They have no student loans and kids to worry about,
but they can challenge the resources of your practice.
Advisors will be "dead" if they don't have clients who are RINKs (retired, independent, no kids), yet many are woefully unprepared to service them, says a planner who is also a health care professional.
"If you're not ready to deal with the problems of RINKs, you're going to be dead as an advisor," predicts Chris Cooper, who is both a certified financial planner and a nurse. He is president of ElderCare Advocates, a Toledo, Ohio, multidisciplinary firm that provides "professional care planning and care supervision" for seniors.
Cooper says the graying of America means RINKs will be a growing client base that almost any practice must have. "This group seems to be growing all the time," adds Donna Wood, a certified financial planner in Haymarket, Va.
What Are They?
RINKs are those with at least $500,000 of investable assets, no mortgage and none of the responsibilities of paying for kids. So the RINKs client has unique needs, says a planning professional who invented the term and specializes in serving the niche.
Raymond Mignone is a certified financial planner with his own practice in Little Neck, N.Y. He wrote a book on RINKs. Mignone notes that RINKs have special advantages and disadvantages. They have large portfolios that usually allow them to live well. Their wealth possibly allows them to pursue a second career, or an avocation. And since they don't have any children, they don't have to worry about paying anybody's college bills.
On the surface, RINKs would seem to be dream clients. Plenty of assets, mature and settled. Therefore, it would appear that the planning needs of RINKs are conventional: wealth preservation, which can be solved by a simple asset allocation plan that involves a generous helping of equities.
But Mignone and other planners caution that the potential problems of
RINKs usually go beyond a sensible, diversified portfolio. Having no
children probably means there is no one to take care of a RINK as he or
"As a RINK," he says, "you need to have more money in your retirement nest egg than someone who has children on whom you can rely. You'll have to pay for more things that other people can get from relatives or children."
These are issues that every financial professional who wants to help RINKs must bring up, according to Mignone. The advisor with a RINKs client must be proactive, according to financial professionals. They must take a more personal approach than in the average client relationship.
Indeed, Wood says she must push some clients to think about "what they will do in retirement. What they will do when they don't have a job. I often find that they don't realize that, without a job, they are going to need something that will make their lives interesting."
Having no spouse or children to fall back on for support presents its own set of problems. "I ask many clients, what are they going to do with their lives now and who is going to take care of them if they get sick?" Mignone says. "And often they have no idea."
Indeed, Cooper complains the problem is more difficult. "Often advisors have no idea of the social aspects of serving RINKs."
Anthony Rossetti, a certified financial planner in Holly Springs, N.C., adds that advisors who effectively serve RINKs must ask clients for all kinds of information that they normally don't. "I want to know about their hobbies. I want to know about the institutions and the things that matter to them," he says.
For example, what about the pets? RINKs often have pets almost as substitutes for the children they never had. Mignone asks clients how their pets will be cared for after a husband and wife are dead. He makes recommendations on retirement places for dogs and cats.
Mignone says that a RINK client should have both a group of money team professionals and a team of health care professionals. The advisor should be familiar with and work with both of these teams, he says. The advisor should also work with a social team of friends and medical professionals who know the client and are prepared to become caregivers or find them for the client when needed, according to Mignone.
Rossetti says the only way for an advisor to set up this kind of network is if he or she has "become a trusted partner, almost a part of the household. It is the kind of relationship that takes years to develop," he says.
Today he has few RINKs clients. "But I think it is inevitable that I will see many more of them in the coming years. There just is not the stigma attached to not having kids that there was 20 or 30 years ago." Rossetti, in his late thirties, says he possibly will become a RINK.
Cooper warns that the problems of the typical RINKs client are daunting and probably beyond the capabilities of many planners. Yet he tells his fellow advisors that, like it or not, in the coming years the average advisor will confront them.
Cooper asserts that advisors with these clients will need expertise or access to expertise in six areas: social, psychological, legal, environmental, financial and medical. Cooper emphasizes that advisors with RINKs should use an interdisciplinary approach to maintain a client's quality of life.
Yet, despite his prediction that RINKs will be an inevitable part of the advisory business, Cooper also warns that advising RINKs will be a quagmire for some advisors. They "could get in over their heads," he warns. "They will reluctantly end up as lay trustees because there are no children to take on the responsibility."
So sometimes the advisor ends up putting his or her own personal assets at risk, Cooper says, because the client "has no son or daughter." This lack of a child means RINKs have special needs, professionals say.
"They must have effective estate planning, long-term health care and a power of attorney in case of incapacity," Rossetti insists. And then there are RINK issues beyond health care. And what about a RINK who has no relative or a close friend to whom to leave his or her estate?
Wood says she helps RINKs work with mutual fund companies to set up charitable giving funds, which she presents as an alternative to a private foundation. "This approach is easier in that the irrevocable donations to the fund are tax deductible in the year they're made and the donor can choose the contributions made from the fund at any time to meet the donor's charitable goals," Wood says.
But sometimes a RINK client has the opposite problem: not enough assets. Advisors working in this area make many mistakes, Cooper says. He believes that, for example, most Medicaid strategies used by advisors-run down the assets to qualify for Medicaid-are often flawed. "They treat it as a risk management issue when, before anything else, you must find out the person's true needs and seek to preserve his or her dignity of life," he says.
These challenged advisors ignore elder care strategies either because don't understand them or won't acknowledge that they've made a mistake, he contends. These kinds of challenges are often "beyond the resources of the solo practitioner," Cooper believes.
How do advisors avoid the myriad potential problems of RINKs? Cooper urges advisors to have alliances or relationships with a large group of professionals. These include officials of a home health care company, and several doctors, including doctors who are board certified in geriatrics, which he says is not common.
He adds that the advisor should also know lawyers who are experts in estate planning and elder law, including a litigator in case a RINKs client must go to court. Cooper also advocates that advisors work with a general contractors to determine the costs of modifying a house for a RINK client who wants to live out his or her last years at home. Most advisors, Cooper warns, aren't ready for this kind of business.
"You have to be prepared as an advisor for this kind of client. It goes way beyond money," says Diane DeCharles, a certified financial planner in Shreveport, La. "The biggest challenge for the advisor is, who is going to be the caregiver?"
For example, DeCharles says many RINKs need someone to oversee their bills and help them decide if they will self-fund long-term health care or pay for a long-term health insurance policy. "Many of these older people, who have large amounts of money, are very trusting. They are often the targets of salesmen who are trying to sell them unneeded annuities," she warns. They also need advisors and a network to protect them, she notes.
Most advisors who are seriously interested in this kind of business say they understand the need for a large network group of professional alliances. For example, in preparation for more RINKs business, Wood, the certified financial planner in Virginia, is working with an elder care attorney in her town. She frequently helps clients with estate planning issues.
Wood has a large client group of widows, RINKs and those preparing to become RINKs. "There's lot of couples who never had children and women who never married or are divorced and never had children," Wood says.
She estimates that, in her own practice, the percentage of RINKs and DINKs-couples with dual incomes, no kids,-has doubled over the past decade and now makes up about 60% of her clients. So, to serve this growing category, a financial professional must offer more than portfolio recommendations, advisors agree. Although preserving that standard of living at first seems to be the most important issue, advisors say, it is only part of serving RINKs.