If your clients are middle-aged or older, learn about old-age care options.

Ten or 20 years ago, financial planners might have been asked if they knew anything about assisted living facilities, or continuing care retirement communities (CCRCs), as they're formally called. The client might say something like, "My grandmother is getting a bit scatterbrained, and we're thinking about finding her some help. Do you know anything about those assisted living homes?" Planners didn't need to answer these questions with great expertise. If they could just point the client in some helpful direction, he was grateful.

But, oh, what a difference a few decades make. Now it's the clients' parents-or the clients themselves-needing this information. And replying with, "I have a friend whose mother just went into the Bayside Home for Very Old People and she seems to like it," isn't going to suffice. Nowadays, planners should be seeking the necessary experience to guide clients through local care facilities, help them compare these facilities' financial and other contractual terms, and even deal with the emotional and psychological issues that often accompany this major life change.

Some advisors' initial experience, if they're middle-aged themselves, is in dealing with their own parents. J. David Lewis, owner of Resource Advisory Services Inc. in Knoxville, Tenn. says, "My mother had dementia which first showed up as confusion. When my sister discovered she hadn't been eating properly, she took my mother to the emergency room for treatment, and eventually ended up living with her in her home for a few months. When she left, we hired someone to be in the house with mother to prepare meals and help out, while I took over paying mother's bills. My sister and I knew we'd need to make other arrangements, but mother didn't want to leave her house. We'd have to force her, and I didn't want to do that. Eventually her confusion progressed. She said she'd do anything she needed to do, so we moved her to an assisted living facility. I made the arrangements. Those were very emotional times."

The technical services that advisors are beginning to provide to assist in situations like Lewis' represent another area of planning to be learned. It's not difficult to apply one's analytical skills to the comparison of different contracts or to the assessment of client funds vis-a-vis alternative care options. Says Michael Potito, a principal of Singer Potito Associates Inc. in Amherst, Mass, "We do this type of analysis routinely by quantifying how long a client's capital is apt to last given the costs associated with the assisted living facility, and by identifying the salient points in the facilities' disclosure documents."

Echoes John Ritter of Ritter Daniher Financial Advisory LLC in Cincinnati, Ohio, "We were working with a client who was making the decision for her mother. We started on the technical side reviewing her mother's assets, the value of her home, how long her money might last, and the types of facilities we should be looking at. We know many of the retirement homes in our area since I have two grandmas in town at different facilities. We were able to provide further technical assistance by explaining how some facilities offer full care-independent living, assisted living and nursing care-while others provide only one or two of these care features."

But does the assistance you can provide your clients end here? No. There is greater assistance you can provide on the technical side and, of course, we haven't yet talked about the "soft side" of assisted living advice. A financial advisor with an established niche in this field, Chris Cooper of Toledo, Ohio, has a second company in addition to his planning firm with a name that reflects the broader expertise Cooper feels is needed to serve the older client. His firm is ElderCare Advocates Inc., which he describes as a "geriatric care management firm."

Says Cooper, who comes out of the health care industry with a background as both a paramedic and a nurse, "We evaluate assisted living facilities, home care, and other clinical issues of retirement planning, but I also see a need by individuals and families to have a frank discussion [with a qualified advisor] about planning for the management of care, whether that care is provided by the family or is delegated." And that is what Cooper does through ElderCare Advocates, a subsidiary of his planning practice. "We provide geriatric care and consulting. Then, I may hire nurses, occupational therapists or other specialists, as needed, to assist the client."

A little-known fact, says Cooper, is that dementia is the largest single cause of what he calls clients' "falling out of retirement." "Dementia can happen in a person's forties, much less eighties, and it has a very serious effect on retirement planning that isn't being taken into account by most advisors." So how should financial plans factor in this risk? "Advisors need to sit down and talk about it with their clients, first of all. It might be hard for those who're just investment managers, or who specialize in retirement projections, but there are questions they should be asking."

