Overwhelmed, under-prepared, emotionally involved and left with no time to consider their options. This is the damning conclusion from academic research that has been exploring how people make decisions about long-term care.
This emotive and controversial topic has recently featured heavily in the media, with the lack of reforms, feelings of unfairness and disparity, and spiralling costs. As life expectancy increases, so does the number of people who need care, and those who provide it are thin on the ground - especially post-Covid, and the casual dismissal of unvaccinated carers who were already overworked, underpaid and in short supply.
Previous research suggests a low take-up of professional financial advice regarding long-term care, which could explain why there are so few advisers who actively advise or specialise in this area – Society of Later Life Advisers offers an accreditation, which less than 1,000 advisers have managed to achieve it over the last 13 years.
However, there are indications that the need for good financial advice will only grow along with longevity – compounded by the lack of reforms, the increase in registered powers of attorney, and the continued complexity of the system.
This means more and more families are likely to navigate the care system, and the financial, emotional, and physical implications of making less-than-optimal decisions during this expensive journey can have long-term and irreversible effects.
It is crucial that more advisers start to actively work in this area, in both pre-empting and addressing care fee shortfalls.
The landscape is changing, and advisers need to evolve and adapt to stay relevant. What was once a stale, soulless and figure-orientated planning exercise has become an all-encompassing role that promotes communication, coaching and empathy.
Due to this, an understanding of vulnerability and the impact that this can have on a client’s decision-making abilities is so important – as it is said, people ask those in the wheelchair how they are, but rarely wonder about the person pushing it.
The trouble is that so many of our clients are pushing either literal or theoretical wheelchairs, with the FCA estimating that 46 per cent of people are vulnerable in some way due to their circumstances – whether that is caring responsibilities, poor health, lack of financial resilience or divorce, amongst many other factors.
When my grandad’s dementia made it unsafe for him to live alone anymore, it became obvious that what should be a set of practical decisions for his attorneys, was being marred by indecision, inertia and inexperience. It is not a criticism – how can you be expected to make good decisions about something you know nothing about, especially when it comes laced with such huge financial and welfare implications?
So, when I got accepted on a master’s degree course at the University of Gloucestershire, I knew I wanted to explore how people make financial decisions about care, and what stops them from seeking or taking financial advice.
It allowed me to ask lots of questions and understand what people are actually going through. When carers and attorneys were asked how they felt during the process; one respondent confessed they felt “stressed, uncertain and helpless - it came out of the blue and, given the onset of the pandemic, was a time of great change and challenge anyway”. Sadly, many responses were along the same lines.
My dissertation was called ‘Long Term Care - The Perfect Storm?” as I felt that the combination of an unfamiliar care system, an emotional or stressful situation, and the inexperience of some attorneys all could lead to a cesspit of poor decision-making.
Their additional responsibilities and heightened stress levels were found to increase preoccupation and limit someone’s ability to absorb information. In addition, the unfamiliar and complex situation often resulted in an inability to fully understand the broader implications, gain perspective, and make clear comparisons.
For financial advisers, this represents both a challenge and an opportunity.
On one hand, it means that clients are less likely to ask for advice regarding long-term care, unless it is directly signposted to them, due to heightened behavioural biases.
For example, a common theme across the literature was a sense of fear; typically, around losing independence, leaving their homes, or spending life savings to fund care fees. According to the loss aversion theory proposed by Kahneman and Tversky in 1984, people tend to avoid taking action when they fear losing something valuable. This instinctive response may be one reason some individuals hesitate to plan for their care fees, and why they don’t always seek advice.
However, the real-world value of working with clients in this space is not to be underestimated. In terms of job satisfaction, the benefits you can bring to clients facing this situation are quite incredible.
Financial advisers are perfectly placed to help overcome lots of the biases and issues clients face when dealing with long-term care. We are trusted sounding boards, there to reduce the emotional burden and promote early conversations to eliminate the time pressure. We are expertly informed, used to navigating complex scenarios and paperwork, and interacting cohesively with different organisations.
Involvement from a financial adviser can also help to reduce financial abuse of those in care, which is sometimes committed by attorneys through ignorance of the rules – and sometimes a deliberate act to hide or preserve assets.
This is particularly seen when attorneys are also beneficiaries, usually due to an enhanced sense of entitlement to their ‘early inheritance’. In fact, the lead from the economic crime unit at North Yorkshire Police told me just last week that fraud is the biggest issue in the UK right now, accounting for 42 per cent of all crime – and that Power of Attorney and Carer fraud is in their top three of most seen cases, right up there with Cryptocurrency and Romance scams.
Ultimately, the research concluded that 92.5 per cent of participants felt, that with the benefit of hindsight, they would encourage others to seek professional advice from a regulated financial adviser regarding the financial implications of long-term care.
All this means that an empathetic and expert financial adviser moves into an integral role, offering truly valued holistic and multi-generational advice for years to come.
To be honest, when I first enrolled in the degree course, I struggled to pinpoint the exact reason why I was doing it. I was already a chartered adviser; my business was doing well and there was no specific outcome or benefit that I could foresee. However, it ended up revolutionising my business. It made me more human, and more emotionally aware. It helped me find a niche in advising vulnerable clients, driven by passion and the opportunity to provide great outcomes for people, not just financially, but emotionally too.
Most importantly, it made me think critically, question things and gave me valuable insight into how my clients' minds work. Anyone who knows me will have heard me say “Just do good things, and good things will naturally happen in return.” – and since completing the degree, I have been featured in various publications, won a national award, started writing a book and speaking at events and taken on two board roles, one with SOLLA, and another as the chair of an ethics and scrutiny committee.
The diploma qualification may well be adequate for now and fit for giving a broad base level of knowledge of finance in general, however, I believe the best outcomes for clients can be found by advisers honing their skills in a niche and specialist area.
To do so, completing professional qualifications such as SOLLA, Divorce Expert (PODE), and Financial Abuse Specialist, will always be welcome, as will understanding wider perspectives from other organisations such as dementia friends, solicitors for the elderly and carers’ resource centres.
If advisers wish to work in this space, I feel that holding chartered status reflects the fact that clients are living increasingly complex and longer lives, bringing more issues with sustainability of income, and creating more potential for care fees and IHT, which often requires them to hold more sophisticated assets and potentially take more risks.
You should also be looking at implementing vulnerable client policies that offer clients shorter ‘layered’ meetings to make complex matters easier to digest and consider, as well as using multi-faceted communication methods, and encourage signposting to charities and advocates.
Finally, play to your strengths and use the members of your team who have buckets of natural emotional intelligence – make them your practice’s dedicated vulnerability champion, responsible for arranging charitable events and spotting potential flags in clients' behaviour.
Ultimately, I just think that life is too short to spend hundreds of precious hours each month working so hard unless it brings you real satisfaction, with a sense of purpose that allows you to directly improve people’s lives. I believe that a combination of stretching yourself mentally to achieve new things, and focusing on creating great outcomes is the key to an adviser’s happiness.
So, in the words of Mary Oliver, tell me, what is it you plan to do, with your one wild and precious life?
Zoe Taylor is a chartered financial planner at Lawrence Neil Wealth Management
