Meeting the growing need for financial caregiving

May is Older Americans Month. To put that in perspective, when President John F. Kennedy established Older Americans Month in 1963, only 17 million Americans had reached their 65th birthday. Today, more than 49 million Americans are 65 or older. And by 2034, America will reach a new milestone: Older adults will total an estimated 77 million, outnumbering children under age 18 for the first time in the nation’s history.

The rapidly expanding elderly population puts a new focus on caregiving —both hands-on care and financial management. Today, more than 40 million Americans serve as caregivers to an adult who's 50 or older, according to the National Alliance for Family Caregiving.

While financial advisers often discuss the need to incorporate long-term care planning into an overall retirement plan, they usually focus on how to pay for potential care with insurance or savings. But a client’s entry into a caregiving journey — their need for care — often begins more gradually with the challenges of everyday living, such as paying bills. Nearly a quarter of Americans over age 65 experience some form of diminished mental capacity, putting them at risk for poor financial decision-making and exploitation.

As financial advisers face the dual pressures of fee compression and competition from automated trading platforms, many are looking for ways to differentiate their practices and demonstrate their value to new and existing clients. Including financial caregiving support may be part of the answer.

“We’re seeing that financial professionals are increasingly being asked to advise older clients on financial caregiving matters such as overseeing transactions, paying bills and monitoring for possible fraudulent activity,” said Stephen Aaron, communications manager for Carefull, a service that helps families organize and protect the daily finances of an aging loved one for a subscription fee of $10 per month.

While there are clear regulatory limits to direct involvement, many financial advisers may be able to support aging clients — or the family members who are caring for them — by helping them set up a transaction monitoring system, like the one available through Carefull, to spot unusual spending patterns or suspicious activity.

Carefull is designed to create a single account that aggregates information from banks, credit card companies and investment accounts, much the way other budgeting software, such as Mint, does. What makes Carefull unique is that it sends alerts on day-to-day activities that a bank or credit card company might not catch, such as a late or missed bill payment, a duplicate payment to a utility company, or a charitable donation set up to be a monthly contribution rather than a one-time gift.

“It would have helped me immensely when I was caring for my mom because I constantly had to log on to each of her accounts to see what was going on,” said Cameron Huddleston, author of “Mom and Dad, We Need to Talk: How to Have Essential Conversations with Your Parents about Their Finances” (Wiley, 2019). Huddleston was a caregiver for her mother for nine years, from her mother’s diagnosis with Alzheimer’s disease in 2008 until her death earlier this year. She now writes a blog for Carefull.

“In the early stage of the disease, my mom experienced a decline in her financial decision-making and was not discriminating in her charitable donations,” Huddleston said.

“She would get a letter in the mail and she would write a check,” she said. “Eventually, I had to make all financial decisions for her.”

Huddleston’s book draws on her experience as both a financial expert and a daughter who has had those essential money talks with a parent. It is full of practical advice from her life and from other adult children, as well as financial, legal and elder care experts. It offers a variety of conversation starters and advice on what not to say.

John Cooper, a financial adviser with Greenwood Capital in Greenwood, South Carolina, has been beta-testing the Carefull account service since March for his own parents and has scheduled a webinar to introduce it to his older clients and their adult children.

“I was totally stoked when I learned about it,” Cooper said. “I had this lightbulb moment: Why hasn’t someone done this already?” He said that at $10 per month, it’s a good value. “If you catch one potential scam or some transaction that looks fishy, it could easily pay for itself.”

Former first lady Rosalynn Carter once said, “There are only four kinds of people in the world: Those who have been caregivers, those who are currently caregivers, those who will be caregivers, and those who will need caregivers.” Many of those caregivers and care recipients may be your clients, and helping them cope with day-to-day money management could be one way for financial advisers to demonstrate the added value they provide.

[Questions about Social Security rules? Find the answers in Mary Beth Franklin’s ebook at Maximizing Social Security Retirement Benefits]