February 8, 2021 BARRON’S 27
ities hold multiple jobs and have long
commutes to work—both of which
have made the entire system vulnera-
ble during Covid. It has also contrib-
uted to incredibly high turnover and
shortages in an overstretched industry.
“The pandemic made it clear that how
we pay caregivers isn’t adequate,” Su-
per says. “We need to make sure we are
paying them living wages and offering
a career ladder to make this an indus-
try they want to be part of. That’s going
to take government intervention.”
Considering ways to compensate the
army of informal caregivers that pro-
vide the bulk of care for Alzheimer’s
patients also needs attention; proposals
like paid eldercare leave and Social
Security credits for caregiving could
slow the intergenerational ripples cre-
ated by the disease. Also on the table:
ways to save for, and possibly insure
against, the long-term care risk. For
example, the bipartisan Homecare for
Seniors Act introduced in the House in
2019 could be revived, potentially al-
lowing home care to be considered a
qualified expense that could be paid for
by health savings accounts.
“There are models out there. It’s
about the will to put them in place and
recognize this is a big challenge that
could really bankrupt our system,”
says Super. “What gives me hope is
that the pandemic has raised aware-
ness of how the system is broken.”B
FINANCIAL ADVISORS ARE OFTEN THE FIRST TO SPOT
DEMENTIA IN CLIENTS. WHAT THEY RECOMMEND
M
elissa Spickler, a financial advisor with Merrill
Lynch in Bloomfield Hills, Mich., knew some-
thing was wrong as soon as she heard that her
client, “Beth,” had called. It was just two hours
after their last conversation, and she was calling
with the same exact question. She called a third time
the same day, with the same question. Spickler did
what she had done with other clients and called a fam-
ily member that her client had on record as a trusted
contact—Beth’s son—and let him know what had hap-
pened and what it could mean. “I know my clients
really well, and I know their kids,” Spickler says. “I
know when something’s changed, and I know the dif-
ference between forgetfulness and signs of dementia.”
Financial advisors are often the first to spot the
signs of dementia, for two reasons: They’re less likely
to be in denial about the symptoms, and trouble with
finances is often one of the first problems. “Managing
your finances is a big frontal-lobe thing,” says Caro-
lyn McClanahan, a financial advisorin Jacksonville,
Fla., who is also a physician. “It requires a lot of
brain flexibility, and it slips the easiest.”
Because of the unique nature of the disease, the first
line of defense is, unfortunately, financial rather than
medical. Alzheimer’s is typically diagnosed when peo-
ple are 75 or older, but the disease often begins some
20 years before signs of dementia manifest themselves—
and that is when planning should begin. Since there is
virtually no medical treatment, Alzheimer’s expenses
are largely caretaking-related, and not covered by in-
surance or Medicare—meaning that costs for a family,
on average, are more than $350,000, according to the
Alzheimer’s Association, twice as much as what’s in-
curred by caregivers of people with other conditions.
Even if you aren’t worried about Alzheimer’s in
particular, McClanahan warns that 70% of people will
need some sort of long-term care: “Rarely do people die
quickly.” The healthiest people are often the ones most
likely to need long-term care: By living longer, their
chances of getting dementia increase, and their physical
bodies can stay healthy for years, even decades, after
their minds begin to fail. That gets costly quickly:
According to the 2020 Genworth Cost of Care survey,
a semiprivate room in a nursing home costs $93,075
a year; add another $12,000 for a private room. As
pricey as that is, if you need more than 10 to 15 hours
of home care per day, McClanahan says, moving to a
facility is usually more cost-effective.
This, of course, requires planning well ahead of a
diagnosis. Many advisors recommend long-term care
insurance; Spickler believes so strongly in it that she
asks clients who decide against it to sign a document
acknowledging that it was discussed and rejected. Even
for the very wealthy, long-term care insurance can pro-
tect a spouse, ensure an inheritance, and generally miti-
gate the financial destruction this disease can wreak.
Pam Smith, an advisor at 6 Meridian in Wichita,
Kan., is among the many advisors who recommend
hybrid policies. These have a single, large premium,
which can sometimes be paid over five or 10 years. If
you don’t end up needing long-term care,
you can get your premium back or leave
it as a death benefit. Smith starts talking
to her clients about long-term care in-
surance at age 58.
Pricing is highly variable, but Spick-
ler offers an example: A 52-year-
old woman can pay $20,000
a year for five years to buy
a $100,000 hybrid
policy with a 3%
inflation rider.
When this
woman is 78, it will cover $10,000 a month for six
years. “That might be just 50% of the cost of care,”
Spickler says, “but it’s a lot better than nothing.”
For people who don’t have, or want, long-term care
insurance, the focus needs to be on ensuring that care-
taking costs don’t decimate the portfolio. Purchasing
an income annuity, for instance, Smith says, can guard
against a spouse running out of money. Spouses or
other family caretakers may require some money for
additional help with housekeeping, cooking, child care,
or other tasks they have less time or energy for—not to
mention some extra caretaking needs of their own.
It’s also worth discussing how much caretaking a
spouse is willing to do, says Geri Eisenman Pell, an
advisor with Ameriprise in Rye Brook, N.Y. One couple,
for instance, was financially equipped to deal with the
husband’s diagnosis, but his wife wanted to make sure
she could continue to spend as much as she wanted on
her own care. “She knew that to get through it, and be
there for her kids afterward, she needed to take care of
herself,” Pell says. “They had $4 million, and they were
going to spend it. And they did.” They didn’t need to
worry about leaving their kids an inheritance because
they had already purchased a $3 million second-to-die
life insurance policy—which factored into their decision
not to buy long-term care insurance.
Not all advisors have experience in this area. For
those looking for this kind of planning, Pell suggests
asking lots of open-ended questions to get at how often
they’ve helped other families in this situation, whether
they’ve run family meetings, and their approach to
family conflict. Most experts stress that, ideally, the
advisor should have some relationship with children
or other close relatives; at the very least, clients need
to provide a trusted contact, and a contact for accoun-
tants, lawyers, and other professionals they work with.
Smith emphasizes the importance of keeping clients
engaged, even after a diagnosis of dementia or Alzhei-
mer’s. “I want them to feel a part of the meeting, and
hear their voices for as long as they have them.”
This is also the time to revisit the crucial conversa-
tion around end-of-life care. Get specific, McClanahan
says. “The last couple of years of life can be a lot of
rehab, hospitals, and nursing homes,” she says. “Most
people want to be kept comfortable, but not go through
all that.” Decide at what point, for instance, a bout of
pneumonia results in a call to hospice instead of a trip
to the emergency room. Have the hard, frank conversa-
tions now and you’ll be better prepared to be emotion-
ally present when the end eventually comes.B
A longer version of this article appears on Barrons.com.
By Beverly Goodman