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Changing Landscape of Retirement #8 – Rachel Lane – Transcript

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Changing Landscape of Retirement

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Rachel Lane

XY ADVISER

Podcast

SUMMARY KEYWORDS

residential aged care, people, aged care, retirement villages, home, aged care facilities, baby boomers, care, advisor, royal commission, clients, built, government, financial advisor, talking, advice, person, choices, absolutely, moment

SPEAKERS

Fraser Jack, Rachel Lane

 

Fraser Jack 

Welcome to the x y advisor podcast, a global community of financial advisors sharing and learning with one another to drive the positive evolution of financial advice. To get involved, go to x y advisor.com. Or simply download the x y advisor.

 

 

This podcast is proudly brought to you by challenger at challenger. We want to help you ensure that your retiree clients can meet their retirement needs today and tomorrow. To access thought leadership insights and tips on retirement planning for your clients head on over to challenger.com.au forward slash x y.

 

Fraser Jack 

Welcome back to the x y advisor podcast. I’m your host Fraser Jack, and we are talking about the changing landscape of retirement. I’m joined by Rachel lane who I’ve spoken to a few times before but essentially, Rachel wrote wrote plenty of books about about aged care. And she certainly knows what she’s doing. She’s she runs a business called aged keggers. Welcome, Rachel.

 

Rachel Lane 

Hi, Fraser.

 

Fraser Jack 

Thank you for joining me today. Now, maybe we start with quickly just a quick explanation of what aged care gurus is.

 

Rachel Lane 

Sure. So as you know, I came into aged care gurus, having been a financial advisor, and really set about building the tools and resources that I think advisors need to give great advice. And I guess one of the key differences with us is we kind of start with a very different definition of aged care. So our definition of aged care, unlike, I guess the kind of normal definition of aged care, which is residential aged care facilities, is really anywhere the client wants to live and any aged care service they want to receive. So we’ve built our software, the HK gurus advice builder around exactly that. Do you want to stay at home? Do you want to move into a granny flat? Do you want to move into a retirement village? Do you want to move into a land lease community? Or do you want to move into residential aged care? And then what type of care are you going to receive? Are you going to receive you know home care packages, you’re going to receive private care or you’re going to get extra services with that. It’s all really designed to be I guess, aged care your way. You don’t choose your own adventure of aged care, if you like, and then we’d support that with a bunch of other resources. So stock sheets, statement of advice, wording, PowerPoint presentations, invitations to seminars, essentially anything we think that the advisors need, and we get feedback from our advisors regularly decide would you do this? And we absolutely do. Because if I’m a big believer if one person’s asking 10 people are thinking, and we also support them with monthly CPD webinars and roundtable discussions so that they can all get together and find out what other people are doing. So yeah, that’s that’s basically what I jagers is

 

Fraser Jack 

fantastic. Now, as you mentioned, there’s plenty of options and opportunities for retirees going into aged care. But as we’ve spoken about before, if, if there’s no decision or choice or planning done in that space, then then often they don’t get that choice to the sort of the it’s the the last resort, they haven’t they have to get what they’re given.

 

Rachel Lane 

Exactly. So you know, I always say failing to plan is planning to fail. And inevitably, what you end up with is no, it’s interesting to look at clients, you sort of do you have two distinct groups, and unfortunately, the majority of clients are reactionary, so they will plan when they absolutely can’t avoid it any longer. You do get those who are very active, they’re almost trying to create a preemptive strike. So they they’ve likely seen a parent or a loved one go into residential aged care, they’ve decided that they absolutely do not want that for themselves or their partner or both. And they take active action to make sure that they set up their retirement in a way that gives them the best chance of not having to move to residential aged care in the future. But they are. Unfortunately they are the minority of people seeking aged care advice. The majority of people seeking aged care advice, are seeking it on behalf of someone else. That person may or may not have mental capacity to make those decisions. So often the decisions are being made for them. So what I say it’s a very different experience. If somebody is doing this with you, that’s a very different experience than when someone is doing this to you. Yes. So yeah, it is quite, quite different. And typically, you know, if you take that other larger group to the extreme, that person is in a hospital, bed because something has happened, a medical crisis has happened. And the person sitting in front of the advisor is the power of attorney or the guardian. And they’re being told, Look, you’ve got two days, three days, and you need to have this sorted, and they really operating in crisis mode.

