Consumer belief in free advice is ‘red herring’, Partnership

A belief that consumers perceive advice to be ‘free’ and that as a result financial advisers will be starved of business post-2012 as people shy away from hefty fees is a “red herring”, according to Chris Horlick, managing director of care at annuities provider Partnership.

Mr Horlick said that the fact charges will be more transparent will not prevent individuals from buying specialist advice services. In particular, he said that care advice will be seen by consumers as extremely valuable and they will “gladly pay significant amounts of money for that”.

He said: “It’s a good thing that what they are paying for will be more transparent. They were always paying for it, it was just loaded into the product and commission.

“So it’s a bit of a red herring, it will just be clearer what they are paying for - and I think the whole point with care advice is that there is such a lot of advice required.

“Today if a specialist care adviser writes an incredibly detailed report people would gladly pay significant amounts of money for that, whether they go ahead with buying a product or not.”

Mr Horlick said that the complexity of the state benefit provision in this area coupled with the high costs of care, means that people will pay for professional advice but that services needed to be signposted by local authorities.

“Advisers can advise on how to deal with your local authority, how to ensure you get your non-means tested state benefit, how to choose a care home, what sort of care you require and choosing dementia care.

“There’s a whole raft of things that financial advisers, who are care specialists, can advise on and the most important bit is the actual funding advice.

“[But there is] another aspect of this all information and advice piece - how do I find a care qualified adviser?”

Discussing the debates around long-term care, Mr Horlick said the government needs to make it clear to consumers that in many cases they will have to pay for their long-term health care and not the state.

Recent data from Partnership found that 52 per cent of consumers aged 45-85 say the government will fund their long-term residential care.

He said: “If you are aged 65+, you have a three quarters chance that you will need care of some sort. It’s only 25 per cent who don’t and of the 75 per cent who do some of them have very significant costs indeed.”

Mr Horlick highlighted that the likelihood is that the consumer will be a “self-funder” if he/she has assets more than £23,250 under the current system.

He said: “Care homes in the south of England can comfortably reach £800-£1,000 a week... if you are paying £1,000 a week and you are living eight years in a care home you have a pretty serious need for some good financial advice.”