The Elderly Client: 4 Tips to Deal With Cognitive Decline

Advisors are very busy people, and now here’s something else for them to add to their to-do lists: help clients and their families face the facts about cognitive decline and how it affects financial decision-making skills.

Despite the vivid reminders of what happens as we age — from forgetting to pay a bill to coping with a diagnosis of Alzheimer’s disease — the majority of Americans avoid talking to their children and families about planning for the inevitable, according to a survey by the National Endowment for Financial Education (NEFE).

Conducted online by Harris Interactive in November among 2,059 U.S. adults, the survey finds that seven in 10 Americans say “major barriers” prevent them from communicating about who will make financial decisions on behalf of an aging family member unable to make them due to cognitive decline.

“Americans are living longer and they have concerns about becoming a burden to their loved ones,” said NEFE President and CEO Ted Beck in a statement. “But with aging comes a high probability that mental decline can occur, and without a financial plan, the burden looms.”

Forty-seven percent of NEFE survey respondents said they or family members with cognitive decline have had trouble paying bills, whether paying them late or not at all. A full 36% reported difficulties calculating simple math problems; 35% made irrational purchases; and 21% depleted their savings accounts.

Yet the majority of people said that family dynamics got in the way of trusting a relative to make financial decisions, according to the NEFE, a Denver-based private nonprofit foundation with a mission of educating Americans about personal finance. NEFE is funded by its own endowment, which was established with proceeds from the 1997 sale of the College for Financial Planning’s assets, including a building and the rights to its professional education programs. The nonprofit offers a Smart About Money site to help consumers with financial planning decisions.

“Frequently there is defensiveness, denial, embarrassment and sibling rivalry when entering into a dialogue between adult children and a parent concerning their finances,” Beck said.

In many cases, that puts advisors in the position of creating a financial plan and helping an aging parent select who they prefer to take leadership of their finances. Read on to learn about the NEFE’s top four tips for helping clients and their family members face cognitive decline issues.

1) Gather information. Urge families to take the time to learn as much as they can about the illness or medical condition that is impacting an aging family member’s financial capacity. Attend support groups and reach out to experts who handle matters related to Alzheimer’s, dementia or other diseases. If a parent’s cognitive decline is due to grief, reach out to a grief counselor.

“Share what you learn,” says the National Endowment for Financial Education (NEFE). “This also is a good time to do a financial inventory. Consolidate accounts into as few as possible so it is easier to track and manage transactions. Also make sure that a will and financial power of attorney are current.”

2) Be compassionate. Approach the family member experiencing cognitive decline in a positive and supportive way to let them know that you are there to offer your help and support. Be sensitive to their point of view, keeping in mind that they have worked hard over a lifetime to accumulate their resources. The aging family member may be apprehensive about relinquishing control of their finances.

“Family members should be sure to involve the aging parent in the process of developing a plan where you are assisting them with their finances. Remember, this is ‘their’ plan so be sure to follow their wishes,” cautions NEFE President and CEO Ted Beck.

3) Implement the plan. Once the time has come for a plan to be implemented, the family member in charge of overseeing the aging parent’s finances should create a calendar of bills to be paid each month, checking in to ensure that bills are being paid on time and for the correct amounts, says the NEFE.

Accounts of aging parents also should be monitored to check for any unusual activity, and annual credit checks should be done to safeguard against identity theft.

4) Divide caregiving duties. The NEFE recommends that families have an honest and open discussion among siblings about a parent’s cognitive decline, what needs to be done, and what caregiving roles each family member wishes to play: “Set up a schedule for each sibling. Keep family members who do not live nearby updated with weekly emails or phone calls. Invite all siblings who wish to take on some responsibility to do so.”

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Read Olivia Mellan on “Your Client’s Brain: Coping as Your Clients Age” at AdvisorOne.

