Long Term Care A rewarding area of advice
Welcome To raise your hand in the webinar, click here To ask a question, please type here. We will respond during the webinar or shortly afterwards For financial intermediary use only. Not approved for use with customers.
Learning objectives By attending this session, delegates will be able to: Evaluate the size of the market and potential opportunities in care advice. • Understand current demographics and longevity risk with regard to an ageing • population. Recognise the wider advice opportunities that a care proposition can lead to. • Discuss how the inclusion of care advice can help to fulfil other policy and business • objectives. Understand the commercial and non-commercial drivers for advisers involved in the • later life market. For financial intermediary use only, not to be used with customers.
The number of older people is growing! In UK in 2016, there were: 11.6 million 1.5 million 14,450 people aged people aged people aged over 65 over 85 over 100 The projections In next 17 years, In next 23 years, 16 million 4.3 million 1 in 5 people aged people aged will live to see their 100th birthday over 65 over 85 Fastest growth is the post 85 age cohort Source: Age UK Later Life in the United Kingdom December 2016 Report For financial intermediary use only, not to be used with customers.
Where we are at for advice! The estimated number entering a care home each year is 130,000 2017 report, pure self-funders (i.e. no top-up) 44% = 57,200 2017 GPR completions via Medicals Direct Group 6% = 3,446 (approx) PLUS those who are just topping up! Source Laing and Buisson and Partnership For financial intermediary use only, not to be used with customers.
FCA (FSA as was) guidance June 2012 Long-term care insurance contracts “Advisers should not recommend a product that is an alternative to a long- term care insurance contract, where a long-term care insurance contract would be suitable, because they have not passed the relevant examination.” For financial intermediary use only, not to be used with customers.
Poll question Do you have CF8 or equivalent? 1. Yes 2. No, but intend to 3. No, currently considering 4. No, currently refer For financial intermediary use only, not to be used with customers.
Average regional cost of residential care homes Area Care home (without nursing) Care home (with nursing) Greater London £38,532 £49,348 East of England £34,996 £51,272 South East £36,504 £54,132 South West £34,060 £48,204 West Midlands £29,796 £48,204 East Midlands £30,056 £37,700 North West £26,572 £39,832 Yorkshire and Humber £28,392 £39,260 North East £29,276 £34,632 Source: Laing and Buisson, Care of Older People UK Market Report 28 th Edition 2017 (VIA WHICH?) For financial intermediary use only, not to be used with customers.
A rewarding area of advice • Advice opportunities with existing clients. For financial intermediary use only, not to be used with customers.
Your own clients Many advisers Ages 50 – 70 What is the age have clients may be acting as Everyone has (or range of your around the attorneys for had) parents client bank? retirement age parent(s) Do you ask if Do you ask if POA – maybe Is it raised at they have done they are acting indicator of care reviews with all their power of as an attorney? need? clients? attorney? Clients acting as attorneys need advice For financial intermediary use only, not to be used with customers.
If they don’t know you can help them……? Could you lose those clients? They need advice about care funding. Let them know you can help. May think there is nothing that can be done. For financial intermediary use only, not to be used with customers.
A rewarding area of advice • Advice opportunities with existing clients. • Opportunity to increase business via referrals. For financial intermediary use only, not to be used with customers.
A rewarding area of advice • Advice opportunities with existing clients. • Opportunity to increase business via referrals. • Develop ongoing professional connections. For financial intermediary use only, not to be used with customers.
Harnessing the full client lifecycle FI activities shown in black; solicitor activities shown in blue Change Receive RETIRE Buy first Have Move Get house family house jobs inheritance married Mortgage/ repayment Spousal Set up children’s Probate IHT & advice tax-planning investments & CTFs Review Wills estate Conveyancing Write Wills Review trusts Review Wills planning Set up trusts Review trusts Lump sum investment Client asset value Refinance Long-term care Conveyancing Equity release Family cover Regular School fees Arrange Pension Pension Income Annuity savings planning SIPP maximisation/c de-risking drawdown purchase pension onsolidation Annual Annual Annual Annual Annual Annual Annual portfolio portfolio portfolio portfolio portfolio portfolio portfolio review review review review review review review Annual ISA Annual ISA Annual ISA Annual ISA Annual ISA Annual ISA purchase purchase purchase purchase purchase purchase 20 40 50 60 70 80 30 Client age
Where do solicitor/IFA synergies lie? Older client planning Long-term care Power of Remember: insurance Attorney Only financial advisers that hold the CF8 Long- Equity release Trusts term Care Insurance or product selection Will-writing equivalent qualification Impaired can advise on long-term Equity release annuities care products guidance Income solutions Solicitor Financial adviser
A rewarding area of advice • Advice opportunities with existing clients. • Opportunity to increase business via referrals. • Develop ongoing professional connections. • Generational financial planning. For financial intermediary use only, not to be used with customers.
Who’s vulnerable? ? Teresa, 77 Lorraine, 48 Living with Teresa’s dementia daughter For financial intermediary use only. Not approved for use with customers.
What might make a client vulnerable? Mental Low literacy Physical Low income Illness health skills disability and/or debt problems Divorced Low Being Being Caring Bereaved language older old young Job loss skills Source: FCA Occasional Paper 8, February 2015 For financial intermediary use only. Not approved for use with customers.
There are new definitions of vulnerability Existing Added Those who are especially People who can readily be susceptible to harm because identified as significantly less of their circumstances able to engage with the market and/or People who would suffer disproportionately if things go wrong FCA: Our Future Approach to Consumers 2017 For financial intermediary use only, not to be used with customers.
FCA – ‘Risk factors’ Low literacy, numeracy, financial capability Caring responsibilities • • Physical disability Low income and/or debt • • Severe or long-term illness Change in circumstances • • Being ‘older old’ • Source: FCA Occasional Paper 8, February 2015, Appendix 4 – Practitioners’ Pack For financial intermediary use only, not to be used with customers.
A rewarding area of advice • Protects your client bank. • Opportunity to increase business via referrals. • Develop ongoing professional connections. • Generational financial planning. • Helps with vulnerability policy. For financial intermediary use only, not to be used with customers.
where to start? Audit current practice Develop approach and policy Roll out within your business Evaluate, improve, maintain Source: FCA Occasional Paper 8, February 2015, Appendix 4 – Practitioners’ Pack For financial intermediary use only. Not approved for use with customers.
poll Would you like further detail on developing a vulnerability policy? 1. Yes 2. No For financial intermediary use only, not to be used with customers.
A rewarding area of advice • Protects your client bank. • Opportunity to increase business via referrals. • Develop ongoing professional connections. • Generational financial planning. • Helps with vulnerability policy. • ‘Giving something back’. For financial intermediary use only, not to be used with customers.
Scenario for your client(s)? Parent(s) need care Family do not expect or understand longevity Good quality care being received – activities etc Mum/dad condition improves – new lease of life Then worries about longevity arise How long will they live? Conflict arises in their minds? Erosion of money in the bank – ramifications if it runs out? How long will it last? Are they expecting inheritance? For financial intermediary use only, not to be used with customers.
Extremely rewarding Qualified advisers Plenty of Can be very stressful have an excellent Protecting the estate information out for all concerned knowledge of the there whole system Vulnerability - Helping them at But how do you Care costs can funding is a big this critical time make sense of it be high part of the brings huge all? stress relief How long will Clients are very the money last? grateful For financial intermediary use only, not to be used with customers.
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