Those questions focus on the client's health history. "'Were you ever a cigarette smoker?' is a very important question," says Cooper, because "that person is likely to need care ten to 15 years earlier than a non-smoker, even if he smoked and quit as long as 25 years ago." Other questions advisors should be asking are "Has any member of the family ever had dementia?" "What is the family's longevity?" and "What have family members died of?" Cooper suggests advisors specifically ask about diabetes because it's often a precursor to dementia. "Eventually you've got to factor this information into your client's long-term projections because fully 70% of those who ultimately need long-term care are diagnosed with dementia."

Most advisors can ask these questions, and probably deal quantitatively with the answers, but few advisors have Cooper's medical background. How are they to provide geriatric counseling? Says Diane Pearson with Legend Financial Advisors Inc. in Pittsburgh, "Legend has 23 employees, but no one with specific experience in elder care, so we've linked up with a geriatric care specialist. She will assess a client to help us determine what type of facility will best meet that client's needs." Pearson found her firm's geriatric care specialist through a referral from a local estate-planning attorney.

Cooper agrees affiliations of this type are essential, along with networking among the vast array of elder care professionals that exist today. "Advisors should contact the Alzheimer's Association [www.alz.org-a great resource for information on old age as well as referrals] and the National Association of Professional Geriatric Care Managers [www.caremanager.org]," advises Cooper. He suggests planners take to lunch some of the professionals from other fields they meet through these associations. "Particularly if you're in the middle of nowhere-meeting with a geriatric social worker or someone in a related occupation may be your only way to learn this industry."

And how does one get his "soft side" training? Advisors already practicing some form of "life planning" will have an edge. "We're very much a life planning shop, so these are natural conversations for us to have with clients or their children. We look at the client's finances, but we also consider how to [help our client get through this major life change] with as little disruption as possible," Ritter says.

Ritter recalls one situation in which he was working with a young woman on her mother's behalf. "As is often the case, mom wasn't quite ready to admit she needed help, and her daughter felt guilty, saying things like, 'Mom's angry with me ... I'm taking away her independence.' We helped the daughter slowly introduce the concept [of an assisted living facility] to mom so mom could get used to the idea. In the meantime, we were calling different places to arrange meetings with their directors."

Learning that the client was very religious, Ritter found a facility run by the Mercy Hospital system, and was able to arrange a meeting for the mother with its spiritual director so she'd know she'd have a spiritual connection she could depend upon. "I also introduced her to my grandma so she'd know someone there immediately," adds Ritter.

"Soft-side" counseling inevitably deals with clients' almost universal wish to delay action. It's good to be sensitive to clients' fear of rushing into a big decision, but too much sensitivity can be a bad thing. Says Jim Christie at Freedom Financial Planning in Bridgewater, N.J., "In the case of one husband and wife in their early seventies, both were in good health and living on their own. They wanted to stay in the Northern New Jersey area but were concerned their investment portfolio might not sustain them. They also were grappling with the perceived loss of independence by committing to a CCRC. In the end, they decided to wait another year or two before making the commitment. I respected their decision, but cautioned them that, should one of them suffer deteriorating health, it might be more difficult or costly to enter at that time. I've seen this situation several times, and try to encourage friends and clients that the key to CCRCs is to enter when you are still very healthy, not when you are beginning to have major health issues."

Perhaps the best way to uncover and address a client's "soft side" issues is to heed Cooper's warning: "The medical community's standard approach is to treat the patient's 'chief complaint.' But in our work, when people come in with a 'chief complaint,' it's not usually the real problem. For example, if a client says I think my broker's screwing me, we may find after talking further that they can't communicate with their broker, they don't get along with each other, or the client just doesn't understand his investments." In other words, don't take at face value your client's objections to making critical late-in-life care decisions. It's up to you to help him confront his fears and take action."

David J. Drucker, MBA, CFP ([email protected]), a fee-only financial advisor since 1981, is editor of the Virtual Office News monthly newsletter, and co-author of the book Virtual Office Tools for a High-Margin Practice (Bloomberg Press, 2002), both available at www.virtualofficetools.net.