5 Ways To Increase Your Chances Of Getting A Job After College

There's a disturbing trend in America and it's causing soon to be high school graduates to question whether college truly is the key to finding success in a difficult job market. A recent report by the Associated Press found that one out of every two college graduates is either unemployed or underemployed, often working in a field that isn't related to their degree. This, along with the student loan debt topping $1 trillion, is causing graduates to find themselves with low-paying jobs that make them no better off than if they hadn't gone to college at all.

According to economists, college is still the best way to land the higher-paying jobs, but no longer is the act of attending college the key to success. Making the wrong decisions before entering college can hurt your chances of putting your degree to work later on.

Have a Plan
It used to be OK to head to college now and figure out a degree later. According to MyMajor.com, 80% of students entering college hadn't picked a major and 50% will change their major while in college. With rising college tuition and students spending more time in college, they are amassing more debt which translates into higher payments upon graduation. Harvard economist Richard Freeman advises students who are undecided about their future plans to find a job after high school until they decide what they want to study instead of heading to college without a clear plan.

Don't Follow Your Passion
Mark Cuban, entrepreneur and star of the hit television series Shark Tank, advises people not to follow their passion. According to Cuban, we have a lot of passions in our life, but most won't translate into successful careers. Instead, he advises to follow our effort. Look at how you spend your time. Whatever you spend the most time doing may be your perfect career. When we spend time with something, we gain a lot of skill which makes us an expert in that field and being an expert translates to career success.

Create a Barrier
Pursuing a profession that requires a specialized degree creates a barrier to entry. Fields like medicine, education, law and accounting require that you have a degree in order to gain the certification needed to apply for those jobs. Other careers, like the arts, many business jobs and sports management, have collegiate degree programs, but they aren't required to work in the field making the amount of eligible people much higher.

Check BLS
The Bureau of Labor Statistics' website has detailed information about most career paths including average salary and the amount of people needed in those careers in the future. If you're considering more than one degree path, choose one that will have a large need for workers in the future. Fields that have a saturated market not only make it harder to find a job, but the salary may also go down due to the oversupply of workers willing to work for less.

Reduce Your Debt
There are plenty of ways to reduce college debt. Go to a state college if appropriate for your field. You can live at home instead of paying the high price of campus housing, purchase used books, work a part time job if your degree program allows or take summer classes to reduce the amount of time you're in school.

The Bottom Line
Although the college years are still full of fun and great memories for many, making the most of your college education is essential to having the best chances of finding the job you dreamed of having. Remember, the sooner you get out of college, the sooner you will earn money instead of building up more debt.

Sign up for Dividends from John Hancock

This fund is basically an actively managed mutual fund, but it just happens to trade on an exchange, explains income specialist Ari Charney of Big Yield Hunting.

Income-oriented investors will appreciate this closed-end fund's mandate, which requires it to deliver high current income along with modest capital gains.

John Hancock Premium Dividend Fund (PDT) tends to allocate roughly 30% to 40% of the portfolio to equities and 60% to 70% to preferred stock, with the utilities and financial sectors as its main focus.

Management does use substantial leverage to boost its payout and returns, but it's done so while delivering excellent long-term returns.

Over the past five years, utilities have taken up as much as 61% of assets, while financials are currently at their highest weighting over that period.

The seasoned management team, one of whom has been with the fund for over 18 years, tends to invest with conviction. In fact, portfolio turnover has averaged just 14% over the past five years.

I also reviewed the fund's performance during the Fed's last tightening cycle, which ran from June 2004 though September 2007. Over that period, PDT still managed to gain 4.5% annually on a net asset value (NAV) basis, 0.9% annually on a price basis, and 7.2% annually on a price basis with the reinvestment of distributions.

So, a rising-rate environment clearly poses a challenge, though the fund should be able to hold its value, while continuing to pay its distribution.

And, in contrast to many of its peers, PDT's monthly distribution typically consists of net investment income and the occasional long-term capital gain, without any destructive returns of capital.

