Grow Your Business with a New Focus on Healthcare

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By 1st Global

Most CPAs and wealth management providers would love to find a way to grow their businesses in a sustainable manner. One solution we don’t often think about is right in front of our noses – especially now, as cold and flu season has arrived. The solution is healthcare – how to plan for it and how to pay for it during the latter stages of life when incomes are often fixed and expenses expanding. A great need exists for financial planners to assist clients in planning for this inevitable expense.

According to a study released last month by Bank of America[1], 73 percent of affluent Americans are afraid that they will outlive their retirement assets. Eighty-four percent are concerned about the rising cost of healthcare. And 60 percent – three out of five affluent Americans – are planning to fund their retirement through personal savings and public sector programs such as Social Security or Medicare.

It is clear now that no one should plan for Social Security or Medicare to take care of them in their golden years. With 77 million baby boomers set to retire over the next 20 years, the need for experienced financial advisors to help them – as well as the Generation Xers coming up behind them – properly account for healthcare expenses in their retirement planning is paramount.

A Nationwide Financial survey released last month revealed that failing to discuss retirement healthcare expenses could cost advisors their clients. The survey, conducted by Harris Interactive, found about 80 percent of advisors say they will be able to sustain relationships with clients if they help them plan for the cost of healthcare.[2]

But how many CPAs, financial advisors and wealth managers are prepared for this? Of the 501 advisors who took that survey, more than half said they find it challenging or very challenging to talk about their clients’ healthcare, despite 57 percent indicating that they are aware their clients want to have those discussions.

To grow our financial services firms in this manner, we first have to educate ourselves on what healthcare costs our clients must be prepared to pay. A Fidelity Investments study released earlier this year says that a 65-year-old couple retiring in 2012 will need about $240,000 to cover medical expenses through retirement,[3] and each year that number increases by an average of six percent. The study also indicates that by 2027, retirees depending on Social Security as their primary source of income will spend 61 percent on healthcare expenses each year.

Second, financial advisors must make sure clients understand what Medicare covers and what it doesn’t.  Medicare does not cover most dental care, hearing aids or exams, most vision exams or care (including glasses), over-the-counter medications and more. All of these are out-of-pocket expenses unless you pay for supplemental insurance.

Medicare coverage has five components[4]:

  • Part A: Hospital insurance, with a monthly premium of up to $441 each month in 2013 (higher-income consumers may pay more)
  • Part B: Medical insurance, with most people paying a premium of $104.90 each month in 2013
  • Part C: Medicare Advantage Plans, with premiums varying by plan
  • Part D: Prescription drug coverage, also with premiums that vary by plan
  • Medigap: Medicare supplemental insurance, also known as “donut-hole insurance,” with premiums that vary by provider

After these costs are accounted for, you must come up with a plan for your clients. Ask them questions including:

  • Is it important to you that you continue seeing your current doctors?
  • Have you estimated the total costs for your prescription drugs?
  • Do you have catastrophic insurance for major medical illnesses?
  • Are you looking for flexibility when finding providers – particularly specialists – without having to go through red tape?

Following the three steps outlined may allow financial service providers to make the most of today’s healthcare opportunities and help your firm stand out against others that aren’t prepared to face this topic that will eventually affect everyone.

1st Global Capital Corp. is a member of FINRA and SIPC and is headquartered at 12750 Merit Dr., Suite 1200, Dallas, Texas 75251; 214-294-5000. Additional information about 1st Global is available via the Internet at

1st Global was founded by CPAs on the belief that accounting, tax and estate planning firms are uniquely qualified to provide comprehensive wealth management services to their clients. Each affiliated firm is provided with education, technology, business-building framework and client solutions that make these firms leaders in their professions through dedicated professional client relationships built around wealth management.

[1] Fall 2012 Merrill Edge Report, Bank of America, Oct. 24, 2012.

[2] “Financial advisor survey: Discussing health care costs in retirement key to retaining clients,” Charley Gillespie,; Oct. 29, 2012.

[3] “Fidelity Estimates Couples Retiring in 2012 Will Need $240,000 to Pay Medical Expenses Throughout Retirement,” Fidelity Investments; May 9, 2012.




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