Kirsty Hudson looks at why IFAs are reluctant to enter the LTC fold as providers move to use education and training to change their minds.
Healthcare providers are tearing their hair out at IFAs' reluctance to break out of their comfort zone and venture into the unexplored realm of long-term care.
A Government report issued in July proposes to meet the first £18,000 of LTC costs but then it will be up to individuals to foot the bill. Despite this announcement, IFAs remain hesitant. Years spent dealing with pension and investment products have lulled IFAs into feeling safe in these areas and they appear reluctant to consider less familiar products.
PPP Lifetime Care head of retired market development Jacque Langford says: “Unless we hold their hands through the first few sales, they quickly lose confidence. Unfortunately, people do not want to admit the fact that they are getting old. There are many underlying emotions regarding ageing and it seems that IFAs do not want to bring this to the attention of their clients.”
One of the main reasons IFAs have been hesitant is that people were delaying making a decision, believing the Government would change the rules and pay for LTC.
Now the Government has come off the fence, providers say people, especially IFAs, must actively think about LTC.
When IFAs are planning to minimise inheritance tax, they are not accounting for LTC, which puts a client's assets in great risk.
Langford says: “By focusing on the financial aspects, it is hoped IFAs will understand the cost of good quality care. Assets could potentially depreciate by £30,000 a year and we are trying to get IFAs to understand these implications.”
Age Concern Financial Partnerships technical support manager Chris Ellicott says: “We feel that it has been uncertainty coupled with the hopethat people would not have to pay for LTC. The Government is not going to spend money on this and so we will have to spend our own money. We are telling IFAs they know the rules now and they must pass this message on to their clients.”
Since the Government issued its state-ment on LTC, there has been a lot more interest in LTC and it should be seen by IFAs as a real development opportunity.
Providers have seen the opportunity presented by the Government's report and are embarking on an education programme for advisers.
CGU Life LTC strategy manager Sandy John-stone says: “The best way for independent advisers to establish themselves in the market is to get good quality education. There are huge dangers of going into this marketplace for your clients if you have not researched the products and the issues regarding Government funding.”
In an effort to promote the product, CGU has joined forces with Age Concern and formed Age Concern Financial Planning. Johnstone says the new company is effectively the IFA distribution team for LTC products. A team has been set up to support IFAs moving into the LTC arena.
Earlier this year, PPP Lifetime Care presented a series of LTC roadshows. Langford says the aim was to show how client assets are at risk. PPP has also set up a phone support service with trained advisers and is running seminars to teach IFAs how to sell LTC and provide support.
Langford says: “The workshops were set up due to requests from IFAs. We take them through why LTC is important and we have developed role plays to help IFAs raise this often sensitive issue with clients. People will buy LTC products, IFAs just need the confidence to sell them.”
Sofa is also looking into methods of bringing members up to speed on LTC. Spokesman Robert Reid says Sofa is looking at training material for advisers who want to specialise in LTC and for those who just want an overview.
Reid says LTC has been given prominence in the G80 exam for IFAs in the last six months. He says: “Our first objective is to make sure people are aware of LTC and all the legal aspects to ensure people make as few errors as possible.”
Bupa is offering Air Miles to intermediaries selling its products. The company launched the incentive to its customers last year and the success of the scheme prompted Bupa to extendit to intermediaries early this year.
The sale of each personal scheme earns 250 Air Miles and each company scheme earns 500 Air Miles. As an added bonus, during September the Air Miles reward for selling personal schemes has been doubled.
Bupa's incentives have been heavily criticised by the industry over the principle of best advice being about IFAs recommending the best product to clients rather than thinking of incentives.
Johnstone says: “I think IFAs should recognise that they have not only an incentive but also an obligation to their clients about the risk of having to pay for LTC. I do not think incentives are the right thing. Training and education should be a big enough incentive.”
Bupa press officer Adam Lewis defends the company's stance, explaining that incentives are common practice across financial services but Bupa is the first healthcare company to be offering one.
He says: “We sell a large proportion of our healthcare products through intermediaries and we rely on their discretion to recommend the most appropriate scheme to their client. We agree that the right product will sell itself but we do not feel this offer conflicts with that.”
Although the healthcare industry is pulling out all the stops in educating intermediaries, it is important that the public is not ignored. IFAs need to take action to promote LTC to their clients but it should not be left to them to inform the public. Having declared its stance, the industry believes the Government needs to take responsibility and promote this issue now.