Tips to serve clients both young and old

How best to serve clients of different demographics was discussed by a panel at Advocis’s annual symposium in Toronto on Tuesday.

With younger clients facing challenges unique to their generation — including part-time work, greater educational requirements for entry-level jobs, higher housing and education costs, and debt — advisors might have to get creative with planning, said panellist Shannon Lee Simmons, a fee-only planner and founder of the New School of Finance.

For example, Simmons said some younger clients who are self-employed and have a variable cash flow have had negative experiences with traditional advisors because they were unable to conform to the expectation of monthly saving.

To capture these clients, Simmons recommended advisors “ditch the pitch” and focus on finding a strategy that works for the client. Millennials want an advisory relationship, but they want it “with somebody who they feel understands what they’re going through,” she said.

Another issue to explore with younger clients is homeownership.

“There’s a huge bias to still buy real estate” instead of considering investing in the markets, Simmons said. Renting while building up TFSAs or RRSPs might be a better strategy for some clients, she said.

Panellist Kevin Wark, managing partner at Integrated Estate Solutions and tax advisor to the Conference for Advanced Life Underwriting, said he approaches the younger generation through their parents, who often want to help their children with financial support in the present, not only through the estate.

He supports that desire by facilitating family discussions about wealth transfer and providing the younger generation with education about basic financial tools. For example, even younger clients need wills, he said.

For clients at midlife facing planning challenges due to, for example, increased longevity and a less predictable job market, Simmons suggested more frequent modular planning. Such planning would allow advisors to have a high impact on clients because annual meetings could focus on planning, not solely on performance, she said.

Serving seniors

Rick Hancox, CEO at the Financial and Consumer Services Commission of New Brunswick, said advisors should be sensitive to how elderly clients can be negatively affected if client meetings are scheduled at inopportune times that disrupt the client’s schedule. Also, elderly clients can be distracted if they haven’t been told where the washroom is located.

Handling these issues is important so that advisors can be more attuned to whether certain client behaviour, such as confusion, is attributable to dementia.

Simmons said that ensuring clients have wills and powers of attorney is an essential early step that advisors can put in place to help plan for potential incapacity.

Conversation is also required. Advisors can be afraid to talk about capacity with clients because they don’t want to insult them, Simmons said. One way to start the conversation is by describing to clients any observed behaviour that’s concerning, and asking the client if they’re OK.

Advisors can also ask clients if they want to meet with their power of attorney or a family member present to discuss actions to take in the event of incapacity, she said.

Another topic of discussion was identifying signs of financial abuse, such as unexplained withdrawals from accounts or insurance policies, influence from a third party or a change of mailing address. To help confirm abuse, an advisor can meet with a client alone and ask open-ended questions about what’s happening in the client’s life and the purpose of the withdrawn funds, Wark said.

New Brunswick’s regulator has offered helpful questions, including asking clients if they run out of money at month’s end or have worries about recent financial decisions.

With no clear definitions of financial abuse and thus no mandates to deal with it, reporting financial abuse can be difficult, Hancox said. In New Brunswick, “we’ve been working on definitions and reporting mechanisms,” as well as safe harbour for advisors, he said. Establishing trusted contact persons and placing temporary holds on accounts are options available to advisors.