Aging and retirement is a dramatic period; even the most cursory list of major events ranges from declining health, to the loss of friends and spouses, to key lifestyle decisions about the final decades of life. All of these events involve money — and this is a phase during which financial advisors can become particularly helpful to their clients.

In fact, addressing the economic changes associated with aging is an inevitable part of financial planning, retirement experts say. “I don’t think you can avoid it,” says Cynthia Kett, a chartered accountant and certified financial planner with advice-only firm Stewart & Kett Financial Advisors Inc. in Toronto. “I really believe that an up-front look has to be done to anticipate some of these things that are going to happen.”

Exploring health and lifestyle issues can help you deepen relationships with your clients and keep elderly clients engaged, says retirement expert Barry LaValley, president of financial planning firm LifeFirst Approach in Nanaimo, B.C. He explains that as clients become elderly, they commonly lose interest in discussing investing and portfolio management and become more focused on other aspects of their lives. By shifting the focus of conversations to the ways that asset-management decisions will help clients meet their goals and achieve their desired lifestyle, clients are more likely to be responsive, he says.

“The main issue in retirement isn’t investment management or insurance or estate planning; it’s the lifestyle considerations that have a financial implication,” says LaValley. “The advisor now has to tie the portfolio management into the much bigger picture.”

Changes to clients’ health can have a substantial impact on their financial circumstances. Many seniors have specialized health-care needs that are not covered by provincial health-care plans, which can lead to hefty medical bills. In fact, 90% of an individual’s lifetime health-care expenditures, LaValley says, typically occur in the last few years of their lives.

But many people focus on a financial plan based on wants — the retirement of their dreams — without planning for the things they fear, such as major health-care bills. Financial advisors have a role to play in reminding clients to prepare, LaValley says: “It’s great to create a perfect plan for perfect people. But the chances are, at some point, either the client or their spouse is going to get sick. It’s important for advisors to get their clients to think about these issues.”

In helping clients prepare financially for health-related expenses, long-term care is a key issue to address. Many people fail to consider the possible need for long-term care, and others don’t realize the costs associated with it. An individual’s cash flow needs can vary significantly, depending on whether they want in-home care or care in a long-term facility, and depending on the privacy level of the living arrangements they want.

“The cost of care is going to need to be considered,” says Sterling Rempel, a certified financial planner with Future Values Estate & Financial Planning in Calgary, adding that an increasing number of his clients are seeking advice on their choices for the time when they no longer feel capable of living independently. “They’re looking at options, and talking about the cost of those options.”

Such discussions are also important in assessing a client’s need for relevant insurance products, such as LTC or critical illness insurance.

As clients become elderly, they may also become less capable of independently managing their financial affairs due to physical or mental limitations, Kett points out. As a result, she says, advisors may need to encourage these clients to seek the help of a trusted friend or family member. “If you’re having meetings with a client whom you’re not too sure can understand or can absorb everything that you’ve said,” she says, “it’s advisable to have another family member attend the meetings with that client.”

(For more on clients with declining mental faculties, see page B17.)

Similarly, as clients age, it may be necessary for you to address the need for wills. Estate planning is an area that is commonly neglected by seniors, partially because some seniors have trouble acknowledging that their life may be coming to an end.

“Sometimes, it can be very difficult to get people to have a will drafted or to do the powers of attorney, because they feel that, instead of empowering themselves and their family, they’re giving that power away,” Kett explains. “There’s an emotional side to that.”

@page_break@But a good advisor, she adds, will emphasize the importance of estate planning, despite the emotions it might provoke.

Emotional resistance can also present challenges in acknowledging the possibility of losing a spouse, which is another important event to plan for financially. Approaching the topic can be easier when a member of a family is ill and the possibility is more evident, Rempel says: “If a person is in declining health and everyone is aware of it, then it’s easier to have a frank discussion about it and how to plan for it.”

When approaching such topics, Rempel says, it’s important for advisors to recognize the client’s sensitivity around such issues. If the client is unprepared to discuss painful life changes openly, you should make note of this and continue to work at it gently, in small steps, he says: “It’s going to be a process over time, in which we work through these issues.”

Retirement can also involve a slew of lifestyle changes with financial implications. For instance, adapting to a day-to-day life with much more leisure time can lead to higher levels of spending, which is not always sustainable. In addition, many people make rash decisions to move or buy a new house in the first few years of retirement, or embark on a major trip that puts a substantial dent in their savings.

Although retirees are generally encouraged to travel and fulfil their dreams early in retirement, LaValley says, the advisor’s role is to remind clients of the importance of planning for the long run when adjusting to their new lifestyle.

“I think [clients] lose sight of the fact that retirement is a marathon — as opposed to a sprint,” he says. “You want to do short-term planning, but you have to do some long-term planning too, just to make sure that you always have this sense of financial comfort.”

When discussing any health or lifestyle issues, LaValley warns, it’s important for advisors to avoid moving beyond the scope of financial planning. He urges advisors to remain focused on how these issues relate to the financial plan. “I always recommend that if you’re going to talk about it, you always tie it back to the financial plan,” says LaValley.

Kett agrees that this is an effective approach: “We explain that in order for us to advise them properly, we really do need to know their overall circumstances.”

Still, not all advisors are comfortable asking clients about aspects of their lives beyond their finances. But it’s possible to get clients to think about lifestyle issues without asking them directly, LaValley says. If you want to explore a health or lifestyle issue in depth, he recommends holding a seminar. IE