Tips to include aged care into financial planning

With increased lifespans making future planning more important than ever, aged care remains an often overlooked but rewarding part of financial planning. 

Speaking at a panel on aged care at the FPA Professional Congress in Sydney, Assyat David, director of Aged Care Steps, encouraged planners to rethink retirement planning and redefine their retirement services.

“One of the misconceptions is that when people think about aged care, they think they have to be specialists, but that's not necessarily the case.

“We encourage you to think about having a solution for your clients around aged care and determine where you fit in among that and actively put a strategy in place that suits your business,” David said.

She outlined options such as outsourcing specialist advice, providing in-house counsel as part of the business, or “recognising the growth opportunity that comes from aged care” to become specialists themselves.

Addressing the issue of aged care with clients could be difficult, the panel agreed, but this only emphasised the importance of normalising the conversation.

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“People shut down when you say the words ‘aged care’, so I use the words ‘later years’ to talk about the last 25% of a person’s retirement,” shared panelist Kerry Darton, founder, Clarity Financial Advice.

“I often suggest to turn the family tree conversation upside down. You meet with your clients all the time and ask about their job, their life, their kids – start asking them about their parents. Are they alive? Do you think you’re going to have to help them when they get older?

“One of the big things that can derail a long-term investment plan is when one of the people generating income for the plan has to suddenly stop work to start looking after a parent or cut back on their work hours.”

Finally, it was important to address the state of health and enduring power of attorney (EPOA).

“A non-confrontational way to find out how a client’s parents are is asking about whether they have an EPOA in place or whether they are an EPOA for anyone else. Do they expect to be responsible for someone else? Are they going to need assistance in the home?

“Addressing aged care in all your conversations is about understanding your client, their potential longevity, and roadblocks that could potentially derail the plan you’re putting in place,” Darton said.

However, pricing of such services remained an issue as it was often undercharged. From $2,000 to build a financial plan to $6,000 for a full comprehensive service, the fees of aged care specialists could vary depending on the level of service required.

David observed, “Advisers often undercharge because they don’t necessarily appreciate or recognise the value they are providing to the client. Also, they often don’t have a method to come up with exactly what their pricing should be, as opposed to when they’re running investment portfolios and can pick a price relative to the value of the portfolio.”