Mary Beth Franklin

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Mary Beth Franklin on what your clients really want when they talk about retirement.

Mary Beth Franklin: Talk health care to clients — or lose them

New survey shows few advisers are confident discussing medical costs; big price for ignoring the topic

Oct 29, 2012 @ 12:39 pm

By Mary Beth Franklin

health care
+ Zoom

Discussing health care costs in retirement with clients is new territory for many financial advisers. In fact, few say they have the knowledge and resources to do it well.

That's a real problem, since four in five advisers say they know if they can have these discussions, their clients will stay with them, according to a new Nationwide Financial survey released Monday.

“There are not enough advisers right now talking about future health care costs with their clients, but more will soon learn how – or risk losing customers to an adviser who can,” said John Carter, president of distribution and sales for Nationwide Financial.

Nearly 60% of financial advisers say their clients really want to talk about their health care costs in retirement, but more than half of the advisers surveyed admit that it is “challenging” to “very challenging” to discuss information about their clients' health, according to the Harris Interactive survey of 501 financial advisers conducted in July.

Only 30% of advisers say they are confident in their ability to estimate their clients' health care costs in retirement, according to the survey that was originally embargoed for 12:01 a.m. Tuesday October 30, 2012. Nationwide agreed to lift the embargo for InvestmentNews due to the impending storm that shut down much of the East Coast.

“Advisers need to have these discussions with their clients,” Carter said. “Especially since 49% of the advisers we surveyed believe they could be liable for not properly preparing their clients for the costs of health care in retirement.”

Estimating costs

One of the problems that may be keeping advisers from having these discussions is that 43% say they do not have the proper solutions or proper tools they need to estimate health care costs in retirement.

Out-of-pocket health care costs for the average 65-year-old couple can reach $240,000 over 20 years of retirement, according to Fidelity Investments. And that doesn't even account for long term care. People living to age 65 have a 70% chance of needing some type of long term care in their lifetime with an average cost for a nursing home projected to reach $265,000 per year by 2030.

To help simplify this complicated issue and encourage these discussions, Nationwide Financial launched the Personalized Health Care Assessment program to help advisers estimate their clients' health care expenses in retirement. The program uses proprietary health risk analysis and up-to-date actuarial cost data, such as personal health and lifestyle information, health care costs, actuarial data and medical coverage, to provide a personalized cost estimate that will help clients plan for medical expenses.

Brian Fenstermaker, principal managing partner for the Envision Consulting Group LLC in Westerville, Ohio, has been using the health care assessment tool since it first became available last year.

“As a Certified Financial Planner, I try to do an in-depth analysis of our clients' potential costs,” said Fenstermaker. “This tool allows me to make projections based on specific factors that apply to my clients,” he explained. “It makes a huge difference in the way we do income planning and it definitely creates an 'a-ha' moment for our clients.”

More than 5,200 advisers have used the tool so far, well beyond the 3,800 advisers that Nationwide had projected for its first year. Advisers can visit to learn more about the free tool. Carter says Nationwide plans to add long-term-care cost projections to the program in coming weeks.

Tune in to IN Webcast

Due to their long life expectancies, women are particularly concerned about health care costs in retirement and how to pay for it. For insights into the challenges of managing longevity, tune in to the third and final Investment News webinar on Women and Investing on Tuesday October 30 at 4 p.m. ET.

The webinar's panel of experts include Ron Mastriogiovanni, President and CEO of HealthView Services (the company that created the healthcare cost assessment tool for Nationwide); Katy Votava, President of; and Thomas West, Financial Advisor with Signature Estate & Investment Advisors.

The panelists will discuss the ins and outs of buying long-term care insurance; ideas for building income-generating portfolios; and making smart decisions about Social Security and Medicare to enable clients optimize their benefits and maximize their savings.

To register for the webinar, go to


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