Wealth managers must embrace the unglamorous role of aiding in eldercare

More and more wealthy individuals are taking on the responsibility of caring for elderly relatives as well as supporting adult children and other family members, but few are planning for the morbid details.

Nearly half (47%) of wealthy individuals have a financial plan to cover long-term care costs for themselves and a spouse or partner, but only 18% have a plan to cover long-term care costs for their parents, according to the 2013 U.S. Trust Insights On Wealth And Worth report, which surveyed 711 high net worth and ultra high net worth adults across the country. Younger respondents (Generation Y) are nearly twice as likely as Baby Boomers to have a financial plan or to have purchased long-term care insurance for parents.

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A staggering eight in 10 families have no plan to support the needs of aging parents and relatives, the U.S. Trust study found. Married women are more likely than married men to say they devote more time as a family caregiver while making sacrifices with their own income and career. Only 19% of families have calculated the monetary value of time devoted to care giving.

“We are finding that to some extent some new clients will say that investment to them is becoming a bit of a commodity and (they want us to be) dealing with family issues,” Chris Heilmann, U.S. Trust’s chief fiduciary executive and a managing director of Bank of America, tells eFinancialCareers.

U.S. Trust’s Eldercare Planning program takes care of the details most people just want to ignore, helping with: gathering and organizing documents such as insurance policies, wills and health care proxies; finding the best facilities or in-home caregivers; and overseeing medical care

Major private banks and money managers are increasingly offering similar services.

Morgan Stanley Wealth Management on May 28 announced a global arrangement with private health advisory PinnacleCare to access to the management of health issues including eldercare into wealth planning discussions.

A recent poll by Morgan Stanley Wealth Management found that 68% of millionaire households in the U.S. worry about affording quality healthcare. No global figures are available.

“Healthcare is a silent concern for many of our clients until it becomes a real issue in their lives and the lives of family members,” said Robert Seaberg, managing director of Wealth Advisory Solutions at Morgan Stanley Wealth Management.

Helping with eldercare isn’t yet a high priority among the burgeoning ranks of private bankers in Asia. Relationship managers at DBS in Singapore only sporadically receive requests to name clients’ aging parents as beneficiaries of family trusts, according to a spokesperson for Southeast Asia’s largest bank.

But bankers in Singapore and Hong Kong, the main Asian hubs for servicing private wealth, may have to take on more of this type of work in the future. “In Asia, wealth is slowly moving to the next generation,” said Rahul Sen, a director at search firm Sheffield Haworth in Singapore and a former a private banker at HSBC, Deutsche Bank and Merrill Lynch. “Clients now increasingly expect their private bankers to handle every financial need, and this includes taking care of all generations,” he added.

John Koh, managing director of the Wealth Management Resource Centre in Singapore, said eldercare duties aren’t written into private bankers’ job descriptions. “But it is implicitly understood that to be in their clients' good books, they are expected to approach this subject with compassion and offer practical solutions.” 

Koh said private bankers in Asia typically help with medical and health insurance products, trust and estate planning, and investments that provide regular payouts to retirees.

“Private bankers are likely to be increasingly engaged in these kinds of arrangements because we have a very family-centric culture in Asia,” said Finian Toh, manager, banking and finance, at Robert Walters in Singapore. “Adults typically care for their parents in Asia, and as the population ages children will need to support their parents and grandparents, who are living longer,” he added.

In the U.S., the need is extremely apparent and several private banks and wealth managers have been offering some form of eldercare services for years. Wells Fargo Private Bank has been offering services to clients with more than $2 million in investable assets since 1997. Morgan Stanley Wealth Management had been referring its wealthiest clients for years, but the new partnership is offered to a broader client base.

Attitudes toward eldercare are driving companies to expand their offerings.

The majority of wealthy people don’t even want to discuss their own future needs with the very children that will inherit their money, the U.S. Trust study found.

While 78% have discussed their long-term care wishes with their spouse or partner, only 35% have shared the same information with adult children. Women are somewhat more likely than men to discuss long-term care with their children. About a quarter have never shared their long-term care wishes with anybody.

The old family broker-dealer model is broken and wealthy families are now seeking comprehensive services to manage their wealth and ongoing needs for every family member. Heilmann says each family member should be playing a role in the planning process, not just the primary wealth holder or creator.

“Clients in past have been that member of family who has generated the wealth or inherited the wealth,” says Heilmann. “You need to do family planning, and the best way to do it is to have seats filled.”

“Rather than a lack of interest, it’s just the overall family dynamic,” he says. “Let’s say the husband is the leader because he’s been the wealth generator, finding the time for one family member to meet monthly or quarterly (is difficult), finding time for both just adds of scheduling complexity because of how busy families are. “

Nearly half (46%) of all respondents say they provide substantial financial support for adult members of their family, yet more than two-thirds (69%) do not have a financial plan that factors in the needs of any adult family member, other than their spouse or partner.

Heilmann says it is up to wealth managers to provide a kind of concierge service for their clients, almost like family therapy.

“From industry perspective, not U.S. Trust’s, too much focus is given to asset management,” he says. “Value transfer and legacy” must be prioritized.

Additional reporting by Simon Mortlock.

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