James Sullivan
Beware the elder care planning trap

Don’t let empathy tempt you into offering advice beyond your skill set and engagement parameters.

October 28, 2013
by James Sullivan, CPA/PFS

There is no typical engagement for a CPA planner working with an elderly client who is suffering from a chronic illness. CPA planners who market elder planning financial services are actually selling a bundle of services and skills. To be successful, however, planners must offer more than just a set of skills. The planner must also be empathetic and flexible.

At the same time, the planner must recognize his or her practice limits, which are circumscribed by everything from competency to professional standards.

Empathy is a natural human reaction to seriously ill clients and their families. Empathy makes CPA planners eager to assist in any way they can—even if it means providing and responding to a question outside their skill set. In addition, the need to be flexible in such engagements may tempt CPA planners to take on greater roles than they should.   

Therein lies the trap: Because successful planners exhibit both empathy and flexibility, clients begin to look to planners for opinions beyond both their skill set and engagement parameters. While developing a close personal relationship with clients can be inevitable and is not, of itself, a bad thing, it can come at the expense of maintaining a proper professional distance.

The unique role of the CPA planner

Often, a chronically ill client relies on several professionals to provide assistance. These include an attorney, several health care professionals (including a general practitioner, one or more specialists, nurse practitioners, physician assistants, nurses, physical therapists, etc.) and a geriatric care manager. The attorney drafts documents and provides legal advice but rarely offers financial guidance. The medical professionals are typically focused solely on the client’s health care needs.

The CPA planner must look long term. What financial resources are available to pay for the care? How will the financial needs change as the care needs change over time? The CPA planner draws on the expertise of the other professionals to develop a long-term financial plan (provided, of course, that the client approves the release of health information to the planner).

While the attorney and health care professionals are somewhat narrowly focused, CPA planners will find themselves in a broader role. As a result, CPA planners play a unique role in such engagements and may find themselves inadvertently transitioning from being a financial counselor to a family counselor.

What’s the difference? Consider this example: A financial counselor would be asked if a client can afford to move to a particular assisted living or skilled nursing facility. But a family counselor would be asked for his or her opinion regarding not only affordability but also regarding suitability. The question may be posed innocently enough by a family member: If she were your mother, would you put her in the ABC skilled nursing facility?

An experienced elder care financial planner will have some familiarity with most of the care facilities in his or her market. The planner may even have a superficial opinion about each facility (“Well, it always appears clean when I’ve visited there. The nurses are very pleasant and seem responsive to resident needs.”)

But the underlying issues are much deeper than that. According to Luise Warren, a geriatric care manager in the Chicago area, the real issue has to do with the suitability of the facility to the client’s needs. Facilities may specialize in treating patients with different conditions or even different stages of a condition. For example, a person with mild Alzheimer’s can deteriorate much quicker living among those with moderately severe or severe Alzheimer’s.

So while it may be tempting to provide feedback on a facility, Warren believes that the best guidance a CPA planner can provide is this: The client and his or her family should ask a health care professional about proper facility placement. Typically this will involve performing an assessment of the client’s physical and cognitive abilities to match him or her to a proper facility. While the facility under consideration may do an assessment, it makes more sense to obtain an independent assessment from a professional without financial ties to any particular facility. Helping clients find someone to provide such an objective health care assessment only reinforces the objectivity of the CPA planner. Once one or more suitable matches are established, the CPA planner then can help the client address the financial implications of moving into a facility.

A compliment and a trap

Clients pay CPA planners a compliment when they begin to consider us family advisers rather than financial advisers. Working for a chronically ill client for many years forges close professional and personal relationships with the client and the family. These can be the most rewarding client relationships a CPA planner will ever have.

But the planner still must keep a professional distance between himself or herself and the client. This is in the best interest of both the planner and the client. It is of little benefit to the client if the planner answers questions or offers opinions that are beyond his or her professional competence. Instead, the planner can still offer value by pointing the client and the family to professional resources that can provide the best possible answer and guidance.

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James Sullivan, CPA/PFS, is a financial planner in Wheaton, Ill. He specializes in working with clients, and the families of clients, suffering from chronic illness.

PFP Section members, including CPA/PFS credential holders, will benefit from additional elder planning resources in Forefield Advisor on the AICPA’s PFP website at aicpa.org/pfp. Members will also benefit from the free CPA’s Guide to Financing Retirement Healthcare written by this author.

The AICPA’s PFP Section provides information, tools, advocacy and guidance to CPAs who specialize in providing tax, retirement, estate, risk management and investment advice to individuals and their closely held entities. All members of the AICPA are eligible to join the PFP section. For CPAs who want to demonstrate their expertise in this subject matter, apply to become a CPA/PFS Credential holder.