 

Fraser Jack 

So we’re very, very beginning important decisions with zero sort of lead in time and zero time to to think about them, and really have to make quick decisions.

 

Rachel Lane 

Yeah, back when I was a financial advisor, I used to joke and say, if I could just put a billboard in the hospital car park that says, Don’t decide whether to keep or sell the family home here, you know, because it seemed to me that those decisions were just literally being made in the hospital car park. And that’s not a great place, and you’re not in a great mind, you know, frame of mind to make the right decision or, you know, the best decision in that environment. No, there is no

 

Fraser Jack 

way like the emotion that is going through those people at the time would cloud any decision. Yeah. So So the big thing is here is to, to have the conversation early, which obviously we’ve we’ve we know that from past behaviors, people are leaving into the last minute or because they maybe they’re fearful, or they’re, they just don’t want to talk about it. What what’s the main reason?

 

Rachel Lane 

Oh, look, I think there’s a combination of things. And I don’t discount that there’s a significant cohort of people who have never sought financial advice. So because they haven’t necessarily had a huge amount of wealth outside the family home, they haven’t seen the need or the value in seeking financial advice. And now they might be considering selling, you know, a million dollar property. And they start going well hang on. If this isn’t a million dollar investment decision, I do need financial advice. It’s just that the trigger has been some sort of crisis, or the fact that they, you know, I mean, the number of clients who seek advice when they’ve got a contract of sale on the home, and then they say, they say, Oh, I better go and get advice. Now, now that I know how much my home is going to sell for and how much money I’m going to have, you know, in my pocket in 30 days time, I better go and get advice. And back when I was a financial advisor, the number of clients, I would just shake my head and go, Well, we we can’t Ansel a house, and that was potentially the best strategy you had.

 

Fraser Jack 

Okay, so um, so what can planners do, then? If that’s the case, because I mean, to say it sounds to me, like there’s a, there’s a fair amount of education around that, you know, you’re going to you as a retiree or or the clients, talking about their parents, whatever it might be, whether it’s the actual, you know, the retiree themselves or their kids, as the client of the financial advisor, what can advisors do in this space to make the clients more aware?

 

Rachel Lane 

Yeah, I think you’re spot on. I think it is all about education. I think it is all about clients, or prospective clients learning those trigger points, and saying, well, that means I need to get advice I need to stop before I keep going down this road, I need to stop and get advice. And that’s, that is really the motivation behind the the books that I’ve written, and the columns that I write for Sydney Morning Herald and the age and people like that. It’s really about getting that level of education through to consumers, that you do have a smorgasbord of choices. And that’s, that’s the great thing. You know, people always complain about the complexity. But the complexity comes from the smorgasbord of choices that you’ve got. So when you’ve got that many choices, you have to take on the responsibility to investigate those choices and to get great advice and work out which of those options is going to best suit you? Because, you know, when it comes to aged care, there isn’t a silver bullet there isn’t? You know, I think sometimes people think that, you know, there’s a perfect solution, or, you know, I think before the Royal Commission, everybody had some very strong held beliefs that weren’t necessarily based on anything but assumption about residential aged care. So they thought that if if you move into residential aged care, you’re going to get more care, then then what you could get at home, or that if you move into residential aged care, you’re going to get better care than what you could in a in another environment or or both. You’re going to get both more and and a higher quality of care. And I think what the Royal Commission has shown us is that that’s not necessarily true, and it really has Shaking that, that line, or that kind of pinnacle of residential aged care being the if you like the ultimate care solution.

 

Fraser Jack 

It’s interesting when you mentioned the word assumptions, because, you know, obviously people have an assumption based on a very narrow experience, often not many experiences, one or two experiences, and then that’s, that’s what they think of the whole system is and which I guess is very difficult from the education point of view when people come at it from so many different angles.

 

Rachel Lane 

Yeah, that’s right. And, and everyone does come in with their own their own idea of what education looks like. And unfortunately, it may be shaped by bad life experiences, the other unfortunate shaping baby by the media. And and it might not be representative, you know, there’s 1.3 million people receiving aged care services in this country, and less than 200,000 of them live permanently in an aged care facility. You know, when when people are talking to me about aged care, I can tell that they are the underlying assumption of what they’re talking to me about is residential aged care. And I just love to grab that assumption and turn it upside down. And so listen, when we’re talking about aged care, and you’re only talking about residential aged care, you’re ignoring 80% of people who are receiving aged care services.

