Positioning Health Care as Part of Your Service Offering
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Whether your planning approach involves three, five or seven pillars, it is likely you are missing the top financial concern for Americans: health care.
Healthcare costs can have a profound impact on someone’s retirement goals, driving concern among clients that has accelerated in recent years and over the course of the pandemic. As such, health care is a critical consideration in the financial planning process.
In my experience working directly with clients of advisory firms, I have identified the major factors that contribute to this concern. I am sharing them to empower advisors to address these areas head-on rather than avoid them.
The cost of health care is increasing unpredictably
The cost of health care is rising in an unpredictable fashion. In my conversations with advisors, I’ve heard the increase will be 4-7% per year. Rates have increased above the rate of inflation and, if continued, may consume the majority of our GDP.
There is no crystal ball to predict whether this will in fact be the case, but I can guarantee you that this is scaring clients into thinking that most of their retirement savings will go towards health care or that they have to work longer to build a safety net. What if, instead of projections, we educated clients on the costs and the likelihood of various scenarios, like a new diagnosis or the need to live in a long-term care facility? Only a third of Americans are knowledgeable about how much they’ll need to cover healthcare costs in retirement. When a client identifies the cost of health care or long term care as their biggest financial worry, don’t just add extra money to an emergency fund. Take it as an opportunity to understand why they feel that way, to provide education, and to put a plan in place for the different scenarios that could happen.