IFAs are under-equipped to benefit from a looming explosion of interest in long term care products, says a market specialist.
Chris Horlick, long term care managing director at Partnership, says 53,000 self-funding people enter long term care every year, but the those who seek advice are likely to do so from an adviser who is not qualified to advise on long term care planning.
"Only 6,000 or 7,000 IFAs have the CF8 qualification," Horlick says, "So IFAs say, ‘buy an investment product' which is inappropriate for a client who is 82 and going into care."
The CF8 qualification was introduced in 2005 in order to better equip IFAs to advise on products such as long term care annuities.
The FSA introduced the exam to "ensure that customers have an enhanced level of protection covering issues such as the suitability of financial advice, product information and cancellation rights."
Horlick says with the number of people aged 85 and over set to treble by 2050, IFAs need to be prepared for the boom in business.
"Long term care is going to grow massively," Horlick says. "IFA's existing clients need this advice, perhaps not for themselves, but to support their parents.
"There is a decent living to be made for IFAs, as the premiums on long term care products are high and the commission is around 4%.
"Also, clients usually sell their houses to buy long term care products, and the average home is around £270,000, so IFAs then get to advise on the investment of the rest of those assets."
