By David Nugent, managing director at UK care advisory service Grace Consulting, working closely with alternative investment manager Ingenious
There is an increasing demand from advisers and wealth managers for services that deliver across a wide spectrum of client needs in later life. From investment growth to estate planning and preparing for care, it is clear to see that later life is one of the most complex areas to plan for.
Can you put into context the magnitude of the requirement for care today?
In the next 20 years, our population will age, with 50% more over 65s and 93% more over 85s1. Nearly one in 6 people will reach their 100th birthday in 20402. This is all great news as it is down to advances in medicine and lifestyle choices. However, it of course comes with its own challenges. In the later part of their lives, many are living with disabilities, such as dementia or arthritis, or the lasting impacts of a stroke or fall. And indeed, even those who are physically healthy may suffer with loneliness. This will result in a huge rise in care needs for a large part of the population. In England, more than 1 in 3 people aged 85+ will require some form of care1.
What are the greatest challenges that individuals and families face when it comes to care?
The answer to this is three-fold.
- The provision of care
- There is an existing undersupply in care facilities in the UK and a lack of planning to increase this provision to meet the increasing demand outlined above. In fact, the provision has reduced over recent years with the number of care-at-home hours falling by 3,000,000 between 2015 and 20181, for example. Due to the lack of funding, private funders, who make up a substantial proportion of the total number in residential care are having to subsidise state funded spaces. This makes it even more important for people to ensure they are getting care that is right for them.
- Lack of information about care
- The increasing need for care, combined with the longer amount of time people are spending in care, means that making care arrangements is a more important decision than it once was. However, whilst the Care Act has put a duty on local authorities to make information available to ensure people are aware of the options that may be available to them, in practice this information may be limited, or may simply signpost individuals to generic materials that are not tailormade for the particular person or their circumstances. Similarly, those that search for information online are unlikely to find all the information they need, and there is no guarantee that what they do find is current or accurate.
- Care is expensive and in the last 10 years, prices have increased considerably faster than the Retail Price Index.
How can people deal with these challenges?
The need for care is becoming one of the sad realities of modern living. The real challenge is turning this reality into a positive experience, not something that is bolted onto life in an emergency. The best way to achieve this is through forward planning and preparation. There are two main areas people should prepare for:
The first is financial preparation. It is important to understand the funding provided by the state when it comes to care. Most funding is means-tested and in England, for example, local authorities do not typically provide financial assistance for anyone with capital over £23,250 (and if you’re looking for residential care, this will include the value of your home if you live there alone). There is some non-means tested support available in certain circumstances, but it is limited.
Assuming your clients have assets over £23,250, they will probably be liable for the full cost of their care, so how much should they expect this to be? Care options vary hugely of course, from assisted living to care at home and residential care, but to give you an idea, two hours of care at home per day could cost around £18,000 per year and residential care can cost over £65,000 annually.
This means financial preparation for care needs to be considered early on and not just by the elderly. And importantly, people need to retain access to their money. We see many people who have prepared for legacy planning, resulting in funds being tied up in trusts, or families who have gifted money to their children and need to ask for it to be returned. That is one of the reasons Business Relief Services are becoming increasingly popular, they can offer both investment growth and access to savings.
The second crucial area of planning is practical preparation. This is wide ranging, but to give some examples:
- Have conversations within the family about the individual’s expectations and wishes
- Have a needs assessment carried out to see if there are any early steps that can be taken to prevent some of the issues we have stated as being a cause for care needs, for instance, falls or loneliness
- Consider the different types of care available and if residential might be an option, research and select a preferred home. Many homes have long waiting lists and so joining this can give you far more choice in an emergency, you don’t have to take up a place if it is not needed
All of these steps can contribute to a far better outcome for the individual and their loved ones. Having a contingency plan in case of emergency helps many people to stay in control of their situation and not need to make such hurried decisions, for instance when discharged from hospital.
That all sounds very simple, but with the challenge of a complicated system that you identified earlier, where should people start?
I wholeheartedly encourage people to engage with expert advice when it comes to preparing for care. It is something we often deal with only once in our lifetime and the stakes are high, it is important to get care right. On average, people spend two and a half years in care2 and that is a significant amount of time if you, or your loved ones are unhappy with the choice. Independent advice can help by including the whole family and supporting a plan that is truly tailored to their needs, rather than having to take the first option available.
What is the cost for a care advisory service?
At Grace, we supply many families with advice across different price brackets and our services are available to many of the UK’s leading financial providers. Packages range from £295 to £2,450. However, investors in Ingenious Estate Planning benefit from our most comprehensive service, for themselves and their families, at no cost.