I'm a Retiree. Can a Financial Advisor Help Me Understand Medicare?

Retirees are confused about enrolling in Medicare, according to a 2022 survey from Sage Growth Partners and Healthpilot. Notably, 33% of respondents have a financial advisor, but only 2% use that advisor to help plan their selection. Understanding Medicare can help financial advisors best direct clients in choosing plans, reducing health care expenses and protecting retirement savings. Let’s take a look at how advisors can help Medicare-eligible clients.

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Clients Are Confused About Medicare Selection and Costs

A survey of 1,142 Medicare-eligible individuals age 64 and older found that the majority of participants reported confusion about Medicare enrollment and which Medicare plans to select.

In fact, 63% say they are overwhelmed by Medicare advertising, according to the survey from national health care consultancy Sage Growth Partners and commissioned by Medicare education platform Healthpilot.

Additionally, only 20% of Medicare-eligible individuals have a good understanding of original Medicare, while just 31% have a good understanding of Medicare Advantage.

The survey also found that one-third (33%) have a financial advisor, but only 2% use their advisor to help with plan selections.

“Financial advisors that are also licensed as a sales agent may be a valuable but underutilized resource for Medicare enrollees,” the report says.

Financial Risks of Choosing the Wrong Medicare Plan

Choosing the wrong Medicare plan can set retirees back financially and physically. High health care costs can threaten retirees’ savings. And carrying insufficient or inappropriate health insurance can allow medical expenses to snowball and derail their retirement plans.

To put health care costs in perspective, an average retired couple that is age 65 in 2022 may need approximately $315,000 saved after taxes to cover health care expenses in retirement, according to Fidelity.

“It’s critical to help Medicare-eligible individuals select optimal plans to reduce the likelihood that lack of coverage would prevent smart health care utilization choices — not only for their health outcomes, but also to help keep health care spending in check,” the survey says.

How Financial Advisors Can Counsel Medicare Clients

Given that advisors often work with retirees and soon-to-be retirees, understanding Medicare is essential to their practice. This isn’t a topic about which advisors should remain ignorant.

Here are three ways advisors can be a reliable Medicare resource for their clients:

Educate yourself and clients on Medicare plans and costs. Advisors should read up on the myriad plans and costs presented by Medicare. They may also ask questions about the health care resources their clients are accessing and their impact on clients’ financial situations.

Outsource Medicare advising to a trusted local Medicare advisor. Financial advisors may choose to work with a trusted, local Medicare advisor who can help clients navigate and access the market. Some larger firms may have in-house Medicare experts. But those who don’t may look to develop and maintain strong relationships with these external agents.

Bring up health care costs and strategies early in your advising relationship. Understanding a client’s medical costs, needs and concerns early in a relationship can help an advisor offer a holistic plan that takes those projected expenses into account. Being a trusted resource on questions related to health care expenses and Medicare plan selection can strengthen your advising services.

Bottom Line

Financial advisors shouldn’t overlook Medicare when providing advisory services to clients. Having sufficient and appropriate health insurance can protect clients’ nest eggs from high health care expenses. Financial advisors should educate themselves and work with reliable, trusted Medicare brokers when needed.

Tips for Growing Your Financial Advisory Business

• Let us be your organic growth partner. If you are looking to grow your financial advisory business, check out SmartAsset’s SmartAdvisor platform. We match certified financial advisors with right-fit clients across the U.S.

• Expand your radius. SmartAsset’s recent survey shows that many advisors expect to continue meeting with clients remotely following COVID-19. Consider broadening your search and working with investors who are more comfortable with holding virtual meetings and/or spacing out in-person meetings.

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