At its simplest, the key purpose of financial planning is to ensure clients have the money they need when they need it most.
However, in discussions with our clients about their protection and saving requirements, it is increasingly apparent that we are overlooking the elephant in the room.
There is a massive issue facing our clients, which is often referred to as a generational time bomb, that has the potential to destroy inheritances and cause misery to millions of elderly people.
Even more importantly, it hits them when they are at their most vulnerable.
I refer, of course, to the horrendous costs of long-term care.
The good news is that many pensioners continue to live active and healthy lives, long after their normal retirement age.
The fact that outcomes for any individual are unknown, as to need, timing and cost, make financing long-term care a natural for the insurance sector to solve.But encouraging as this is, though, in reality it is simply deferring the inevitable and neither the government, the financial services sector nor individual advisers can afford to ignore what is an increasing problem.
From the government’s perspective, the potential cost of providing the necessary social care for this ever-increasing section of the population will give any chancellor nightmares.
Equally, for the families of someone who ultimately has to go into care, the emotional and financial problems are immense. Even more so as the cost of care can virtually wipe out the value of the estate.
I believe a holistic approach by government, society and the financial sector is needed to end the misery caused by inadequate funding for long-term care.
While not everyone ends up in long-term care, for those that do, the time spent in care can vary hugely.
The fact that outcomes for any individual are unknown, as to need, timing and cost, make financing long-term care a natural for the insurance sector to solve.
Secondly, because, for some, the cost will be enormous, there needs to be a government backstop as a quid pro quo for the bulk of the costs being met by the insurance sector.
Lastly, individuals themselves, aided by financial planners, need to wake up to the potential dangers of funding long-term care and ensure it forms a key part of their planning.
I am confident that if we all work together to solve the challenge of paying long-term care, we can kick this particular elephant out of the room.
Ken Davy is chairman of SimplyBiz Group
