In “Alleviating the Anxiety of the Merely Well-to-Do Boomer,” I wrote about several topics with two things in common. First, they’re of widespread and deepening concern to merely well-to-do baby boomers. Second, boomers are finding it increasingly difficult to find advice and services associated with these topics.
As to the deepening concern, I don’t see any way to reverse the trend. Just spend a couple of hours scanning the news, catching up on social media and talking with boomers, and you’ll get a sense of their profound concern about dealing with many of the issues they see ahead of them. And it’s not just about the well-publicized costs and challenges of elder care. Plenty of other matters on their plate are or will be calling for attention.
As to the second, I think it’s pretty clear that boomers will have an increasingly difficult time accessing the advice and services they need. I’ve experienced it myself. That’s because, without a transaction, such advice and services are outside the lines of most advisors’ business models. That makes a lot of boomers invisible to a lot of advisors. Fortunately, there may be a way to address this second point.
The Designated Planner
I see a role for what I’ll call a “designated planner” or “DP.” With variations on the theme, the DP would be a well-credentialed, likely fee-only planner. For an hourly fee or on retainer, the DP would directly advise individuals on matters of concern or identify, vet and perhaps collaborate with other resources to address concerns on an ad hoc basis.
Here are some specific topics that the DP could help with:
Memorandum of Instructions
I’ve written about this topic several times, most recently in the “Boomer Anxiety” article. I stressed the importance of having a memorandum not only in case of a spouse’s death but also in case of a spouse’s incapacity. You show me someone who says that writing such a memorandum is easy, and I’ll show you someone who hasn’t tried it. Aside from the usual inertia and time constraints, I think there are two principal reasons why people who should have these memoranda don’t. First is human nature. Someone who sits down to write a memorandum could soon realize that their affairs are in an alarming state of disarray and disorganization. They may also be reminded of the many things they’d promised their spouse they’d do but haven’t. So, maybe they’ll put off the memorandum until everything’s in better shape. You know, perhaps a year from now.
Second, drafting this kind of comprehensive memorandum is technically challenging. It’s difficult enough to list everything there is to list and provide the contact information for those the spouse has to contact for one reason or another. The task becomes exponentially more difficult when it comes to providing the spouse with guidance regarding the decisions they’ll have to make, the money they’ll have to invest and all that. And, if the advisory relationships aren’t in place to provide that guidance, the spouse is on their own at a very stressful time.
The DP can guide the couple through the process of creating their memoranda. Aside from the obvious benefit of helping the couple accomplish the task, the planner’s multi-disciplinary background can be immeasurably helpful by pointing out any gaps in the couple’s planning, like whether they have adequate insurance coverage, are saving money, have an estate plan, are titling their assets and designating their beneficiaries properly and more.
The Estate Plan
I’d like to have a dollar for every time I’ve heard any of these things. “Yeah, I know I have to get that done, but…” “I have an estate plan, but truthfully, I have no idea how it works.” “I have no clue where my money will come from or what I’ll have to do to get my money when my spouse dies.” “I had no idea that my spouse’s plan deprived me of control of my own money.” That one’s also called,’‘Say what?” “Isn’t that great, the trust company we designated as our successor trustee now tells me I don’t have enough money to meet their minimum. Now what?” And one more for good measure, “Our attorney won’t recommend a corporate trustee. The best they’ll do is give us three names. Who’s going to help us find and interview them?” The DP can help with all these issues and concerns, either directly or as a liaison with an estate planner and other advisors.
Life Insurance
Boomers can find it difficult to get objective, non-transactionally motivated guidance on what to do with an existing policy. There are countless ways for the DP to be helpful here. The DP could vet the credentials, process and motivation of someone who offers to do a policy review. Or, refer the couple to an agent whose work the DP admires and then stay involved in the analysis. If a life settlement could be in the offing, the DP could oversee the “keep vs. sell” analysis, monitor the life settlement company and more. The DP could also help demystify annuities.
