By James Morris, Suitability Specialist
As a financial professional (FP), you may find that assisting seniors with their financial future during this stage of their life can be one of the most important roles you will have. However, working with seniors requires an increased level of care and documentation. Documenting your client interactions and maintaining records of all conversations and product recommendations is particularly important when working with seniors.
Knowing your customer and their goals is the first step in creating a meaningful dialogue that your recommendations are based on. This includes assessing the customer’s risk tolerance, investment objectives, time horizon, and financial resources available, among other items. Documenting and reviewing this information can help both you and the customer review products that meet their requirements.
It is important to note that if your recommendations include fixed index annuities (FIAs), the suitability guidelines for customers over age 65 generally change across most insurance carriers. These changes include an increased level of liquid assets available after the purchase, reduced concentration of annuities to net worth, and other guidelines that are used to determine if the customer has the financial flexibility to enter a multi-year contract deferral period. Also, some carriers will contact the client directly, based on their age, to verify that the customer understands the terms of the contract purchased.
You also may need to identify the customer’s ability to understand the strategy or product you are suggesting. If you suspect that the customer does not understand what you are recommending, you may want to take a few extra steps. As many FPs know, every customer is different and extreme care and judgement must be used to determine the customer’s level of understanding. If you observe any indication of diminished capacity, it may be time to ask your client to include their legal representative or trusted family member in future meetings to ensure all parties understand the strategy and recommendations for the client.
Working with seniors can be very rewarding, however a heightened level of care and diligence must be exercised at all times as seniors can have unique needs and constraints. Ann Arbor Annuity Exchange is committed to being a resource for your business. If you have any questions concerning suitability and seniors, please call me.
James Morris | Suitability Specialist
Ann Arbor Annuity Exchange
Ph: 800.321.3924 x159 | Dir: 734.786.6159
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