Dr. Carolyn McClanahan’s advisory practice is relatively small, but she focuses on serving a big need that clients have.
As you can read in this issue’s cover story, written by Jerilyn Klein Bier, McClanahan has integrated health-care planning into her advisory practice and teaches other financial advisors how to do it. McClanahan, a doctor of family and emergency medicine, manages a little more than $100 million for 78 families and plans to keep her number of clients small so she can stay closely connected with them.
For most advisory firms, health-care planning is a new frontier, but it is a service that will be desperately needed by a large number of clients. As I’m sure you’ve read over and over, more people are living longer. Recent stats include those from the Society of Actuaries, which issued updated mortality tables in October 2014 that showed an improvement in longevity: Among males age 65, overall longevity rose two years from age 84.6 in 2000 to age 86.6 in 2014. For women age 65, overall longevity rose 2.4 years from age 86.4 in 2000 to age 88.8 in 2014.
Most clients, however, won’t be dancing their way into their late 80s and 90s without health issues. They may become suddenly ill or may gradually be diminished, but their lives will end up a lot fuller and satisfying if they have an advisor who helps them take control by planning earlier for health-care costs and by discussing what kinds of choices best reflect their wishes and could give them the most independence for as long as possible.
Those kinds of discussions will deepen relationships with clients and provide them with a longer-term road map. However, because the costs of medical care and health insurance in the United States are increasingly being shifted to individuals, a growing number of clients will need help with more immediate decisions: Which health insurance plan offers the best coverage for me at the best price? I’m 65 and still working, but I don’t know if I should stay on my company health plan or go on Medicare? Can I afford all these drugs? Can you help me understand this complicated policy? I want to take that buyout at work, but can I afford to purchase health insurance for two years?
For advisory businesses, expanding health-care planning can make a lot of sense. Investment management is getting easier and more commoditized, while health-care planning is getting more complicated and more expensive. According to a recent survey by Bankrate.com, more people rank high medical expenses as their chief concern in retirement over running out of money.
Financial planners who invest the time in understanding health-care issues will be able to fill a pressing need for more clients as time goes on. And for the time being at least, advisors who offer in-depth health-care planning should have a competitive advantage; they will be offering a service that not enough advisors have yet embraced. In Financial Advisor’s latest retirement survey, the results of which we will report on in the January issue, only 16% of advisors say they offer extensive health-care advice as part of retirement planning.
I hope that more advisors take up the cause as Carolyn McClanahan has done.
Dorothy Hinchcliff, Managing Editor
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