Qualifications requirements could discourage advisers, but providers say opportunities exist.
By Donia O'Loughlin | Published Mar 30, 2012
Article from FT Adviser
In the post-Retail Distribution Review world advisers will need to differentiate themselves to attract business and the care arena will be a way to do that, but tough qualifications requirements could deter some from moving into the space, according to product providers.
In a recent guidance note, The Retail Distribution Review: independent and restricted advice, the Financial Services Authority indicated that care fees advice and long-term care insurance would be classed as a ‘specialist’ activity.
This means advisers wishing to remain independent post-RDR must have either the relevant qualification or a referral process in place in order to protect their clients’ interests.
Andrew Tully, pensions technical director at MGM Advantage, agreed that long-term care is going to become an “increasingly important” part of the retirement advice process as the population ages.
He said: “Advisers who choose the independent route after RDR will want to differentiate themselves and being able to advice on specialist areas such as long-term care is one way to do that.”
However Mr Tully pointed out that more innovation was needed and the government “may want to consider other options”.
He said: “For example, giving tax incentives to someone with a ‘normal’ pension annuity who asks for some or all of the income to be paid direct to a care home in later life.
“Flexible investment linked annuities may also be a useful option as they allow a higher income to be withdrawn than a standard annuity, so people can increase income being taken if they have additional outgoings for long-term care.”
Andrea Rozario, director general of Safe Home Income Plans, said that while the RDR will require advisers to undertake further qualifications, this “will not deter them” from entering the long-term care sector.
She said: “People are living longer than ever before, yet as we well know many will not have sufficient income or savings to pay for all of their possible care needs.
“Therefore it is likely that many more consumers will seek financial advice, to ensure they are financially prepared to cope with these costs.
“Advisers will want to make sure they are prepared and equipped to offer the best advice for their clients, especially given the importance and sensitivity needed when making decisions around how to pay for care.”
However, Dean Mirfin, group director at Key Retirement Solutions, believes the RDR it will both deter and encourage advisers to enter the care arena.
He said: “Some will see this as an opportunity due to the hoops to jump through to deliver advice to this sector at a time when others are backing away.
“I would expect many to steer clear, though, for two reasons. The first being the requirements to advise this sector and the scrutiny post-HSBC fine, but also as a result of the ongoing lack of clarity from the government regarding what precisely individuals have to contribute towards the costs of their care.”
Ros Altmann, director general of the Saga group said: “I do fear that imposing tough qualification requirements on those advising on long-term care risks reducing the amount of advice available to the increasing numbers of older people who will be needing care in coming years.
“In fact, advice is vital to help them manage with the costs of care and to also help people plan for later life care needs as well.”
Article from FT Adviser
