January 13, 2014

Advisors Fail to Address Retirees’ Housing Needs: Legg Mason

Planning for housing, like downsizing or moving to a retirement community or nursing home, takes backseat to planning for having enough income

Advisors are falling behind in helping their aging clients prepare for what could likely be one of their most costly expenses in retirement: where to live, according to a just-released study by Legg Mason.

Legg Mason recently collaborated with the Center for Innovative Care in Aging at the Johns Hopkins School of Nursing to create a new Planning for Housing advisor education program.

A new survey of 506 financial advisors by Legg Mason found that only 14% of advisors have helped their clients develop specific plans to address their future long-term housing needs, such as downsizing, moving to a retirement community or preparing for advanced care. This lack of focus on their clients’ housing needs in retirement comes despite the fact that nearly half of the advisors surveyed (45%) said they have “personally considered other housing options” for their own retirement.

The advisors polled said that the primary reason they have not helped their clients plan for their housing in retirement is because “My clients do not ask about it,” while 26% of the advisors who have not helped clients plan for housing in retirement said they do not feel “knowledgeable enough about the topic” to address it.

Not planning for clients’ housing needs in retirement takes a backseat to what advisors listed as the top three “aging” challenges that they do focus on:

  • Having enough money in retirement (65%)
  • Wealth transfer (34%)
  • Plans for retirement, e.g., their “bucket list” (24%)

“Planning for the financial implications of housing choices should become a much higher priority for aging investors and their advisors,” said Kathleen Pritchard, managing director, head of Advisor Business Development at Legg Mason, in a statement. “Every decision around housing has significant economic implications.”

If someone wants to age in place, Pritchard continued, “chances are they will have to substantially modify their home to make it age-safe. Moving to a retirement community, assisted living community, or nursing home can deplete savings if the appropriate planning has not been done. Unfortunately, many people are forced to deal with the issue when it’s too late – when a fall or ailment takes the choice out of their hands.”

While advisors might not be helping clients plan for their long-term housing needs yet, they expect that a significant percentage of their clients will be moving during their retirement years.

Advisors polled say they expect that:

  • 27% of their clients will downsize from their current home and will likely do so when they are 70 years old;
  • 25% will move into a retirement community around the time they are 74; and
  • 22% will move into a facility that provides medical care around the time they are 79.

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