 

Fraser Jack 

That’s incredible. And you’re right, the the media needs to make headlines. And of course, they’ve had plenty of headlines over the last sort of 12 months to be able to point the finger at facilities and say they’re doing a terrible job where a lot of them might be doing a great job.

 

Rachel Lane 

Well, in some, some of them have, there’s no there’s no doubt about it. Some of the stories. I know people who’ve been working in aged care literally for decades, and they are shaken to their core over some of the stories that have come out. It’s certainly something that I haven’t seen. And I don’t know anyone personally, who has experienced that. But the fact that someone has, it’s completely unacceptable.

 

Fraser Jack 

Yeah, absolutely. And it’s very much similar to what the financial pros have been through in the past with regards to you know, a few people doing the wrong thing. And then everybody else getting getting tarred with that brush. I wanted to talk about the current the the industry as a whole at the moment, because we’ve had conversations around the profitability and the sustainability of the system or the facilities themselves, and what they’re going to be expecting in the short term. And also in the long term as that as a bubble of baby boomers sort of hit aged care. We talked about the sustainability. Do you want to comment on that?

 

Rachel Lane 

Yeah, well, I guess that’s, that’s one of the greatest hopes coming out of the Royal Commission is that the industry will be sustainable. At the moment, you’ve got somewhere between, you know, depending on which figures you look at, but somewhere between 40 and 50% of aged care facilities are operating at a loss, you’ve got this, you know, huge cohort, the government call it the aging population, you know, you and I call it the baby boomers rose up. But you’ve got this huge cohort of people that are going to want to access or need to access accommodation and care services. The government are estimating that the current 1.3 million people accessing aged care will grow to 3.5 million by 2050. So that’s, that’s huge in terms of demand. And to put that into context, there’s roughly 200,000, residential aged care beds in the country at the moment. And we would need to add another 500,000 if we were to keep the current 20% of people receiving aged care receiving that care in an aged care facility. So you look at that, and you think, well, where are those 500,000 beds going to come from? Who in their right mind in terms of an organization, whether you’re a church charity, not for profit organization, or whether you’re a for profit organization? Who is going to build more aged care beds, more aged care facilities? If on average, you’re making a loss? And don’t get me wrong, that doesn’t mean that everybody’s making a loss or, you know, you will find a greater proportion of aged care facilities making a loss in rural and regional areas than you will in in metro areas. But it’s an issue, how are they going to get 500,000 bids in that short period of time, if they can’t sustain the current 200,000

 

Fraser Jack 

This is the same absolutely crazy the growth that’s required on or needed in this space. Obviously, there’s to me straightaway that says supply and demand that fees are gonna have to go up and costs a heck and have to go up in this space.

 

Rachel Lane 

That’s where it becomes interesting because it’s against the backdrop of the Royal Commission, and the Royal Commission of recommending a whole range of 148 recommended But in terms of the financial arrangement, it’s a complete revolution. So at the moment to be a fully supported resident by the government, which means that you pay a basic daily fee, but the government cover your cost of accommodation and the cost of your care, you need to have assets below $171,535. And income below about $27,800 a year. So essentially, what you’re talking about there is the equivalent of a full pensioner with less than $171,500 of assessable assets in the proposed new world, that they’re saying, well, we don’t want there to be any crossover between the age pension means testing arrangements. And the Aged Care means testing arrangements, which means that potentially you’re talking about someone with $797,500 of assets before they start contributing towards the cost of their aged care. That’s, that’s going to be very, very expensive to the taxpayer. So if you and it’s also going to, I mean, the pension is kind of the holy grail to so many retirees, but the desire to get and keep that age pension, if you can achieve that, then under these proposed reforms, you would have a cost of care, that’s only, you know, 85% of the pension at the moment, $52.25 a day, even though you might have, you know, $700,000 in assets. Oh, close enough to $800,000 in a year,

 

Fraser Jack 

it’s pretty clear the numbers don’t work. Is the pension actually, do you see going down as in the government’s commitment towards it because of the superannuation environment? And how well it’s done over the past sort of 2030 years?

