As Australia’s population continues to age, independent financial adviser Nathan Fradley is urging more advisers to consider aged care advice to cash in on this gap in the market but warned that it can be quite different to mainstream financial advice.
“This is partly emotional, partly technical, partly structural, but there’s often very little you can do to change. It’s about making the best decisions with what you’ve got,” Fradley said on The ifa Show.
“It’s different to advice where you’re seeing people every single year, you’re regularly catching up with them. Like, it’s very transactional. It may not be in the future if we’ve got to be organising investment portfolios to fund care costs, but the way it’s structured right now, it is very transactional.
“Often it’s, you might have had a client for a long time and by the time moving to the care, you’re disengaging them from an ongoing advice perspective. And it’s a different kind of advice from a structure.”
For advisers who want to engage in aged care advice, Fradley urged them to seek specific training and accreditation as mistakes in this area are easily made and difficult to rectify.
“There’s certain specialisations, like SMSF, similar kind of thing. If you don’t really know the rules and you can’t explain them well to people, you can do some real damage … which is hard to unwind. In the case of aged care, sometimes you can’t unwind it, and I think that’s really the danger,” Fradley said.
“I was chatting with a couple of advisers recently about it and that also, they’re all CFPs and there’s a bit of aged care in your CFP and even they were like, you know, it was so light compared to what’s out there. It is very complicated, beautiful in its complexity, but very complicated, and has a number of really specific rules.”
He added: “There’s so many little things that can be just accidentally done wrong that can’t be undone.”
Fradley explained that, with the origins of financial advice being in product sales, many struggle to understand how they can quantify the value of their service in an aged care advice relationship that requires next to no products.
“That can create a bit of a, like, how do I charge for this? How do I sufficiently create value? Am I sufficiently creating value? Can I charge enough to make this viable and invest my time, effort and energy into this?” he said.
“I think that’s a real challenge for advisers, to realise their value doesn’t lie in the specific super fund or portfolio, necessarily, for everyone. That there’s so much more value that can be achieved in other areas.
“And helping someone through probably one of the hardest things they’re ever going to do as a family … That help isn’t just telling them what to do, but even in the initial outset, ‘This is what to expect, I’ve done this before’.”
With so many Australians struggling to manage the complex aged care system and the rules surrounding it, Fradley said advisers have an important role to play in quelling the anxiety of clients and their families.
“The nitty-gritty in aged care makes it tricky sometimes … There is so little information about how the aged care system works. You know, who to go to, where to turn to, what are the little rules, what are things to watch out for?” he said.
“And that lack of information will create an enormous amount of what else don’t you know? What do you not know about your own retirement situation? You know, and that could definitely create some anxiety around that. I think that’s a real challenge and also a huge opportunity for advisers.”
To hear more from Nathan Fradley, tune in here.
Just give a license to all of the companies currently giving advice in this area on an unlicensed basis and problem solved. That of course doesn’t adjust for the fact that they are unlicensed because it is cheaper, easier and safer to provide advice that way.