Becoming More Health-Conscious

Be Prepared
Gary Shor, a financial planner with Warren, N.J.-based AEPG Wealth Strategies, is especially concerned about the impact of health-care expenses on clients with $1 million to $2 million in assets. With taxes, “It’s a double hit if they have to take $300,000 out of a qualified account,” he says.

AEPG brings up the topic of health care with every client. “I don’t know how you can do a plan without this being a big part of it—it touches everything,” he says. “A health-care event is one thing that can devastate a family pretty quickly.”

New clients are asked if their parents and siblings are alive or what happened to them. At review meetings, AEPG asks clients if there is anything new health-wise with them, their parents or children. “We want to prepare, not repair,” says Shor.

AEPG discusses disability insurance with all its clients. Younger people are often in denial about the need for this coverage or too busy to consider it, but Shor stresses it’s essential for them to protect their working capital. Some plans include income replacement and retirement funding replacement, he notes.

Shor says the sweet spot for pricing of long-term-care insurance is generally between ages 57 and 63. He generally recommends minimum coverage of three years and likes to see an inflation rider included. When clients reach their mid-60s, AEPG begins stress-testing their portfolios for a possible long-term-care event.

AEPG is continuously building its life-planning manual to provide its advisors with guidance, says Shor. The firm works with outside experts, including eldercare attorneys and geriatric case managers. Caregiver.org is a good place for clients to start gathering information when care is needed anywhere across the U.S., he says.

AEPG works with many small business owners who sponsor health-care plans. They are worried about rising costs. And although 90% of proposed legislation doesn’t pass, says Shor, “the changing regulatory landscape is their biggest headache.” Debora Ristau, AEPG’s vice president of group benefits, keeps these clients up to date on changes in regulations and recently sent them a compliance checklist.

Mark Baniewicz, president and CEO of Socius Family Office, headquartered in Boca Raton, Fla., makes sure clients have advance medical directives including health-care proxies and living wills. “It doesn’t matter if you have no wealth or a lot of wealth,” he says. Clients often need coaxing to consider these issues. “It’s a reminder we all have an expiration date,” he says.

Socius discusses long-term care with clients. Baniewicz is aware of its importance because three of his four grandparents required it. An average stay of two to three years runs $100,000 to $200,000, he says. Most families Socius works with prefer to self-insure this coverage. If so, he says it’s important to set aside a portion of a portfolio with immediate liquidity in case there is a health event.

The firm also brings up disability insurance with its clients, about half of whom are professional athletes. A key question it asks is, “What would happen to your human capital if you were to get hurt?” says Baniewicz, a former NFL football player.

He tries to meet in person with clients at least once a year and converse with them quarterly. During meetings, he can often tell if a client is deteriorating. When working with family members, it’s helpful to observe how relatives may react to an older client’s comments, he says. This could include a nod, a head shake or shrug.

McClanahan expects the medical system to change dramatically over the next few decades. While the legislative picture is a big unknown, she anticipates more patient-centered care, stepped-up use of technology in medicine and more patients using “Dr. Google,” she says.

Her prescription for better health outcomes—physically and financially—is to enjoy life, save for the future and do the work you love for as long as you can. She has even sent patients who are unhappy in their jobs to career therapists. “We weren’t made to live 30 years in retirement,” she says.