Aside from rates, of course, I'm also concerned that yield-starved investors have pushed both utilities and preferreds higher and higher, without regard to price. But I trust the management team's value-oriented approach to keep them from chasing the high flyers.

The financial sector's dominance of preferred stock issuance could soon change, as the Federal Reserve has ruled that it will no longer allow bank holding companies to count trust preferreds toward Tier 1 capital, though it will grandfather existing preferreds for smaller institutions. It remains to be seen how these changes will affect the preferred market.

Finally, investors should be aware of the fund's dividend reinvestment program (DRIP). New investors are automatically enrolled, so if you prefer to receive the distribution as cash, you'll have to opt out of it.

But the DRIP also offers a significant benefit: Whenever shares trade at a premium to NAV, distributions are reinvested at the NAV or at 95% of the market price.

So, at the very least, DRIP participants will never pay the market price when PDT trades at a premium. When it trades at a discount, reinvestments are done at the prevailing market price.

Subscribe to Big Yield Hunting here…

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Why the Dow Likes Bad Economic News

To any ordinary person, the recent movements in the stock market don't make much intuitive sense. Today, for instance, news that weekly jobless claims rose and revised U.S. GDP figures were weaker than expected would lead most non-investors to expect the stock market to decline. Yet in the upside-down world of Federal Reserve monetary policy, investors have taken bad news for the economy as good news for the markets, in the belief that a longer period of Fed intervention through quantitative easing and low interest rates will boost the stock market. At least for now, the Dow Jones Industrials (DJINDICES: ^DJI  ) are reflecting this recent trend, gaining 63 points by 10:45 a.m. EDT, marking a turnaround from yesterday's triple-digit losses. The broader market is also higher, showing that the phenomenon applies beyond the Dow.

When the Dow's movements don't make sense, it's more important to focus on fundamentals in your investing. For instance, Caterpillar (NYSE: CAT  ) has struggled recently because of its high exposure to the slowing Chinese economy, and that has held the stock back despite the Dow's record run. Yet with an attractive valuation of just 11 times trailing earnings, Caterpillar offers a margin of safety even if the reductions in future earnings estimates that we've seen recently continue. You'd have to see substantial further deterioration in the global economic environment before Caterpillar's stock would look expensive at these levels.

Tech stocks have also offered attractive values to investors willing to take on the risk of turnaround projects. Both Intel (NASDAQ: INTC  ) and Cisco Systems (NASDAQ: CSCO  ) trade at below-market multiples, in large part because of concerns about heightened competition among big tech companies and a transition toward broader offerings throughout the IT space, rather than niche segments of the market. Investors fear that Intel won't be able to diversify beyond its PC-chip dominance and that Cisco will lose its place atop the networking space while failing to get a foothold in broader IT services. Yet low valuations -- Intel and Cisco trade on respective P/Es of 12 and 13.5 -- discount their current business prospects far more than appears justified, even given concerns about low IT spending levels throughout the industry.

Beyond the fundamentals, though, news plays an important role in short-term stock movements. Outside the Dow, microturbine producer Capstone Turbine (NASDAQ: CPST  ) soared 8.8% after receiving its second large order in the past week. After getting word of a purchase from real-estate and investment firm Related Companies on Tuesday, Capstone got an order today from Southern California Gas to buy three of its C65 uninterruptible power-source units for use at the gas company's data center. Given the relatively small size of the business, which sports sales of only about $122 million over the past year, orders like this have a material effect on Capstone and also draw the attention of other prospective buyers.

The overall lesson, though, is not to let the Dow's Fed-affected moves confuse you. By keeping focused on the long run, you'll avoid drawing bad conclusions from the market's short-term jumps and plunges.

Once a highflying tech darling, Cisco is now on the radar of value-oriented dividend-lovers. Get the lowdown on the routing juggernaut in The Motley Fool's premium report. Click here now to get started.

