It’s not easy to talk to clients about what will happen if they lose their mental capacity through illness or injury. But having a difficult conversation now could make an enormous difference to their financial wellbeing in the future.
As an accountant or financial adviser, you get to know your clients on a personal level over a long period of time. You’ve probably had meaningful conversations with your clients about their hopes and dreams for the future – but have you discussed what will happen if things don’t go according to plan?
For instance, imagine if one of your clients lost their mental capacity – either through a brain injury or a degenerative condition like dementia, which affects almost one in ten Australians over 651. Do your clients have a plan in place in case if they’re no longer able to make sound financial decisions?
Of course, no one likes to think about losing control over the life and their finances. But the sooner you broach the subject with your clients, the better prepared they’ll be if they ever need to hand over their financial decision-making to a loved one. It can even help you build stronger relationships with your clients if they know you care about their long-term wellbeing.
Preparing for the conversation
Before you sit down with a client for any kind of difficult conversation, you need to choose an appropriate place for the meeting. Because you’ll be discussing highly confidential matters, it’s important that their privacy is protected and the conversation can’t be overheard.
The timing is also crucial, as you don’t want the meeting to clash with any stressful life events that could distract your clients – such as an illness, divorce or the recent loss of a family member.
Bear in mind that your client might be resistant to talking about challenging topics. It can help to prepare a list of questions and discussion points in advance, so you’re ready for any questions or concerns your client may have.
Care and empathy
First and foremost, it’s important to let your client know that you’re there to help them and act in their best interests. And it’s not just what you say that matters: using the right body language can also convey empathy and help to build trust.
So how should you begin? As with any client conversation, you need to focus on the things that matter most to them. You can start by asking them about the challenges they might expect in terms of their potential living situation, finances and care needs if they’re faced with a serious mental health issue either in the immediate or distant future.
Then, work with your client to map out their options for addressing these challenges. By drawing attention to the supporting resources available – including family members, community services and government funding – you’ll be able to help your client identify any gaps in their support network.
Making a plan
The next step is to review your client’s financial plan to prepare them for any eventuality. First of all, it’s worth making sure the client’s life insurance arrangements are still appropriate for their needs. You can provide peace of mind to your clients by explaining how you’ll help with any insurance claims and demonstrating how their finances can be restructured to fund their future care expenses.
If your client doesn’t already have an estate plan in place – or it hasn’t been updated since any major life events such as getting married or having children or grandchildren – you can discuss their estate planning needs to ensure their assets will be distributed according to their wishes.
You can also explain the benefits of appointing an Enduring Power of Attorney (EPOA), who will be authorised to make financial decisions on the client’s behalf if they can no longer do so themselves. It’s essential that your client appoints their EPOA while they still have full capacity – but, since the decision could have a major impact on their financial affairs, they shouldn’t feel rushed into it either.
You can also discuss with your client the benefits of appointing an Enduring Guardian2 who can make certain health, lifestyle and medical decisions on their behalf if they’re no longer able to do so.
You might also want to draw your client’s attention to healthcare resources such as the:
- Advanced Care Directive – available from your state government
- Australian Organ Donor Register.
Engaging the whole family
Often, people feel more comfortable discussing important life decisions when they have a friend or relative there to support them. Before the meeting, you might want to ask your client if they’d like to bring a loved one along, but you should also respect their wishes if they’d prefer to come alone.
Many of the decisions your client has to make will concern the whole family, particularly around estate planning, health care needs – and also succession management if they’re a business owner. By providing advice to your client’s children and grandchildren as well, you can make sure everyone’s interests are looked after and ensure a smooth transfer of wealth from one generation to the next when the time comes.
This will help put your client at ease, knowing they and their loved ones will be taken care of – no matter what the future holds.
1. Dementia Australia, Dementia statistics, September 2018.
2. The name of this appointment varies from state to state.