Elder Care is one of the Greatest Under-estimated Risks to Wealth that Financial Advisers Need to Talk to Clients About
by Sam Del Rowe, via CFA Institute
With baby boomers aging and average life expectancies rising, financial advisers are finding that they need to address elder care in their conversations with clients.
Bernard Krooks, founding partner of the law firm Littman Krooks LLP and chair of its elder law and special needs practice, explains the health-related discussions that advisers and clients should be having, in a recent Take 15 interview with Lauren Foster.
“We find that many clients — and their advisers — spend their entire lives focusing on how we’re going to accumulate wealth,” Krooks says. “They fail to realize that it can take a very long period of time to accumulate substantial wealth. But it can take, unfortunately, a very short period of time to lose it if you or someone in your family gets stricken with the wrong illness.”
Medicare only pays for what’s called ‘skilled nursing care,' not long-term elder care.
Krooks also notes the high cost of long-term care in the United States. “This country . . . has no health insurance system for long-term care,” he says. “The average cost of long-term care in the United States exceeds $100,000, and in major metropolitan areas it can exceed $300,000 to $400,000.”
Additionally, many Americans assume that Medicare or the government will address their medical issues. “Medicare only pays for what’s called ‘skilled nursing care,’ and then under very limited circumstances,” Krooks says. “If you simply can’t perform some of your activities of daily living . . . Medicare’s not going to pay. But, if you have a heart attack, or you have a stroke, and you need rehab, Medicare will pay for a portion of that.”
Yet perhaps the most important issue to discuss with clients is appointing someone to make decisions in the case of their incapacitation. “(It is important for) the financial adviser to bring up this topic while the person is well,” Krooks says, “because you have the opportunity to appoint someone else to make these decisions for you.”
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