It's common to experience deterioration in health in our older age.

Generally, both sexes can expect to spend part of their years after age 65 in poorer health.

A decline in your clients' mental capacity or physical wellbeing will add a number of challenges for you as their adviser. 

Not only will you be considering the best way to recognise and support your vulnerable clients, it will be essential to develop flexible and robust retirement plans that can adjust with your clients’ health needs. 

Mental health

Cognitive decline isn’t necessarily a problem until it evolves into something more serious, but the chance of this happening increases with age. For example, one in six people over age 80 suffer from dementia.

This has all sorts of implications for advisers. The need for regular reviews throughout retirement has never been greater. With more people choosing drawdown, reviews can become difficult when cognitive ability declines.

Appointing a Power of Attorney can help, but clients are often reluctant to do this. People may struggle to imagine that their future self will think or feel any different to the way they think and feel today. Behavioural economists call this ‘projection bias’.

Physical well-being

Serious conditions like cancer, stroke or a serious accident can render someone incapable of making decisions, and there will be many cases where there isn’t a Power of Attorney in place.

Then there is the issue of care needs. If residential care is required, this can be expensive. On average, a one year stay in a residential nursing home can cost over £47,320. Often, care is carried out at home and by family and friends. However, not everyone is this fortunate and home care may have to be provided by a commercial agency.

Vulnerable customers

With 50% of UK adults displaying one or more characteristics of being potentially vulnerable, it’s important to be able to recognise and support your vulnerable clients.

For those aged 75 and over the proportions showing vulnerable characteristics are higher: 69% for those aged over 75, and 77% for those aged over 85.

Risk factors for older vulnerable customers may include cognitive or dexterity impairment, sensory impairments, onset of ill-health, change in circumstances such as bereavement or divorce or not being comfortable with new technology.

Given all these factors, it’s no surprise that the ‘one size fits all’ approach of the past is unlikely to prove effective today. By layering together different solutions, you can build a flexible retirement plan that can be adapted with any changes in your clients’ health. By including guaranteed income within this plan, you can also provide clients with security and peace of mind.