Business Innovators Radio - Interview with Dan Brooks, Founder of Xexis Private Wealth Discussing Long-Term Care Considerations

Episode Date: October 31, 2023

Dan entered the U.S. Navy’s Nuclear Power program after high school and upon discharge, he purchased the family business which he operated for 7 years.After his father’s death, he discovered his father lost a small fortune due to bad advice from a stock broker. Dan decided to enter financial services to find out how this could happen and help others avoid it.In 2004 he completed the Certified Financial Planner coursework and in 2005 opened a Registered Investment Advisor firm.He owns both a Financial Advisor firm and a tax firm based in Lake Mary, Florida. Dan works with a Registered Investment Advisor firm that manages over $3 billion dollars and is one of the fastest-growing firms in the nation.Dan’s specialty is comprehensive retirement planning, including income planning, tax mitigation, catastrophic health care planning, Medicare, Estate Planning, and Generational Wealth.On a personal level, his proudest accomplishment was being a single father to his daughter, who is a Police Officer. He enjoys golf, hiking, traveling, cooking, and discovering new restaurants.Learn More: http://www.xexiswealth.com/Investment advisory services offered through Virtue Capital Management, LLC (VCM), a registered investment advisor. VCM and Xexis Private Wealth, LLC are independent of each other. For a complete description of investment risks, fees, and services, review the Virtue Capital Management firm brochure (ADV Part 2A) which is available from your Investment Advisor Representative, or by contacting Virtue Capital Management. Information provided is not intended as tax or legal advice and should not be relied on as such. You are encouraged to seek tax or legal advice from an independent professional.Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-dan-brooks-founder-of-xexis-private-wealth-discussing-long-term-care-considerations

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello, and welcome to this episode of influential entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have back with us Dan Brooks, who's the founder of Zexis private wealth and we'll be talking about long-term care considerations. Dan, welcome back to the program. Thank you, Mike. Good to be here. Hey, so I know talking about long-term care, that means health care. And I know that there's a rising cost in that broad spectrum of health care. And that means we have to be ready for that.

Talk a little bit about when you start bringing this topic up with your clients, where do you start helping them understand the breadth of the need and help them to start understanding their options? great question the answer to that is that when when the words long-term care are spoken most people have this picture in their head of a very old person in nursing home it just automatically pops into your brain and of course that is an example of long-term care but most care most what we what we call long-term care is done in the home it's not done in a facility and most of it is unpaid it's done by a family member. So the costs can be, as everybody is aware, gigantic. And there's a number of ways to deal with it. But the answer to your question is I bring it up with every client because, you know, long-term health care is not just a need of the aged. You know, it could be a head

injury for you or me that could require extended health care needs, which means that you have to have somebody else helping you with your, what we call activities of daily living. And in that scenario, is it true to think that you might be pausing your work life for a while to deal with that situation? And then it might be, you know, six months or nine months or whatever the time frame is. And then you're getting back to work as opposed to the other example where you're just in that state for years and years to come. Yeah, and that's right. And, you know, honestly, that most people are not in that state for years and years. You know, God forbid that you in that way because some people are, you know, with,

memory care and Alzheimer's. But in a lot of cases, it's temporary. But again, most of the care is given at home. And if you bring a professional of any sort in, it's expensive no matter where you're at. But we really kind of need to dispel kind of people's preconceived notions about it to tell them what exactly is the potential cost of that and what are the ways that they can potentially mitigate it. Yeah. You know, statistically, I know that I've heard some number in the past where it's a staggering number of people that

one time in their life or another will need this type of a need. So how big of a problem really is long-term care and the cost of health care late in life. Because that's a double-edged sword there. It's the cost of health care. And it's also long-term care. consideration. So what are some of the stats and what are some of the costs there that are surrounding that? Well, I've seen different statistics. You know, we used to say that half of the people, half of the population is going to need some sort of long-term care. Now, what I'm seeing popped around at 70%. Wow. Yeah, it is, it is a problem. And frankly, most people have had somebody they know either close in their family or, you know, relative go through this. The sad thing is

a lot of people, another misconception is they think that Medicare is going to pay for it, which it doesn't. Medicare only pays 13%. And that's an accurate statistic. And by the way, this is kind of one of my sub-areas of specialty. There's a designation that is earned through study and taking an exam called certification for long-term care. And I do carry that designation. So it's, you know, it's an area I'm very familiar with. Yeah. Wow. So now it, it, it, it, I thinking correctly that, you know, healthcare late in life is more than just the cost of premiums for health care coverage like use of Medicare, Medicaid, things like that, but also what else goes into the cost of health care late in life?

Well, again, keep in mind that it doesn't have to be late in life. It could be tomorrow. The car accident are falling off of a better. But in most cases, of course, it is later in life. And, you know, the cost of having somebody come into your home, even part-time is, you know, thousands and thousands and thousands of dollars a month. And then you go all the way up to, you know, somebody in permanent 24-7 memory care or Alzheimer's care. Today can be over $100,000 a year. So a lot of people are prepared to pay that. You know, most of us are self-insuring. But there are ways that most people aren't aware of that you can mitigate those costs.

and some of them are even free. Well, let's talk about some of those, you know, start with free because that's great, but then some of the other resources and options people have to deal with these. Well, one of the ones that's free, and if it isn't free, it's very low cost is there are there are products that pay an income, a lifetime income, to a person or a couple. And then if they're collecting that lifetime income and they qualify for what we refer to as long-term care. And, you know, the qualifications are the inability to do two of six, what are called activities of daily living. And that's a standard across the country. You know,

those are things like bathing, getting in and out of bed, toileting, you know, and so on. The things that we take for granted right now that we could do, that if you're unable to do two of those six without substantial assistance, then you are considered qualified for long-term care assistance. Yeah, that's huge. And I think that has. having like policies or products or tools like you mentioned there that have that feature. It's neat that if you need it, it's there. If you don't, then it's still as part of that tool and working for you. So that's wonderful.

