What you can do to prepare your clients to care for elderly parents.

After their mother died, Mary Lacey Gibson, a financial advisor in San Juan Bautista, Calif., and her four siblings realized their 80-year-old father might well need help down the road.
They noticed he was beginning to wobble through the streets of San Francisco. They weren't sure he was receiving the correct medical treatment for his ailing heart. Would his pension be sufficient? What if he needed to move to a nursing home? Which of them would manage his personal affairs?
They knew it would be a challenge to begin the conversation. They feared he would resist, since he was a proud, independent person. He never wanted to discuss his finances, but the time was fast approaching when they might have to.
"Growing up, our model for talking about money or any sensitive subject went like this: "Dad, do you make a lot of money?' 'It's not polite to ask people that question. It's too private,'" recalls Gibson. "In many families the response would be exactly the same, and just because someone ages, their private feelings discussing money [still] remain the same."
With millions of baby boomers retiring and living longer today, caring for parents and other older relatives is bound to become more common. As advisors, are you preparing clients to properly care for aging parents? Is it something you're adding to your clients' plans? Should it be included in data gathering? What other issues should be considered?
Here's just one cold, hard statistic: Nursing home costs today average nearly $75,000 a year, according to a new Genworth Financial study.
Even without prompting, some clients are bringing the subject up themselves, asking planners whether they can retire early to devote time to caring for an elderly family member. "In most cases, it's uncompensated," says Chris Cooper, a planner in Toledo, Ohio.
Cooper, who also has a background in gerontology and nursing as owner of Elder Care Advocates (www.eldercareadvocates.com), feels many advisors are unprepared to advise clients concerning these responsibilities. "I was telling this to my peers 25 years ago, and no one listened then. Even five years ago, I was talking about adding care management to financial planning and they were saying, 'That's nice you're doing it, but we don't want to do it.'
"Typically, when clients of a financial planner approach the planner about advice in caring for an older adult or their parents, it takes the form of, 'How do we hide mom's money so the nursing home doesn't get it?'" says Cooper. "The problem is that the planner could harm the person's parents or the person because they're not taking into consideration the quality of care the person needs, the type of care and the setting, whether it be at home, in an assisted-living facility or a nursing home.
"The truth is, it requires a great deal of education and experience to do financial planning, and when you add caregiving on top of it, it's just that much more education and experience a planner has to have. We don't mint financial planners out of school to do this type of planning."
What's more, a loved one's care can be expensive. Medicare and Medicaid offer only limited help. Long-term-care insurance may cover home care, assisted-living facilities, chore services and even home-delivered meals. But there are other costs, like out-of-pocket expenses, that can add up.      
"The reason caregivers don't understand this is they tend to pay incidental expenses like groceries and prescriptions along the way, and don't keep track of them. After all, it's your family. You don't necessarily keep a running ledger," says Maureen Mohyde, ChFC and director of the corporate gerontology group at The Hartford, which works with advisors on gerontology issues.
Mohyde suggests advisors counsel caregiver clients to have a frank discussion with their parents about their care needs and whether they have the means to finance them. "It's good to know these things in advance," she says, "rather than tiptoeing around them. They don't want to be blindsided by the financial issues because it could disrupt their own financial plans."
The legal questions that arise with one's declining health can cause stress and emotional pain. Scott Meyer, an attorney with Montgomery, McCracken, Walker & Rhoades LLP in Philadelphia who has worked with families providing for the needs of their parents, suggests making sure there is a durable power of attorney in place, as well as a will or living will. "If the parents have enough money, [their families] should investigate whether the parents would find it attractive to live in a continuing care retirement center, which is a place that will provide for staged transitions from independent living to assisted living to skilled nursing care. There are places that are practically country clubs, but some parents don't want to leave their own homes."
Both Charles P. Buck, a fee-only advisor in Woodbury, Minn., and his wife have direct experience, having dealt with aging issues with their own parents. "My dad voiced concern about Social Security being taxed," relates Buck. "That was a trigger to me that he had income from investments, but my younger sister didn't pick up on that. She was concerned whether they had enough money to support themselves.
"After I found out they had some assets, I led them to an estate planning attorney who made sure they were set up in case something happened to one or the other of them. It also gave my sister some peace of mind. They have since passed on."
Buck believes clients with caregiving responsibilities for aging parents need to open the lines of communication, as older people may be more susceptible to fraud, especially if they have assets in sufficient amounts. With better communication, parents may be more willing to tell their children about suspicious activity. Buck also advises clients whose parents don't live near them to learn about elder care where their parents are, so when the need arises they're able to contact the right people.
Elizabeth Potts, a fee-only advisor in San Jose, Calif., whose clients range in age from 30 to 45, always asks them during the data-gathering process whether they have parents or siblings who are or may become partially dependent upon them. That opens the dialogue, she says, which then ensues along these lines:
How much have they saved for retirement? Are they getting Social Security? A pension? Do they have health insurance, and have they taken out a long-term-care insurance policy?
"I also talk about practical matters," says Potts. "Do their parents live close by or far away? Do you know where they keep their financial and medical records? If something sudden happens, that logistical issue can be challenging because you can't get the information. Also, knowing the names of their doctors, attorney, financial advisor, bank and brokerage house is important. Do they have a will, a health-care directive or power of attorney in place for health-related purposes?"
In addition, Potts suggests advisors ask their clients whether the parents plan to stay in the family home, move to a retirement community or move in with the client. Special needs should also be addressed. "A person 30 or 40 may be still living with the parents who are providing for them. Could it be because they're irresponsible or have special needs? Who is going to care for that person?"
Todd Smith, a Phoenix-based advisor, also brings up the caregiving matter during the data-gathering process with clients when it is appropriate. "I ask about current health, family health and longevity, and about the needs for parents and other family members [such as disabled children or adults]," says Smith. "Generally, I account for this added potential cost in the retirement expense analysis and in potential insurance needs."
So how should advisors prepare for the increased need on the part of their clients to assume a caregiving role?
Cooper recommends you begin creating a multidisciplinary practice. "Financial planners should seek out geriatric care managers or geriatric social workers to be available to consult with their clients along with the financial planner and possibly an elder-care attorney, so the planner can help them lay out a comprehensive plan of action.
"As this field develops," he adds, "financial planners are going to be under scrutiny for their actions and advice. That's why I advise the multidisciplinary approach. Planners may not be versed in these areas, and may easily give the wrong advice or approach it from too narrow a perspective."
Gibson, by pointing out the high cost of car ownership in San Francisco and the ease of public transportation, won over her father, who agreed to surrender his car keys.
Gradually, the process unfolded as he sought her help to deal with other issues as well. "When my father would call to discuss his life insurance, his taxes or a bill he didn't agree with, I was glad to help," says Gibson. "I could feel his great sense of relief, and over time he more easily relinquished the responsibility for his finances." 

Bruce W. Fraser is a financial writer in New York. He was co-editor of the recently published Sixty Things To Do When You Turn Sixty. frasernyc@aol.com; www.bwfraser.com/home.