August 1, 2017 • Joel Bruckenstein
If you are like most advisors, you may believe that the greatest threat to your business is that all of your clients are dying. That’s right; it is inevitable. Most advisors are by now aware that a massive generational wealth shift is under way. If you are a typical successful advisor, many of your clients are at or nearing retirement. As they age and pass away, their wealth will transfer to the next generation. If you do not have a good relationship with that next generation, you are likely to lose their accounts. But there is a more immediate threat to your business that is much less frequently discussed: the threat that your clients will have health or age-related issues that jeopardize their financial decision-making and their wealth before they die. If you do not help your clients identify potential risks, plan for change or take the necessary steps to protect them before problems arise, their financial security will be at risk, and your ability to provide financial advice for the next generation will be jeopardized, too. Until recently, there was no health and eldercare financial planning platform that advisors could turn to that dealt with these issues systematically. Now there is. It’s called “Whealthcare.” It’s the brainchild of Carolyn McClanahan, a medical doctor and CFP. McClanahan is the co-founder of Whealthcare Planning LLC and founder and director of financial planning at Life Planning Partners Inc. In addition to NAPFA and the FPA, she belongs to the American Academy of Family Physicians. Having begun her career as a doctor, she speaks nationally to planners and physicians on the interplay between health and financial issues, while also contributing to Forbes, Financial Planning magazine and CNBC; offering quotes to The Wall Street Journal, The New York Times and The Washington Post; and appearing on Hardball and National Public Radio. Whealthcare’s co-founder is Chris Heye, a tech entrepreneur who earned his Ph.D. from MIT. The firm’s advisory board includes Anthony Weiner, the director of outpatient geriatric psychiatry at Massachusetts General Hospital, and Ned Hallowell, a child and adult psychiatrist who has authored 18 books on various psychological topics. Barb Culver, another respected name in the planning profession, is also an advisor. It is difficult to imagine a more qualified brain trust. While most advisors would agree that protecting their clients is the right thing to do, there are other, more practical reasons that Whealthcare is the right product at the right time. First, we’ve already outlined the case for protecting the assets for the next generation. In addition, beginning in February 2018 Finra will require advisors to make a reasonable effort to obtain the name and contact information of a trusted contact person for their clients. This is part of the Whealthcare process. The North American Securities Administrators Association (NASAA) Guide recommends that firms “consider providing client-facing and other personnel … an assessment tool for cognitive skills that can be incorporated into ongoing training.” Furthermore, the Senior Safe Act, now before Congress, would require advisors to undergo training for the identification and reporting of the exploitation of seniors in order to receive immunity from legal suits. So, What is Whealthcare Planning? Whealthcare Planning is a software platform that contains three modules: the Financial Caretaking Plan, the Whealthcare Risk Profile and the Proactive Aging Plan. The Financial Caretaking Plan is a 30-question exercise that should not take more than 15 minutes to complete. It collects some basic demographic information, then asks a few questions about who currently manages the finances, whether a power of attorney exists and, if so, how old it is and has it been accepted by all relevant institutions, etc.? The program then asks the client to designate one or more financial caretakers (you can split the tasks among multiple people). It next asks a number of questions that help you determine how capable the client currently is to handle financial decision-making. If a client is currently capable, he or she can set parameters under which a caretaker will be notified or take action (for any transactions over “X” amount of dollars, for example). Finally, the client answers a number of questions to determine how current his or her current estate plan is and what, if any, actions are necessary to bring it up to date. The application then generates a nice color report in the form of a checklist. It highlights clearly all the high-priority tasks. In addition, it contains multiple hyperlinks with definitions, explanations and additional educational materials. The report is divided into sections on the caretaker, bill paying, investments, estate planning, and other topics so it is very clear what need each recommendation addresses. The test for the client’s risk profile differs substantially from others that advisors may have seen. It begins with an assessment of behavior, which may appear somewhat similar to other industry tests, but which also has some questions that are less typical. It then moves on to questions about the risk of cognitive decline. Next, the application presents questions to assess a client’s financial literacy and, finally, it asks about a client’s memory. Upon completion of this section, a report is generated that scores the client in each area. The number is not immediately meaningful to new users, but the scores are color coded (for example, a green check mark means a good score). Short explanations and warnings adjoin each score. For example, even if you score well on the cognitive test, the software may advise you to take it again regularly since changes can be sudden in some cases. The scores are followed by additional information and recommendations. For example, even if your cognitive score is good, the application may advise regular exercise to help keep it that way. First « 1 2 » Next
But there is a more immediate threat to your business that is much less frequently discussed: the threat that your clients will have health or age-related issues that jeopardize their financial decision-making and their wealth before they die. If you do not help your clients identify potential risks, plan for change or take the necessary steps to protect them before problems arise, their financial security will be at risk, and your ability to provide financial advice for the next generation will be jeopardized, too.
