December 18, 2009

USA: VOICES - Ron Rogé, On The Impact of Longevity

. NEW YORK, NY / Wall Street Journal / Blogs / December 18, 2009 Financial Adviser News and insight for financial advisers, wealth managers and their clients. By Zack Anchors Ron RogéRon Rogé is the founder, chairman and CEO of R.W. Rogé & Company in Bohemia, N.Y. Rogé became trustee and co-portfolio manager of the Rogé Partners Funds in 2004 and recently served three years on TIAA-CREF Institute’s Financial Advisor Advisory Board. He discusses how longer-living clients have changed his firm’s approach to financial planning Ron Rogé When I first started this business, back in 1986, we would write plans for clients that projected them living to age 85. That was beyond the life expectancy at that time, so we felt we had a bit of a cushion. As the practice matured, we noticed that people were living longer, and that life expectancy tables were being adjusted by insurance companies. So in 1990 we began planning to age 90. Around 2003, we raised that to age 100. We’re seeing a whole new dynamic emerge as clients live longer and longer. There are so many unexpected things that could come up in the 30 or 35 years that our clients are retired, and it’s important for us to help prepare them for these unknowns. These could include anything from unexpected health care costs to having to support an unemployed child. There are always the ups and downs of the market, but there are also other risks that can be more catastrophic than what happens to a portfolio. When we first tell clients that we’re going to plan for them to live to 100, they sit back and say “I’m not going to live that long.” But then we ask if they have any longevity in their family, and they remember, “Well, yeah, mom is 98.” Once they have a tangible example in mind, they start to get it. So we try to share real-life cases that we’ve experienced over the years. There’s a new field that deals with the issue of longer-living clients, and it’s called “financial geriatrics.” There can be some very delicate issues involved. We just handled a situation last week where a client in her 90’s all of a sudden stopped paying her bills. We had to call her nephew in because he had power of attorney. So you need to prepare for these things ahead of time. Otherwise, you need to go to court and have the person declared incompetent so that someone can be appointed by the court to handle the person’s finances. The whole financial geriatrics area of our practice can also be very labor-intensive, and we’re actively discussing whether it should be an add-on service and how much we should charge for it. With clients living longer, it’s not just about planning projections and investing anymore. [rc] Copyright ©2009 Dow Jones & Company, Inc.