With billions of dollars in financial assets under their control, seniors are the wealthiest and fastest-growing demographic group in Canada — and an enormously attractive market for financial advisors. The challenge in working with this group is to recognize that its members require a different approach to financial planning and then make the necessary adjustments.

These changes will affect everything from your client communication style and the financial products you recommend to the furniture and lighting in your office. Making your practice more accommodating to this important demographic group could pave the way to both increased profitability and personal satisfaction.

“It’s definitely not for everyone,” says Rick Singh, president of CRS Financial Group Ltd. in Surrey, B.C. “Working with older people requires patience because you often have to explain things slowly and tell stories instead of giving them numbers.”

Be prepared to do more listening than with other clients, says Bev Evans, investment advisor with Richardson GMP Ltd. in Mississauga, Ont.: “Seniors usually have more time on their hands than other people. And since they may be lonely, your visits fill a social as well as a business need. [Seniors] also tend to go off on tangents and may need to be brought gently back to the matter at hand.”

The effort, however, is worth it, she adds, because those discussions often reveal important financial and personal issues.

Such conversations with a widow Evans works with revealed that the client wanted to honour her husband’s legacy by leaving her children a substantial inheritance. “That led to the purchase of some insurance products that named her kids as beneficiaries,” Evans says. “In addition to helping the woman achieve her financial goals and gain self-confidence, I was able to add her children to my clientele.”



> Different Priorities

Evans’s client is typical of many older retirees, whose primary focus is preserving their capital so they can pass it on to the next generation.

“The relationship of older seniors to their money is based on stewardship,” says Rhonda Latreille, founder of Age-Friendly Business in Burnaby, B.C., which confers the certified professional consultant on aging designation. “Maintaining their independence and not being a burden to others are also important to them.”

Evans agrees that leaving a legacy is important to this demographic, even if it means making personal sacrifices: “You have to design an investment strategy that meets their needs — one that might rely on annuities or GICs, for instance.”

But not all seniors have the same goals. Younger seniors, particularly free-spending baby boomers, need investment income to maintain their accustomed lifestyle. (See page B3.)

“They’re interested in securities or vehicles that generate ongoing cash flow while providing tax efficiency,” she says. “These might include mutual funds that pay a distribution, as well as preferred shares.”

Younger seniors might also be open to guaranteed minimum withdrawal benefits, such as Manulife Financial Corp. ’s IncomePlus products, Evans says, which have a variable annuity structure that protects capital and provides a guaranteed income structure.

“This group focuses on what the market is doing daily,” Singh says. “And they expect more frequent contact and information from their advisors than do older clients.”



> Communication Is Key

All seniors must be treated as individuals with unique needs and communication preferences. They don’t want to work with advisors who are only in it for the transactions. They want a relationship with someone they can trust.

“As people age, they get better at spotting those who are insincere or patronizing,” says Latreille. “They expect better from their advisors, and they vote with their pocketbooks.”

One common complaint among senior clients is that while advisors know a lot about their products, they don’t take the time to understand their older clients. You need to take a genuine interest in your older clients — ask them about themselves, find out what matters to them — and then create an investment strategy consistent with those priorities.

Careful listening will help you recognize each client’s personal communication style, says Linda Cartier, a registered financial planner, professional retirement planner and president of Financial Decisions Inc. in Sudbury, Ont. Start by asking how your client likes to receive information. Does she prefer face-to-face meetings to phone calls? Is he comfortable with email?

Although a growing number of seniors now use the Internet, many older people still prefer in-person or phone communication, says Singh, who adds that it’s best to ask rather than make assumptions.

In meetings, he says, it helps to use personalized stories and examples to illustrate your point. Singh, who often uses segregated funds for estate planning purposes, often tells his clients that “65% of all wills are contested, and it can take several years to settle them — problems that [seg] funds help to avoid.”

Cartier says she uses a lengthy questionnaire with all new clients to make sure she fully understands their needs and wishes. She also asks questions during meetings to determine each client’s comfort level with the information she’s presenting. “To fulfil your responsibility,” she says, “you have to ask enough questions to ensure [clients] know what’s going on.”

Nancy Graham, associate portfolio manager with PWL Capital Inc. in Ottawa, believes simplicity is key when it comes to communicating with older clients. “Unless the client is an experienced investor,” she says, “I present information in a simple, graphic form — usually, one page at a glance. I discuss asset allocation as the basis for understanding investment risk and point out that we’re trying to preserve and grow capital while managing costs, not hit home runs.”

During meetings, Graham watches for non-verbal clues, such as eye contact and body language, to help her determine whether her client is following the conversation and clearly understands the proceedings.

At the start of a new client relationship, Graham checks that her client’s will is up to date. If the client is 80 or older, Graham also asks if the client has established powers of attorney for finances and personal care. Says Graham: “I then request the client’s consent to meet the POA, who is often an adult child, so I can establish a relationship with them.”

A surprising number of people are without an up-to-date will, according to Singh. “That’s especially problematic if there have been significant changes in their lives,” he says, “such as children divorcing, grandchildren being born, etc. Many seniors also divorce and remarry, so it’s essential to review the beneficiaries on their wills, investments and insurance policies.”



> Mental Capacity

As the overall population ages, awareness of the cognitive issues that affect seniors is growing. Unfortunately, there’s also plenty of misinformation around to confuse matters. The first thing advisors need to understand is that mental decline is not a normal part of aging, says Latreille. Confusion and short-term memory loss can result from medication problems, inadequate diet or sleep, or emotional upset, as well as Alzheimer’s disease or other brain impairments.