This Is How Social Media Companies Make Money

Over the last month we've seen Facebook's (Nasdaq: FB) dramatic share price rebound, Twitter's stock IPO announcement, and LinkedIn (NYSE: LNKD) stock on fire, but have you ever wondered... how do social media companies make money?

To find out, we turned to Money Morning E-commerce Director Bret Holmes. Part of Holmes' job is to utilize web advertising via social media platforms to best market Money Morning. As a result, he's on top of what's going on inside of today's social media giants.

Holmes said the key to unlocking value for social media companies is successful advertising models.

"Social media companies are legitimate advertising websites, no different than, say, Google or Yahoo. The same way Google made its money is the same way Twitter and Facebook will make their money," Holmes explained.

Web advertising is a growing market. In a 2013 Nielsen report, data showed that 89% of advertisers use free social media advertising, and 75% use paid social media advertising. The report also highlighted that 64% of advertisers expect to increase their paid social media advertising budgets over the course of 2013.

That means a lot of opportunity for social media companies to make major money.

The trick for social media companies looking to profit as ad platforms is to find the best way to insert advertising into the user's experience without impacting the user in a negative way.

For any doubters out there who don't believe that advertising methodology is hugely important to investing in social media stocks, take heed...

In late July, Facebook announced that mobile ads account for a whopping 41% of its $1.6 billion second quarter ad revenue. Facebook shares closed at $26.51 that day. But in after-hours trading, shares skyrocketed to nearly $31.

It's clear that advertising plays a huge role in a social media company's value - and the success of social media stocks.

To learn how to gauge which companies will succeed, here's how social media advertising actually works...

How Social Media Companies Make Money: A Lesson from Facebook

The Facebook initial public offering (IPO) was an unmitigated disaster. It lost more than half of its value within six months of listing and was priced at 107 times trailing 12-month earnings, making it pricier than 99% of all companies in the S&P 500 at the time.

But boy did it rebound.

From July through September, the Facebook stock price has more than doubled. On Sept. 30, it hit an all-time high of $51.5 a share, putting it $13.5 over its IPO price of $38.

It was advertising that undoubtedly turned the tides for Facebook.

"Facebook has gotten really good at advertising. It's new, it's inexpensive, and it's smartly done," Holmes said. "When Google first started, it wasn't good at advertising, and look at them now. Facebook is going to be a success story."

Here is what Facebook did to unlock its value and become what Holmes described as "the most advantageously competitive product on the market for advertisers, hands down"...

Originally, Facebook started with space ads. Then, it added self-promoting individuals' or a company's Facebook page. But things were still sluggish.

However, about nine months ago, Facebook developed a new advertising format.

"Facebook has integrated in-stream ads to the user experience. Response rates are high and advertisers will always chase the least expensive ad with the best response. It works because it's new and cheap," said Holmes.

In-stream ads can be videos. For instance, a commercial will appear before the user may watch an Internet video. The in-stream video ad will typically last 15-30 seconds.

On a social media site like Facebook, which has real-time update feeds, in-stream ads can be inserted into a streaming feed. So, for example, the user scrolls through the News Feed to see what friends and family are up to, and in-stream ads are peppered into the Feed.

By far the largest social network, Facebook saw over $1 billion in ad revenue at the beginning of 2013, and it's getting better at integrating ads into its News Feed.

"Recently, Facebook let advertisers access FBX, an ad exchange where you can customize your own ads," explained Holmes. "Now we can glean information and better target our audience. We can also advertise on mobile now."

The ad model is helping Facebook monetize its massive 1.15 billion users who increasingly access the site via mobile devices.

And to top it all off, Facebook continuously improves its method to provide performance-based analytics that are invaluable to advertisers.

Watching Facebook's advertising Cinderella story shows us a great deal about how advertising makes money for social media companies. Having taken a glimpse into the past, we can now see if Twitter - and its stock - will have the same success...

Twitter Stock Success Hinges on Ad Model

Just on Sept. 12, Twitter filed its IPO. And according to Holmes, its advertising will have to improve to make it a viable success.

