Your essential guide to managing your health and wealth

Wealth and health areas are often viewed as two separate entities. Yet they are actually closely intertwined. There is an inextricable link between your physical and financial wellbeing, with both being foundational to a happy, productive life.

It is all too easy, however, to let both health and wealth considerations fall down your list of priorities in the midst of a busy life, incurring serious consequences that might have easily been avoided with proper plans in place. There is a symbiotic relationship between maintaining good health into your twilight years and effectively planning and managing your financial affairs; in contrast, poor health has negative far-reaching consequences on your quality of life and family, as well as your financial security. It also hardly needs to be said that reducing your stress levels is invaluable to your long-term health.

Research confirms that the top concern of High Net Worth Individuals globally is their health and that of their family, with 66% of those based in the UK citing this as their biggest source of anxiety 

The impact of longer life expectancies

One of the real game-changers for managing wealth and health are the very much longer life expectancies we see today. In 2014, life expectancy at birth in the UK was 79 years for a male and 83 years for a female. These figures are predicted to rise to 86 and 88 years respectively by 2030, with life expectancy for women to reach an incredible 100 years before 2060. 

Essentially, the longer you live, the higher of risk of you running out of money – and the reality is that you may well have to fund decades in retirement. It is therefore imperative that individuals and families alike determine how best to provide for their financial health today and for decades to come through preemptive planning that encompasses the priorities for each life stage.

The adequacy of your estate and its structure need to be reviewed periodically in order to keep up with the changes to your wealth and health strategies, alongside the needs of your dependents (and in time, beneficiaries).

 Unfortunately, not all affluent households have taken any action to ensure that their financial plans yield sufficient assets to fund potential healthcare costs, particularly those associated with long-term care; nor have they thought about what happens when they pass. These considerations are often glossed over as individuals do not like to openly discuss their mortality (or reveal the full extent of their wealth to family members).

Indeed, an estimated 58% of all UK adults have not written a will, with levels of intestacy scarcely less alarming even among the affluent – who will naturally have far greater amount and complexity of assets to consider. It is natural to push thoughts of one’s death to one side, but you have to think of how much more additional pain will be caused to your family if you die with your financial affairs in disarray. 

Not being prepared could derail your well-laid financial plans

Paying over the odds for your medical insurance and being underinsured are just two real dangers affluent individuals face without adequate planning and advice in place.

At the same time, it is crucial for wealthy individuals to create advanced medical directives to instruct others about their future healthcare wishes and to appoint a person to make decisions related to their welfare if they are incapacitated. You should have a Living Will and consider putting Lasting Power of Attorney arrangements in place (this is best done well in advance).

Healthcare and care costs to consider

Private healthcare costs in the UK are rising meteorically: in the past decade the average annual cost of an individual policy has tracked up 40% to almost £2,000. There seems to be little choice however: without cover, those not wanting to rely solely on an overstretched NHS could face costs of up to £15,000 for an operation like a hip replacement. Health issues naturally come with a hefty price tag, and long-term care in particular often puts a deep drag on finances, leading to a huge disruption in retirement and succession plans.

Meanwhile, the introduction of a £72,000 government cap on care home fees which came into force in April 2017 may be in doubt over the long term. As a result, those with assets in excess of £23,250 could face bearing the full costs of long-term care at a time when fees are ratcheting up by 10% a year and the average annual cost already stands at £34,000.

As more and more families are realising, failing to think about long-term healthcare well enough in advance can spell financial disaster.

Drafting a solid investment plan at the same time as a comprehensive preventative health programme that includes extensive medical insurance is also vital to secure long-term financial and physical wellbeing.

However, this is easier said than done as our needs are dynamic and ever-changing, requiring input and guidance from competent professionals.

Plan well in advance

Effective financial planning demands a holistic approach that starts with a deep analysis of your vision and values; developing a comprehensive plan based on your goals; assessing your situation periodically and implementing alterations or solutions in a timely manner.

Your plan needs take into account all aspects of your financial portfolio including debt management, asset allocation, the formation of trust funds, cash flow, tax, life and health insurance and estate planning to grow and protect your wealth.

Three key health and wealth questions

Your personal health-wealth plan should be reviewed regularly. Priorities and needs evolve at different life stages and thus, financial and health plans must align accordingly. 

#1 What are your health and wealth priorities (and are these reflected well in your plans)?

Am I prepared for the next juncture of my life, financially and physically? Is my net worth growing and have I set aside sufficiently for the next big-ticket item, including healthcare? Discipline is crucial during tough times.

#2 Is your health and wealth protection adequate?

Dying too young, living too old and falling sick are three life risks we all face. At different life stages, we need to ensure sufficient insurance coverage and that our policies are kept up to date.

