There is a strong case to be made for health care as the linchpin of retirement planning. Virtually every major aspect of the retirement planning process is somehow correlated to or contingent on health status. For example, health status has an impact on each of the following retirement planning components:
- Health expenses affect desired spending levels and subsequent income requirements
- Bequest considerations
- Liquidity needs
- Time horizon
- Longevity risk
- Long-term care needs
- Personal rates of inflation
- Overall risk tolerance and subsequent asset allocation decisions
- The level of demand for risk transfer and hedging solutions
Ignoring the health care piece of the retirement planning equation is pretty much like flying blind, and yet there are relatively few resources focused on this area. Perhaps this is because health care expenses are less of a factor during the asset accumulation phase.
One company that is entirely focused on illuminating retiree health expenses to create a more cohesive retirement planning picture is Massachusetts-based HealthView Services (HVS).
Founded in 2008 by a team led by Ron Mastrogiovanni, HVS is a software company that is bridging the gap between health care and financial services.
HVS has developed a SaaS-based offering that provides detailed and personalized health care expense projections that are placed in a financial planning context. The software provides an actuarially credible projection of health care expenses (both insurance premiums and out of pocket) and informs the user of what is actionable based upon the expense projections, including: how to finance the expenses; how to potentially affect the expenses, and; how the expenses impact one’s financial plan for retirement.
Part of what is unique and compelling about HVS is that they are addressing the health care issue with a solid financial services foundation in place. HVS software powers the income floor analytics used by the Retirement Income Industry Association (RIIA). In addition, the HVS management team has deep experience in financial services.
The larger question, though, is why financial services should care about health care. After all, shouldn’t health care remain in the domain of employee benefit consultants and asset management under the purview of financial advisors?
Further, pundits have been writing about the emerging health-wealth paradigm for more than a decade. Health-wealth sounds great in theory, but skeptics are quick to point-out that very little is currently actionable on the health-wealth front.
Here are 5 reasons why the skeptics may not have a case:
1) Health care is a huge issue that is not going away. Health care is a major pain-point for individuals and businesses. The topic is most likely a top priority for any current or potential customer, and there are powerful structural trends—namely demographics and the extinction of employer-sponsored retiree health plans—that are in place.
2) Health care is an integral piece of the retirement planning picture. One could argue that it is difficult for a financial advisor to effectively serve in a fiduciary capacity without addressing health care.
3) The availability of tools such as those developed by HVS help to bridge the knowledge gap for those who do not have specialized health care knowledge, and they enable informed conversations. A substantive conversation backed by credible analytics may be just what many customers are looking for.
4) Health care can have a big impact on marketing and customer retention. The ability to at least speak to health care issues can serve as a great customer acquisition tool for those seeking to grow their business, and can serve as a sticking point or retention tool for existing customers.
5) Putting Humpty back together again. As HVS President and CEO Ron Mastrogiovanni pointed-out during one of our conversations, financial advisors will likely spend increasing amounts of time aggregating the disparate pieces of their customers’ financial lives. Health, investing, life insurance, long-term care and retirement income planning are pieces of a whole that—for a number of different reasons—have splintered over the past several decades. The advisors who can put these pieces back together will likely be winners, and healthcare may very well be the piece that ties it all together.
- tom's blog
- Log in to post comments
Comments
Anonymous replied on Permalink
Availability
Is Healthview licensing their software to individual financial advisors or just to larger broker-dealers?
tom replied on Permalink
HealthView Licensing
Pretty sure they have products and pricing structures for both individuals and organizations.