Advisers can’t ignore client health-care needs

It doesn’t take a brain surgeon to figure out that rising health-care costs have the ability to wipe…

It doesn’t take a brain surgeon to figure out that rising health-care costs have the ability to wipe out someone’s retirement savings.
Countless consumer studies have concluded that people are unnerved by the skyrocketing cost of health care in this country. To make matters worse, because many companies are either dumping or shrinking employee health plans while raising deductibles and co-payments, these same consumers now are being held accountable for health-care choices.
That is a scary proposition for many people.
We can all agree that the U.S. health-care system is a mess. In fact, the World Health Organization in Geneva ranked the U.S. health-care system 37th in the world for overall performance.
For a point of reference, the United States ranked just above Costa Rica and just below Slovenia in the WHO report.
These problems are quite serious, but they aren’t unsolvable. What is missing right now is some political imagination and the courage to move forward with a new vision for health care in this country.
Of course, no matter what the brain trusts in Washington come up with, it is clear to anyone who can fog a mirror that Americans are living longer and that a retirement financial game plan must account for all types of health-care costs.
There is a tremendous business opportunity for financial planners and advisers who can find a way to position themselves to handle these health-care issues for their clients. Savvy financial advisory professionals will create a strong competitive advantage if they can navigate their clients through some very challenging times ahead.
One adviser in Florida with whom I spoke readily admitted that he isn’t prepared to handle these issues for his clients. He now has made it a priority to forge relationships with health-care providers in his community in order to offer health-care solutions for his clients.
An adviser in New Jersey with 25 years’ experience said he now is urging clients to sign up for long-term-care insurance once they turn 50 or 55.
“To be quite honest, I don’t think advisers, in general, are totally prepared to assist baby boomer clients with their health-care needs as they face retirement,” said this adviser, who asked not to be identified. “I wasn’t really prepared, and I think our profession has a ways to go before it’s truly ready.”
There are planning options available to address the probable need for long-term care, and financial advisers and planners need to be quite familiar with them, said the adviser in Florida, who also asked that he not be identified.
“Understanding complicated health-care needs is important, and that is why education is key for an adviser — so they can better know what to do for their clients,” said the Florida adviser, who has 20 years’ experience.
Of course, long-term care has become more relevant, as people are living longer.
In fact, long-term care now tends to sway toward maintenance and not rehabilitation. Also, those high costs typically aren’t covered by standard health insurance policies.
To make it more complicated, planning for long-term health care requires individuals to consider gift and estate tax consequences.
Therefore, the financial professional’s job is to make sure the client is aware of all of the facts and various options that apply when planning to purchase long-term health-care coverage.
The bottom line, several advisers said, is that individuals want to address three goals when deciding on long-term health care. They want to provide their spouse, who may not be in need of medical care, with a sufficient income; they want to protect their assets for descendants, and they want to protect themselves financially.
Rising health-care costs and the need for long-term health-care coverage aren’t going away.
Financial planners and advisers have a responsibility to address these serious issues with their clients while everyone can still think clearly and work on a solid game plan before it becomes a critical issue.
Obviously, if the discussions are put off and it becomes a critical-need conversation, it makes it more difficult for the individual, the person’s family and the financial advisory professional.
As the adviser in New Jersey said: “Taking care of a client’s money has become the easy part. It’s beyond that now, and it’s a much more complicated situation. People are going to need a bundle of money to pay their post-retirement health-care bills, so it’s up to us to help address the problem and prepare clients so they can rest easy at night.”