denotes premium content | Jan 9 2009 Feature
posted 1 Jul 1997 in Volume 2 Issue 5
Paying for Nursing and Residential Care
A Unique Survey
Derek Wright, Assistant Director at Kleinworth Benson Private Bank, provides ECA readers with results and analysis from an exclusive independent survey conducted during the past year.
The survey involved questioning hundreds of individuals who acted as "affairs managers" for a relative or friend in residential or nursing care.
Kleinworth Benson Private Bank conducted an independent survey last year amongst those who have a relative or friend in a care home. The answers provided a unique insight into the actual affect of the Community Care Act 1993, and the real life concerns of those looking after the financial and personal affairs of someone in care. The survey also showed what steps are taken to manage the finances to ensure they are efficiently used and what advice is sought and from whom.
This is the first of three articles by Derek Wright, an Assistance Director at Kleinworth Benson Private Bank, based on the results of the survey that have been kindly provided exclusively to "Elderly Client Adviser".
This first article will look at the extent to which advice is sought and how assets are reviewed before entry to the care home when a substantial requirement for additional income is often required. The next article will look at the Community Care Act, how often gifts of property occur and the extent to which personal tax considerations are reviewed. The final article will look at the financial arrangements that are made to meet the cost of care coupled with a review of the financial market place today and the solutions available.
To set the scene, those answering the survey were unaware of Kleinworth Benson's involvement and therefore provide a truly independent reflection of the views of people with someone in care. So who were those answering the questionnaire? 35% were daughters, 20% were sons with a further 12% being a spouse of the person in care. Only 2% represented a professional advisor.
Is advice sought concerning the personal affairs of the resident of the care home?
The most important advisers are solicitors followed by financial advisers and accountants. The responses are shown in Table 1. The survey shows that nearly half did not seek any advice at all. This reflects a theme emerging from other questions in the survey that the management of the affairs becomes inefficient without proper advice on tax and related matters such as seeking appropriate assessments from Local Authorities. Hospital social workers and community social workers were an important source of guidance and information particularly in regard to the private homes to be used. It is also clear that friends and relatives are a key channel to hear about a particular care home when personal experience is far better than using Yellow Pages or care home lists.
Who helps with finances for private payers?
In general terms, the family member looking after the financial affairs is unsophisticated and adverse to taking perceived risks in the stockmarket. The preference is for TESSAs, National Savings and building societies. As we shall see in a later article these are not perhaps the best investments to produce a long term and increasing income stream. Financial advice was sought from a range of advisers as shown in Table 2.
Again it is clear that professional help is used in only a limited number of cases. Perhaps it is to be expected that the local high street bank manager and stockbroker were consulted because of previous connections and links, but this shows an absence of information that specialist advisers do exist. When advice was sought, the quality of advice received failed to encourage a number of affairs' managers to make any changes to the assets or investment strategy, despite the fact that a considerable increase in income was often required. This point is emphasised in Table 3. Here the survey asked whether the assets held, such as bank deposits, unit trusts and shares, before the move to a care home, were changed or different after the move. Here 83% said that the assets were not changed or only slightly changed in response to possibly one of the biggest changes in financial circumstances that can occur in a persons life. This is also surprising, bearing in mind that 62% of the respondents to the survey confirmed that the net worth of the person in care exceeded the threshold of £16,000 with 21% having a net worth in excess of £75,000. Thus the person in care had to make a full or partial contribution to the fees. This lack of response to changed financial circumstances was compounded because when asked how often available assets were reviewed after entry to a care home, one third said never, with a further 25% saying only annually.
Conclusion
The initial conclusions to be drawn from these results is that your potential clients are ill-informed of the need for professional advice. This theme is again in evidence when Derek Wright looks at assessments and taxation issues in the next issue of ECA.
Derek Wright, Kleinworth Benson Private Bank,
Table 1
Have you had help from the following professional advisers? Yes
Advice from solicitor 29.5%
Advice from tax adviser/accountant 6.2%
Advice from financial adviser 18.3%
No adviser 45.2%
Other advice 8.3%
Table 2
When there are assets do any of the following professionals advise on or manage them? Yes
Stockbroker 6.8%
Bank 7.3%
Independent financial adviser 7.3%
Adviser tied to insurance company 1.6%
Solicitor 9.4%
No professional used 62.5%
Table 3
Are the assets now used different from those used before the move to the care home? Yes
Very different 9.5%
Fairly different 7.7%
Slightly different 24.3%
No different 58.6%
Total with assets 100.0%
