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Don’t overlook this important subject with clients

HealthWe’ve all heard the phrase, “Your health is your wealth.” Why then are so many advisers hesitant to talk to their clients about it? Health intersects the planning you provide in many ways, yet practitioners rarely go there. The result is missed opportunities and incomplete planning.

A client of mine suffered a major heart attack and stroke at age 65. In the aftermath, he and his wife resolved to spend his remaining years traveling and gifting the wealth they had amassed. On the surface, their reaction sounded like a generous, intentional plan. Unfortunately, they hadn’t considered that his life expectancy was quite a bit longer than they assumed, even after the scare. In that time, the term insurance he was certain would cover his wife’s living expenses after he was gone would expire.

He was initially adamant that he would be gone by 72. After taking him through a longevity projection that estimated average life expectancy would be age 84, we worked together on a plan that wouldn’t deny him the experiences he was eager to enjoy, but also balanced safety for him and his wife in the future. He’s now 76 and has a good chance of making it to the age we originally estimated, and is grateful we didn’t let them give their money away.

Unfortunately, I can also cite circumstances where curve balls in a client’s health resulted in a different outcome, but it’s no less important to have these conversations. Here are a few steps to get you started:

Initiate a conversation about health.

In my years of practice as a planner and physician, I’ve learned that if I can comfortably communicate with empathy and kindness why my understanding of a client’s health history is valuable to the planning process, they will buy in and appreciate the conversation.

The way I most often open up this conversation is simply to ask, “What do you do to take care of your health?” If a client is hesitant or uncomfortable, I’ve observed that by being vulnerable about my own health challenges, they more readily understand that there is no judgment and are willing to share. The client’s answer will provide insight into their lifestyle and can lead to more pointed questions.

While you should be cautious not to profile your clients, if you notice something obvious like a weight issue or smoker’s cough that they don’t offer up in their response, you can gently probe deeper.

Understand the planning implications of a client’s health status and longevity.

In our initial conversation, I explain how important it is to know about the client’s health because it affects their longevity; so much planning hinges on this projection.

Take tax planning, for example. A married client with assets at a loss who has been diagnosed with a serious llness should transfer those assets to a spouse so the losses don’t disappear at death. Or, in a scenario where a client has significant, deductible unreimbursed medical expenses, the spouse or other family members might consider undertaking medically necessary treatment to take advantage of the deductibility of those expenses in the current tax year.

If we are discussing insurance planning, understanding my client’s health status gives me valuable information when advocating for them to get the best life, long term care and disability insurance. Each insurance company treats medical issues differently, and my understanding of their health can improve my client’s insurability. The planning implications of a client’s health status are extensive – impacting not only tax and insurance planning but cash flow planning, estate planning, long term care discussions, and much more.

If a client is in perfect health, lives a healthy lifestyle, exercises regularly and eats a balanced diet, I use age 100 in my longevity calculations. If a client has significant health or lifestyle issues, I refer them to a longevity calculator, such as livingto100.com, which asks extensive questions relating to their health and family history. An added benefit is that clients are often spurred to make lifestyle changes as a result of this exercise and the feedback they receive.

Walk clients through transitions of health and aging.

After you’ve discussed your client’s health, you can create a triage list to prioritize their planning needs. In addition to their general financial planning needs (tax, estate, retirement, risk management and investment planning), this will most commonly include planning for the four major transitions of aging – housing, driving, financial and healthcare decision-making transitions. The key in all of these transitions is to avoid reactive decision making, which is more costly and diminishes the client’s quality of life as they age or face major health issues.

For example, a very healthy 50-year-old needs to plan for the possibility of living a very long time, which increases the chance of dementia. If they want to age in place, we discuss the cost and difficulties of this option if dementia occurs and have the client document their willingness to move to a facility. On the other hand, someone with multiple chronic illnesses needs to focus more on optimizing quality of life in the time they have left.

As you begin engaging in these conversations with your clients, you will undoubtedly recognize the intersection of physical and financial wellness and the value you bring to the table when you are willing to understand clients holistically. If you need more guidance in this area, the AICPA Personal Financial Planning Section can help. Take a look at the Elder Resources Page filled with podcasts, videos, articles and much more to help you talk with and plan for clients who are aging. 

Carolyn McClanahan, M.D., began her career as a physician. Recognizing the similarities between medicine and financial planning as she and her husband sought answers to fundamental questions, and feeling empowered by helping people plan for their future, Dr. McClanahan decided to make a career change. In 2004, she founded Life Planning Partners, Inc. in Jacksonville, Florida to provide the type of personalized financial life planning services she and her husband originally desired. She is a frequent speaker and commentator on the interplay between health and financial issues.

Health courtesy of Shutterstock.


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