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Financial Caretaking and Why It Matters


Financial abuse, especially as it applies to seniors, is a growing field of concern within the financial planning world. I wrote before about how estimates include seniors lose $36 billion annually to fraud and many experts feel this number is low due to lack of reporting because of embarrassment. In my world as a CFP®, it is becoming more apparent ensuring clients are not falling prey to financial abuse will become a requirement for us.  Because I like to think of myself as forward thinking (get it, because of my firm name), I am now utilizing a software program that specifically focuses on protecting clients from health and age-related factors when it comes to their financial lives.

The software itself is called Whealthcare.  It was developed by a team of financial planners, physicians and software developers.  The basic concept is by using Whealthcare I work with my clients on three specific areas: Risk Profile, Financial Caretaking, and Proactive Aging Plan.  Let’s dig into each one a bit more.

The Risk Profile is designed to identify traits that could put a person at higher risk for financial exploitation.  It is based on a study out of Massachusetts General Hospital looking at the relationship between aging, cognitive impairment, and financial decision making.  The goal is to identify if clients may be at higher risk for elder financial abuse.

Financial Caretaking addresses financial management challenges as clients age.  It helps outline steps to take to prepare to transfer the payment of bills, management of investments, implementation of the estate plan, and the tasks you need to complete for the day when you can no longer manage your finances on your own. A nice checklist is created telling you what you need to get done.

Finally, there is the Proactive Aging Plan.  This plan helps to identify your living preferences, quality of life directives, and attitudes toward medical treatment. It incorporates these components as well as factors such as life expectancy, health status, and region, to generate customized health care cost estimates, including long-term care cost scenarios.

The software and plans are easy to create as it is a click-through online process.  There are separate questionnaires for each plan including links to lots of reference information.  I will begin using this with my clients who have reached the magical age of 50.  Yes, I know 50 is not old (unless you ask my sons), but cognitive function peaks in your early 50s.  My goal is to get a baseline for each client so as we update these plans on a regular basis (every year or two) we can track things easier.

Now, let me be clear this does not replace legal documents! Part of what a Whealthcare plan does is help you identify what legal work you need to have in place.  For example, maybe you realize going through this process you would rather live at home as opposed to a nursing home. You can then reflect that in your legal documents. Hey, would you rather figure that out ahead of time with someone like me operating under a flat-fee arrangement or an attorney who may charge by the hour?

Again, helping clients protect themselves from financial abuse is something I take seriously and will be required at some point for all financial planners.  As with most stuff, I like to stay ahead of the curve and my competitors. This is just another way I separate myself as a CFP® focusing on the comprehensive financial planning picture as opposed to investment managers just looking at your investment performance.  I will update you as to the response from my clients, however, I believe financial caretaking should be a minimum for anyone at least 50 years old.