Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 239

Make an earlier start understanding aged care

Every day, approximately 32 people in Australia turn age 85 and this population sector has grown by 133% over the last two decades. An industry survey conducted jointly by Aged Care Steps and Swiss Re reveals that aged care is an increasingly important topic for advisers and clients and should be an earlier part of retirement planning. The survey was done in October 2017 with results compiled from 173 respondents.

Consumer implications

Australians need to plan for the affordability of future care needs and understanding the options to make informed decisions with confidence.

Chart 1 from the survey shows that Australians tend to seek aged care advice after a medical event or crisis, but often this is too late and their options are limited. They should deal with their aged care needs well in advance such as when planning for retirement.

Chart 1: When do people seek aged care advice?

Key issues include:

  • how to fund aged care costs given the shift towards a greater user-pays
  • willingness to access the equity in their home instead of a focus on inheritance
  • the ability to rely on family and friends to provide care and financial support.

The survey explored the challenges and fears of people concerning care, and show Australians are grappling with the following issues when accessing the right care.

Chart 2: The challenges and fears of people dealing with aged care

Professional advice implications

The aged care survey revealed that professional advisers should be preparing for aged care to become a standard business focus in response to increasing client demands. Advisers who ignore the demand for aged care advice risk becoming uncompetitive and less relevant to their clients.

Other results from the survey include:

  • 90% of surveyed advisers expect an increase in client demand for aged care over the next three years. About 85% of advisers report that clients are proactively seeking aged care advice with 29% suggesting this is happening frequently.

  • 30% of advisers provide aged care to service existing clients. The remaining provide aged care services to attract family or friends of care recipients (25% of respondents), build their client base and attract new clients (22% of respondents) and to provide intergenerational wealth transfer advice (21% of respondents).

These results align with the trend of advisers exploring new revenue sources and opportunities to better align with their client base, and about 51% of surveyed advisers regularly promote aged care services and a further 27% offer it on a case by case basis.

Advisers report that family members (children or relatives) and spouses approach them for aged care advice more than the person requiring care, as shown in Chart 3 below.  ‘Target clients’ therefore tend to be clients aged 40–70 years who take responsibility for dealing with their ageing parents. This age group often already represents the bulk of an adviser’s client base.

Chart 3: Who approaches financial advisers for aged care advice?

These survey results reinforce the risk that advisers who do not include aged care solutions to address broader needs, risk losing clients and forgo the opportunity to capture new revenue sources. Clients need to be made aware that they can approach their professional adviser when dealing with aged care issues for themselves or their loved ones.

Adviser groups need a compliance framework for the delivery of aged care advice, accreditation training, access to practical tools and efficient planning software. They need to review their portfolio construction guidelines for retirement planning to adequately address clients’ aged care needs throughout the retirement phase.

People should not wait until there is a medical crisis before considering their alternatives, and nor should they leave it to family members who might not know what’s in the best interest of the person requiring care. The desire to minimise family conflict is obvious.

 

Assyat David is a Director of Aged Care Steps.


 

Leave a Comment:

     

RELATED ARTICLES

We need hard conversations about frailty planning

The reality of three phases of retirement

Three key retirement factors other than super

banner

Most viewed in recent weeks

Lessons when a fund manager of the year is down 25%

Every successful fund manager suffers periods of underperformance, and investors who jump from fund to fund chasing results are likely to do badly. Selecting a manager is a long-term decision but what else?

2022 election survey results: disillusion and disappointment

In almost 1,000 responses, our readers differ in voting intentions versus polling of the general population, but they have little doubt who will win and there is widespread disappointment with our politics.

Now you can earn 5% on bonds but stay with quality

Conservative investors who want the greater capital security of bonds can now lock in 5% but they should stay at the higher end of credit quality. Rises in rates and defaults mean it's not as easy as it looks.

30 ETFs in one ecosystem but is there a favourite?

In the last decade, ETFs have become a mainstay of many portfolios, with broad market access to most asset types, as well as a wide array of sectors and themes. Is there a favourite of a CEO who oversees 30 funds?

Australia’s bounty: is it just diversified luck?

Increases in commodity prices have fuelled global inflation while benefiting commodities exporters like Australia. Oftentimes, booms lead to busts and investors need to get the timing right on pricing cycles to be successful.

Meg on SMSFs – More on future-proofing your fund

Single-member SMSFs face challenges where the eventual beneficiaries (or support team in the event of incapacity) will be the member’s adult children. Even worse, what happens if one or more of the children live overseas?

Latest Updates

Investment strategies

Five features of a fair performance fee, including a holiday

Most investors pay little attention to the performance fee on their fund but it can have a material impact on returns, especially if the structure is unfair. Check for these features and a coming fee holiday.

Interviews

Ned Bell on why there’s a generational step change underway

During market dislocation events, investors react irrationally and it should be a great environment for active management. The last few years have been an easy ride on tech stocks but it's now all about quality.  

SMSF strategies

Meg on SMSFs: Powers of attorney for your fund

Granting an enduring power of attorney is an important decision for the trustees of an SMSF. There are alternatives and protections to consider including who should perform this vital role and when.

Property

The great divergence: the evolution of the 'magnetic' workplace

The pandemic profoundly impacted the way we use real estate but in a post-pandemic environment, tenant preferences and behaviours are now providing more certainty to the outlook of our major real estate sectors.

Shares

Bank reporting season scorecard May 2022

A key feature of the May results for the banking sector was profits trending back to pre-Covid-19 levels, thanks to lower than expected unemployment and the growth in house prices.

Why gender diversity matters for investors

Companies with a boys’ club approach to leadership are a red flag for investors. On the other hand, companies that walk the talk on women in leadership roles perform better, potentially making them better investments. 

Economy

Is it all falling apart for central banks?

Central banks are unable to ignore the inflation in front of them, but underlying macro-economic conditions indicate that inflation may be transitory and the consequences of monetary tightening dangerous.

Sponsors

Alliances

© 2022 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. Any general advice or ‘regulated financial advice’ under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.

Website Development by Master Publisher.