Financial advisors must look beyond the numbers when dealing with sandwich generation clients, especially when the issues at hand are sensitive ones, like caring for an aging parent.
“The financial responsibilities are important, but from experience I’d say there are as many or more non-financial stresses associated with caregiving,” says Jason Round, head of financial planning support for RBC Financial Planning in Toronto, a division of the Royal Bank of Canada.
Among other issues, clients may be emotionally distraught by seeing an elderly parent lose their independence. And in many cases, these clients are also facing many other family and work obligations that leave them strapped for time and energy.
Bringing a specialist into the conversation can help these clients open up about these issues, Round suggests.
“Whether that’s an expert in eldercare, a professional caregiver or even a family counselor — the financial planner can be a kind of quarterback for that process,” Round says. “They bring the parties together [and work out the] financial aspects and emotional issues.”
The advisor should also consider bringing in the client’s parent to join the conversation, Round suggests. The advisor can act as a mediator, drawing out questions both parties need to ask each other. These can include discussion of amounts that are available for the parent’s care, as well as the emotional impact the costs of eldercare may have on the family.
“It may not be a comfortable conversation, and if there’s family discord it can be a challenge, but it’s part of being an effective financial planner, to be able to help navigate these things,” says Round.
According to Susan Eng, vice president for advocacy at the Canadian Association for Retired Persons, the conversation between advisor, client, and possibly the client’s parent also needs to address potential unexpected eldercare bills.
Eng’s own elderly mother has severe osteoporosis and suffered a compression fracture recently when she fell. “Every time she went up the stairs afterwards would have been a risk,” Eng recalls. “So, our family had to put in a ground-floor bathroom for her. How many families have $10,000 for a bathroom renovation just hanging around? It’s not like it’s all covered by OHIP.”
And, while each province offers a co-payment subsidy on nursing homes and long-term care facilities, Eng warns that the cost can still drain a client’s finances.
“In many circumstances, it’ll cost $2,000 a month, after the Ontario government, for example, pays its share,” Eng says. “And what if there’s another spouse? Now they are paying for two residences.”
Planning proactively for these expenses is crucial, Round says. For ideas on getting the conversation started, Round points to an online tool called RBC Your CareGiving Planner. Launched by Royal Bank of Canada last summer, the tool poses a series of questions designed to assess a senior’s financial, emotional and physical needs — as well as the current and future impact on the caregiver. A customized report shows the senior’s weekly needs, how much time it will take to meet those needs, and the financial implications of providing that care.
Round encourages advisors to use interactive tools such as this one with their clients. “[It’s] a similar concept to a traditional financial plan, and once again the financial planner plays a quarterback role to help establish the goals, identify the strategies to achieve those goals, and put an action plan in place to implement those strategies.”
This is the second in a three-part series on the sandwich generation. Tomorrow: Bracing clients for boomerang kids.