Until recently, there was no health and eldercare financial planning platform that advisors could turn to that dealt with these issues systematically. Now there is. It’s called “Whealthcare.” It’s the brainchild of Carolyn McClanahan, a medical doctor and CFP. McClanahan is the co-founder of Whealthcare Planning LLC and founder and director of financial planning at Life Planning Partners Inc. In addition to NAPFA and the FPA, she belongs to the American Academy of Family Physicians. Having begun her career as a doctor, she speaks nationally to planners and physicians on the interplay between health and financial issues, while also contributing to Forbes, Financial Planning magazine and CNBC; offering quotes to The Wall Street Journal, The New York Times and The Washington Post; and appearing on Hardball and National Public Radio. Whealthcare’s co-founder is Chris Heye, a tech entrepreneur who earned his Ph.D. from MIT. The firm’s advisory board includes Anthony Weiner, the director of outpatient geriatric psychiatry at Massachusetts General Hospital, and Ned Hallowell, a child and adult psychiatrist who has authored 18 books on various psychological topics. Barb Culver, another respected name in the planning profession, is also an advisor. It is difficult to imagine a more qualified brain trust. While most advisors would agree that protecting their clients is the right thing to do, there are other, more practical reasons that Whealthcare is the right product at the right time. First, we’ve already outlined the case for protecting the assets for the next generation. In addition, beginning in February 2018 Finra will require advisors to make a reasonable effort to obtain the name and contact information of a trusted contact person for their clients. This is part of the Whealthcare process. The North American Securities Administrators Association (NASAA) Guide recommends that firms “consider providing client-facing and other personnel … an assessment tool for cognitive skills that can be incorporated into ongoing training.” Furthermore, the Senior Safe Act, now before Congress, would require advisors to undergo training for the identification and reporting of the exploitation of seniors in order to receive immunity from legal suits. So, What is Whealthcare Planning? Whealthcare Planning is a software platform that contains three modules: the Financial Caretaking Plan, the Whealthcare Risk Profile and the Proactive Aging Plan. The Financial Caretaking Plan is a 30-question exercise that should not take more than 15 minutes to complete. It collects some basic demographic information, then asks a few questions about who currently manages the finances, whether a power of attorney exists and, if so, how old it is and has it been accepted by all relevant institutions, etc.? The program then asks the client to designate one or more financial caretakers (you can split the tasks among multiple people). It next asks a number of questions that help you determine how capable the client currently is to handle financial decision-making. If a client is currently capable, he or she can set parameters under which a caretaker will be notified or take action (for any transactions over “X” amount of dollars, for example). Finally, the client answers a number of questions to determine how current his or her current estate plan is and what, if any, actions are necessary to bring it up to date. The application then generates a nice color report in the form of a checklist. It highlights clearly all the high-priority tasks. In addition, it contains multiple hyperlinks with definitions, explanations and additional educational materials. The report is divided into sections on the caretaker, bill paying, investments, estate planning, and other topics so it is very clear what need each recommendation addresses. The test for the client’s risk profile differs substantially from others that advisors may have seen. It begins with an assessment of behavior, which may appear somewhat similar to other industry tests, but which also has some questions that are less typical. It then moves on to questions about the risk of cognitive decline. Next, the application presents questions to assess a client’s financial literacy and, finally, it asks about a client’s memory. Upon completion of this section, a report is generated that scores the client in each area. The number is not immediately meaningful to new users, but the scores are color coded (for example, a green check mark means a good score). Short explanations and warnings adjoin each score. For example, even if you score well on the cognitive test, the software may advise you to take it again regularly since changes can be sudden in some cases. The scores are followed by additional information and recommendations. For example, even if your cognitive score is good, the application may advise regular exercise to help keep it that way.
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