Advisors are typically unafraid to talk about anything retirement related with their clients—how their funds are performing, what expenses they might have in retirement, what age they might be able to retire, etc.
But there’s one topic that advisors seem to be avoiding: long-term care. A new study conducted by Lincoln Financial Group found that only 20% of advisors have discussed long term care with their clients. Of the clients, only 10% have a plan in place.
How can advisors breach the topic and why is it so important in the first place? Read on to find out. (For related reading, see: Long-Term Care: How Technology Can Defray the Cost.)
Being Mum on Long Term Care
While only a fifth of advisors have discussed long-term care with their clients, the study found that only 10% of advisors actually created a plan for those clients regarding long-term care. The study also found that less than 20% of people surveyed had a long-term care policy.
“It can be hard to talk about long-term care because aging clients may have anxiety over asking for help and possibly losing independence,” said CFP Melissa Sotudeh of Halpern Financial.
And it's not just the advisors who are anxious about discussing long-term care. Many don’t want to acknowledge their mortality. As people live longer, the need for long-term care and other solutions becomes more prevalent. If both parties avoid the subject, the client will end up being ignorant of their options as they age.
According to the study, people were more likely to imagine their relatives needing long-term care instead of themselves. It’s easier to see someone else’s mortality instead of our own, and we’re often able to make shrewd and practical considerations about other people that are too personal and emotional for us to apply to ourselves. (For related reading, see: The 10 Most Expensive States for Long Term Care.)
Other studies say that a majority of both men and women will end up needing long-term care. This isn’t an issue that plays gender favorites, and currently less than 15% of seniors 65 and older have long-term care insurance.
Compliance analyst John Schneider of DebtFreeGuys said many advisors are simply unaware of long-term care and what it entails. Also, long-term care is not a cheap provision; many people hesitate buying something they see as unnecessary.
“Long-term care, such as home modifications, in-home nursing care, nursing homes, insurance, medical expenses, etc. is almost the third-rail of financial advising because it's more detailed and serious than saving and investing for the ideal retirement,” he said.
What Advisors Can Do
Sotudeh suggests bringing up long-term care insurance when clients are taking care of elderly parents or other relatives. By seeing the realities of old age, they may be more receptive to the idea of long-term care insurance for themselves. (For related reading, see: Medicaid vs. Long-Term Care Insurance.)
Still, she recommends that advisors not wait too long to broach the topic. “If clients wait too long, they may not be underwritten for LTC coverage,” she said.
It’s an uncomfortable reality that many advisors face: What’s best for your client may not be what they want to discuss. Advisors need to tread the line between encouraging their clients to consider tough realities and maintaining a comfortable and trusting relationship.
The Bottom Line
Long-term care is a difficult subject — one that most clients and advisors would rather avoid. But it’s a reality for millions of retired Americans and ignoring it can only lead to disaster and pain in the golden years of life. Try bringing up the topic in non-threatening ways and see how your clients respond. If you can make long-term care a part of your regular conversations, it will lead to a healthier future for the client and a stronger reputation for your practice. (For related reading, see: Taking the Surprise Out of Long-Term Care.)