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To stand out and deliver value to clients, financial advisors embrace healthcare



How to use healthcare as a differentiator

How can a financial advisor differentiate themselves in a crowded field? In years past, it was easier: Become an RIA and take on a legal fiduciary duty to clients. However, with the new Department of Labor Fiduciary Rule coming into effect, all brokers who work with retirement plans or provide retirement planning advice will have no choice but to become fiduciaries as well.

The savviest clients may still recognize really talented and committed advisors, but now even the least talented advisors will be able to say, “Hey, I’m a fiduciary too!” According to Walt Bettinger, President and CEO of Charles Schwab, firms will now have to differentiate themselves through relationships and planning. But in a world where everyone is a “fiduciary,” how can an advisor add value not yet being provided by the competition? 

Sean Allocca with Financial Planning magazine says that healthcare planning is one area where Americans are feeling financial anxiety that isn’t yet addressed by most financial planners.  He says that healthcare planning “could become a ripe growth area for firms and a way to differentiate themselves from competitors." While healthcare planning has not traditionally been within the scope of a financial advisor, more and more smart advisors are saying it’s an obvious way to stand out, first and foremost because healthcare is material to the financial health of their clients and prospects.

What specifically is causing so much anxiety?

  1. Rising health insurance premiums. Health insurance premiums rose by >300% for families between 1999 - 2015. Families who don’t have coverage subsidized by an employer paid about $17,545 in 2015.

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  2. Healthcare costs are increasingly threatening retirement savings. In 2017, Fidelity estimated that couples retiring this year could expect to spend about $275K on healthcare in retirement.
  3. Not only is healthcare expensive, however, but it’s also confusing. A recent Kaiser Family Foundation tracking poll found that only 20% Americans understand that most of the healthcare headlines we’re seeing around the Affordable Care Act and insurance exchanges only affect Americans who don’t get coverage through an employer or Medicare. Furthermore, health insurance companies enter and leave every year, hospitals move in and out of networks, Part D drug formularies change annually, people leaving employers have access to COBRA and Medicare retirement plans, and nine out of ten medical bills contain errors.
  4. Speaking of Americans on Medicare, those turning 65 not only have access to dozens of options, but they are inundated with confusing Medicare mailers. For those already on Medicare, CMS recommends reevaluating Medicare options every year.
  5. Families with adult children are also affected. Not only are those signing up for Medicare confused, but younger people without employer-based coverage and those turning 26 are also experiencing a high level of anxiety.

So what can financial advisors do with this?  More and more are saying that healthcare is an opportunity to provide peace of mind in an area of obvious financial consequence. Not only can they win new business, but they can delight current clients as well.

Advisors who decide to incorporate healthcare planning into their value proposition are faced with two options. First, they can build competency in-house. While this might be an option for some firms, many are choosing to instead partner with an outside resource to incorporate healthcare planning into their practice. Whichever route firms chose, healthcare planning will no doubt help them stand out in the crowd.

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