Overcome client discomfort about discussing DI and LTC

Disability and long-term care can be unpleasant topics to discuss with clients. Most people do not enjoy considering the possibility of becoming disabled or needing assistance with daily life. Discussing the idea that their families may not be financially prepared to support them in those scenarios can be difficult as well. These discomforts lead many clients to avoid the discussion altogether.

The worst possible outcome of being financially unprepared for disability or long-term care needs, however, is far more unpleasant. This is especially true if the client assumed their loved ones were equipped to handle those needs. Financial advisors must make sure they discuss these important protections with clients — because a lifetime of relief and security is well worth a few uncomfortable conversations.

Why planning is crucial

A person’s earning potential is one of their most important assets. This is likely old news to financial advisors, but it may be a different story for clients. We now live in a world that pulls our attention toward an ever-increasing number of flashy investment options and strategies, such as cryptocurrency, real estate and the FIRE (financial independence, retire early) movement.

Because they’re inundated by an incessant stream of news articles and social media posts, it’s not surprising that some clients will forget they are their most valuable asset.

The prospect of losing that earning potential is so scary that most people prefer not to think about it, or they think about it only in the context of others. But this avoidance hides the reality that it’s statistically common for someone to lose their earning potential through acquiring a disability or need for long-term care. One in four Americans will experience at least temporary disability before retirement age, and 7 in 10 seniors will require some form of long-term care.

This means advisors may need to start a discussion that clients may not want to have.

Making the conversation easier

Before approaching this topic, or any other that can set off emotional alarms for your clients, advisors should make sure they have a solid relationship with the client.

This relationship must be built on trust and a mutual conviction to act in the client’s best interests. Most people want advisors who ask thoughtful questions, actively listen and offer feedback or recommendations when truly appropriate. Taking this approach makes it far more likely that advisors will be taken seriously when they bring clients into unpleasant territory.

Once it’s time for the conversation, begin by asking questions about a client’s family and friends — have any of them needed assistance with day-to-day life? Most people will say yes. Ask them if they understand the true financial impact of lost income, from needing assistance themselves or from taking time off from work to care for a loved one, and most people will say no.

At this point, you can outline the potential costs of care in their location and the stress families often face when they are without coverage. The final point of discussion should be an explanation of how much disability or long-term care insurance can save your client. This is especially true for disability insurance, which typically has a low annual premium.

Conversations with clients about disability and long-term care can be incredibly daunting. Not only will some clients initially not want to engage with the topics, but the details can be emotionally difficult for almost anyone to digest. But tackling the problem head-on, as uncomfortable as it can be, is far superior to losing a lifetime of built-up assets in just a few years because of an unplanned-for need for care.

Scott Fligel, CFP, is a wealth management advisor with Northwestern Mutual and Fligel Financial Services. Scott is a 24-year and lifetime MDRT member and a Top of the Table qualifier. He may be contacted at scott.fligel@innfeedback.com.