Brie P. Williams, Head of Practice Management, State Street Global Advisors
Age has a way of sneaking up on all of us, including our clients. Life experiences may make us wiser, but they don’t protect us from the natural decline of cognitive capabilities as we age.
A proactive contingency plan can help protect clients from potential financial risks associated with a decline in cognitive health.
Proactive, positive and practical
Client conversations about aging often focus primarily on retirement income planning, overlooking the need to manage potential financial risks related to a decline in cognitive health. Advisors and clients may be hesitant to broach the subject, but ignorance is never bliss. Failing to put a plan in place leaves the client, their family, and your practice at greater risk.
Many people continue to handle their finances well into their later years, but we can all expect at least some challenges as we age. The hidden danger is that, while decision-making erodes, confidence levels can actually increase.
Advisors who are mindful of the challenges investors face as they age can apply a strength-based approach to starting the conversation, building on the client’s own experience, wisdom, and family support.
Taking a proactive, positive and practical approach can ease the conversation for both the client and the advisor. Clearly understand privacy laws and encourage clients to prepare documentation that outlines their plan to address potential cognitive impairment. Informed consent is an essential part of the planning relationship.
An inclusive approach
Approach the conversation with open and respectful dialogue, but also with intent. While it can be an uncomfortable topic to broach, advisors are often well placed to handle these conversations because they can be more objective than a family member might be.
An action plan for every client
None of us are invincible, nor should we be overwhelmed by fear of the unknown. And while everyone hopes that the statistics will not apply to their personal situation, hope is neither a plan nor a strategy. Advisors who guide their clients to proactively manage the potential risks of cognitive decline are helping them maintain control and achieve peace of mind.
A comprehensive checklist of financial and legal items is a critical tool to help protect clients from risks associated with cognitive decline.
For more information about protecting clients from the risks related to cognitive decline, including additional hypothetical examples based on practice techniques and two modes of communication, read our conversation starters guide: Contingency Planning to Help Clients Avoid Age-Related Financial Risks.
For more, please read the rest of the post originally published on the SPDR Blog on June 24.
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