 

Rachel Lane 

I don’t think the for the most part, but when you and I get to that point, phase A definitely. But I don’t see it, I can say that there will be a growing number. And certainly, you know, abs statistics support that there will be a growing number of people receiving a part pension versus a full pension. But in terms of this idea that there won’t be pensioners that that, you know, it just doesn’t stack up that that would be the case. Yeah,

 

Fraser Jack 

so So essentially, if superannuation was started 30 years earlier, we might be okay. But the problem we’re going to have, as you said, the three and a half million people by 2015, needing aged care services, and the fact that those people didn’t really have a whole superannuation pot growing over 40 years that tell fundam,

 

Rachel Lane 

exactly, you know, and there’ll be a disparity in there, as we know, between men and women, so you’ll have women who will have far less in superannuation than men, because, you know, they, they stopped their careers to have children and do all those sorts of things. So,

 

Fraser Jack 

okay, so got some big, big, big, big problems coming down the track, as you mentioned,

 

Rachel Lane 

sorry, that the the other issue that you’ve got, is the workforce. So it’s not like we can just look at, you know, the population of Australia and say are the population is aging, but think that, that that doesn’t happen within the aged care workforce, you know, the aged care workforce or aging, as well. So you’ve got, you know, this kind of retirement of skills that that’s going. But you’ve also got this issue of how I mean, we saw with COVID, the issues that the sector had in staffing, the aged care facilities, and the fact that so much of the workforce has a casualized workforce, and they work across multiple aged care facilities. That’s the issue we’ve got now. So you know, imagine what that issue looks like when there’s an extra 500,000 aged care beds that require care to be delivered to them. And even imagine, Fraser, you know, we’ve got sort of a million people accessing tear in the home. Imagine what that looks like when you’ve got 2.8 million people getting care in their home, the idea that we can have the current models that we’ve got, where we’ve got literally nurses driving door to door in the suburbs, I just don’t think the workforce is going to be able to sustain that I think what you’ll find is they’ll need to move to more of a hub type model. And, and potentially, you know, they’ll need to move to a retirement village, a land lease community, some form of community based housing, where those services can be delivered in a really effective and economical way.

 

Fraser Jack 

So just expand on that hub model a bit more because I mean, I live on the Gold Coast. And it seems to be a fair few sort of now, areas coming out where, you know, the advertising for over 50 is over 60 years old, you know, those sorts of things that you’re talking about for the sort of that later stages of retirement where people are moving into a space? More so where they’re sort of semi there’s semi care available, but at a close range?

 

Rachel Lane 

Yeah, I think, look, the economies of scale that can be offered by retirement villages, landlords communities, even, you know, strata title developments, I guess the issues you get with strata title is that there is no discrimination based on age. So you will get single, young, single professional working people, you will get young families, you will, you know, you’ll get a mixture of everybody, whereas retirement villages and landless communities, I guess, looking at the need for care looking at their, their residents and their prospective residents. And they’re building their buildings, whether they’re freestanding homes, whether they’re apartments, whether the, you know, units, whatever they might be, with what I call care infrastructure, so you don’t necessarily see it. And certainly the majority of them don’t look anything like an aged care facility. But you know, there’s nice wide corridors, for example, and, and that just gives a sense of space. But when you know what you’re looking at, you know, that your look, the reason they’ve built it that wide, is so that you can get, you know, one of those Zippy frames to go up and down that corridor. And likewise, when they’ve got a very spacious kitchen, there’s extra gap between the island bench and the and the back wall of the kitchen, you know that it’s for mobility related reasons, and likewise, the bathroom, but they don’t necessarily have the grab rails on display. But they’ve, they’ve got the anchors in the wall, so that if those grab rails are needed, and likewise, there’s no, you know, there’s no step to get into the bathroom, there’s no recess on the shower, it’s all very big and open, and it looks like a hotel, sometimes you even have a shower that you can access from both sides, it looks very much, you know, like a luxury hotel. But in reality, a lot of those design choices are about the delivery of care whether it’s now or in the future. So I guess, people if they’re, you know, a lot of people have that long held view all, you know, if I, if I need aged care, I’m going to get it in my own home, they discover that that’s not necessarily safe. That’s not necessarily practical. That’s not necessarily affordable. When that time comes, because they’ve never really looked at that their home through those lenses. Yes,

 

Fraser Jack 

yeah, I agree. And I’m in we’ve sort of talked before about the concept of baby boomers when they come through having different expectations than what they what they would have put their parents into.

