As a financial professional, it's unlikely you went to medical school. But even if you're not an M.D., don't be surprised if clients seek your advice on complex health care decisions as they approach retirement.
According to a study on health care and retirement conducted on behalf of
Ameriprise Financial Inc. earlier this year, 63% of baby boomers surveyed said they expect their financial professional to have some involvement in discussions about the impact of health and health care costs on their retirement savings.
And they have good reason to want to involve their advisers; evidence shows they need your help.
The study uncovered a number of interesting facts that should make advisers pay attention.
For example, even though most baby boomers know they likely will face large health care bills in the future, most are not preparing for this potential financial tsunami.
Only 19% of respondents said they have done one or more things to prepare for their health care costs in retirement. Another 26% said they have re-searched options but haven't taken action. Especially noteworthy: About 53% of those who have taken action said they “feel confident” about retirement.
CONCRETE STEPS
Other findings from the study give us a better understanding of what consumers have done to prepare and what they expect from their financial adviser:
• Few respondents have taken concrete financial steps to get ready for future health care expenses. Only about one-third have developed advance directives (medical power of attorney, living will, etc.), only 20% have obtained long-term-care insurance, and a mere 17% have calculated how much they may need in retirement to pay for health care coverage.
• About half of those who said they want their financial professional involved in planning for health care costs in retirement expect their adviser to prompt them to get health care coverage, help to create a comprehensive retirement health care financial plan or provide an explanation of health care options.
• Many consumers believe financial advisers have the knowledge and resources to help them prepare for the “big unknown” in retirement. Nearly half say the benefits of working with advisers include that they “will likely have the tools to help.” Twenty-eight percent believe their adviser will be able to provide valuable references to other professionals who also can help them plan for health care costs.
• Sixty-five percent of respondents said it's important that a financial adviser have a conversation with them about the costs of long-term care, its impact on their retirement savings and the options available to pay for it. One-quarter classified this conversation as “extremely important.”
Among the more fascinating elements of human behavior is how difficult it can be to prompt action, even in the face of possible calamity. So what does it take? For many, it's a suggestion.
As a financial adviser, you can and should initiate that discussion.
THE CONVERSATION
For some financial advisers it may feel like second nature to have challenging conversations about health care choices and the associated costs; it may be less comfortable for others. But don't panic if you're in the latter group. You don't have to become a health care, Medicare or insurance expert to help your clients get a head start on preparing for this part of retirement.
Your clients want your opinion, and they want you to be knowledgeable and willing to discuss health care costs and considerations to some degree.
Consider leveraging your network and referring your clients to professionals who can help with specific aspects of preparing for health care costs in retirement.
Either way, the bottom line is that the more value you can add in this area of need, the more valuable you will become.
Craig Brimhall is vice president of retirement wealth strategies at Ameriprise Financial Inc.
