Regulated advice will be a source of comfort for those who may need long term care in the near future, writes Owain Wright
There are three key reasons why the long term care (LTC) sector has failed to burgeon in recent years: political uncertainty over what financial help the Government would introduce; lack of consumer awareness; and lack of adviser awareness.
The biggest of these hurdles has now been overcome. The Registered Nursing Care Contribution was the Government's minimalist response to the Royal Commission's main recommendation. It will now be easier for advisers and clients alike to quantify the financial risks that will be faced should long term care be required.
Research has shown that, while most elderly people know long term care can be expensive, very few are aware that LTCI exists or in what form. Most are aware, however, of the Government's response to the Royal Commission and will therefore be more open to the idea of discussing LTC as an issue.
This brings us onto the third reason for the poor take-up of LTCI policies ' lack of adviser awareness. I know many advisers who have asked their clients: 'You don't want to discuss long term care, do you?' thus dispatching that tricky subject for another day.
LTCI can be a fiddly area for advisers, as behind the relatively simple products lies a wide and varied list of knowledge requirements and, while most advisers are au fait with the basics, few have significantly invested the time which is needed to understand the sector fully.
While a great many advisers presently treat LTCI as if it were regulated, the introduction of formal regulation will make it a much more difficult subject for the remainder to ignore. This in turn will bring about more discussion, enquiries and ultimately, business.
Regulation will force advisers to decide if and how LTCI will fit into their operations and this is a decision they will be unable to avoid.
Clients too will be thankful such a complicated advice sector has finally come under the regulator's protective wing. Despite a general lack of knowledge of the LTCI sector, the reality is that the prospect of needing long term care is a great source of concern for those in their 70s and over and many will want advice on the options they might consider.
The fact that the advice they receive will be regulated will add another layer of comfort and help to turn what are currently vague thoughts into affirmative action.
There is still a good deal that needs to happen before the LTCI sector sees the expansion that it deserves, but the existence of political certainty and regulatory protection are vital in helping to provide a firm base for growth.
