I frequently hear advisors who are proponents of long-term
care planning say:
•
“I would be remiss if I didn’t bring it up with
every client.”
•
“Not bringing it up is negligent and setting clients
up for financial catastrophe.”
•
“It’s too big of a risk to ignore in the planning process.”
•
“It could blow up their entire retirement plan.”
•
“It is my fiduciary responsibility to have every client
prepare for this possibility.”
On the other hand, advisors who aren’t yet on board with
the idea often say:
•
“My clients don’t need it.”
•
“It’s too hard to sell.”
•
“I’m uncomfortable engaging in the long-term
care conversation.”
•
“It’s too expensive.”
•
“It’s not worth my time.”
I can certainly understand the arguments on both sides,
but I would argue (how could I not, as a long-term care
product manager?) that long-term care planning is vital
to clients’ financial health. Of course, having the discussion
with clients is often easier said than done. If you’re not
sure where to begin, this four-step approach can help you
incorporate long-term care planning into your practice:
1.
Believe
2.
Commit to action
3.
Master the conversation
4.
Tap into the Insurance department’s resources
Believe
In order to talk convincingly with your clients about
long-term care planning, you first need to believe that
it’s a critical component of their financial plans. Most
advisors plan well for the inevitable death of a client,
but it’s just as important to plan for old age. Without
a long-term care plan, a client risks significant financial
loss due to health care costs.
Keep in mind that all of your clients already have a
long-term care plan in place. How is that? Well, in the
absence of a long-term care insurance (LTCI) policy,
their plan is to spend their own income on long-term
care expenses. Your plan, in the absence of an insurance
policy, is to counsel them at the time of a long-term care
event on the least damaging way to reallocate their
income to cover those expenses.
It is generally assumed that clients’ biggest worry is
running out of money. A 2013 Merrill Lynch retirement
study, however, revealed some surprising responses to the
questions “What is your number-one retirement worry?”
and “What are your top financial worries for retirement?”
(see Figure 1).
commonwealth.com
For Advisor Use Only
7
Wealth Management
/ Insurance
Overcoming Commitment Issues: A Four-Step Process for
Eliminating the LTC Wild Card in Clients’ Retirement Plans
SUSAN KOBARA, CLTC
Long-term care planning can be a
controversial topic, generating enthusiastic
discussion and debate among advisors.
0% 10% 20% 30% 40% 50% 60% 70% 80%
0% 10% 20% 30% 40% 50% 60%
52%
72%
60%
47%
26%
21%
13%
37%
34%
28%
4%
18%
6%
15%
3%
2%
Serious health problems
Biggest worries about living a long life
Top nancial worries about retirement
Being lonely
Not having a purpose
Health care expenses
Outliving my money
Lack of personal savings
Lack of social security
Lack of company pension
Not being a burden
on my family
Running out of money
to live comfortably
Having nothing left to leave
my children/grandchildren
Above $250K
Below $250K
Population by
Investable Assets:
Source: Merrill Lynch, “Americans’ Perspectives on New Retirement Realities and the Longevity Bonus”
Figure 1. Health Problems: The #1 Retirement Worry
