Few planners have helped their clients develop plans to address their long-term housing needs, although many advisors contend with this issue in their own lives.
Thats according to a new survey of 506 financial advisors by asset management firm Legg Mason. The study found that just 14% of respondents have aided clients with this issue, although 45% have made housing-related plans for themselves.
We think theres a huge opportunity here for advisors and, of course, its a really important issue for clients, says Kathleen Pritchard, who heads up advisor business development at Legg Mason. What we are trying to do is to get financial advisors to think very strategically about this. Were saying, Lets plan for some of the realities. If [clients] want to age at home, lets make sure their home is safe.
And, if clients want to move to a facility, advisors can and should encourage them to be the ones choosing which one, Pritchard says.
The primary reason advisors have not helped their clients plan for their housing in retirement is because My clients do not ask about it, the survey found. Additionally, 26% of those advisors who do not help clients plan for housing in retirement said they do not feel knowledgeable enough about the topic to address it, according to Legg Mason.
The fact that clients dont ask about this all-important subject is precisely why advisors need to bring it up, according to Pritchard. They should remember that doing so is likely to lead, naturally, to new business, she says.
To plan for their housing needs, many clients may end up buying products such as annuities or long-term care insurance, Pritchard says.
We say, Look, if you start having these conversations with clients, you will open up income-producing opportunities, while wrapping clients children or grandchildren into the discussion, she explains. You will be a true resource for the family and retain those assets in the next generation.
The survey also identified the top three aging challenges for which advisors said they develop extensive client plans:
1. Having enough money in retirement (65%)
2. Wealth transfer (34%)
3. Plans for retirement, e.g., their bucket list (24%)
The vast majority of advisors surveyed, or 86%, agreed that dealing with aging clients is becoming increasingly important. Most also said they relate to these client issues on a personal level, the study found: 71% of respondents said they have been involved with organizing care for an aging parent, grandparent or loved one.
Though advisors might not be helping clients plan for their long-term housing needs yet, the survey found, they do expect that a significant percentage of their clients will be moving during their retirement years.
Specifically, respondents said:
27% of their clients will downsize from their current home and will likely do so when they are 70.
25% will move into a retirement community around the time they are 74.
22% will move into a facility that provides a level of medical care around the time they are 79.
Legg Mason collaborated with The Center for Innovative Care in Aging at the Johns Hopkins University School of Nursing to launch a new advisor education program that includes a 108-page workbook with information about how to address housing issues, Pritchard says.
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