Arranging later-life care for a loved one can be a heart-wrenching and complex process made easier by a professional financial advisor – but is the cost worth it?
Only 11% of people over 45 who helped organize care for an elderly relative had support from someone financial advisorAccording to new research.
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cost of care May be important. According to the NHS, the average cost of a residential home in the UK is £600 per week.
When to use a financial advisor to organize care
1. Access to specialist products
One of the main benefits of using a financial advisor to arrange the care of an elderly relative is that it opens up products that might not otherwise be available.
Lucy Spencer, financial planning partner at wealth manager Evelyn Partners, said one such product is the urgent needs annuity, also known as a care annuity, which pays a guaranteed, tax-free income to a registered care provider for the rest of the person's life.
Care annuities are specialist products and can only be recommended by regulated financial advisers, who must have additional qualifications to give advice on them, and will charge a fee for the advice.
2. Flag Benefit Eligibility
Licensed counselors – which may include people from the Citizens Advice Bureau who are exempt from speaking to them – can also give family members pointers about benefits a relative can claim if they are going into care, such as attendance allowance.
Note, if you live in a care home and it is being funded by your local authority, you will not be eligible for Attendance Allowance.
An adviser may also be able to tell you about other benefits such as funded nursing care, where the NHS contributes to nursing home fees and continuing health care, allowing people with long-term complex health needs to qualify for free health and social care arranged and funded by the NHS.
“By claiming these benefits, it can cover far more than the cost of financial advice,” Spencer said.
3. Help with Lasting Power of Attorney
A financial advisor can also ensure durable power of attorney (LPA) rules have not been broken.
An LPA is a legal document that gives an assigned person, known as an 'attorney', the ability to manage your financial affairs if you lose the mental capacity to do so yourself.
But under the LPA, the rules on giving gifts to a solicitor can be complex and any unauthorized payments may be investigated by the Office of the Public Guardian (OPG) and required to be repaid. You may also be ordered to pay additional costs on top of that.
4. Manage savings and investments
Finally, a financial advisor can help tailor a loved one's investment portfolio to the right level of risk to allow access to funds when needed but allow remaining assets to grow to their full potential.
Spencer explained: “This involves dividing assets into short-term (one-three years), medium-term (three-five years) and long-term (five years or more) investments, ensuring each pot matches the appropriate level of risk for each time frame.”
For example, a one- to three-year investment pool may contain a greater percentage of (usually less risky) bonds and a smaller amount of stocks, while a pool of five or more years may contain a greater percentage of (higher risk) equities.
When not to use a financial advisor to organize care
There are some circumstances where getting help from a financial advisor would not be the most cost-effective approach.
1. Minor illnesses
In most cases, if a loved one is going into care for a short period of time, for example after an operation, you will not need a financial adviser, which will have a minimal impact on their finances.
Spencer said: “If the care is short-term or temporary it is relatively simple to finance it from the person's existing assets.”
You may also be able to get short-term care for free through the NHS. You can sometimes qualify for up to six weeks of free care and support at home after a hospital stay or to prevent a hospital visit, known as intermediate care.
2. Adequate income
Meanwhile, if an elderly relative's income is already high enough to pay for any ongoing care, a financial advisor may not be needed. It is only when you need to sell an asset such as a home to care for a relative that financial advice may be advisable as this is a more complex scenario.
Spencer explained: “There is no point paying for financial advice when a person's expenses, including their care home fees, exceed their income.”
3. End of life
If you do not expect a loved one to live very long, it may not be worth paying for financial advice to help arrange their care. If they die soon after receiving your advice, you may have paid a large sum of money for little benefit.
How to find a financial advisor and how much do they cost?
You can always ask friends and family for recommendations of a good financial advisor. This way, you'll know if they had a good experience or not.
For expert later life financial advice it can be a great idea to speak to a financial adviser who is SOLLA accredited. Society of Later Life Advisors.
Otherwise, you can use websites like Neutral Or voucher Which connects you with financial advisors.
The cost of hiring a financial advisor will depend on who you choose. According to the MoneyHelper website, the typical hourly fee for financial advice is between £100 and £350, but you may also be charged a fixed or percentage fee.