How Will Australians Fund The Last Stages of Life?

Financial advisers are the key to creating a financially-stable retired population. This is good for Australia, for individuals and their families. It’s also good for your business. Trenna Probert takes a look at how Advisers can help with the aged care conundrum. 

Aged care is already a $25 billion industry in Australia and the ageing population will ensure this number continues to grow. Given the disproportionate size of the market need in comparison to the number of accredited aged care advisers, the time is ripe to become an expert in aged care advice. Those advisers and practices who approach this opportunity seriously now, will become the go-to-brands in the decades ahead.

Australians are being urged to prepare responsibly for retirement. As the nation continues to age, this pressure will increase. Individuals are facing a longer life but with less government support. And so, the burden of care is increasingly falling back on families who are ill-prepared.

Every day, more than 5,000 Australian families face the decision to move a parent into aged care. It is one of the most significant and emotionally charged decisions they will ever make about their parents’ well-being. Emotions run high between grief, guilt, fear and helplessness, with stress exacerbated by the difficulty in easily accessing reliable information and support services. Understanding, arranging and financing aged care is incredibly complex and the lack of reliable information makes it even harder.

Arranging aged care is not just about convincing a loved one. Nor is it simply a matter of balancing the suitability, availability and cost of facilities. One of the greatest stresses relates to finance. Most people don’t know how they will fund care. They worry about related issues such as cashflow, needing to sell the family home, the impact on pensions and intergenerational wealth transfer. These are complex subjects and family dynamics can make it even more challenging to make good decisions.

Families need expert support to understand their options, to find suitable solutions, make the necessary arrangements and then finance the transition from retirement into aged care. It requires a delicate balance of strategy and sensitivity. This is where advisers can make a significant, positive impact.

Whole of Life Advisory doesn’t end with planning for retirement. Proactive advisers play a vital role in ensuring families are planning effectively for the later stages of life, for their loved ones and ultimately themselves. 

About half of Australia’s financial advisers are already conversing with clients about aged care. However, many lack the confidence and knowledge required to progress these discussions. The Investment Trends 2017 Retirement Planner Report found that while 60% of planners had provided retirement advice, only 6% provided aged care advice to their clients.

Only 10% of the people seeking aged care information are turning to financial advisers. Typically, most people seek support from doctors, government services and family members. This is not optimal. Given the complexity of structuring and funding aged care, financial advisers are uniquely positioned to make this process so much easier. This is a service which can deliver significant benefits not just to the ageing, but also their families and generations to come. 

A vibrant opportunity exists to create a new service vertical which can deliver value along the entire length of Whole of Life advisory relationships. To do this, advisers need to move beyond simplistic conversations about aged care. Investing into training and tools to become a trusted source of knowledge on the subject is worthwhile as clients will trust the adviser’s ability to deliver genuine value at a crucial time.

“Our clients really value our help at this important time in their lives. Now we are in a position of trust and our clients’ children are also turning to us for services like estate planning.”

Grant Chapman, FinTech Financial Services

Value for advice businesses and their clients. So why aren’t advisers taking advantage of this opportunity to differentiate and create new revenue channels?

Anecdotally, there are a range of issues which limit the engagement of the advice community in providing aged care support. These include:

1) Identifying clients who need support

Many advisers recognise there is a growing need for aged care planning, yet they aren’t certain how to find the opportunities within their existing client base. Often that’s because advisers are looking for elderly people as the likely beneficiary. That’s a mistake.

Around 50% of people turn to younger family members to help them navigate these subjects. And as those needing care tend to be in their late seventies and older, the people making decisions on their behalf are often in their forties and fifties. This is a demographic with high levels of engagement with advisers. It is also the peak wealth demographic and therefore the most important for advisers to retain and attract. What better way to do this than to help them through one of their most stressful life events?

Therefore, when planners are having Transition to Retirement discussions with clients, they should integrate questions about their client’s hopes for their later stages of life and ask about their parents’ situation. This creates an ideal opportunity to discuss aged care planning across the generational divide.

2) Time and investment to upskill 

When you are deep in the day to day of running your business and looking after clients, creating a completely new area of expertise can be overwhelming. Certainly, there are significant complexities to consider in the provision of aged care advice. However, the balance to that argument is obvious.

With the continued digital industry disruptions and tighter regulatory frameworks due to high-profile scrutiny of the industry, it makes sense to build expertise in a growing sector where personalised advice will always be valued. You will need to invest into the process to achieve this. But today that is easy to do with many highly skilled groups providing adviser training, accreditation, ongoing support and customised planning tools.

3) Financial viability

Another deterrent for many advisers has been pricing inconsistency. Many advisers are unsure what to charge and how to validate the pricing with clients. However, this is a relatively easy problem to solve. Given the need for aged care advice and for planning businesses to differentiate, it is well-worth the effort. There are many examples today where advice practices offer a full range of options, from basic up to a full-service, and the pricing model reflects the relative complexity and value of each. A small amount of research will reveal these.

There is also a misconception that aged care services are transactional rather than ongoing, and therefore difficult to scale. In reality, providing good aged care advice is about building and enhancing client relationships. Ongoing reviews of strategies, cash flow and performance are valued by aged care clients and intergenerational wealth transfer is a key complementary service.

Advisers willing to push past these pain points can tap into a massive commercial opportunity given only 6% of advisers are providing aged care advice, and even fewer are accredited to do so. 

Transition to Aged Care: Unlock hidden opportunities within your business with a new advice service which delivers real value to Australia’s fastest growing demographic.

Transition to Retirement strategies are offered as a service by most financial advice practices today. With people living longer, Transition to Aged Care is a vital new area of expertise and a logical extension to retirement planning. Fortunately, the people considering their own pathway to retirement are often the aged care decision-makers for elderly family members. This makes it quite simple to extend the conversation to uncover opportunities to add value today.

Advisers who choose to specialise in supporting clients through this stressful process can enhance their client value proposition and create intergenerational client loyalty. Not only can it be financially rewarding for the practice and extremely important for families, many advisers take great satisfaction in delivering value at this crucial juncture. Future proofing the ageing process for your clients will also future proof your practice.

Trenna Probert is part of the founding team at Care360, a new Australian start-up designed to make the emotional process of finding and selecting appropriate aged care less stressful.

Adviser Ratings is partnering with Aged Care Steps, Care360 and Care Page to educate Advisers on the aged care sector. 

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Article by:

Trenna Probert

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