Winning the Aging Game

At 6 feet 1 inch, 247 pounds and only 31 years old, Tedy Bruschi doesn't fit most people's profile of a stroke victim. But just two weeks after helping his team win the Super Bowl, the star New England Patriots linebacker was in an ambulance racing to a Boston hospital, where doctors confirmed he had suffered a mild stroke.

Though Bruschi was spared the most debilitating effects of stroke, his ability to resume his career is in question.

According to The Boston Globe, the story has captured the attention of fans and local media in part because, “He's dealing with an ailment that seems to be more common than many people realize, prompting many to wonder, ‘Is this something that could strike someone in my family?’ ”

What does Bruschi's story have to do with the financial advisory business? It is a reminder of something most of us would just as soon forget: A person's physical condition can change in a moment, and with those changes come significant financial questions: Will the patient recover enough to resume work? If not, where will his income come from? How will he pay for his long-term health care?

With the aging of the baby boomer generation, more and more advisors are going to face questions like these. Given the complexity and rising expense of health care, their ability to answer such questions could go a long way to determining their ability to expand their practices.

HNW Health

Put another way, in the battle to attract and retain affluent clients, an advisor's ability to add value must reach beyond markets and investments. Virtually all millionaire households hope to enjoy a comfortable retirement — yet that comfort is just as dependent on health as it is on money. And just as most people do not understand the risks of financial markets, most also do not fully comprehend the risks to their lifestyle from the impact of health care events.

With the baby boomer retirement wave rolling over the financial advice business, advisors must be prepared to help clients with both their money and other aspects of their lives. The reward will be a loyal following of clients who are surprised and delighted to find an advisor with a broader view of their situation than just the numbers on a monthly statement.

We're not suggesting advisors need to become financial Marcus Welbys. But just as advisors strive for a conversational proficiency on income tax-reduction strategies, so should they be able to talk about the financial implications of health care decisions. No one expects advisors to replace either his primary care physician or his CPA. But the more knowledge the advisor has, the more valuable he becomes to his clients.

In aging, as in life itself, there are “winners” and “losers” in terms of longevity and health. Americans are bombarded by images celebrating the lucky ones — those who are aging with complete success. The stereotype is familiar and summed up in many advertisements for upscale retirement communities, typically in the Sunbelt. A svelte platinum-haired couple, smiling deliriously, is golfing, dining or dancing in luxury. Neither displays any hint of ill health or physical limitation, and together they portray an affluent, active lifestyle of complete gratification.

Lost in the “good news” of increasing longevity and the highly touted vibrant lifestyles of fortunate seniors is the potential for a health-related financial derailment. People over the age of 85 represent the fastest growing age group, yet nearly half suffer from dementia. Almost two-thirds of Americans over the age of 65 are sufficiently disabled as to require assistance with activities of daily living, according the book Age Power by Ken Dychtwald (Tarcher Putnam, 1999). One in five Americans will enter a nursing home at some time in their lives, yet how many people know that Medicare covers only four months of nursing home care — and that that must be preceded by hospitalization.

Because many lucky seniors escape these increasingly common problems, it is tempting to maintain an optimistic view of these statistics. On the other hand, should any of their clients be unlucky, the most successful financial advisors must be prepared to respond to the worst-case scenarios.

The unprecedented demographic wave of aging Americans, including the masses of retiring baby boomers, will redefine the financial advice industry during the next 25 years. The retiree's financial responsibilities for health care costs for himself and dependent family members is not just a significant expense of retirement, these costs can spell financial ruin for all but the most wealthy families if they are not prepared if and when a disaster like Alzheimer's disease strikes.

Case Study: What happened to Tedy Bruschi?

A stroke is a cardiovascular disease — an ailment of the heart and circulatory system — in which a blood vessel carrying essential nutrients and oxygen to the brain is either blocked by a clot or ruptures. When the affected part of the brain cannot get the oxygen it needs, it begins to die. Most strokes are ischemic — that is, result from clots that block an artery. Less common are hemorrhagic or “bleeding” strokes, like Tedy Bruschi's. Common to all strokes is that when part of the brain dies, the part of the body it controls is affected. Strokes can cause paralysis, hinder speech, sight, thought and sensation.

What causes strokes?

Untreated high blood pressure (140/90 or higher) is the leading cause of stroke. Factors that raise blood pressure should be identified in the patient's lifestyle and family history, such as high levels of LDL (bad cholesterol, above 100 mg/dL) and triglycerides (blood fats, above 150 mg/dL), and low HDL (good cholesterol, below 40 mg/dL). Age plays a factor, as does a family history of stroke. Men are more likely to have strokes, but women are more likely to die from stroke. Tobacco use is linked to stroke since carbon monoxide and nicotine reduce the amount of oxygen in the blood and damage walls of blood vessels. Diabetics are also a higher-risk group.