 

Rachel Lane 

Absolutely. I mean, baby boomers have revolutionized everything they’ve touched. And I think, you know, retirement villages that the financial model has really been built on an exit fee. And it came out of the the church charity and not for profit organizations who built retirement villages, back in the 50s. And they wanted to make it affordable. So really, it’s an affordable housing model. And what they did is they built these villages, and they said, well, we’ll charge you this amount upfront, and we’ll charge you 30% later. That’s basically how it worked. And then along the way, they just charge almost like a body corporate, there’s a budget of expenses, they apportion the expenses, there’s no profit in, in the running of the village in that way. So that’s where where that industry has come from. But I think the idea that you say to a baby boomer look, retirement villages, you know, the birth of that industry, which may have occurred before your birth, is this financial model, ergo, you’re going to have to pay an exit fee, because that’s what’s been accepted for the 70 years before you got here. Baby Boomers will just say, Well, why I Okay, I understand. That’s how you you’ve always done it. But if I go and buy a new car, if I go and buy a mobile phone, if I you know, I have choices about the way in which I pay for that, why would I be forced into paying an exit fee? What Why are you forcing me to accept affordable housing when I don’t need your affordable housing? Thanks, anyway.

 

Fraser Jack 

Okay. And that comes back down to when we do talk to people before they have to make the choice and show them their options and then let them have an A bit of a negotiation period rather than being forced into something.

 

Rachel Lane 

Yeah, absolutely. I just, I don’t I mean, some of the options riders are already moving down that road and providing payment options. But by and large, the industry is still very, very wedded. And I do try and challenge their thinking on that from time to time, you know, when I speak at conferences and things like that, I say to them, imagine if you went down to BMW, and you wanted to buy a car. And imagine if the salesperson said to you, you can buy this car, it’s $80,000. But you can’t buy it. For $80,000, what you need to do is you need to pay me $50,000 today, and $50,000 in five years time, and the consumer would rightly say, but it’s only worth $80,000. Today, it’s going to cost me $100,000. If I pay for it over five years, and the sales guy was Oh, yes, but that’s the value of our money over time, we need to be compensated, because we’re effectively letting you have the capital for that period of time, everyone would be outraged. Everyone would say that is forced finance, you, you absolutely cannot do that. You cannot force somebody to borrow money from you and pay a premium for the right to do that. And yet in retirement villages, because that’s the origin of the of the industry. And because they don’t view it in that way. They don’t view it as false finance. And I think it’s probably only because, you know, I and, you know, many of your listeners being financial advisors look at it and go, well hang on a minute, what’s the difference between that and they just accept it. But the idea that baby boomers are going to just accept that and say, oh, okay, I’ll pay an exit fee? No, I don’t think so. That being said, I don’t think exit fees will be removed completely. I think exit fees play a really important part of helping people who otherwise couldn’t afford to pay the full price upfront. But I think they should just be used for exactly that they should be used for those who need it and not forced on those who don’t, because it just makes the transaction more expensive.

 

Fraser Jack 

Yeah, that’s, that’s really well put in absolutely right. I think, you know, that you’re you’re right, that the the models will have to change. And then we mentioned the Royal Commission, obviously 148 recommendations, who’s gonna pay for them all?

 

Rachel Lane 

Yeah. Well, and that, that is, I’d love to say that’s the million dollar question. But I think that that is it’s closer to $25 billion question. But there was talk about a levy, there were a couple of different models that were proposed. So one of the interesting things about the Royal commission’s report was that the commissioners didn’t necessarily agree on everything. And so in some cases, you have, you know, a divergence of views about how these things would happen. And certainly when it came to the aged care, Levy, the commissioners agreed that a levy would be necessary to fund the improvements and the freeing up of aged care services. But they didn’t necessarily agree on how that levy would work. And Josh frydenberg, has kind of come out and said, well, we’re not really sure that there will be a levy, because the levy did receive a lot of media attention. And a lot of people were very, very concerned about what that would, what that would mean, you know, potentially you would be increasing the top marginal tax rate by 5%. That means you’re taking the top marginal tax rate over 50%. It’s it’s a pretty expensive exercise for for tax payers. Yeah, I’m not I’m not 100% sure that we’ve got the right balance within the proposed reforms around means testing and user contributions versus what the government at Ergo, the tax payer will need to pay for.

