Is Healthcare in Retirement a Financial Advisors Responsibility? - Apparently So.

A few months ago, the Centers of Medicare & Medicare held their New England seminar entitledTrain the Trainers. This seminar, and others across the country, is conducted to inform S.H.I.P & SHINE specialists of any Medicare changes and to provide a networking venue to discuss best practices for clients. These specialists, usually community volunteers, are trained and certified in their respected states to counsel subscribers on Medicare (Part A & Part B), MediGap insurance, Medicare HMOs, retiree insurance plans, Medicaid, and free or reduced-cost health care programs.

During one of the sessions, the topic of healthcare was briefly supplanted by a turn to the “dark side”— a discussion of the economic side of healthcare in relation to the financial services industry.

An attendee posed a simple question: “With everything that financial advisors do for their clients, should they also be held responsible for knowing about Medicare and healthcare in retirement?”

The person explained that she asked the question out of frustration because many of her clients had the wrong coverage or were generally worse off after receiving advice from their financial advisors, but she wanted to give the benefit of the doubt.

After a few moments of chatter, another SHIP specialist stated, “Today’s advisors claim to be ‘retirement specialists.’ We never did. When I turn on the TV, I see ad after ad highlighting how such and such company can help me retire by answering all of the hard questions. Anyone here want to argue that healthcare is not the most difficult question in retirement? They (the advisors) are 100% accountable.”

This exchange draws a parallel to an article by Bob Powell in last week’s Retirement Weekly entitled “Advisers could be liable for not broaching retiree health-care costs.” Powell broached the topic of how advisors are aware about the very real costs of healthcare in retirement and may, in the very near future, be held accountable for not addressing the issue. The hands-off approach to healthcare planning may be waning, as generic numbers from Fidelity, articles from Credit Suisse, and complete expenses calculations from firms like HealthView Services are providing hard data that will force all financial advisors to consider healthcare costs in the retirement planning process.

In general terms, the probability that healthcare will garnish over $250,000 from a retiring couple’s portfolio, or that 33% of a person’s total expenses over the age of 60 is healthcare-related is not surprising anymore. Because of this, advisors will no longer be able to brush aside this topic—and it is becoming more apparent that there will be severe consequence for those that do.

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