Let's face it: It is not surprising that long-term care, and the issues associated with it, is not a topic that many people like to discuss. It's hard for relatives to talk about personal issues such as finances, health, aging and changing needs. Families often don't know where to start, and that is when financial advisors can play a key role in providing guidance on how to initiate the discussion.
Having these conversations early and often is extremely important because when everyone (parents, children, siblings, etc.) is on the same page, the emotional and financial impact is lessened if a crisis erupts because there will already be an agreed-upon plan of action in place.
The need for planning and frank discussions will only increase as our population ages. The majority of older people will require often costly long-term care services. Moreover, where people were once primarily worried about their parents and in-laws, many are now also worried about siblings. Twenty percent of baby boomers and 28% of Millennials (ages 21-32) worry they will be responsible for a sibling1
Add in the fact that the troubled economy has diminished many people's portfolios and the need to plan becomes even more urgent. The cost of long-term care in the U.S. has increased for the sixth consecutive year, and most of these price increases are outpacing inflation2.
The average median hourly private pay rate for a non-Medicare certified, state-licensed home health aide is $18.50. At 44 hours each week, this cost could total more than $40,000 annually; it's clear how preparing for a LTC event should be as much a part of a financial plan as your retirement plan. You can be sure your clients and their families are concerned. Unexpected long-term care needs can significantly deplete people's nest eggs within a few short years.
As a leader in the industry with 35 years of long-term care insurance experience, Genworth Financial understands consumers' needs and wants to help make these decisions as painless as possible. In response to public demand, the company designed the "Let's Talk" campaign, which offers materials for advisors to provide to their clients so that they can have easier, more productive conversations around long-term care planning with their loved ones.
The time to talk is now
Too often, people wait for a tragedy to talk to the people they love about big issues. But waiting is risky. People can suddenly find themselves in the midst of a crisis, trying to make decisions when emotions are blinding, time is short and options are limited.
Whatever the relationship with a parent or loved one -- good, bad, indifferent or complicated -- it's important that clients know that the conversation won't go perfectly. And they may not cover everything. But any conversation, any preparation, is far better than none at all.
Financial professionals who have these conversations with clients do more than just make sales -- they become viewed as a trusted advisor with the clients' interests at heart.
When you help your clients prepare for life's uncertainties they can minimize the emotional and financial impact an unexpected event can have on their lives.
How to open the discussion
Clients look to their financial advisors for advice on their most important financial planning decisions, and the need to open up the conversation with their loved ones about long-term care is no exception. By sharing the below tips with your clients, they will have the right tools to ensure the discussion is well-received and delivers the best results possible.
Don't take the person by surprise. Tell him or her that you have something important you want to talk about and do it in a comfortable, pleasant setting.
Use a situation you have gone through as a lead-in to your conversation. "Mom, remember when Aunt Marilyn fell and broke her hip? And her kids ended up selling her house to pay for the years of rehabilitative care she needed? It's the kind of situation we would like to avoid if we can. If we plan in advance, we can be better prepared and be proactive in what options would be available."
Ask if they ever need care -- short- or long-term -- who are they counting on to take care of them? Spouse? Family members? Kids? Outside professional help? How would that decision impact the family dynamics and finances?
Listen carefully and stay focused on concerns. Let the parents or loved one talk about their fears and dreams for the future. There can be unexpected rewards from communicating honestly, such as getting to know someone in a whole new way and encouraging future discussions. This should be a continuous conversation; as things evolve, the conversation should, too.
Create a strategy and put it down in writing. From your conversation, what does this future look like? Financial planning, estate planning and long-term care planning are all connected. It's important to write down specific wishes so that everyone involved knows what is expected both today and in the future.
By helping clients and prospects open up the discussion about a loved one's financial future, you add value to the relationship beyond your product knowledge and technical expertise. Having a client or prospect consider you a trusted resource creates loyalty and generates referrals -- especially important in today's competitive environment. Remember, you are their best advocate!
Colleen Goldhammer is Senior Vice President at Genworth Financial. For information about the "Let's Talk" campaign, visit www.genworth.com/lets-talkadvisor.
Footnotes:
1. AgeWave "Retirement at the Tipping Point," 2009
2. 2009 Cost of Care Survey conducted by CareScout(R) 04/09
