Aged-care advice requires hand-holding
Aged care clients sought genuine help and understanding around the process and costs of aged care rather than advice on products and strategies, according to Challenger.
Head of Technical Services, Andrew Lowe, said that while clients may have enjoyed cash-flow positive situations through their working lives and retirement through prudent saving and spending habits, they may have begun to experience cash-flow negative situations for the first time as they transitioned into aged care.
"It's very much that what is valuable here, is the advice. It is very much the guidance that an adviser can provide, it's about holding the hand of the client, it's about delivering outcomes for the client," Lowe said.
Advisers should take a "boots and all" approach to aged care, and have the conversations over a period of a decade even as they transitioned their clients through retirement, he said.
Advisers needed to maximise social security payments, minimise aged care fees, and find income for clients to pay their aged care fees, as well as put them in a cash-flow positive situation rather than drawing down on their assets.
They could also find ways to increase clients’ level of assessable assets so they are not treated as a low means resident, through avenues like the child gifting assets to them.
Also where the former home is not lived in by a protected person when a client goes into residential aged care, the home will be assessed up to the home cap of $157,987, Lowe said.
"This can help avoid long wait times for a low means place to become available or allow family members to contribute towards a higher quality lifestyle for the rest of the resident's life," he said.
Advisers should also look at asset test reduction strategies once the client is in an aged care facility by reducing their means tested amount and/or boosting their Age Pension entitlement.
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