Specialist IFA for care funding?

Golactico · 29 July 2019 at 12:19PM

My Mum is 81, with no regular income other than her state pension (about £600/month). A few years ago, she sold her flat and moved into a rented retirement flat. We engaged a financial advisor to invest the proceeds of her flat sale with the aim of making her financially comfortable for the rest of her life (being ruthlessly practical – probably not more than 20 years). However, a lot sooner than anticipated, Mum has found herself no longer really capable of living independently and we have sourced a care home that she is happy to move into. This will obviously mean that she will burn through her money a lot sooner than anticipated (probably 2-3 years), so the strategy for her investments will need to change.

My question is, would we be best switching to a financial advisor that specialises in investments for funding care costs (I can see that there are plenty such firms out there)? Our current financial advisor’s firm make no specific claim to specialise in this area on their website, but I’ve no idea whether we need someone with specific expertise in this field. It may well be that it doesn’t, but would be grateful for any thoughts. I have no real issues with the current IFA, and would feel slightly guilty for dropping him, but I must do what’s best for Mum.

Keep_pedalling · 29 July 2019 at 5:27PM

I doubt such a specialist exists, but if the current advisor is truly an IFA, not a restricted FA tied to limited products, they should be more than capable of handling the change in her circumstances. Ask the advisor about an immediate needs annuity. Depending on her prognosis and the value of her assets this may be the best option for her.

JoanneW19 · 30 July 2019 at 2:07PM

You could try contacting your nearest SOLLA (Society of Later Life Advisers) accredited adviser.
They are Which? recommended.

Alfrescodave · 30 July 2019 at 4:51PM

You are in a difficult position which many of us have also been in.

Your IFA should be discussing with you (as her representative) on a regular basis what her situation is regarding her personal circumstances, particularly her forthcoming move into a care home with regular withdrawals to top up her care home fees. You should also be reviewing the performance of the investments as suggested by the IFA.

Without providing specific details, are you satisfied with the return on her investment, the commission the IFA is paid and the level of risk attached to the investments. If yes, then why change IFA.

kkgree1 · 2 August 2019 at 1:38PM

I would re-iterate the advice to see a SOLLA registered adviser.

You may also want to look into "immediate needs" annuities, sometimes called care annuities. They help meet care home fees which in our experience are very expensive (currently paying £1200 per week).

We moved my mum-in-law into residential care, now higher needs 4.5 years ago. We've taken out 2 immediate needs annuities for her and this has given her peace of mind to meet ongoing care fees. Message me if you want details of who we used as very happy to recommend them. We used them alongside our existing IFA who still deals with the rest of her investments so can be done.

Clowance · 3 August 2019 at 9:55AM

I am not in this position at the moment, but surely if £1200 per week is needed you would need a massive amount - well over a million pounds even if able to get 5% invested - to produce this as a return (or even for the £1050 taking off the pension mentioned)?

Linton · 5 August 2019 at 2:35PM

Clowance wrote: »

I am not in this position at the moment, but surely if £1200 per week is needed you would need a massive amount - well over a million pounds even if able to get 5% invested - to produce this as a return (or even for the £1050 taking off the pension mentioned)?

Yes, so the capital will need to be used. The IFA will need to balance income from investments and direct use of capital. In the unlikely event that almost all the capital is used up the responsibility will pass to the council.

lisyloo · 5 August 2019 at 4:03PM

I looked into annuities recently for my MIL aged 91.
The IFA said the ball park (note prior to medical) was that an annuity would cost about 3 years fees and that's at 91 !!
Also note that this doesn't guarantee to cover all increased fees in future (a major issue we had with it).
You can build in an annual increase but it's not a guarantee if fees increase more than you built it.
This is very ballpark, but if this lady has 2-3 years worth of fees available then she may not be able to afford an annuity.

In the unlikely event that almost all the capital is used up the responsibility will pass to the council.

Note that the council may not pay the fees of somewhere nice and may want to move her into somewhere horrible after she's run out of money (sorry, but it's better to know this up front).

Have options of care at home been exhausted? (can be up to 4 times a day)

Does she claim attendance allowance?

FWIW - we decided not to take an annuity for a variety of reasons but one of them was that family were very unhappy it didn't provide the guarantee we thought we'd be buying in the case of fee increases. MIL is very frail and in decline, so will probably not outlive her means.

Specialist IFA for care funding?

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