Helping Your Clients Celebrate Their Parents

Mitch Anthony

At this time of the year, we all love to celebrate--at home, at the office, with friends and family.  What better way to celebrate than give back to those who brought us into this world--our parents.

Chances are many of your clients want to help out their parents but aren’t sure what they can do or how they should go about it.  As a financial life planner, you can help those clients fulfill their goal of wanting to help out one or more parent by helping them design a parental pension. 

I’m sure many of us would agree that we owe a great deal to our parents for the sacrifices they made for our benefit.  I think of my own father’s decision to turn down higher-paying, more prestigious jobs in many cities because those cities were experiencing racial tumult in the late 1960s.  He chose instead to restrict his career advancement so he and my mother could raise us in a small, quiet Midwestern city.  Many of our parents are stunned at the financial opportunities we have access to today.  The kind of money we take for granted was rare in their prime working years, even when adjusted for inflation.  Consider the following story I was told several years ago:

“My sister and I had talked many times about how unjust our father’s retirement situation was and wondered if there wasn’t something we could do to make it more enjoyable.  He had worked loyally and earnestly for the same company for 30 years.  Because of numerous ownership changes over those 30 years, the end result was that Dad’s pension was basically worthless, something like $60 a month.  Now he is 65 and working odd jobs (some he likes and some he doesn’t) to make ends meet.  We could see the anxiety in his eyes even when he said he was quite content.  My sister and I talked together about the fact that we had both prospered in our respective professions.  Neither of us was yet at the point where we were set for life, but we figured out a way we could help.  We had agreed years ago that we would take care of Dad’s needs in his later years should he become ill or frail, but now we realized that the best thing we could do was contribute now while he was still healthy, vibrant, and full of life.  Why wait until his life was limited before helping out?”

“What we came up with was the parent’s pension.  It worked this way.  We both contributed $30,000 of our own savings for a total of $60,000 into a mutual fund that had averaged 15 percent returns over the last 15 years. We arranged for a disbursement of $500 a month to be sent to our father’s checking account.  Even though our father receives the distributions, the fund itself is in our names so we, in effect, both still own the $30,000 we contributed.  This was all quite easy to arrange.  Basically, all we are sacrificing is the interest on our savings; a small price to pay to help our father rid himself of his financial anxiety.  We feel it was the best thing we ever did.”

In the preceding example we see how two people discovered a way to celebrate a loved one by giving their father a margin of comfort and security while he is still vital and mobile enough to enjoy it--a parental pension.  Many of your clients have already prepared themselves, at least mentally, for the possibility that they may need to subsidize and support their aging parents’ later years.  Some of these people have decided to accelerate that subsidy to lesson the economic anxiety of their parent’s retirement years.

I have met those who took a portion of a windfall they received and created a parental pension for parents who were living exclusively on Social Security payments.  These parents had already adapted their lifestyle to the level of income they were forced to live on and enjoyed great freedom and liberty with the added income.

Now that’s something to celebrate.

Adapted from The New Retirementality:  Planning Your Life and Living Your Dreams…At Any Age You Want, Second Edition by Mitch Anthony.  (©2006 by Mitch Anthony.  Published by Kaplan Publishing.)

Mitch Anthony is the founder and president of Advisor Insights Inc. and The Financial Life Planning Institute, training companies serving advisors and the financial services industry. He is a contributing editor for Research magazine and his column “Financial Life Planning” appears in Financial Advisor magazine. Anthony has been named one of the financial service industry’s top “2006 Movers & Shakers” by Financial Planning magazine. His radio feature, The Daily Dose , is heard every day on 200 radio stations nationwide. Anthony is the author of several books for advisors, including StorySelling for Financial Advisors , The New Retirementality, Your Clients for Life , Selling with Emotional Intelligence , Making the Client Connection , The Financial Professional’s StoryBook, and Your Client’s Story. Contact him at mitch@mitchanthony.com

© 2007 Mitch Anthony