How to advise older clients whose mental health is deteriorating

This article is part of
Guide to advising clients with mental ill health

How to advise older clients whose mental health is deteriorating
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Mental ill health can affect any of us, at any time in our lives, and for any reason. 

But with increasing age often comes increasing frailty - and that can include a deterioration in mental health.

Whether this is because the person's existing mental health condition is becoming increasingly problematic for them, or because of a diagnosis of dementia, advisers can end up facing the prospect of a long-standing client becoming deeply vulnerable. 

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This not only presents emotional problems for the adviser - who may have known the client for many, many years - but also presents additional challenges to overcome. 

Traditional financial planning will always build into the retirement pot the expectation of a higher expenditure later on in life as actuarial assumptions about long-term-care and additional needs come into play.

So financially, a good pension plan will have factored in the costs of having a home help or even the client needing to go into a nursing or care home.

But while this plan would have been laid out, and stochastic modelling charts showing anticipated income and expenditure, as well as variations due to drawdowns or market shocks, presented to the client while they are in good health, this sort of conversation cannot be had with a client who no longer has the capacity to understand it. 

In a recent webinar with FTAdviser, Jon Scannell, distribution director for Legal & General Retail Retirement Income, noted it is useful to pay attention to a variety of factors when it comes to determining how to stretch the pension pot to cover any contingency - including living longer into ill-health.

During the webinar, he told listeners there were 'four Ls' that could prove a good starting-point for conversations around making the pension pot last. 

These are: "Legacy, Liquidity, Lifestyle and Longevity". At the time, he said the challenge is for advisers to be able to balance client expectations for retirement with the facts around lifestyle, health, mortality and the various other risks that can have an effect on a pension pot.

Peter Hamilton, head of retail protection for Zurich, stresses it is important to make sure the advice process is thorough enough to cover such complicated later-life questions.

He comments: "Getting expert financial advice can help people to make the most of any savings as well as putting in place valuable protection to help manage complex issues like inheritance tax liabilities."

Other considerations

But it is not only savings advice, and making the money stretch as far as possible that is uppermost in a financial adviser's mind when it comes to clients whose age-related mental incapacity is presenting concerns. 

There are myriad other considerations, such as arranging wills, making sure any assets that might be passed to the next generation are done so as tax-efficiently as possible, and ensuring that the client's wishes are indeed their wishes.