 

Fraser Jack 

Yeah, that’s really interesting. You’re not sure neither are the commissioners. So which, which no matter, which means no matter what they do, or say, there’ll be somebody disagreeing. So it’ll be tough to get reforms through,

 

Rachel Lane 

you know, when it comes to these proposed, you know, new means testing arrangements, there’s a significant change to how the the former home would be traded. At the moment, the former home is included in someone’s aged care assets. Unless a protected person lives there for a protected person lives there, it’s exempt. And if it’s included in your assets, it’s included up to 171,535 odd dollars, what the age care Royal Commission is saying is what they want those rules to also married with pension rules. So what that would do is, at the moment, the definition of a protected person includes, you know, a spouse or dependent child, a carer who has been living in Home for the last two years who’s eligible for an Australian income support payment, or a close relative who’s been within there for the last five years, who’s eligible for an Australian income support payment. So what this change would mean would be, because pension means testing has no concept of a protected person other than your spouse. So the only protected person would be your spouse. And then what they’re saying is, well, for two years from the day you or your spouse move out of the home, same as pension, the home would be exempt. And then beyond that, it would be included up to the market value. So there’s potentially going to be winners and losers. And there’s always winners and losers when they make big changes like this. But I guess my concern really revolves around those people who currently meet that criteria of a protected person, you know, those carers though those close relatives who are living in that home, and what this change to these rules means for where they’re going to live. And, and even what what arrangements people kind of willing to get into knowing that this is how the home would be assessed. If that person was to subsequently move into residential aged care.

 

Fraser Jack 

Yeah, that particular person thing to me sounds pretty, like it needs to have more consultation or conversation around it. Because Yeah, the the requirements for people in hands of people to help is sort of being cut here.

 

Rachel Lane 

Yeah, that’s right. We already know that the heavy lifting when it comes to care, is done by what what the government called informal carers, which overwhelmingly is family. So the idea that we would remove these rules and make it harder as a society, for us to get those people to do that. And therefore place greater strain on the formal workforce, it doesn’t make a lot of sense

 

Fraser Jack 

with regards to the main changes out of the Royal Commission, what what how would you summarize that? What are the main things that are coming out of it?

 

Rachel Lane 

Oh, well, obviously, with 148 recommendations, there’s potentially a lot. But look, I want to make the point that I don’t think whether the commissioners agreed on everything and presented to the government 148 recommendations that were a completely united view that the government would, would pick that up and implement every recommendation. So I’m not sure that having a divergence of opinions around certain elements is necessarily a bad thing. I think sometimes, sometimes you can get a better outcome by saying, well, we could do it this way. Or we could do it that way. I think if you just give one option to the government and say, Well, this is how to do it, it’s easy to say no. Whereas if you say, Well, you could do it this way. Or you could do it that way. My child had to say no, because now you’ve got an option. So some of the interesting things around the proposed reforms are the the change to the means testing arrangements, which would basically mean that if somebody could get and hang on to an age pension, they would only only contribute $52 a day towards the cost of the residential aged care. Some of the the recommendations that I was really excited about were changing the funding for aged care. So that the funding available in residential aged care is also available in homecare. So removing at the moment, there can be a gap of between residential aged care funding and home care funding. And it can go both ways. So the there can be circumstances where in home care, the person can receive significantly less funding for their care, than what would be available to a residential aged care facility if that person chose to move into the aged care facility. But likewise, you can have the opposite, you can have someone getting a home care package, particularly if they’ve got dementia or, you know, cognition related care needs. And the funding for those care needs through the home care package is greater than what the government would fund if they had those same care needs in a residential aged care facility. So, you know, it was part of our submission to the Royal Commission, there were these anomalies, and it didn’t really make a lot of sense that the amount of funding available for someone’s care was different based on where they lived that so I’m really excited that that that’s being removed. I’m really excited that aged care is basically being moved from a rationed by system. So people often think of aged care as like Medicare. If you need it, you get it. It’s not going to take very long to get it. It doesn’t work like that at the moment. It’s basically a budget of money, and they apportion that budget of money across the services from home care. services to residential aged care services with residential aged care services getting the lion’s share of the funding. And that’s it. And and the result of that rationing is exactly what we see with the Home Care Package waiting list. You know, there’s roughly 100,000 people waiting for a homecare package. And the Royal Commission took evidence that, you know, it’s estimated about 16,000 people a year die, waiting for their home care package. And certainly there were stories of people waiting 34 months for their homecare package to start. I mean, it’s, I guess, the reality of the system versus people’s perceptions. It’s, you know, it’s black and white people have an expectation always, if I say to my GP, that I need some help around, you know, to stay at home, and I need a little bit of aged care. On Monday, someone’s going to come and they’re going to force me to get the reality of the system is is the complete opposite of that, you know, people think it’s going to move quickly. It’s it’s just

