Do High-Net-Worth and Ultra-High-Net-Worth Clients Really Need Healthcare Planning?

Christine Simone
February 7, 2024

“My clients are high net worth so they don’t worry about healthcare costs.”

Unfortunately, I hear this every so often from financial advisors, and every time I think to myself how much of a missed opportunity this mindset creates. Healthcare is currently the top financial concern for Americans and 45% of Americans reported feeling very or somewhat worried about being able to afford various healthcare costs. Sure, these statistics reflect the concerns of the average American, but does that mean wealthy clients really need healthcare planning? Absolutely! Healthcare planning isn’t just about saving money.

Plus,  one survey found that 89% of ultra-high-net-worth individuals prefer receiving value-add services from a single source. Additionally, 46% of high-net-worth investors revealed in a survey that they planned to change wealth management providers or add new wealth management relationships in the next 12 to 24 months, or both. And over the past three years, 39% of those same respondents said they had already switched and/or established an additional relationship. 

One of the top three reasons high-net-worth clients switch? They want access to different products and services. Many of the respondents said they were looking for “wealth management adjacent services”, like tax planning, trust and estate planning, and healthcare planning. To build stronger relationships with your existing high-net-worth clients or attract new ones, simply telling each and every one of them to either self-insure or pick the “platinum” plan options is not enough. In fact, the lack of personalization could be hurting your retention and growth goals.

In this blog, I’ll go over how healthcare planning can help you retain these high-value clients, and ways to implement healthcare planning.

Addressing client concerns and meeting client expectations 

When asked which areas were of greatest concern for their clients, the top responses from financial advisors were retirement funding (95%), healthcare costs (95%), and tax burden (95%). Although high and ultra-high-net-worth clients aren’t generally worried about healthcare costs, they are still equally as confused about healthcare and health insurance as an industry. Most people aren’t well versed on what their health insurance options are if they retire before 65, and many feel overwhelmed by the complexities of Medicare and the Marketplace. High-net-worth and ultra-high-net-worth clients value peace of mind and expertise, which is why they’ve engaged you, their financial advisor, despite not needing to worry about running out of money.

Additionally, two-thirds of high-net-worth investors revealed in a survey that they want more personalization in their wealth management relationships, particularly in financial planning. To create “sticky” relationships with your clients, offering additional services to create a more comprehensive financial planning experience is a necessity, especially given that 32% of millionaire investors would leave their advisors if they didn’t provide financial advice outside of investments. 

Healthcare planning is an excellent strategy to create more personalization for your clients (no matter their net worth) and additional touch points throughout the year. Don’t you want to get in front of your “platinum” clients more throughout the year while having tangible advice to deliver? Healthcare can be an annual topic addressed in your meetings that is guaranteed to deliver value and directly impact the strength of these relationships. 

So how can I use healthcare planning to address the healthcare-related concerns my high-net-worth and ultra-high-net-worth clients have?

Let’s start with the biggest (and simplest) way to use healthcare planning to meet clients’ expectations and alleviate their worries about health insurance and healthcare costs: optimizing their healthcare coverage for retirement. We’ve established that high-net-worth clients aren’t worried about the costs of healthcare, so why optimize their health insurance? 

If you aren’t providing this service, your client will go to someone who does — they might even look at other products they offer or move their assets with them. I say that because, not only have I seen it happen, but there are plenty of studies that show that clients expect to receive their financial advice all under one roof. Envestnet, Inc. found that 62% of U.S. investors prefer or already use one single financial provider for all their needs. Their research also found that investors expect holistic advice. Optimizing high-net-worth and ultra-high-net-worth clients’ health insurance provides a service they want and ensures they go to you for all their needs, which protects your relationship with them.

If your high-net-worth client is retiring before 65, you can help them identify which health insurance options make the most sense for their needs, preferences, budget, and retirement timeline. I recommend reading this guide to learn more about the options available to pre-65 retirees, but in summary, the most comprehensive options are:

  • The Marketplace
  • Their spouse’s employer-sponsored health insurance
  • COBRA coverage

If your high-net-worth client is retiring at 65, you can help them understand how Medicare coverage works and determine which coverage options (Original Medicare or Medicare Advantage) work best for them. Even just explaining the different parts of Medicare and going over important enrollment timelines can alleviate a lot of the worry clients have about enrolling in Medicare for the first time. But, if you want to take healthcare planning further and offer personalized HealthPlanning Analyses to your clients, book some time with me to talk about Caribou’s healthcare planning software.

Additional financial planning strategies and considerations

Did you know that healthcare costs can have an impact on clients’ taxes? Or that your client’s income affects the cost of their Medicare? Again, even though your high-net-worth and ultra-high-net-worth clients might not be concerned about how their income impacts the cost of their Medicare, what your client will care about is the fact that this expense wasn’t planned. What they will wish, is that they had been informed about all the Medicare documents they would receive stating they owe more than they expected in healthcare costs because of their income from two years prior. To reduce client confusion and stress, it’s critical to plan for these costs that impact a major milestone for most clients.

And since clients prefer to receive their comprehensive financial planning needs from one single financial provider, it benefits you to be able to talk about tax planning, healthcare planning, and other services that complement each other. The benefit? Better client retention. 

There’s a quote from a McKinsey & Company report that I think explains how client expectations are shaping comprehensive financial planning:

“In the next ten years, advisers will…become more like integrated life/wealth coaches who advise clients on investments, banking, healthcare, protection, taxes, estate, and financial wellness needs more broadly.”

So how can I use healthcare planning to inform other financial planning strategies for my high-net-worth and ultra-high-net-worth clients?

I’ve written other blogs about how healthcare planning, tax planning, and estate planning all work together and improve overall financial plans, so I recommend reading that to learn how you can use all three to create more comprehensive, personalized plans for your clients. For healthcare planning, it’s important to understand the full picture of a client’s life and how certain Life Events can impact their health insurance options and costs. Informing clients of what documents they can expect as they near Medicare eligibility, or showing them that they can receive a bigger tax deduction if they itemize their medical expenses, will show clients that you care about their entire financial picture and well-being. 

Being able to offer guidance on all areas of clients’ lives will also help to ensure you’re meeting their expectations, and that they not only stay with you as their comprehensive financial advisor but that they also go to you for all their needs. Removing the need to have several professionals guide them in their decisions protects your advisor-client relationship and reduces the risk of them moving their assets.

Final Thoughts

Just like financial planning isn’t just about saving money, neither is healthcare planning. It’s about being the go-to person for your clients to talk to about how they will receive health insurance if they retire early, what Medicare plan they’ll pick once they turn 65, how they can lower their taxable income to reduce their premiums, and most importantly, providing a value-add service that helps to ensure clients stay with you for the long haul.

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