#3 Have you looked at your financial preservation plans thoroughly?

Have you legally appointed someone to manage your welfare and your financial matters should you lose mental capacity? Are structures in place to manage your assets according to your wishes should you not be around anymore? Is your estate sufficiently funded so that the legacy you leave endures for your beneficiaries?

The value of professional advice

We all like to Google any symptoms we might have, but few of us would like to self-diagnose potentially serious illnesses. The same is true of financial health. Do turn to a financial advisor to help you decipher your exact financial planning needs. They are a great source of advice and many utilise a range of sophisticated analytical tools to help you prepare better for your future financial needs.

A good advisor would be able to run a Monte Carlo Simulation. This is a tool allowing advisors to incorporate a client’s goals and values along with a full range of financial resources to model scenarios to predict if individuals have sufficient financial resources to support themselves and their families during a projected life expectancy.

A sound plan for your finances and health

A solid financial planning cycle anticipates and encapsulates healthcare needs alongside asset enhancement priorities.

Initially at Stage 1, you should articulate your life goals for both your health and wealth; plot health milestones you would like to achieve and envision what type of retirement you want.  Also, assess what you can do today to improve your future health. From a financial viewpoint, you would need to spell out how you could save for retirement, minimise taxes and inheritance duties, buy property to let or reside in, pay for university fees and select wise investments.

In Stage 2, get a snapshot of your health and assess your current financial situation. Arrange for a full medical examination and identify lifestyle factors that are damaging your health. List all your assets and debt and ensure you have sufficient insurance coverage. Also, try to draw estimates on the taxes you will have to pay upon your demise.

Stage 3 involves drawing up a comprehensive plan based on the information you have collated. Determine where you and your family stand in terms of health and build contingency plans based on your health histories. Study how you can make changes to your lifestyle to improve your health and everyone else’s in your household. Then, engage a wealth manager to help you to craft an effective financial strategy that covers retirement needs, cash flows, insurance, education funding, estate planning, investments and business succession.

Stage 4 is when things really start to get moving. Talk to your physician about your healthcare plans and gather a team of professionals who can help you and your family reach your health goals. Finally, ensure that your health records are easily accessible to family members as well as health partners.   Also, assess if your wealth manager is compatible with your values, priorities and needs. Finally, do ensure that your financial team are privy to all your financial history, records and undertakings.

Evaluate your financial and physical health on a regular basis. This is the fundamental principle of Stage 5 in the financial planning cycle. Ask yourself – are my strategies and plans on course? Are there any new resources for me to improve my health? Consider what you need to accomplish and what you have done and then try to plug in any gaps. Also, try to adjust your financial plans in the face of new economic or social realities. The birth of a child or entering a new career phase are ideal times to reassess your situation.

Nurture professional relationships

Developing a comprehensive health-wealth strategy requires the help of professionals as it can be a daunting, arduous and time-consuming task even for the savviest individuals. It is not something you should tackle alone. Forging close relationships with both your physicians and wealth managers is therefore a crucial part of a cohesive health-wealth plan.

Keep medical and finance professionals close on hand to ensure to keep you abreast of any changes or advances that have occurred in their respective fields. This will enable you to navigate new ground and to tweak your plans accordingly. On the flipside, ensure that you communicate your needs and any changes in your life clearly to your medical and financial teams so that they can offer more specific, tailored advice. When talking to financial advisors do also try to initiate conversations about health. You might be interested to learn that some wealth managers have developed specific in-house expertise on cognitive decline, for example.

From a finance viewpoint, owing to the complexity of products and potential solutions in the market today, it would be prudent to engage a team of legal, financial planning and investment advisors who collaborate to develop and implement comprehensive plans designed around your needs. If you have yet to put such a team together, do consider using online services such as findaWEALTHMANAGER.com which will connect you to the best professionals based on your profile and needs.

Summary

There is no one-size-fits-all strategy when it comes to managing and enhancing your wealth and health. Everyone is unique, and individuals have to adopt a holistic approach to craft highly-integrated plans that encompass health and wealth goals. However, this is often easier said than done.

As we have outlined, there are several areas and factors to consider and details can be easily overlooked. Also, plans have to be adjusted at each life stage, and again, this will take up a lot of your precious time and effort.

It therefore makes perfect sense to turn to professionals to turn your well-laid plans into reality. They can get the ball rolling, provide invaluable advice and pointers, and take care of all the details so that you can focus on what matters most to you – namely your family, business or career.

If you are ready to start your search for the best-placed advisers to meet your needs, simply put our smart online tool to work by providing a few details. Alternatively, if you would like to discuss your needs with our expert team, please do get in touch.

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