 

Fraser Jack 

you this this waiting list is staggering. The fact that you as you said, 100,000 people are on the waiting list and and 16,000 a year dying is, you know, imagine if we put some effort into changing that, like the amount of effort we put into, you know, stopping the spread of COVID around the country. It seems to me that that’s a bit of a no brainer, we need to make a big set up now. The package, the homecare package waiting list, is in the recommendations to be scrapped. Is that right?

 

Rachel Lane 

Yeah. So they want that that waiting list to be cleared as a matter of urgency. So this year, of course, saying that and doing that. Two different things. And there is that workforce issue now. So they would need to address where’s the workforce going to come from to to deliver these services? But I think it’s important because fundamentally, until they can do that, what choice do people really have when it comes to aged care? So unless they are, like we’ll talk about at the start, unless they are in that group of people who are really proactive, who understand that the system doesn’t work the way most people think it works. And they get involved early. Because they have that motivation of making that preemptive strike against having to move into residential aged care. The overwhelming majority of people are not in that group. They’re the kind of making decisions at the very last minute. So if you’re, you know, making a decision today, oh, okay, I better start accepting some care. And let’s say you need a level three homecare package. How is it possible? I mean, with that, I guess, that’s where the informal carers come in, you know, the families, the the friends, the, you know, communities, volunteers, all of that come in to try and help you to do that. But for a lot of people, it will just mean that they need to move into residential aged care, even though that is not their choice.

 

Fraser Jack 

Now, we talked about this, before having the choice and, you know, making decisions early. And I know you’ve got a book around the concept of, you know, downsizing or rightsizing homes. Australians do have a lot of their money tied up in their homes, how do you see this playing out? And what can this do about talking to the clients earlier, or helping them with the concept around their, you know, the asset of their family home?

 

Rachel Lane 

Yeah, I think, you know, obviously, the home is the biggest investment for most Australians financially speaking. But the home is also the biggest investment in terms of you know, where you live, has been shown to be the greatest indicator of how happy you’re going to be, or how long you’re going to live. All sorts of health related data comes out about the home. So the home is integral, like I would actually say that when it comes to retirement and aged care planning. The number one question that needs to be asked is where do you want to live? And everything revolves around that. I know from our point of view, the first question that we ask in the software is, where will the client live? Because it really does impact on so much. So I think people especially the baby boomers, will will look at their home a little bit differently to the generations that that came before them. Certainly, baby boomers have been more inclined to move home. And so moving again, won’t be as big of a deal. I think the challenge will be for the Dow sizing options, you know, the retirement villages, the granny flats, the land lease communities, the Community Housing groups, it will be for those guys to build a form of accommodation. And, and plug in the services that that cohort want. And I think what you’ll find is that their, their needs will be quite different to anyone who has come before them. But also, that you will have a lot more if you like subgroups, and different lifestyles that people are searching for. And therefore will will demand certain, you know, whatever it might be,

 

Fraser Jack 

yeah, it almost feels like now’s the time. And we need to start really forming. I don’t know if it’s a government initiative, but groups around this this plan to build these facilities and start creating these facilities and in areas and understanding from a national point of view what that might look like.

