Long-term care: A paradigm shift in financial planning

The financial advisory landscape is experiencing a seismic transformation where adaptation is no longer optional — it’s essential for relevance. As America’s population continues to age, long-term care has become an unavoidable reality for millions of families, with nearly 1 in 4 Americans projected to be over the age of 65 by 2050. Advisors must confront this challenge head-on, integrating LTC with holistic financial strategies that address both the rising costs of care and the profound emotional toll on families.

A recent study by OneAmerica Financial and Lincoln Financial underscores the urgency: nearly every financial advisor has encountered clients facing the need for extended or long-term care, a situation that can double portfolio withdrawal rates for those uninsured or unprepared. The escalating costs of medical and extended care now eclipse traditional concerns such as inflation or market volatility, making LTC planning a cornerstone of sustainable retirement strategies.

Building trust through personalization

Beyond the numbers, financial advisors face another pressing issue: client attrition fueled by unmet expectations and ineffective communication. According to Morningstar Behavioral Research, an advisor’s true value now extends beyond cost and performance metrics; it lies in the strength of relationships and the ability to deliver personalized, proactive solutions. Clients demand more than financial returns. They also seek understanding, trustworthiness and guidance through life’s complexities.

Advisors must evolve to see the person behind the portfolio, providing clarity and emotional support. This human-centered approach is particularly crucial in LTC planning, where clients often grapple with deeply personal and emotionally charged decisions.

Insights from the 2024 OneAmerica LTC Studies

The 2024 OneAmerica Long-Term Care Consumer Study and the Caregiver Survey reveal critical insights:

Personal experience drives action:

» 88% of respondents with a family member needing LTC said it catalyzed their own planning.

» 75% were motivated to purchase LTC insurance after witnessing a loved one’s experience.

» 52% cited peace of mind as a key reason for creating a plan.

The case for proactive planning:

» 52% wanted peace of mind from knowing a plan was in place.

» 46% sought to protect their retirement finances from the high costs of care.

» 45% desired confidence in receiving adequate care when needed.

These statistics highlight the multifaceted benefits of planning, which extend beyond financial security to emotional well-being for individuals and their families.

Caregiving: A labor of love with challenges

Informal caregiving remains the backbone of LTC in the U.S., with 63% of caregivers being family members. However, the challenges are significant:

» 51% of new caregivers struggle to balance responsibilities with personal and professional lives.

» 64% seek advice from medical professionals, underscoring the need for better resources and education.

The emotional and financial tolls on caregivers make informal care difficult to sustain, emphasizing the need for comprehensive solutions that include formal caregiving options.

Opportunities for advisors in a changing landscape

The growing need for LTC planning also presents unprecedented opportunities. With a $68 trillion wealth transfer underway as baby boomers pass their fortunes to Generation X and millennials, advisors have the chance to bridge generational gaps by aligning with younger clients’ values of purpose, sustainability and technological integration.

Advisors who embrace this evolution can redefine their roles from asset managers to trusted life planners, fostering multigenerational loyalty. This requires integrating health care with wealth care, leveraging strategic partnerships and using technology to create seamless, personalized experiences.

Planning for peace of mind

The last segment of the baby boomers turned 60 in 2024, and the aging population will only grow. As the 2024 OneAmerica studies highlight, planning for LTC is not just about finances. It’s about dignity, reducing stress for loved ones and embracing peace of mind in an uncertain future.

For financial advisors, this means recalibrating their approach to prioritize holistic planning that addresses both financial and emotional needs. By doing so, they can help clients navigate the complexities of aging with confidence, ensuring that LTC planning becomes an integral part of a sustainable, human-centered financial strategy.

Carroll Golden, CLU, ChFC, LTCP, CASL, FLMI, CLTC, LACP, is executive director of NAIFA’s Limited and Extended Care Planning Center. She is the author of How Not to Tear Your Family Apart: A Practical Guide to Caregiving and Financial Stability. She may be contacted at [email protected].