Whose Money Is It?

By Ken McNaughton, CFP,CLU,Ch.F.C.,RHU,CSA

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I have been doing retirement planning for the last twenty-five years. Heck, I remember when there was no such thing as a “retirement industry”. I started off as an insurance agent, and in 1985, specializing in retirement planning and all of the issues related to seniors, was decidedly unsexy. In fact, some of the people I worked with couldn’t even wrap their heads around the idea of RRSPs – they just kept telling their clients to buy more whole life insurance and everything would work out just fine. Everyone knew that if you wanted to get ahead in the insurance business, you had to be in the business market. The only problem was – I didn’t like it. I would rather spend all afternoon with one or two elderly clients reviewing their retirement and estate plans than run from business to business trying to convince harried business owners of the merits of funding their buy-sell agreements with life insurance. Besides, my elderly clients were never too busy to see me, never stood me up, and their cheques never bounced. I loved the seniors’ market then, and I love it now!

But now things have changed dramatically with the baby boomers ageing visibly, and our parents living much longer than they envisioned, often in poor health. We are all reminded constantly by the media, the banks, insurance companies and investment firms that retirement could be a pretty grim experience if we don’t have enough saved up for that long rainy day. Yes, the “retirement industry” is in full bloom, and in a way that we could not have imagined a couple of decades ago.

Now various professions have “elderplanning” and “eldercare” divisions; we have designations for financial planners denoting some level of expertise in dealing with the elderly, and the financial companies have produced some highly innovative products designed to provide both flexibility and guaranteed income during retirement. Issues of elder abuse are now part of the dialogue surrounding seniors’ care. Long term care needs are being addressed by the wider public as it all starts to hit close to home. All of this is good. It has been a long time coming.

But I always wince a little when I hear about the “trillion dollar transfer” of wealth to the next generation. It’s almost as though the financial planners, advisors, or whatever the heck we are this week will have done all things right if we have safely shepherded the money from Mom’s bank account to the accounts of the grieving but grateful Boomers, who really need it now that the recession has wiped out so much of their personal net worth.

Let me say this to all the heirs and beneficiaries of all of my senior clients, “YOU are not my client.” I frankly don’t care whether you ever pay off your mortgage, manage to retire in the style you deserve, or put your children through university. Your mother and/or father are my clients, and I will be exactly as concerned about your needs, issues and well-being as your parents are – no more, no less. Rest assured, Mom and Dad and I have talked about you, your siblings, your assorted spouses, children, step-children, ex-spouses, nieces and nephews. I know how proud they are of you, how disappointed they are in you, why they want to leave you some money, and why they don’t. I have asked them every question under the sun about you, and they have told me pretty much everything over the last twenty or so years. After the first five years as my client, there aren’t too many rocks left to uncover, and I have an annoying habit during my regular reviews of asking for an update about the family. I have also had no hesitation in telling Mom and Dad exactly how any planned gift or inheritance for their family will affect THEIR lifestyle and future income.

Having said that, I can also assure you that I have used absolutely every tool at my disposal to ensure that as much as possible, they have been able to meet their financial goals, and treat you fairly (if not always equally). I have never missed an opportunity during our planning sessions to make a suggestion that might benefit their family, as long as it did not undermine the planning for themselves.

When they expressed an interest in leaving a large sum to the hospital foundation, we set up a joint, last-to-die insurance policy, and named the foundation as owner and beneficiary. When they were concerned about the rising costs of long term care, and worried that they might be a burden to their family, we set up a long term care policy, enabling them to receive care both in their home or in a facility, as needs dictated. And when they expressed their concerns about your disadvantaged sister, I helped them establish a private and confidential fund that will never be disclosed in the will, never form part of the estate, and will only be revealed to those who need to know, exactly as they requested. Because Mom and Dad are my clients, and their welfare and wishes have always come first. I know that some of their children may not like how things were set up, and thus may not reward me by becoming my clients after Mom and Dad pass on, especially if they didn’t get everything they were expecting. I don’t lose any sleep over it. I know what my job is, and I know who my clients are. Frankly, a lot of my new clients are the children of my original clients, who thought Mom and Dad were absolutely BRILLIANT the way they had things arranged, and would like the same type of planning for themselves.

For more information please contact;

Ken McNaughton, CFP, CLU, CH.F.,C., RHS, CSA
(250) 727-3445

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Showing 1 to 1 of 1 comments.

Article Senior living Magazine posted August 5-2010 "Whose money is it". This is by far the best article I have read that is so up front, truthful and is exactly what is required in this field. I have copied and certainly will pass on for all to understand what is expected. A great job by Mr. McNaughton and I'm sure he sleeps well at night. Thank you with appreciation. Bill

Posted by William Gravel | May 5, 2011 Report Violation

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