How to Help an Elderly Parent Manage Investments

Son reviewing investments with parents.

There is a current trend of adult children taking care of elderly parents. It can be a juggling act trying to care for children of your own while at the same time overseeing your parent(s) as they face the concerns of getting older. Managing finances, and particularly investments, is a matter that typically gets brought up sooner or later as care giving expenses add up. Here are some practical tips and insights from financial experts on how to help an elderly parent manage investments wisely by planning ahead.

Plan a Sit Down Conversation

Your parents have worked hard to get to where they are. If they have an investment portfolio, they have given considerable thought to preparing for the future and part of that preparation includes how to ensure they are well-cared for in the later years. Even if they are not showing signs that their age is catching up to them yet, it is a good idea to begin the conversation. According to the experts, the earlier you can begin talking about finances the better. Even if you are uncomfortable with the idea of handling and taking care of elderly parents finances, having a conversation about what role you will play and how they see their financial situation will be a benefit for everyone when the time comes for a more active role.

Here are some signs that it is past time to hold that sit down conversation:
• There is a noticeable decline in the ability to understand financial documents
• There is trouble with paying attention to the “fine print” of financial statements or other transactions
• Unopened mail from financial institutions begins to pile up
• Display of declining memory or the inability to keep up in a conversation

Having a conversation will allow you to better gauge where your parents are at with their finances and determine how much help they need right now, if they need help at all. It never hurts to ask your parents if they have considered or planned for the costs associated with care giving and aging in place or if they plan to live in an assisted-living community- both require financial planning. The best case scenario is they have everything well covered. The worst case scenario is there has been no planning.

Estate planning lawyers can help manage diverse investments, including bonds, IRAs, and real estate. Kathleen Michon is an estate planning lawyer from the San Francisco Bay area. In one of her many articles, she points out that there is a formal process to becoming a conservator, someone who handles the financial and day to day affairs of another. That process can take a while as the conservator is generally appointed by a judge. Having a conversation now to prepare for the future can prevent lengthy waits on the court and gets the ball rolling in the right direction before consequences build up.

If your parent(s) are showing signs of dementia, it may be necessary to look through their checkbook and various accounts. Look for missed payments and late fees assessed on utilities. Do they have any outstanding tax liens or collections accounts? Approaching the topic of finances with parents isn’t an easy task, but it is necessary to ensure they have the best opportunities to enjoy their golden years. If they are having trouble with day to day finances, their investments need a closer look.

Hiring a Professional

Even if you are highly competent in the area of finances and investments, it helps to have a professional financial advisor to ensure everyone’s interests are protected. Many older parents are still very hesitant to hand over certain aspects of their finances to children so having a professional manage things can give them peace of mind; and avoid conflict with the parent/child relationship.
According to a Consumer Finance Survey, households who had the highest financial literacy had the highest rates of return on their investments. This comes as no surprise. People who know how to read the stock market and how mutual funds operate are more prone to get the most from that knowledge. However, the survey also found those who thought they had a good grasp on finances with the know-how to invest wisely still didn’t receive the returns that those who delegated at least part of their portfolios to expert management. Convincing your parents to hire a financial advisor may not be as hard as you may think when they see they are leaving money on the table.

It’s All in the Approach

When the time comes to sit down, talk about the future and taking care of elderly parents, it is always best to never treat your parent(s) like a child. The process of fully taking over finances is generally a gradual one and not taken lightly by most parents who want to maintain control over their hard earned investments for as long as possible. Even if they do begin to make mistakes and experience a setback or two, it isn’t time to begin panicking. Now is a good time to learn what you can from your parents about their goals and plans for care giving in the future and how they see your role as a caregiver.