In this interview with Senior Advisor Gretchen Hollstein, we uncover several tips for families as they navigate the issues of financial management that often come with aging. Gretchen explains why this is so important, and how she and the advisors at Litman Gregory work with clients to follow the steps involved in planning ahead.
At Litman Gregory, we have been working with families and their next generations for over 30 years, so our entire team has a great deal of experience working with clients as they age. But this topic does hold a special place in my heart, as I experienced firsthand the impact of aging when my father battled the effects of Alzheimer’s. What I learned is that even after planning as well as he did, the experience can still be hard on the family. But being prepared is what also gives you the opportunity to spend precious time creating moments of joy.
As wealth advisors, our goal is to provide financial guidance throughout our clients’ lives, so planning for changes that come with aging has always been inherent in our work. But, as we see people living longer, we also see more families dealing with the difficult issues of dementia. This decline in cognitive skills limits a person’s ability to direct their own finances, so it’s imperative that we help clients plan in advance for the stewardship of their assets.
Honestly, I see that cognitive decline still comes as a surprise to most families. It can be a shock to watch the most intelligent and talented people become affected by dementia, and it can also progress slowly— sometimes years before being noticeable. Further, it is difficult and painful to acknowledge that either you yourself are losing cognitive abilities or that someone you love is struggling. Because it can come as a surprise, we try to have conversations about this with clients early. The table below shares some of the things we hear and discuss when broaching this subject
There are certainly many directions we go in these conversations, from planning ahead for the family’s living situation, care taking, medical support, etc. But for the moment, let’s focus on planning for finances—here are a few pieces of advice:
We always recommend planning early, when everyone is healthy, capable, and can be part of the planning discussion and decisions.
There are numerous types of investment and financial accounts, and therefore numerous options for backup and succession. The chart below gives a summary of at least five different types of ownership structures and how those assets receive direction, backup, and later succession.
One of the most impactful things we do for our clients is what I sometimes call “professional financial organizing”—helping them simplify and organize financial assets and accounts. This is helpful throughout life but becomes even more effective and important in later years. Here are a few ways we help clients simplify and consolidate:
There is one consistent theme that we’ve seen within families that plan ahead well—having a trusted team of advisors. As wealth advisors, we regularly collaborate with tax and estate professionals, as well as insurance advisors, bookkeepers, and even bankers. This collaboration helps our clients receive coordinated support from a team of professionals and ensures their best interests are at the forefront of every decision. Below is an example of the types of professionals to consider as a team to support a family as the current owners begin to transition to their successors.
I think the key takeaway is that it’s important to be willing to think about these issues and begin planning for multiple possibilities. The first step is simply to start talking; we can help by providing a sounding board and encouragement to think through different scenarios. It’s an honor for us to be invited into the process and help our clients as they navigate unique paths into the future.
Our Thoughts on the Silicon Valley Bank Failure
Recent problems in the banking industry have increased uncertainty in the financial markets. On behalf of our clients, we have taken a close look at the situation and assessed the potential consequences. In this post we summarize the circumstances at Silicon Valley Bank that led to its failure, describe the broader implications, and review what we see as minimal impact for our clients and their portfolios.
Insight Newsletter—Winter 2023
Our Insight Newsletter is now available. Included in this edition: Investment Commentary Research Update: Trend Following with Managed Futures Tax Planning Opportunities from
Research Update: Trend Following with Managed Futures
The evidence of the long-term value that trend-following managed futures bring to a balanced portfolio is compelling, even though there are shorter periods where sharp see-saw patterns can lead to disappointing returns. However, in a year like 2022 that saw significant declines for both stocks and bonds, managed futures experienced large positive gains and were one of the only asset classes to provide meaningful downside protection. This research update serves to address many of the questions that we receive about this interesting investment strategy.