More than a few times I have talked with marketing directors of continuing care retirement communities (CCRCs) who have expressed somewhat unfavorable views of financial advisors when it comes to the guidance provided to clients (the prospective resident) about whether or not they should move into a CCRC. This sentiment is clearly due to a bad experience; whereby the financial advisor caused the marketing director to lose a potential new resident by recommending their client not move into the retirement community. When this happens the marketing director naturally wonders, what was the FA’s reason for recommending against moving into the CCRC? Was the recommendation well-founded? I have found there to be a few key issues that cause a level of concern for marketing directors when it comes to financial advisors providing guidance in this situation.

First, the financial advisor may lack a clear understanding of how the CCRC’s contracts works, such as the potential tradeoff between the entry fee and cost of care. For that matter, the FA may lack an understanding of CCRCs in general compared to other retirement living communities. It is difficult for an advisor to give sound guidance if they don’t fully understand CCRCs, the contract(s) offered, and other important aspects.

Secondly, the financial advisor may fear losing assets under management if the client liquidates portions of their investment account if the client is considering an entry-fee community. (Of course, if this were the only reason for recommending against moving into a CCRC it clearly would not be objective guidance.) In most cases, however, retirees desire to first sell their home and use the equity to cover any applicable entry fee, or at least a large portion of it. (Although this has not been as easy to do over the past few years!)

Finally, for any number of reasons, the financial advisor may simply be of the opinion that people are better off aging in place (at home) than moving into a CCRC.

I should be clear that by bringing these issues to light I am not suggesting that CCRCs are a good fit for every retiree. I am also not suggesting that FAs are always wrong when recommending against moving into a CCRC. What I am suggesting is that before an FA offers guidance about this important life decision, she should be well informed about the CCRC, including the type of contract(s) offered, and understand the client’s objectives regarding future lifestyle and healthcare needs. Only then is the FA in position to weigh the necessary information against the potential financial impact to the client, and ultimately make a better-informed recommendation.

Now, you may be wondering how the title of this post fits into the discussion. Well, despite everything I have just described there are actually some ways that CCRCs and financial advisors can work together to create a long-term, win-win situation. Stay tuned next week when I’ll highlight the benefits of such a partnership.

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