“Always assume cognitive ability first,” Latreille says. “Although older clients may require more time or explanation, it doesn’t mean they are incapable. Only a proper [medical] assessment can determine that.”@page_break@According to the Canadian Centre for Elder Law in Vancouver, a person is capable when he or she understands and appreciates the nature and consequences of a decision he or she is making. Capacity is also decision-specific, says Krista James, staff lawyer with the CCEL and the B.C. Law Institute. Signs of mental incapacity may include difficulty understanding basic concepts, memory loss, confusion and incoherence.

Cartier says it’s easier to tell whether a client is showing signs of incapacity if you’ve known them a while: “If they suddenly start displaying unusual behaviour, such as going off on tangents unrelated to the discussion or asking the same questions repeatedly, it may signal a problem.”

In such situations, it’s important to listen carefully, says Cartier: “If you think the client may not understand you, start probing. Ask open-ended questions using clear language to gauge their level of understanding.”

If you suspect that a client has dementia, it may be appropriate to contact his or her family. However, such situations are delicate and your client must consent before you can discuss his or her account with family members.

The rules governing the disclosure of personal information vary by jurisdiction, so be aware of the code of professional conduct that governs you. You should protect confidentiality unless you know that someone is going to be harmed or you’re assisting in a legal investigation.



> Fraud and Elder Abuse

Older people are vulnerable to predators because they tend to trust authority figures, says Clay Gillespie, vice president of Vancouver-based Rogers Group Financial Ltd. “We have a responsibility to protect our older clients because they’ll often listen to us even when they may not listen to their children,” he says. “The key is to establish protections before they become incapacitated, because once someone is considered incapable of managing their affairs, the courts get involved.”

The first step is to set up a POA that stipulates who has the authority to represent your client in financial matters, says Geoff White, a lawyer specializing in estate law in Kelowna, B.C. “It should be someone they trust implicitly,” he says, “because the POA can act without oversight.”

Sadly, POA abuse is a growing problem, according to Brian Trainor, a retired Saskatoon police sergeant and author of the book Stop Fraud. “Most abuse cases involve family members,” he says. “Often, the senior is bullied by an adult child who threatens them with isolation unless they comply.”

Signs of possible abuse include the POA refusing to let the senior speak for him- or herself in meetings or treating the senior disrespectfully.

If you suspect wrongdoing, try to meet your client alone in his or her home, where your client is likely to be more relaxed and comfortable. Ask why your client chose that person as POA, whether your client trusts the POA and how that POA uses your client’s money. Listen carefully to what your client says, repeat it back to your client and keep notes of the discussion.

If your suspicions persist, discuss the matter with your firm’s compliance department. The next step is to contact the public guardian, who has the power to freeze your client’s accounts pending an investigation. If all else fails, go to the police.



> Physical Limitations

Vision and hearing loss can have a significant impact on an elderly client’s interactions with you. And arthritis, osteoporosis and reduced muscle tone and fitness can affect mobility and independence.

Gillespie often makes house calls to accommodate his older clients’ mobility limitations and other issues. For those clients who visit his office, Gillespie ensures easy accessibility. “Provide parking near the entrance for clients who drive,” he says. “If they use a wheelchair or walker, clear room to get through doorways. And keep walkways free of snow, ice and other impediments.”

Reception-area chairs should have arms so clients can support themselves while getting up. Avoid deep, fluffy couches, which are difficult to get out of. And keep area rugs, low coffee tables and plants out of the way to help prevent falls.

For those with visual impairments, good lighting in lobbies, reception areas and offices is important. The size of the type on all documents should be easily legible — at least 14 points. You should also keep reading glasses and magnifying glasses on hand.

An estimated 60% of people over age 65 have some hearing loss; among 80-year-olds, that figure is 90%. Behaviour associated with hearing loss is sometimes mistaken for dementia, including inattentiveness, lack of expression when listening to you or inappropriate responses.

To accommodate the hearing-impaired, minimize background noise in the office. And remember that sound conducted through the telephone has reduced quality. When leaving a message, recite your telephone number slowly and repeat it at the end of the message. Always follow up in writing if the message is important.



> Marketing To Seniors

Perhaps the best way to attract senior clients is to serve your existing clients well. “If you do a good job, it can be great for business development,” says Latreille. “Women in particular love to recommend professionals whose work they appreciate to their friends and acquaintances.”

Bev Moir, senior wealth advisor with ScotiaMcLeod Inc. in Toronto, says she gets many referrals from satisfied clients. Moir enjoys addressing seniors’ groups about retirement planning issues and also networks with lawyers, social workers and others who have the same client base.

Singh is involved with community organizations such as Rotary Club International and the White Rock (B.C.) Hospice Society, which, he says, helps to establish his credibility in understanding seniors’ issues. Singh also markets himself to advisors who don’t want new clients and requests referrals. He recently partnered with an independent advisor who plans to retire and takes frequent vacations. Says Singh: “He tells his clients, most of whom are seniors, that I’ll look after them in his absence. They know a transition is underway, and are learning to trust and work with me.”

Although there are definite challenges involved in working with people of retirement age, advisors who do it say the rewards outweigh the burdens. Seniors’ complex life planning issues often encompass entire families, opening doors to working with second- and third-generation family members. And from a relationship perspective, says Moir, the work is tremendously satisfying, both personally and professionally.

“I’m passionate about working with older clients,” Evans says. “I have so much respect for them and their life experience. If you’re willing to invest the time these relationships deserve, you be will be inspired and rewarded.” IE