The Conversation Gap: Clients tuning out on advisor health care discussions

Financial professionals and their clients have sharply different views on whether they discuss critical health-related issues during retirement planning, according to the final chapter of Alliance for Lifetime Income by LIMRA’s 2025 Protected Lifetime Income & Planning study.

A key component of a comprehensive and effective retirement plan includes estimating potential costs and risks in retirement, including those associated with health care and long-term care. Four in 10 financial professionals and consumers surveyed agree this is one of the most difficult aspects of retirement planning. Yet, the study shows while most financial professionals say they are discussing these topics, less than half of consumers recall these discussions.

Nearly all financial professionals (96%) surveyed said they talk about physical health issues with clients, but only 44% of clients recall those conversations.

Bryan Hodgens, senior vice president and head of LIMRA Research, told InsuranceNewsNet that financial professionals should document the conversations around health care in their financial planning process and, in future conversations, begin with reviewing the topic.

“When designing an income plan for a client addressing health care needs, the financial professional should stress the investment strategy to specific securities,” he said. “Financial professionals could consider using software that projects health care costs and scenario planning to address the need as an additional strategy to focus the client on the outcome.”

Ninety percent of financial professionals report discussing cognitive decline, yet just 31% of clients say the topic came up.

“These communications gaps around health care costs can undermine financial security,” said Jean Chatzky, education fellow at the Alliance’s Retirement Income Institute and CEO of HerMoney. “Even when financial professionals raise the topic health care costs, the message isn’t resonating. While a financial professional may come armed with projections, models, and risk tables, clear, simple language matters more to clients than charts and models.”

Shared optimism and persistent concerns

When assessing retirement readiness in terms of savings, financial professionals and consumers who work with an advisor feel optimistic. On average, financial professionals believe that two-thirds of their clients will have the income to cover their essential expenses in retirement; 78% of consumers working with a financial professional are confident they will have adequate income in retirement. In comparison, only half of unadvised consumers feel the same.

Yet, the study finds there are distinct differences in their perceptions about retirement risks.

When listing top retirement concerns, consumers who work with a financial professional cite inflation as their top worry (63%), with health care costs (62%) and outliving savings (45%) rounding out their top three worries. Meanwhile, financial professionals don’t include inflation among their clients’ top concerns, instead listing outliving savings (56%) as the top issue, followed by market volatility (51%) and health care costs (50%).

Hodgens said financial professionals should address “income planning” first and foremost in retirement planning.

“Starting conversations around longevity, retirement lifestyle, health care needs, covering basic expense needs in retirement leads to addressing inflation impacts and sourcing guaranteed income,” he said.

The latest findings show consumers’ and financial professionals’ expectations about Social Security also differ. Consumers overall believe half of their retirement income will come from Social Security payments. Expectations of consumers working with a financial professional are more restrained, saying a third (34%) of their retirement income will come from Social Security. Meanwhile, financial professionals estimate Social Security will account for only 23% of their clients’ retirement income, on average.

Consumers, however, are more pessimistic than financial professionals about the stability of Social Security. More than half (52%) say they have less confidence than five years ago; just 26% of FPs have lost confidence in the program over the same period.

Hodgens said most consumers don’t understand the impact taxes and Medicare premiums have on Social Security.

“Once adjusted for those costs, the net income from Social Security shrinks. Financial professionals will point this out in an income planning discussion, likely explaining the disconnect between consumers’ expectations and advisors’ estimates. Advisors can position annuities as another guaranteed income source that will complement Social Security.  Annuities can also play a role for a consumer that wants to delay Social Security payments (increasing the lifetime payout) by filling the gap with guaranteed income.”

Advisors overestimate how much their clients know about annuities

Twenty-eight percent of financial professionals believe their clients understand annuities and the role they play in a retirement plan “very well,” but only 14% of consumers working with a financial professional believe they have a strong understanding of annuities. Earlier LIMRA research shows there is a strong correlation between annuity knowledge and annuity ownership. Consumers who demonstrated a higher understanding of annuities were more likely than those who exhibited lower annuity knowledge to own an annuity.

Hodgens said one way to bridge the annuity understanding gap is for advisors to speak to consumers in simple terms.

“By discussing the risks in retirement (market risk, longevity risk, inflation risk) and explaining how their clients can mitigate those risks though the purchase of annuity. Financial professionals should also highlight the peace of mind that annuities offer, enabling consumers to enjoy retirement more knowing they have certain expenses taken care of (i.e. health care) and offering guaranteed lifetime income.”

To read the full report, visit: 2025 Protected Retirement Income and Planning Study (PRIP) Chapter 3: Mind the Gap

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