"Twitter is going to start off similarly to where Facebook did last year," Holmes said. "Advertisers aren't flocking to Twitter. I'm sure it will try outside ads, and that will probably yield good results, but unfortunately for Twitter, it just doesn't have the right demographic."

According to an August study released by nonprofit research company Pew Internet, Facebook not only has by far the largest user base, but it also reaches an older demographic.

When compared to other social media sites, Facebook blows away the competition - as shown in this chart by Adweek.

Reaching an older demographic means you're reaching more users who click ads. According to PaidContent.org, women over the age of 50 have a 22% click rate, significantly higher than any other demographic.

"If Twitter can tweak its advertising and reach an older demographic, it will get closer to the kind of profitability that has fueled Facebook's rise over the last four months," Holmes noted.

Just yesterday, the Twitter IPO became official - the U.S. Securities and Exchange Commission filing was revealed to the public. The symbol is to be TWTR, though no exchange, pricing, or share information has been listed yet.

But will Twitter's IPO bomb like Facebook's?

Here are 5 reasons why we think it won't...

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Why Universal Display Is Poised to Bounce Back

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, organic light-emitting diode manufacturer Universal Display (NASDAQ: OLED  ) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Universal Display and see what CAPS investors are saying about the stock right now.

Universal Display facts

Headquarters (founded)	Ewing, N.J. (1985)
Market Cap	$1.4 billion
Industry	Electronic components
Trailing-12-Month Revenue	$83.2 million
Management	CEO Steven Abramson (since 2008) CFO Sidney Rosenblatt (since 1995)
Return on Equity (average, past 3 years)	(9.9%)
Cash/Debt	$243.9 million / $0
Competitors	BASF Eastman Kodak Sumitomo Chemical

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 95% of the 1,295 members who have rated Universal Display believe the stock will outperform the S&P 500 going forward.

Just yesterday, fellow Fool Simon Erickson (TMFInnovator) summed up the Universal Display bull case for our community:

Over 1000 issued and pending patents on OLED technology. They have the know-how in this fast-growing industry. OLEDs shine brighter and are more energy efficient than current lighting technology. They're a better mousetrap.

- HUGE opportunity if OLED's catch on in televisions. DisplaySearch research estimates the OLED TV market to reach $16 billion of revenue by 2020.

- Extremely high profit margins, and revenues have doubled in each of the past two years.

Smartphone displays for Samsung have given them a good foothold and reputation in the industry. Adoption of OLED TV's will no-doubt be the long-term driver of growth. And the wildcard is if Apple adopts OLEDs for the iPod. ... That development would blow the roof off.

Many are impatient with the long-term story, as OLEDs always seem to be "around the corner". But I like the risk/reward trade-off.

If you want market-thumping returns, you need to put together the best portfolio you can. Of course, despite a strong four-star rating, Universal Display may not be your top choice.

We've found another stock we are incredibly excited about -- excited enough to dub it "The Motley Fool's Top Stock for 2013." We have compiled a special free report for investors to uncover this stock today. The report is 100% free, but it won't be here forever, so click here to access it now.

Should Apple, Inc. Worry About Subsidy Cuts in China?

Once upon a time, Apple (NASDAQ: AAPL  ) investors were easily rattled by any headlines about carrier subsidy cuts. That made sense because most people still aren't willing to pay full sticker price for an iPhone, but at the same time subsidies played an important role in customer acquisition for carriers.

Well, one of Apple's newest prominent carriers is looking to reduce subsidy costs: China Mobile (NYSE: CHL  ) . Should Apple be worried?

Shifting to the mainstream
Bloomberg first reported last month that China Mobile was looking to reduce subsidies by $2 billion, following up again today with additional details on China Mobile's intentions to cut costs. Government agencies told the state-controlled carrier that it spent too much on subsidies and marketing for devices like the iPhone, among others.

