Sep 20 2024
The essential guide to planning for senior clients
Financial advisors dive into strategies fit for the needs of the senior citizen workforce in Malaysia to secure a comfortable future.
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Malaysia is undergoing a rapid demographic shift, poised to become an aging society by 2030. The elderly population is projected to surge from 11.1% to 15% of the total population within a decade, presenting unprecedented challenges. A key concern is the financial preparedness of this growing senior demographic, many of whom are extending their working lives out of necessity or desire. This evolving landscape offers both hurdles and opportunities for MDRT members.
Tam Kim Fang, a 13-year MDRT member from Selangor, Malaysia, and David Ooi You Wai, a 12-year MDRT member and five-time Court of the Table, from Penang, Malaysia, shed light on four critical financial and insurance needs for clients in this stage of life.
Healthcare coverage
Healthcare coverage is paramount for clients who are senior citizens, especially given the escalating costs of medical care. This is the period in their lives where healthcare needs are most pronounced, and unfortunately, these costs can become overwhelming.
Tam shares three similar stories of clients over the age of 70 who had to discontinue their health insurance policies due to prohibitive repricing and inadequate financial protection. "It's heartbreaking to see them let go of essential solutions because they simply can't afford them," she remarks.
Other than regular check-ins on how they are doing, Tam does not practice active solutions offering as to maintain their friendly relationship and not be perceived otherwise. This also contributes to her maintaining a positive center of influence amongst clients and prospects alike.
Ooi adds that mismanaging healthcare costs can have severe consequences on family dynamics. He would set up meetings to discuss financial plans and wishes with family members or a trusted advisor to ensure everyone is aware of the solutions in place.
“In Asian culture, it is not unusual for children to take care of their parents when they are adults. As such, we can recommend they consider plans that offer flexibility with family coverage. Here, the decision maker should be the children as they will be the ones paying for the premiums. We will need to work with them to compare monthly or annual costs to find a plan that suits their budget.”
Robust retirement planning
Retirement planning is another critical concern for the senior citizens. Despite their continued employment, these clients must carefully prepare for a future transition out of the labor force.
Tam emphasizes the importance of sufficient funds to ensure a comfortable retirement for clients. "In Malaysia, we have not taken income replacement seriously enough, and this is alarming, looking at the rising current cost of living," she notes.
When speaking to clients from this demographic, Ooi walks through their current funds and assesses their contributions while providing advisory on their existing contributions such as cash savings and short-term investments. Once this is adjusted, he explores other investment options such as annuities as an additional revenue stream.
If clients have limited funds, Tam prioritizes channeling resources into their retirement plans. Adequate protection is essential to safeguard their financial future, ensuring they can maintain their desired lifestyle and meet their needs without the stress of financial shortfalls.
Asset planning and protection
Asset planning offers significant leverage to keep senior citizens financially secure. Ensuring that financial affairs are in order and assets are protected is essential, particularly for those with larger families. Tam highlights the need
for collaboration with various resources such as advisors and other financial solutions like succession planning and financial protection to establish a robust safety net. "It is crucial to have everything in place so that they don't have to worry about their financial legacy," she advises.
“Proper asset planning can include setting up trusts, drafting wills, and ensuring that all legal documents are up to date. This meticulous planning safeguards clients’ assets and provides them with a peace of mind, knowing their families are protected,” said David.
Continuous education and financial literacy
Ooi and Tam both stress the importance of continuous education and financial literacy for their senior clients. This age group often requires regular refreshers and updates on financial tools and strategies.
Ooi regularly checks with his clients and prospects to determine their preferred communication mediums and adjusts his approach accordingly. "The level of proficiency with digital tools can vary vastly in this age group, so it's essential to tailor our education efforts to their comfort levels," he explains. During the introductory stage, a simple “Are you comfortable with WhatsApp, regular calls or even a Zoom meeting?” would benefit all parties regardless of the outcome.
Planning for continued workforce participation is essential for a secure financial future in retirement. By carefully considering income generation, healthcare costs, retirement savings, and insurance coverage, clients who are senior citizens can navigate this new phase of life with confidence. As Tam and Ooi's insights demonstrate, addressing these areas with empathy and expertise is crucial to help them navigate their financial journey with confidence and peace of mind.
Contact: MDRTeditorial@teamlewis.com