Planning challenge: Aging clients, no kids, assisted living required
Choosing an assisted living facility can be frightening prospect for anyone, but the fear can be greater for people with no kids to help them through the process.
"When you don’t have kids, it can often feel so lonely and daunting that you don’t want to think about it as early as you should," says Manisha Thakor, vice president of financial education at Brighton Jones, an RIA in Seattle that caters to wealthy clients. "For many people, the thought of moving into assisted living can feel like entering a long, dark tunnel that is leading towards the end of your life."
The challenge is often the same for clients whose children live far away or for those who are estranged from family members, Thakor points out.
In coming decades more Americans will find themselves in the same predicament as the one facing today's childless adults, according to a 2013 study by the AARP's Public Policy Institute.
While most elderly people receive some care from family members, the number of those able to help "is unlikely to keep pace with future demand" as people live longer, the study found.
"In 2010, the caregiver support ratio was more than seven potential caregivers for every person in the high-risk years of 80-plus," the authors wrote. "By 2030, the ratio is projected to decline sharply to 4 to 1; and it is expected to further fall to less than 3 to 1 in 2050, when all boomers will be in the high-risk years of late life."
At this sensitive juncture in clients' lives, financial advisors can help them successfully make the transition, advisors like Thakor say.
To be sure, providing this service can take extra time and effort. How should advisors approach compensation for acting essentially as surrogate family members?
Therese Nicklas, a CFP in Rockland, Massachusetts, considers the additional hours a “goodwill gesture" in the case of one longtime client. Others, who charge retainers, see the extra steps as similar to helping a client through a big life change such as a multi-year divorce. But for the most part, planners who agree to help elderly clients in this way generally expect their rewards to come from the knowledge they have helped someone solve one of their biggest life decisions, rather than monetary compensation.
Nicklas, Thakor and other planners offer the following advice:
1. Start early, often at age 65. The earlier clients begin examining their options for assisted living, the more peace of mind they will have and the better decisions they will make.
While visiting a facility with her nonagenarian client, Nicklas says an elderly resident piped up with his own opinion. "He said, 'Better two years too early than five days too late,' " says Nicklas.
It was good advice, she thinks.
"Many of these facilities that are very nice, but require that you are mobile and are going to be there for a while before you need nursing," she says. "Once you are not mobile, some places won't take you."
2. Gather documents. Before reviewing facilities, "we make sure they have their estate planning documents in order," including contact information, says Lauren Lindsay, a planner with Personal Financial Advisors in Covington, Louisiana. "Often they will list a doctor as a trusted contact. We like for all involved parties to be aware of our relationship with the client, and to reach out to us for help when needed."
3. Brainstorm. "We then brainstorm a list of places they are interested in moving to and we request information," Lindsay says. "I usually call the person at the facility to get a sense of cost and services to see if it is a good fit for the client."
4. Cafés, hospitals or nature? Find out what your client's priority is, Thakor says. Some people value proximity to large medical facilities, such as the Mayo Clinic or the Cleveland Clinic, she adds.
Others want to live near cafés and cultural offerings while some want only the silence of nature.
5. Go on a journey. Lindsay and Nicklas often accompany clients on visits to facilities. Other advisors follow-up with clients about how their visits have gone and guide them in the research involved in making a choice.
6. Meet the caregivers. Talk to the people at a facility who work directly with residents, not just the sales staff. "There was a difference between the care staff and the sales staff," Nicklas says she's discovered. The sales staff "have a way of putting on a good dog-and-pony show."
7. Buy in without moving in. One of planner Cicily Maton's clients, a woman in her sixties who lives in a "lovely" home she's not ready to leave, is interested in a nearby assisted living facility. At a cost of between $30,000 and $40,000, she bought into a program that preserves her spot on the facility’s wait list should she eventually choose to move in.
In the meantime, she visits the facility three times a week for meals and exercise programs. She also can use its medical center.
"It gives her the opportunity to know some of the people, to know the lay of the land, participate in some of the activities without committing," says Maton, a partner with The Planning Center, an RIA with offices in Chicago and six other cities around the country. "From her point of view, it's kind of a win-win."
8. Consider paying up-front. When a client is ready to make the move, it may make sense to pay a steep upfront buy-in fee. In subsequent years, that fee can allow the client to move from an independent wing of the facility, to assisted living, to memory care for people with dementia and, finally, to skilled nursing, without an otherwise very high bump in monthly costs.
However, advisors say, what is right will differ from client to client, depending on their health and resources at the time they are ready to move.
9. Employ a caregiver service. Some clients without family to visit them could benefit from services provided by elder care companies like LivHome or A Place for Mom, Maton says.
"They will do an assessment of what your needs are and what your choices might be based on your personality, your health and your resources," Maton says. "I have clients engage them to help make that choice."
But Nicklas warns advisors to monitor these services closely.
"In my opinion, they tend to gouge people," she says.
10. Build a community. Some planners have acted as a liaison between client and the client's church or synagogue, a local senior community center or a nonprofit to find visitors to spend time with their clients.
11. Stay in touch with caregivers. Every two weeks Nicklas talks with caregivers who care for her client who is estranged from her daughter and now lives in a facility.
12. Be optimistic. Clients without kids need to remember there's an upside to not having family; they are free to make decisions based on what they really want to do, Maton says.
"Having the kids is a two-edged sword," she says. "It's really nice to share that decision making and to have that support. On the other hand, siblings often disagree about what mom or dad needs and it can be a bone of contention with family members. Who are you going to live next to, the one on the East Coast, the one on the West Coast or the one next door?
"I've seen parents throw their hands up," she says. "It's anguish."
As is often the case in financial planning, the emotional work is the toughest, Thakor says.
"The raw financial planning mechanics are the same" when dealing with clients who have kids and who don't have kids, she says. "It’s really the emotional piece of getting childless clients to take action on the logistics and financial analyses that separates the two scenarios."