The Cost of "Free" Advice in Financial Planning

“We have a free local Medicare agent for clients already.”

We hear this from financial advisors who have not yet realized how essential personalized healthcare planning is. To those advisors, we ask:

Would you send your clients to a free CPA to file their taxes?

Would you refer them to a free attorney to review their estate plan?

Are your financial planning services free to clients?

Hopefully, you answered, “No.” Because, as the saying goes, “You get what you pay for.”

In all those instances, you likely thought of a cost to those free versions of tax planning, estate planning, or financial planning—the cost of errors, low quality, and limitations. 

Healthcare planning for your clients is no different.

Limitations

When working with a free, local Medicare broker, clients are rarely shown all the plans available in their ZIP code. This means they might be missing plan options that are more cost-effective and/or offer better coverage. 

When speaking with financial advisors, some have told us that they have a local contact from a single insurance company, meaning they represent only one carrier. This is not great for clients, because they could miss out on being able to see doctors who are important to their care if those doctors don’t contract with that carrier.

Lastly, let’s look back at the statement shared at the beginning, “We have a free local Medicare agent for clients already.”

The keyword there is Medicare. 

Who do you have to help clients who are retiring before 65 and need healthcare coverage? Who do you send clients to when they need to decide between taking COBRA or enrolling in an ACA plan? 

Supporting clients in significant decisions about healthcare plans gets you, the financial advisor, involved in more of your clients’ financial lives and allows you to create more accurate financial plans throughout all stages of life—not just when clients turn 65 and become eligible for Medicare.

Unscalable Client Support

As mentioned in the previous section, most local brokers can only sell the plans they’re licensed to. This means that a broker in Pennsylvania likely can’t support your clients outside that state — some can’t even offer the same support from ZIP code to ZIP code in one state. 

One of our longtime clients shared that needing to scale client support was one of the main reasons they chose to join our HealthPlanner platform, rather than an insurance brokerage: 

“We had a couple of local consultants in Philadelphia who could help somebody in the area, but…we have clients in almost all 50 states. An insurance consultant in Philadelphia can’t help our client in Miami. I liked Caribou’s model (now Move Health’s model, thanks to the acquisition) and that it had a nationwide ability to answer the questions that I couldn’t. Five years later, it’s only gotten better and better.” – Clifford Haugen, President & Financial Advisor at BLBB Advisors

Last, if you’re a large or growing RIA, your local health insurance contacts are probably small, mom-and-pop-style shops. They likely have limited bandwidth during high-volume times like Open Enrollment. They also can’t comply with the same level of security you do. They’re likely incapable of extending the same level of client service that you’d expect for your clients due to capacity constraints. 

These are all critical reasons to be involved in clients’ selection of health plans, which leads us to the last major point.  

No Advisor Oversight

This risk isn’t talked about much, but it should be. If you’re referring your clients to a third-party insurance agent or broker, they could sell them other products that might put their financial plans at risk or compete with other areas of your business, like long-term care insurance or annuities. 

Remember, these contacts are incentivized to sell, and there’s no reason why the conversation about Medicare couldn’t spark a conversation about other forms of insurance. 

Even worse: Nothing is keeping your health insurance referral contacts, likely brokers or agents, from suggesting that your clients speak to other financial professionals, putting your client relationships at risk. 

This is part of why advisors have moved towards more comprehensive planning in other areas of clients’ finances, like tax or estate planning. More oversight allows for more control over client relationships, and offering healthcare planning in-house means that advisors can:

• - Offer truly honest guidance driven by data, not human bias or commissions.

• - Present clients with all, not a limited set, of their options.

• - Support all clients (not just Medicare beneficiaries) in healthcare planning decisions. That’s especially critical in today’s financial planning landscape, given that the average retirement age is 62.

At Move Health, we make it possible for advisors to extend the scope of their services by providing a pathway for clients to receive unbiased, personalized health insurance analyses that address both their financial and healthcare needs.