Aged Care

Thinking about aged care should start now – for clients and financial planners

Financial planning businesses that are not already thinking about how to provide aged-care services to clients should start now, before it’s too late, says Michael Monaghan, managing director of State Super Financial Services (SSFS).

Monaghan says aged care is a growing and increasingly complex area of advice but effectively meeting client needs requires access to specialist technical knowledge, and advisers need to be able to spot potential issues for clients before they become insurmountable.

“You’ve got to learn about the system and understand what the issues are, and identify where in your client base you’ve got people who may be needing this sort of advice over the next few years,” Monaghan says.

“If you have not got the expertise in that area, you need to perhaps identify where you’re going to find that expertise. As much as anything it’s a mindset – and there are a lot of planners around who have the mind-set already of thinking five to 10 years out for their older clients, and what are the things they should be thinking about here.”


As people reach a stage of life described as “old-old” – that is, aged about 85-plus – the range and scope of services they need changes. And it’s also when health-related factors, including dementia, enter the picture, so financial planners have to be alert to the potential issues that consequently arise. Issues linked to aged-care are already complicated, and new rules come into effect on July 1 this year.

The role of financial planners in aged care is expanding because the needs of ageing individuals have become too complex for a typical family to deal with.

“The nature of the illnesses, particularly things like dementia and other mental illnesses, are such that it’s actually not possible for family to care for them very easily,” Monaghan says.

“You need to think about it two senses. One is the aged care services they need; and then there’s the advice and other services that go along with that.

“Most people – not all people, but most people – need a bit of help somewhere along the line once they get into that old-old category. It can be care at home – people come to their home and help them, if they will allow that.

“But if it gets to the point where they can’t cope at home you’re talking about residential aged care, which is a very, very complex area, not only for issues like selecting a facility and making sure you find one that’s going to provide a good quality of care and is financially viable and so forth.

“You then interface directly with the aged care finance system: Centrelink, new terms like daily accommodation payments [DAPs] or refundable accommodation deposits [RADs]. And trying to make a decision about whether it’s better to go down what we used to call an accommodation bond, but is now called a refundable accommodation deposit route, or go the daily accommodation payment route is actually quite complex, and you run into issues of conflicts of interest between family members, particularly children, and parents – their interests aren’t necessarily aligned.”

Not just financial

Managing aged care needs is not, therefore only about the financial issues. Financial planners have to be psychologists, mentors and relationship counsellors all at the same time.

“It usually comes down to what do you do with the family home?” Monaghan says.

“Other issues that emerge, for example, when you have an elderly couple, one in good health and one in poor health, and one has to go into an aged care facility. One has to stay living in the house. What are the options there for funding either of those payment mechanisms?

“It’s an extraordinarily difficult time emotionally, because you’ve got typically at least one of the couple will have either a physical or a mental illness – sometimes both.

“You’ve got people who have been used to living independently all their life; and suddenly they’ve got people coming in to their home to help with very basic things – toileting, showering, cleaning, that sort of stuff. So it’s a very emotionally charged time, and family members feel helpless.”

Monaghan says SSFS is developing in-house the technical expertise it needs to support its advisers. He says planning firms that do not have the resources to do the same should seek expert input from external sources.

Two factors

Financial planning businesses cannot afford to ignore the growing need for aged care advice, Monaghan says, because it is being driven by two irresistible demographic factors.

“One is that many, many more people are in retirement and are going to be in retirement over the next 20 years to 30 years than have ever been in retirement before,” he says.

“So the phenomenon we’re now experiencing, with baby boomers and their parents being in retirement and living for a long time is new, and it hasn’t happened before.

“The second issue around longevity. The fact that people are living to advanced old age is brining in a whole bunch of different problems that society hasn’t had to deal with before.

“The reality is that when people are old-old, they need care, and the system has to provide that case because as a society we’re not geared up for families to do it.”

March 15, 2014
Simon Hoyle
Source:  Professional Planner

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