What's Happening?
A recent study by the Alliance for Lifetime Income and LIMRA highlights a significant communication gap between financial professionals and their clients regarding health-related issues in retirement planning. The study reveals that while 96% of financial professionals claim to discuss physical health issues with clients, only 44% of clients recall these conversations. Similarly, 90% of advisors report discussing cognitive decline, yet just 31% of clients remember such discussions. This discrepancy suggests that the message about health care costs and planning is not resonating with clients, despite advisors' efforts. The study also notes that financial professionals and clients have differing views on retirement risks, with clients more concerned
about inflation and health care costs, while advisors focus on outliving savings and market volatility.
Why It's Important?
The communication gap between financial advisors and clients on health care discussions is crucial as it can undermine financial security in retirement. Health care costs are a significant concern for retirees, and failing to address these adequately can lead to financial instability. The study indicates that while advisors may use projections and models, clients prefer clear and simple language. This gap in understanding can affect clients' confidence in their retirement plans and their ability to manage health-related expenses. Moreover, the differing perceptions of retirement risks between advisors and clients highlight the need for better communication and alignment in financial planning strategies.
What's Next?
To bridge the communication gap, financial professionals are encouraged to document health care discussions and use software tools to project costs and scenarios. Advisors should focus on simplifying their communication and addressing clients' specific concerns, such as inflation and health care costs. Additionally, there is a need for financial professionals to educate clients about the impact of taxes and Medicare premiums on Social Security income, as well as the role of annuities in providing guaranteed income. By improving communication and understanding, advisors can help clients better prepare for retirement and manage health-related financial risks.