Elder Care
For many boomers, just thinking about how to develop a phased plan for moving from living independently to dependently takes them beyond the pale, both intellectually and emotionally. Boomers would value having a DP, who, though not necessarily an expert in the various disciplines associated with the journey, can get them to the right, properly vetted resources at the right time.
Long Term Care (LTC) Insurance
Boomers are overwhelmed with infomercials about why to buy the product but underwhelmed by guidance on whether and how to buy it. A typical conversation between boomers and an agent selling LTC insurance would likely go like this, “We acknowledge that one of us is likely to need some level of LTC, that Medicare won’t cover it and all that. So, put away the statistics and get down to business. What’s your analytical process for determining whether we should self-insure or buy some coverage? If the latter, what kind of coverage and why? How should the policy be designed? How should it be funded? How do you evaluate policies and the carriers that issue them, especially the carriers’ track record for customer service and paying claims? By the way, how many of your clients are now on claim for LTC policies? Are you finding any issues? How do you help clients when it comes to filing claims for benefits? What has your experience at claim time taught you about how you approach this business?” This is complicated stuff, and I, for one, would like to have someone sitting on my side of the table to help me deal with the agent
Interfacing with a Money Management Firm or Corporate Trustee
I’ve discussed how a boomer couple might interview investment advisor firms and trustees. I’ve offered a series of questions to ask each type of organization. Generally speaking, the questions are best suited for larger firms that, among other things, would assign a particular individual or team to serve each client. In that setting, the couple is there for an introduction to the firm, not because they know a particular individual who works there. Of course, this may not be the only type of advisor they’ll be interviewing.
As helpful as my interview suggestions might be, they don’t go far enough. That’s because, no matter how thoroughly the couple prepares for the meeting, they might be unable to “hear” the firm’s answers or even know if their questions are being answered. There’s just so much happening in those meetings, including so many people describing their roles and providing much material to the couple. They would have to be extraordinarily knowledgable, prescient and discerning to focus on what’s being said without being distracted by the personalities and presentation skills of those saying it.
What’s more, this could be the first time that this couple, who’ve always managed their own money, has had to show their portfolio to strangers who just happen to be investment professionals. It could be a bit unnerving for the couple. To me, there’s no more critical moment for the DP to be in that meeting than when the conversation turns to how a client’s portfolio is constructed and monitored, who’s involved in that process, meaning the respective roles of firm management and the advisor, and so forth. By “constructed,” I’m mainly referring to allocation among and within the asset classes, security selection and asset location between taxable and tax-deferred accounts. By “monitored,” I’m referring to things like the routine maintenance of the portfolio and rebalancing.
The DP would likely be far more able than the clients to see the full picture of the firm’s approach here. The DP’s ability to explain to the clients where firm management’s involvement in the portfolio construction stops and the advisor’s involvement begins could be critically important to the more financially astute spouse who’s concerned about potential advisor turnover in the firm and therefore, how their less financially astute surviving spouse’s portfolio will be managed when they’re no longer around to deal directly with the advisor. I noted this concern in “Alleviating the Anxiety of the Merely-Well-to-Do Boomer.”
I’ll close with another topic as to which the DP could add value. Many of these firms offer an array of services beyond investment management. With everything else the couple has to absorb at the meeting, they’ll appreciate the DP’s taking the lead in getting the firm to describe what those services are, when they’re provided, how they’re provided, who provides them, whether sample deliverables are available and, of course, how much the services cost, if anything.
That just scratches the surface of why it’d be helpful to have the DP attend the meeting, let alone subsequent meetings if the circumstances require, and they well might. By the way, the investment professionals presenting for the firm will likely to have a better chance of getting more of their nuanced and competitively distinctive points across if the DP is there to help explain them to the clients. A win-win?
There’s no question in my mind that many boomers would embrace the concept of the DP if it were available to them. I guess that’s the next step.
