take advantage of the markets if they do improve,” said Wouters, director of tax and estate planning at Empire Life Insurance Company in Toronto.

“It’s not a matter of ‘Should it be this one or that one?” It should be ‘How much of this and how much of that?’”

Then, stress test it all with a best-case and worst-case scenario, he said, and draw up a back-up plan.

DeGraaf said while older clients are often necessarily cautious with investments, advisers still need to ensure they’ll have enough money to last through retirement.

“It’s always a tricky balance between being conservative and needing to outpace inflation,” she said. “For me, segregated funds often give a principal guarantee so they will get out whatever they put in ... and that takes away some of the fear of a down market.”

Both deGraaf and Gilbert said one of the first conversations should be about power of attorney to ensure clients have legal documents in place in case of incapacity. Financial advisers should then ask to meet with both the client and their power of attorney before a crisis comes.

While most people hold powers of attorney want to work in the interest of the client, it is up to the adviser to watch out for those who want to change investment strategies or save money at the expense of an aging family member.

“We could use more estate planning specialists, to look out for the red flags of power of attorney abuse,” said deGraaf, whose EPC designation taught her to gauge family dynamics and watch for odd transactions.


Investment strategy aside, financial advisers should consider the physical needs of an aging clientele. Meetings should be accompanied by documentation to aid memory and comprehension, and be designed for older eyes. Fonts should be simple and large, in black and white. Background music should be avoided. The office should be accessible by wheelchair and walker, with clear pathways and bright lights.

Better yet, Gilbert said, meet clients in their home, eliminating transportation or mobility issues. That way, in addition to providing investment help, an adviser can watch for health issues or signs of neglect. And time meetings with care.

“There may be times of the day when a person is in better form mentally and physically,” she noted. An elderly person may be least fatigued in the morning, or in less pain after medication in the afternoon.

DeGraaf said she generally makes home visits, and spends more time with her older clients.

“They do need more reassurance than some younger generation might, but they are very appreciative of it - to have that peace of mind,” said deGraaf. “I find it very rewarding.”

Editing by Leslie Gevirtz

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