Across the financial services spectrum, professionals in the advisory community like CPAs, CFPs, RIAs, and attorneys insist their expertise is necessary to guide consumers through complex decisions that can and do significantly impact their financial well-being.  Having specialized knowledge or years of experience allows them to discourage Americans from handling critical tasks independently as they will argue that tax preparation, investment management, legal document drafting, etc., are not "Do It Yourself" (DIY) activities.  The reason is simple: these tasks are complex, laden with risks, and require a depth of understanding that most consumers do not possess.

However, regarding Long-Term Care (LTC) Planning, most in the advisory community still insist that their clients can successfully implement a self-funding strategy without needing specialized guidance, preparation, or tools.  If the advisory community tells millions of Americans that their advisory role shouldn't be a DIY endeavor, then it's time for that same group to stop encouraging or recommending a DIY approach or Self-Funding strategy with Long-Term Care Planning.

The Dangers of DIY Across The Financial Services Spectrum

Throughout the advisory community, there's more than a recognition of the inherent dangers of a DIY approach as the need for "experts" has been pounded into the consumer psyche.  Tax professionals and CPAs insist they understand tax laws far better than the average Joe, as the rules and regs are subject to frequent changes.  Even a small mistake in tax preparation can result in audits, penalties, or missed opportunities for deductions and credits.  Thus, tax professionals want consumers to seek help rather than attempting to navigate the complexities of tax preparation DIY.

Similarly, CFPs, RIAs, investment advisors, etc., know that managing a portfolio or implementing financial planning requires a thorough understanding of finances and markets and how emotional discipline is needed to avoid making impulsive decisions….. It's professional guidance that keeps the focus on achieving financial goals.

Attorneys, too, are acutely aware of the risks associated with DIY or internet-based legal document drafting.  Wills, trusts, and other legal documents must meet stringent legal standards to be valid and enforceable, and an improperly drafted document can be challenged in court or deemed invalid, leading to outcomes that are far from what the client intended…..so, again, professional guidance ensures better outcomes.

Pick any specialty or core competency, and someone in the advisory community will happily explain how truly indispensable they are……until you say those three simple letters:  LTC 

Applying the Same Caution to Long-Term Care Planning

LTC Planning is, in many ways, quite complex and fraught with more potential pitfalls than tax preparation, investment management, drafting legal documents, etc.  It's not simply a matter of setting aside money for future care needs; it involves making informed projections and decisions about potential care needs, the cost, understanding the tax implications of funding care, evaluating potential insurance options, estate planning or elder law consideration, and on and on and on.

While most won't admit it, far too many in the advisory community lack a thorough understanding of the LTC Planning process, and often, they don't have the licensing or credentials to equip them to recommend, much less oversee any LTC Planning strategy.  LTC Planning may be tangential to taxes, investments, and legal matters, but the same could be said for the primary care physician and a brain tumor.  Sure, the physician knows the basics of a brain tumor, but treatment or removal is left to the neurological surgeon because that's their job!  

A DIY approach or Self-Funding strategy for LTC extends beyond financial expertise as LTC Planning requires a level of objectivity and proactive thinking that clients may struggle to maintain on their own.  Much like the role of an investment advisor is to help clients stay the course during market volatility, the LTC Planning specialist has the expertise to help clients navigate the emotional and cognitive biases that might otherwise lead to poor decision-making.

The Importance of Insurance Expertise & Guidance

Given the intricacy of LTC Planning and the critical role various insurance solutions might play, the argument can be made that proper insurance licensing is necessary to recommend a DIY or self-funding approach.  There's a longstanding acceptance that "one who is their own lawyer has a fool for a client,"  and that extends to much of the specialized knowledge of a CPA to handling taxes or the guidance of the investment advisor or CFP…..A comprehensive LTC Planning strategy should be developed by a licensed professional and someone with the necessary expertise who knows it's not just about setting aside money; it's about protecting assets, ensuring access to quality care, and preserving the client's estate for future generations. 

Without the appropriate guidance, clients risk underestimating the need for care and underfunding it, improperly structuring their assets, or overlooking critical tax strategies that could better serve their long-term goals.  Without the proper licensing, it's inappropriate to discuss or make recommendations for a self-funding strategy for LTC, particularly one that involves significant insurance considerations, and doing so could be seen as an ethical violation and carry potential legal liabilities.  However, avoiding the discussion altogether could be seen as a breach of the fiduciary duty, Know Your Client rules, or numerous other compliance mandates.

It's clear that across the advisory community, consumers are advised against a DIY approach for most financial and legal matters, and that should extend to recommendations about DIY or self-funding strategies for LTC…..especially when less than 10% of those surveyed in the latest Retirement Income Literacy Study from The American College of Financial Services have a formal plan to fund LTC Planning.  The complexities and risks involved in Long-Term Care Planning, particularly regarding insurance and risk mitigation, demand the involvement of an experienced and licensed professional who can provide the comprehensive guidance necessary to protect the financial future and provide suitable options for a consumer.

Ultimately, the best approach for consumers recognizes the limit of most DIY strategies and advocates advisory guidance to ensure they are well-prepared for whatever the future holds....