The net result is that the cost for an iPhone 5s could end up doubling, while the iPhone 6 is still in the process of getting regulatory approvals before launching. China Mobile is shifting its focus away from the high-end and toward the mainstream, which inevitably could benefit local smartphone manufacturers like Xiaomi and Huawei, which offer more affordable smartphones.

What's different
Chinese carriers structure subsidies very differently than U.S. carriers do. U.S. consumers are used to paying less upfront in exchange for higher monthly bills, while in contrast Chinese consumers pay more upfront in exchange for lower monthly bills.

Under China Mobile's old structure for an iPhone 5s, consumers would pay 5,288 yuan (~$860) upfront but then receive monthly rebates of 194 yuan (~$32) for two years to offset the cost. Now the upfront cost will be 4,488 yuan (~$730) with the monthly rebate falling to 136 yuan (~$22). After everything is said and done, consumers end up paying nearly twice as much for the phone.

But since the upfront cost is lower and the added cost is spread over the course of two years, the overall impact to Apple's business is unclear, but could even potentially be positive if you consider the behavior of U.S. consumers. We do know that in the U.S., spreading out premiums over time has led to consumers becoming less price sensitive, which ends up shifting Apple's product mix toward higher-priced models.

Other considerations
Additionally, Apple has been making broad pushes in making its devices more affordable in emerging markets, with installment plans being its primary tool. The Mac maker launched installment plans in China in early 2013, partnering with third-party banks -- China Merchants Bank and ICBC -- to handle the financing. These plans do come at a cost, with interest rates that go as high as 10%, but offer lower upfront costs to customers.

Perhaps more importantly, Apple's entry into the phablet market represents an enormous opportunity for the company, since phablets are extremely popular in China. Phablets do cost more, but eager Chinese consumers are already buying iPhone 6 models for upwards of $3,000 in the grey market pending the official launch in mainland China. Of course, early adopters willing to pay exorbitant grey market prices may not be representative of the mainstream market.

China Mobile reducing subsidies isn't exactly good news, but it probably won't put a dent in Apple's business.

Apple Watch revealed: The real winner is inside
Apple recently revealed the product of its secret-development "dream team" -- Apple Watch. The secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see where the real money is to be made, just click here!

Your Digital Life: Your phone is not invited to…

Steven Petrow helps you navigate the digital world in the real world.

I recently hosted a dinner party and one of my guests had his phone on the table the entire time. He never checked it, but it was looming as if a call might interrupt us at any moment. I didn't say anything, but I'm wondering if I could have asked him to put it away without seeming rude myself.

~H.M., Rehoboth Beach, Del.

I'm sure you were afraid of what happens all too often – dinner guests checking their phones throughout the evening, texting under the table or hearing the dreaded Marimba iPhone ring stop all conversation dead in its tracks. Leaving your phone sitting out on the dinner table is like wearing a sign that says "Yes, I'm here, but I may get a better offer at any moment."

Frankly, I'd urge you to ask your guests to refrain from using their phones – or having them lurk – at the table. I'd say it with as much good grace ("May I take that for you so we're not all distracted by it?") or humor ("I didn't set a place for Siri, so let's put her away now") as possible. Either way, your message will be clear: Electronic devices do not have a seat at your table.

To guests: Even without such an admonition, please keep your smartphones in a pocket or purse – not on the table like a package of TNT ready to detonate. Yes, you have my permission to slip out to the restroom from time to time and check your phone. (And if you're a doctor on call or otherwise expecting a truly important phone call, tell your hosts ahead of time; I'm sure they'll be happy to waive the usual dinnertime rule).

As a last resort, I love this new dinnertime ritual: Ask your guests to put their smartphones in the center of the table; the guest who reaches for his or hers first has to stay and do the dishes (or, in a restaurant, pay the bill). Believe me this works!

Read more of Steven Petrow's Your Digital Life columns on usaweekend.com. Submit your question below. You can also follow Steven on Twitter @StevenPe! trow and like him on Facebook at facebook.com/stevenpetrow.

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