Your clients work with you today because they need your help piecing together their puzzling financial plan so their retirement lifestyle is comfortable and structured for a lifetime benefit. After building their net worth, your clients are happily coasting through retirement, but there is a new challenge on the horizon that you probably have not discussed with them yet. That missing puzzle piece is an asset-based long term care plan.
Before implementing a long term care plan to complete your client’s financial puzzle, there are a few considerations to make. The first thing to recognize is the steep costs associated with long term care expenses without implementing a proper plan. Second, you must identify the target market within your current book of business. Finally, you must determine which asset will be the most appropriate to fund your asset-based long term care plan.
The rising costs of a long term care facility could be the biggest financial burden your clients face. Without proper planning they could be paying a $100,000 annual bill for nursing home care alone. The average nursing home cost in the United States is $108,405. Depending on their location, that number can reach shocking heights. For instance, in my home state of California, the average nursing home cost is $146,000. If your clients faced an annual bill of this magnitude in retirement, wouldn’t that be a key factor to consider in their financial plan?
Insurance is already a requirement to mitigate future financial risk in many areas of our lives. I own a car and need car insurance to drive. I own a house and need homeowner’s insurance to live. The odds of me getting in a car accident are 1 in 240, the odds of a fire in my house are 1 in 1,200, yet the odds of me needing long term care insurance are one in two. The fact of the matter is that long term care insurance is not a want but a need. The costs for a nursing home are rising each year with inflation and, as their advisor, you are responsible for recommending a long term care plan that addresses this financial threat that half of your book of business is expected to face.
After recognizing this financial gap within a comprehensive retirement plan, it’s vital to identify who needs asset-based long term care within your book of business. In the past 50 years we have moved towards the most critical time to promote asset-based long term care. In 2024, 4 million baby boomers will retire, or 11,000 per day. This wave of retirees is called the “Silver Tsunami” due to the astounding size and opportunity within this target client base. Much like the series of waves that strike during a real tsunami, another surge from the Silver Tsunami is rippling through our industry. The 4 million baby boomers retiring this year alone hold an astounding $27 trillion of retirement assets, creating an immense opportunity for financial planners to work with this large, asset-heavy client base.
State governments are already acknowledging the implications of this overwhelming population in need of long term care. On July 1, 2023, the state of Washington put into effect the WA Cares Act to reduce the pressure on the Medicaid system and combat the rising medical costs. The WA Cares Act implements a 0.58 percent payroll tax on all W2 employees to pay into a state-run long term care program. When the announcement went public, requests for asset-based long term care plans in the state of Washington for W2 employees increased drastically to avoid the statewide mandated tax.
Furthermore, the following 12 states have established committees for implementing statewide long term care taxes in 2025: Oregon, California, Arkansas, Utah, Colorado, Minnesota, Missouri, Illinois, Michigan, Pennsylvania, New York, and North Carolina. People have not forgotten the horrible effects COVID-19 had on nursing home facilities. Interacting with loved ones through a plastic screen is far from the ideal situation for any client. People are opting for the higher costs of in-home care so they can spend the remaining years with their loved ones. As previously stated, between the Silver Tsunami and state-mandated long term care taxes on the horizon, today is truly the best day to promote asset-based long term care plans.
Your unique selling proposition as an advisor needs to address the main concerns vocalized by the baby boomer generation of guaranteeing income until life expectancy and protecting their hard-earned retirement assets. In a recent nationwide baby boomer survey, we found that boomers are three times more worried about running out of income, experiencing a major illness, or ending up in a nursing home compared to dying. This demonstrates the complex emotional distress when planning for the unexpected. Unfortunately, a majority of clients are less worried about their health than they are about becoming a financial burden to their loved ones in their old age. If we do not create a proper plan early enough in retirement, then your clients’ children could risk facing nursing home costs of over $100,000 per year.
Now that you know the importance of asset-based long term care planning and the target market, it is time to go over how you are going to get this important message to your clients. You likely have received calls from an insurance marketer pitching you on a fancy seminar program that costs you a ton of marketing dollars and bogs you down with more work than anticipated. I am here to let you know that you probably have hundreds of cases within your current book of business that are right in front of you and ready to go paid today. How many families do you currently manage assets for and, of those families, how many have a long term care plan in place right now? If the answer is less than 100 percent then we have some work to do.
When approaching clients about long term care strategies, the most important pieces are the delivery of the message and the ease of implementation. We do not need to show par rates, bonuses, or ledgers. We need to identify their current concerns, create their desired scenario, and illustrate the easiest path of implementation. If you are an independent advisor in the field trying to generate asset-based long term care sales, then you have access to a client-friendly long term care survey that will accomplish exactly what you just read. This process is incredibly simple.
First, generate an email list of clients from your current book of business who you have identified as someone who needs to hear this message. Second, you need to include a link to the five-question 2024 Long Term Care Survey in the body of the email and track the results. After the survey is completed, you will have access to the following results:
- Which clients are concerned about future long term care costs.
- Would they prefer a nursing home, assisted living, or in-home care.
- Which asset they would use to pay for long term care costs.
- Who wants to make an appointment with you.
Finally, the third step is collaborating with your team on identifying the best asset-based long term care plan based on your client’s survey results. Each client has a unique set of circumstances, so it is important to partner with a team that specializes in asset-based long term care strategies to ensure you can meet their individual needs.
In conclusion, rising medical costs are a concern that is top of mind for clients, and a growing number of state governments planning to implement mandated taxes to address it. If you are not currently talking about this with your clients, then I highly recommend you get the 2024 Long Term Care Survey implemented in your marketing. I highly encourage you to reach out to me and my team at Simplicity for support in harnessing this immense opportunity at your doorstep.
