A Potential Risk to Your Clients’ Portfolios: Aging Parents

Part of risk management during intake from prospective clients is including queries about parents, their health, and any expectations for longevity. It is wise then to segue into questions about the parents’ personal financial situations. As an investment advisor and financial planner you’ll likely find that most clients believe that their parents’ current financial situation is not in jeopardy.
As an investor’s financial advisor, you should, to the best of your ability, illustrate any potential risk and thorough risk management strategies after the parents’ retirement age, assets, and life expectancy is computed. It can, of course, prove to be a future risk to investors if their parents’ money is exhausted leading to them having to use their assets as a substitute.
This can lead to conversations about discussions that clients and their parents may have had about the future. Have they discussed pooling assets? Sharing households to stretch assets further? If not, you might want to help broker such discussions.
Younger clients are often unaware of potential issues. It’s important to address these as early as possible, for you to provide the most effective guidance to their financial decisions.