1 Decide to do it – properly
If long-term care (LTC) is for you, then don’t just dabble; knowing a little bit about the subject will let your clients and their families down. Janet Davies, joint manager director of LTC adviser alliance Symponia, says advisers should first obtain the CF8 qualification and then become familiar with the legislation contained within the Charging for residential accommodation guide (CRAG).
2 Appreciate the process
Working in the immediate needs sector takes patience and time. “Accepting the need for, and finding, a suitable care home for a mum isn’t an overnight decision, neither is sorting out the future finances, especially if the family home needs to be sold,” says Davies. “If you set yourself a false expectation, you will become impatient.”
3 Plan ahead
The need to fund care will have an impact on a lot of other financial planning issues. Tish Hanifan, director of SVAR fair, a consultancy which developed the Later Life Adviser Accreditation Scheme, says: “Always include a discussion on the potential impact of the cost of care when advising on areas such as inheritance tax planning or retirement income. Those who plan ahead will have the best chance of coping with care costs should the need arise.”
4 Review state benefits
When a client is moving into care make sure that they are receiving all the benefits they are entitled to. Check whether they are claiming attendance allowance at the right level and whether they are entitled to Pension Credit. The latter can be assessed by using the government’s online Pension Credit calculator.
5 Be aware of longevity risks
No one knows how long they will be in care, and with people living longer it will become even more important to plan ahead. Graham Duffy, LTC manager at retirement solutions provider Partnership, suggests advisers consider recommending annuities, which ringfence the cost of care and pass the risk onto a third party. “The average stay in a care home is 18 months to two years, but some people will stay much longer and this could have a devastating effect on their estate,” he adds.
6 Act sensitively
Advisers in the LTC market will be dealing with families who are in a very stressful situation – no one wants to put their parents into care. This means that empathy and sensitivity is crucial. “The last thing the client wants is someone who is pushy and aggressive,” says Duffy.
7 Advice first, products later
“There may well be just one dedicated pre-funded product, but your clients still deserve to be informed about what will happen to them in the future,” says Davies. “Include care fees planning as an integral part of your standard process, present your clients with a working document, using specialist fact finds and reports.”
8 Explain capital protection
Always make sure that you clearly explain and record the option to take out capital protection of the immediate needs annuity. “The cost of such protection is high and therefore the client is likely to decline but it should always be offered,” says Hanifan.
9 Visit a care home
The media paints care homes as terrible places, where people go and wait to die. However, Davies says modern care homes can be inspiring places and the facilities can rival hotels.
10 Check power of attorney
A lot of care funding advice is not done directly with the client but by a friend or relative using a power of attorney. It is therefore essential to read the relevant Enduring Power of Attorney (EPA) or Lasting Power of Attorney (LPA). “Make sure it authorises the attorney to carry out the financial transaction on which you are giving advice,” says Hanifan. “Remember the new LPA can only be used when it is registered.”