Of all the complaints Wanda Morris hears about from seniors these days, the top one on the list remains suitability.

Caught in what seems like a never-ending low-interest rate environment, many seniors, most of whom do not fall into the ranks of the high net worth, still harken back to the days when they could easily get double-digit returns on a safe investment.

But Morris, vice president of advocacy and chief operating officer of CARP (formerly the Canadian Association of Retired Persons) says that’s one of the reasons why suitability issues top the list of complaints to regulators.

“I have some sympathy for advisors because they have people come in who want a 10% return,” says Morris. “So I think the call to advisors is to be super clear with their investors that this is no time for magical thinking…the days of 10 per cent returns on low-risk investments are long gone.”

Here are some other tips that have made it across her desk:

  • Cash flow: Just because investors have to remove a minimum amount every year from their RRIFs starting when they turn 71, it doesn’t mean they should spend it all right away, cautions Morris. CARP, which has put it on record that it believes the increasing scale RRIF minimums are too high for the average Canadian senior, encourages advisors to determine investors’ cash flow needs first and explain the process to their clients. If they have anything left over after paying for planned expenses, they might be able to invest the remainder in a TFSA.
  • Healthcare costs: With people living longer than ever before, setting aside funds for healthcare requirements is also a factor to consider, says Morris. While the government pays some costs, quite often that funding is limited. “We have heard of people spending upwards of $10,000 a month on home healthcare,” she says. Morris recommends advisors talk to their clients at a much younger age about purchasing long-term care insurance.
  • Joint accounts: Many people set up joint accounts to avoid probate fees when one of them dies, but investors have to be very sure of who can take control of their assets. Elder financial abuse appears to be one of the most prevalent forms of abuse among seniors. “The reality is that as soon as you sign a joint account the other person can take out all the assets,” says Morris, adding that most often, financial abuse comes from another family member.
  • Who is your client? Make sure that the investing profile is aimed at clients, not their heirs, she cautions. Morris says that sometimes she sees advisors making recommendations on riskier investments to provide a better inheritance to children and therefore keep the adult children on as clients when their parents pass away. “That’s simply not appropriate. The client is the senior and their affairs should be managed in their best interests.” It’s a different situation, she says, if the parents ask the advisor to suggest strategies that will provide an inheritance for their children, as long as they understand any kind of risks they face with their money.
  • CPP now or later? Many advisors can add to their value propositions by outlining the technical benefits and potential disadvantages of clients taking their Canada Pension Plan at 65. Many Canadians are still working and earning a good living and don’t need to take it right away, says Morris. Advisors should also talk to their clients about the potential of clawbacks on their Old Age Security benefits if they have other money coming in.
  • Ensure mental capacity: Many seniors can make their own health-care options, but have greater difficulty when it comes to financial decisions. As competence drops, often confidence increases, says Morris, a point advisors need to take into consideration.
  • Longevity risk: Annuities have often been cited as a guaranteed option for longer-living seniors. Morris says retirees may face low returns given the current interest rate environment, but at least they will have the peace of mind to know that they do have some income coming in all the time.