The big squeeze: Raising kids, caring for parents

Americans who are raising children and caring for aging parents at the same time, the so-called sandwich generation, are being squeezed, and financial services firms are beginning to pay attention.

“People get blindsided by these issues,” said Carl Zuckerberg, a certified financial planner and managing director of Relyea Zuckerberg Hanson LLC in Stamford, Conn.

“It’s a huge concern,” he said. “We’re seeing it every day, across the board.”

Western & Southern Financial Group of Cincinnati, for example, is rolling out “Connecting Generations,” an educational seminar series for advisers that will address various issues that those with younger children and elderly parents face.

And Commonwealth Financial Network of Waltham, Mass., is offering advisers customizable worksheets that deal with issues clients might face, including documenting family history, a beneficiary review and tracking income and cash flow.

Mr. Zuckerberg said that his firm tries to create a comprehensive family plan when working with these clients, who tend to be baby boomers.

“Our approach is very proactive,” he said.

“We want to make sure the middle generation has talked to their parents and find out if they have secured long term care, have a living will and have granted power of attorney,” Mr. Zuckerberg said. “We also want to make sure important legal documents are updated.”

On occasion, Mr. Zuckerberg’s firm has suggested that clients pay health insurance premiums for their aging parents, he said.

“It may be economical in the long run,” Mr. Zuckerberg said. “If care is needed later on, you don’t have to take it out of savings.”

Clients who are spending money on both children and parents, and getting closer to retirement themselves, are becoming concerned about income, said Larry Tolbert, regional vice president in Nashville, Tenn., for Householder Group LLP of Phoenix.

“Their focus is not on ‘what can I get from the market,’ but ‘where’s my income coming from,’” he said. “They’re not willing to risk it anymore.”

Mr. Tolbert, who is a certified estate planner, said that he is advising clients who are looking for “bulletproof income streams” to examine carefully the newest generation of annuities, especially those with income guarantees and return guarantees.

“I tell people whether you like annuities or not is not the question,” he said. “You need to exhaust them as an option. “They are not your grandfathers’ annuities.”

For those caught between parents and children, “the aging parent issue is much more critical than caring for kids, which is one of the reasons I believe in long term care,” said Cary Carbonaro, president of Family Financial Research LLC in Huntington, N.Y., and Clermont, Fla.

Her grandmother be-came ill with Alzheimer’s disease and needed round-the-clock care at home.

“The only way she could afford it was to pull equity out of the house,” Ms. Carbonaro said. “Alzheimer’s can last a long time and that’s a lot of money.”

In recognition of the seriousness of the issue, the first module of Western & Southern’s educational seminar is “Caring for the Needs of Your Aging Parents.”

WARNING SIGNS

It contains features such as a list of warning signs indicating whether aging parents need help, suggestions for talking to parents, information about nursing homes and assisted living facilities, worksheets for emergency contacts and a monthly budget.

The “Connecting Generations” seminar features a PowerPoint presentation that advisers can show to their clients with financial planning tips for children’s and parents’ needs, as well as workbooks and other literature that they can bring home, said John O’Connell, senior vice president of Western & Southern’s broker-dealer channel.

“It’s been very well-received, so far,” Mr. O’Connell said. “Clients can walk away with good intentions.”

The biggest challenge for advisers when dealing with clients with multigenerational issues, said Mark Caner, president of Western & Southern Financial Group Distributors, has been “changing the paradigm from leading with a product sale to a more consultative, needs-based approach. They need to demonstrate real value.”

E-mail Charles Paikert at [email protected].