Organising care for a loved one in later-life can be a heart-wrenching and complicated process made easier by a professional financial adviser – but are the costs worth it?
Just 11% of over 45s who have helped organise care for an elderly relative had support from a financial adviser, according to new research.
But 66% of those who had been through the process of arranging care said they would have been grateful for a referral to an adviser to guide them.
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Overall of the 2,500 people surveyed, a majority (59%) said they would like the option of being referred to an adviser by their local council, retirement specialist Just Group found.
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Mitch Miller, senior care product manager at Just Group, said: “Currently financial advisers are not front of mind when people start looking for support and guidance for their later-life care planning but our research shows that, when prompted, most people are open to professional help to discuss their options.”
It comes as the UK’s population ages rapidly, with over 65s projected to make up a quarter of the population by 2050 by Office of National Statistics (ONS) estimates. Over 100,000 people will reach retirement age in 2026 alone too, according to analysis by charity Age UK of ONS population data.
With this in mind, many more people will be facing the challenge of arranging care for older loved ones in the years to come, and, if state support is not available, working out how to pay for that care.
Care costs can be significant. The average cost for a residential home in the UK is £600 a week, according to the NHS.
But while the research from Just Group suggests many in mid-life would be open to help from a financial adviser to take them through the process, are the associated costs always worth it?
When to use a financial adviser to organise care
1. Access to specialist products
One of the main advantages of using a financial adviser to organise care for an elderly relative is that it opens up products that are otherwise not available.
Lucie Spencer, financial planning partner at wealth manager Evelyn Partners, said one such product is an immediate needs annuity, also known as a care annuity, which pays out a guaranteed, tax-free income to a registered care provider for the rest of the individual’s life.
Care annuities are specialist products and can only be recommended by regulated financial advisers who have to have extra qualifications in order to advise on them, and will charge a fee for the advice.
2. Flag benefit entitlement
Licensed advisers – which can include those at the Citizens Advice Bureau who are free to talk to – can also signpost family members to the benefits a relative can claim if they’re going into care, such as Attendance Allowance.
Do note, you won’t be eligible for Attendance Allowance if you live in a care home and it is being funded by your local authority.
An adviser might also be able to signpost you to other benefits such as funded nursing care, where the NHS contributes towards nursing home fees, and continuing health care, whereby people with long-term complex health needs qualify for free health and social care arranged and funded by the NHS.
“By claiming these benefits, it can more than cover the cost of the financial advice itself,” Spencer said.
3. Help with lasting power of attorney
A financial adviser can also ensure lasting power of attorney (LPA) rules aren’t broken.
An LPA is a legal document which gives an entrusted person, known as an ‘attorney’, the ability to manage your financial affairs if you lose the mental capacity to do so yourself.
But under an LPA, the rules around an attorney gifting can be complicated and any unauthorised payments can be investigated by the Office of Public Guardian (OPG) and may need to be repaid. You may also be ordered to pay extra costs on top.
4. Manage savings and investments
Lastly, a financial adviser can help tailor a loved one’s investment portfolio to the right level of risk so funds can be accessed when needed but the remaining assets are allowed to grow to their fullest 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 is matched to an appropriate level of risk for each timeframe.”
For example, a one to three year pool of investments might be more heavily weighted with (typically lower risk) bonds and a smaller amount of shares whereas a five or more years pool might contain a greater percentage of (higher risk) equities.
When not to use a financial adviser to organise care
There are some circumstances where getting help from a financial adviser won't be the most cost-effective approach.
1. Short illnesses
In most cases, you won’t need a financial adviser if a loved one is going into care for a short period of time, say for example after an operation, which would have a minimal impact on their finances.
Spencer said: “If the care is short term or temporary then funding this from the individual’s existing assets is relatively straightforward.”
You may also be able to get short-term care for free through the NHS. You can sometimes qualify for free care and support at home for up to six weeks after a stay in hospital or to prevent you going into hospital, known as intermediate care.
2. Sufficient income
Meanwhile, if an elderly relative’s income is already enough to pay for any ongoing care, a financial adviser might not be necessary. Only if you need to sell off assets, like a home, to cover a relative’s care, is when financial advice might be advisable as this is a more complicated scenario.
Spencer explained: “When an individual’s expenditure, including their care home fees, are more than covered by their income then it makes little sense to pay for financial advice.”
3. End of life
It may not be worth paying for financial advice to get help arranging care for a loved one if you don’t expect them to live for much longer. If they die very soon after you’ve received advice, you may have paid out a significant sum of money for little benefit.
How to find a financial adviser and how much do they cost?
You can always ask friends and family for a recommendation for a good financial adviser. That way, you know if they’ve had a good experience.
For specialist later life financial advice it can be a very good idea to speak to a financial adviser who is accredited with SOLLA, the Society of Later Life Advisers.
Otherwise, you can use websites like Unbiased or Voucherfor which pair you up with financial advisers.
The cost of hiring a financial adviser will depend on which one you choose. According to the MoneyHelper website, typical hourly fees for financial advice are between £100 and £350, but you may also be charged a fixed or percentage fee.