 

Rachel Lane 

Yeah, and I think I’ve spoken to people who’ve created co housing arrangements with friends. I’ve heard my mom and her friends talk about doing similar, you know, that they look at retirement villages and go all you know, because they see what’s there at the moment. And they say, well, that’s not what I want, you know, so they say, Oh, well, why don’t we get, you know, six couples, and we’ll build six houses. And we’ll have a central courtyard and a swimming pool and a barbecue, and we’ll get a chef to come in and cook our meals, and we’ll get a cleaner and they can clean our houses. And if we need care, we can share that, you know, that care provider. And it’s not necessarily a bad concept. But it’s fraught with a lot of risks and a lot of dangers. And, you know, it kind of it sounds good in theory, but in reality, and I think that’s the thing, the the providers, you know, the if you like the official providers of retirement villages need to meet those expectations. And I’m not just talking about that particular set of expectations, there’ll be other people who have, you know, completely different expectations around what they, you know, they may be very much wanting something that is green and energy efficient and sharing cars. And, you know, and those exists as well. And, you know, all sorts of other, you know, one’s built on golf courses, one’s built on the right, you know, there’s lots and lots of different lifestyles that that can be provided. But really, that will be the challenge for the official providers of retirement villages to meet those people’s needs. Because the baby boomers are they are organized, they are innovative. And they will, if they can’t find what they want in the marketplace, they will go in and make their own.

 

Fraser Jack 

Yes, I can see developers all around the country starting to think about this. Thank you so much for coming in having a chat to us today about that all the different many changes. And obviously, there’s a there’s a stack of them going on. And this isn’t, you know, in another 140, we didn’t cover the Royal Commission, probably gonna be here all day on it. But I guess it’s an interesting space. And obviously, as we mentioned before, the numbers don’t quite work. So it’s going to be very interesting to see how all this pans out over the next little while.

 

Rachel Lane 

Yeah, it is a great space. And I think, obviously, I have a passion for it. And I know a number of financial advisors out there, share that passion. And the thing is that great aged care advice can make such a difference. And it’s like any kind of great advice, right? The difference is not just about the numbers, don’t get me wrong, the numbers are important. And the advice needs to, to stack up and be valuable financially. But, but great aged care advice is about so much more than that, you know, it’s really about honoring what that person wants for their age care. And I’m finding a way for them to to afford that. And I just think, you know, giving, giving great advice in this space is is really rewarding for the advisors. But I know that the clients get so much more bang for their buck, then than just the financial outcomes.

 

Fraser Jack 

Yeah, absolutely. And I think the big call to action here is to plan early, educate well, educate your clients, well plan, help them plan early so that they have those choices to make. And rather than being just you know, left with what they what they have to do at the last minute. So Rachel, thank you so much for chatting with us. How can people continue the conversation with you if they want to reach out?

 

Rachel Lane 

Well, we’re in the twittersphere if they would like to contact us on Twitter, we’re on LinkedIn, Facebook, and of course, our website, which is just aged cargurus.com delay you. And yeah, anyway, people want to get in touch feel free. Wonderful. Thank

 

Fraser Jack 

you, Rachel. Thanks. Well, there you have it. Another episode of The X Y advisor podcast. I’m Fraser Jack, and I’m here hanging out with Emily Blanche. Emily.

 

 

Oh, yeah. Hey, Ray. up, and we

 

Fraser Jack 

are chatting all things. But specifically, we want to knuckle down the conversation around a shout out on this episode,

 

 

or segment my favorite time of the week. So shout out today goes to expert advisor, Grant Miller from the sunny Gold Coast. So earlier this week, we launched the new Resources Center on the platform. And now this place is chock a block full of advisor shared documents, templates, resources, IP, and grant soar that a couple of cash flow calculators had been shared. So he jumped in and then shared his as well. And as far as I’m concerned, you can never have too many. It’s a way for advisors to not have to reinvent the wheel, they can jump in that take ideas of inspiration and see how others have done things in their business. So just wanted to say a massive thank you grant for jumping in and sharing yours to anyone else who is yet to jump in there, go and check out the Resources Center. And if you have something that you can contribute and add, it all helps in driving the positive evolution of financial advice and I know everyone will be super appreciative of it. So thanks great.

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