Check out this column in ThinkAdvisor!

As health care costs continue to rise, financial advisors are increasingly building health care consulting services into their value proposition to clients. The issue is material to wealth management — health care costs in retirement are estimated at $275,000 for a couple retiring this year, according to Fidelity Benefits Consulting.

More financial advisors are recognizing that strategically evaluating health care and insurance costs is key to an effective retirement strategy. But most financial planners and wealth managers aren’t insurance experts themselves, which has led to a partnership between two industries — health care and benefits advisors and wealth management experts.

How expensive can healthcare really be in retirement?

How expensive can healthcare really be in retirement? These sentiments are reflected in other surveys as well. According to a 2014 Merrill Lynch study, Health and Retirement: Planning for the Great Unknown, 41 percent of Americans pinpoint future healthcare costs as their greatest financial concern.

Surprisingly, that number jumps to 54 percent and 60 percent for pre-retirees with over $250K and $5 million, respectively. Despite these worries, only 15 percent of pre-retirees have planned for these expenses.

Why are these pre-retirees so worried? How expensive can healthcare really be in retirement? Many studies attempt to estimate how much retirees can expect to spend, and they estimate healthcare could cost between $200K and $700K per couple. No matter how you cut it, healthcare is material to the financial well-being of most Americans.

And how to help your employees or clients avoid them

Most consumers know how confusing the U.S. healthcare system can be. From choosing the right plan to avoiding surprise medical bills, most consumers benefit from having an insurance advisor to assist in decision-making.

But health insurance resources are limited. For consumers on a group plan, employees typically consult HR, but HR leaders aren’t usually health insurance experts. Further, not all benefits brokers are willing or able to take questions from individual employees, let alone answer questions about health insurance outside of the group plan—like what to do with a 26-year-old aging off their parent’s coverage.

When it comes to individuals, there are even fewer resources, which can have a material impact on consumers’ financial well being, investment planning and wealth management.

For these reasons, Bernard Health works with employers and financial advisors to provide expert health insurance to employees and clients.

How financial advisors can help

According to a 2017 Gallup poll, the cost of healthcare is the top financial concern for Americans. While many Americans have limited savings and would struggle to pay their deductibles or other medical bills, rapidly increasing insurance costs affect the financial well being of consumers with higher incomes, too.

For financial advisors, there are three particular areas that may affect your clients’ finances and wealth management—Medicare, under-65 insurance costs, and medical billing for high severity healthcare experiences.

This is why more financial advisors are integrating healthcare and health insurance advising into their practices, either in-house or through partnerships with noncommissioned advisors like Bernard Health.

Here’s what financial advisors should know.

How to use healthcare as a differentiator

As the Department of Labor Fiduciary Rule looms over the financial advisor industry, most advisors are having to take on a legal fiduciary duty on behalf of their clients. As their roles shift and, simultaneously, healthcare becomes more and more material to the financial health of their clients, many advisors are including healthcare as a part of their financial planning process. Our team at Bernard Health has talked to hundreds of financial advisors about healthcare in 2017. When it comes to helping clients, the whole industry is evaluating three options:

1. Build health insurance and Medicare expertise in house by hiring an expert or helping a current staff member get a health insurance license

2. Add a “healthcare extension” to their practice by partnering with an outside resource like Bernard Health.

3. Do nothing. While many advisors are addressing healthcare questions head-on, some are concluding that it's not within their scope as a fiduciary to provide healthcare expertise to clients.

For the advisors considering a “healthcare extension”, how can they be sure their fiduciary duty is taken seriously by their partner? In other words, will the outside resource have their clients’ best interest in mind when giving healthcare advice?

When evaluating a partnership with a healthcare expert, here are four considerations that help ensure your clients are getting the kind of healthcare advice they need.

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.

How to help clients better manage costs in 2018

Does your financial planning or wealth management firm have clients on Medicare? What about self-employed clients, or those who own their own small businesses?

Open enrollment for both Medicare and the individual market occur during the fourth quarter. This is the time your clients can determine if they have the right insurance strategy for themselves and their families.

With healthcare costs skyrocketing, choosing the right plan is material to your clients’ financial interests. This is why more financial advisors are beginning to integrate healthcare advising services into their practices.

By partnering with Bernard Health, financial advisors can provide clients with complimentary access to health insurance experts. We’ve been helping individuals and families compare their options and find the best strategy for more than then years.

Want to change plans? We can help.

Medicare open enrollment begins October 15. Until December 7, Medicare beneficiaries make changes to their Medicare Advantage and Part D prescription drug plans.

You won’t be able to make changes to your plan until next year’s open enrollment period, so be sure to evaluate your current strategy.

What are your options?

A 'healthcare extension' gives clients the expert advice they need

1. The Affordable Care Act and subsequent policy debates made health insurance sexy (sort of) for maybe the first time ever.
   
   
2. I learned to stop talking about healthcare. I started asking questions about healthcare instead, and I was surprised by what I observed. The same people whose eyes glazed over when I brought it up became animated when they had space to talk about their own healthcare experiences and concerns.