My dissertation was called ‘Long Term Care - The Perfect Storm?” as I felt that the combination of an unfamiliar care system, an emotional or stressful situation, and the inexperience of some attorneys all could lead to a cesspit of poor decision-making.
Their additional responsibilities and heightened stress levels were found to increase preoccupation and limit someone’s ability to absorb information. In addition, the unfamiliar and complex situation often resulted in an inability to fully understand the broader implications, gain perspective, and make clear comparisons.
For financial advisers, this represents both a challenge and an opportunity.
On one hand, it means that clients are less likely to ask for advice regarding long-term care, unless it is directly signposted to them, due to heightened behavioural biases.
For example, a common theme across the literature was a sense of fear; typically, around losing independence, leaving their homes, or spending life savings to fund care fees. According to the loss aversion theory proposed by Kahneman and Tversky in 1984, people tend to avoid taking action when they fear losing something valuable. This instinctive response may be one reason some individuals hesitate to plan for their care fees, and why they don’t always seek advice.
However, the real-world value of working with clients in this space is not to be underestimated. In terms of job satisfaction, the benefits you can bring to clients facing this situation are quite incredible.
Financial advisers are perfectly placed to help overcome lots of the biases and issues clients face when dealing with long-term care. We are trusted sounding boards, there to reduce the emotional burden and promote early conversations to eliminate the time pressure. We are expertly informed, used to navigating complex scenarios and paperwork, and interacting cohesively with different organisations.
Involvement from a financial adviser can also help to reduce financial abuse of those in care, which is sometimes committed by attorneys through ignorance of the rules – and sometimes a deliberate act to hide or preserve assets.
This is particularly seen when attorneys are also beneficiaries, usually due to an enhanced sense of entitlement to their ‘early inheritance’. In fact, the lead from the economic crime unit at North Yorkshire Police told me just last week that fraud is the biggest issue in the UK right now, accounting for 42 per cent of all crime – and that Power of Attorney and Carer fraud is in their top three of most seen cases, right up there with Cryptocurrency and Romance scams.