What are the typical treatments?

High blood pressure can be treated with several medications, but must be monitored on a regular basis. Cholesterol levels can be affected by improved diet and regular exercise. More stubborn cases may be treated with medication.

What's likely to lie ahead for the patient from a medical perspective?

Stroke has long been the No. 3 killer of American adults — an estimated 700,000 died of them this year. Reflecting a growing national awareness of the benefits of healthier lifestyles and more proactive treatments, the mortality from strokes is decreasing. About 4.8 million living Americans are survivors of stroke. But what is their quality of life? According to studies, within three to six months of a stroke, virtually all of the recovery has taken place. According to The National Heart, Lung and Blood Institute's Framingham Heart Study, among ischemic stroke survivors over the age of 65, half had some one-sided paralysis after six months, 30 percent were unable to walk without some assistance and 26 percent were dependent in the activities of daily living. The greatest financial impact is on the one-fourth requiring institutionalization in a nursing home, according to the American Stroke Association.

Planning options for the patient and his family

Advising a stroke victim — or the family of a stroke victim — is an exercise in empathy and understanding. The sudden nature of strokes disrupts normal family dynamics and financial arrangements. While the family copes with the care and rehabilitation of the patient, you can provide invaluable assistance with the necessary financial restructuring. Most people are financially unprepared for stroke and other disabling health care events. For example, less than a third of millionaire households own long-term-care insurance, according to a 2004 Phoenix Wealth Management Survey. Disability insurance is often provided as a group benefit by large employers, but it is rare among small companies and, typically, an expensive option for the self-employed. Business owners are particularly at risk because of the family's dependence on the business to provide income.

What are the options?

Medicare payments for acute and rehabilitative care following a stroke cease after four months or possibly sooner at the discretion of the institution. At this point, care becomes the financial responsibility of the family. In the absence of disability or long-term-care insurance, the family will have to pay. Families of limited means can opt for a Medicaid spend-down, which will effectively liquidate the patient's assets.

What you can do now to add value to your healthy clients.

Assess the risks

The good news is that most of your clients and their families will avoid strokes — especially at ages as young as Tedy Bruschi. The first job is to assess the relative risk. Inquire about family history. You will need to know about your clients' parents and siblings, including any medical developments and special risk factors. Stroke victims typically have either family or lifestyle risks that are easy to see if you know where to look. Family history of high blood pressure, obesity, sleep apnea and diabetes are important potential warning signs.

Lifestyle risks are more apparent, especially obesity, hypertension and tobacco use.

Anyone with family or lifestyle risk factors should be told about the potential for a stroke. Start with a simple worksheet in which the family history is collected. This is tricky stuff to get clients to discuss, and the worksheet removes the initial awkwardness. It's all about collecting facts. That process will guide your further discussion.

For more information about strokes, including a guide to identify risks of stroke and how to assess your risk of stroke, go to the Web site of the American Stroke Association (strokeassociation.org).

Will the clients take action?

Talk about medical risks with your best clients. How do they feel about their risks and their need for preparation? Use the Tedy Bruschi story to illustrate the random nature of such medical events.

What's the plan?

Consider specific risk-reducing strategies, like disability and long-term-care insurance, remembering that the earlier in life these products are acquired, the lower the premiums and the less likely any condition will have surfaced. If you do not offer those products, use this opportunity to develop a strategic alliance with a specialist (someone who sells these products full-time and does not sell investments), and seek a referral arrangement with reciprocity for your business.

A health care nest egg

Suggest to your clients reluctant to buy specific care or disability insurance that they at least begin to fund a health care defense fund. Studies show that individuals spend more on health care in their final five years of life than in all the other years combined, so start saving now. Approach the idea just like a college savings account — they can get the money back if they don't use it. Of course, the big difference is that a year of nursing home care can easily cost more than two years at an Ivy League school. And before you ask, we think legal maneuvers to sequester assets from Medicaid spend-down are fraught with risk and are not recommended.

Advisors who can openly discuss life's realities walk a fine line, as many clients may not wish to confront the potential for a compromised lifestyle and the financial impact of an unwanted health care event. And even though most will escape the most ruinous circumstances, adequate planning for the possibility is both prudent and professional.

By showing genuine interest in a topic overlooked or unappreciated by most advisors and their clients, you stand out as one prepared to tackle the real life challenges of retirement preparation. That courage will be rewarded by higher satisfaction among your current clientele and referrals of new clients.

Writer's BIO: Stephen D. Gresham is executive vice president of Phoenix Investment Partners.

Glen E. Gresham, M.D., is professor emeritus of rehabilitation medicine at the University at Buffalo, The State University of New York.

For the Long Haul