What other kind of resources can they tap into to cover long-term care expenses? Well, long-term care insurance, you know, standalone insurance to cover just that risk has been around for 30 or 40 years. And kind of got a bad reputation because the original policy that were sold weren't very good. and people had, you know, pretty poor results from that. But those old policies, we see them every once in a while now, are nothing compared to what's available today. The industry has kind of worked through its problems. They originally, they didn't expect that they were trying to pay out as much as they paid out. So they mispriced the early policies, the ones sold, you know, 30 years ago.

But the newer ones are accurately priced, and also the federal government has stepped in, along with the state. regulators to make sure that there's no kind of funny clauses in the policies. There's a, there's a higher standard for those insurance policies these days. So that's always been one of the ways. And the second one was the one that we just talked about with the lifetime income product. And then there's other products that, we call them combo products, which is like a life insurance chassis product that has some long-term care features or riders. And those can, those can be really neat in certain situations where what that does is if you if you need the long-term care, that plan provides money for that.

But if you never need the long-term care, then the death benefit, because it is on a life insurance chassis. The death benefit will go to your error. And they'll go tax-free. So it's, you know, some people say, well, it's kind of a no-lose situation. Yeah, you could look at it that way. But there are, there are options for people. And the right one is different for everybody.

There's no one solution in most cases. that's a that's a that's a that's a recurring thread through a lot of retirement conversations hey we're talking about this or that or the other this is not you know cookie cutter template for every human being it's everyone's different everyone has needs so we you've mentioned several of these types of options and that's it's it's it's neat to know that if this is such a big um need that comes up there's ways to address that you mentioned something just in passing. You said the word self-funding. And I would venture to say that you would put a X next to that one to go. That's probably the worst way to address any long-term care considerations because

self-funding means I'm taking cash out of something, savings, retirement or something to pay for these. And you threw out some numbers that are pretty staggering. So self-funding is probably not the best choice out there unless it's a dire emergency, right? That, you know, that's right. And the sad thing is that most people don't have any choice but to self-fund. They just don't have the assets to either set it aside for that potential cost, or do they have the extra income to pay for any sort of a product that would mitigate that? Yeah. But then, you know, most people are in the middle where they do have the resources and should look at what their options are. And the thing about my entire practice is, you know, long-term

care is just one aspect of it is once people know what their options are and they have you know, they understand the positives and negatives of each one of the financial products, they're able to make the decision for themselves. It's when they're confused and they get, they get one person telling them this, another person tell them that, and then they read an article and they get a third opinion. And they don't really have what they consider facts. Yeah. You know, without accurate facts that you can count on, it's impossible to make a, you know, a really

good decision. So we just lay out the options for them, telling them the positive and negatives, because no product has all positives. Everything has a negative to it. Sure. But people are smart. They can figure it out once they have the information. Yeah. And that gets back to your ease process of educating people because people, you know, intrinsically have some smarts. And when you lay things out, they go, oh, that makes sense. That resonates with me. But you just need to educate them. I think that's super important. And this is a piece of a puzzle. It's not a standalone everything. It's a

piece of the retirement puzzle because if not handled, then these long-term care costs can really chip into, you know, your retirement needs. So I think that's a huge thing to keep in mind as well. You mentioned something else in home. And I think that maybe a misconception that some people have is, oh, well, well, if I get some of these tools or policies or, you know, remedies to pay for that, then I'm restricted. You know, I don't want to have to go to this or go to the other, I want my options. And if I heard you correctly, you know, these kinds of solutions out there can allow you to have some in-home care to go to facilities of your choice. How does that flexibility factor in? Well, most of the plans today are not a reimbursement plan. In other words,

you don't have to send a bill in and have it paid by an insurance company. In other words, if you had a home health care aid coming in, you wouldn't send an invoice once a month to the insurance company. Instead, they're going to indemnify you based on the product that you own. In other words, if you had a benefit of $5,000 a month, well, once you qualify with the two of six activities of daily living, the insurance company is going to start sending you that amount of money. And you can spend it on anything you want. And if you don't spend it all, you can keep the rest. So all things are considered, most people like that better, because they can use that care where they want.

They can pay a family member to help them. It doesn't necessarily have to, you know, a medical professional. Yeah, I can just envision the horror stories of back when it was required to send invoices in of getting denied. And now it's like, oh, what a big mess that is. So to have that indemnification and here's the cash to use it to take care of your needs. Boy, that just gives some of that freedom of flexibility. Yeah, that's right. So if someone is working with someone already in long-term care, like, you know, oh, I've got a guy, I've got a gal.

What is it that you could do to come alongside and give them some guidance? I'm sorry, I got distracted for a second. Would you ask that one more time? Yeah, if someone is already working with a financial professional and they say, oh, I've got a long-term care policy, is there anything that you can do to help guide them and help them in this area? You mean when they already have a policy? Yeah. Yeah, and that's the case of, you know, any time we meet with somebody, we're going to review what they already have. And once again, that's part of the education because most of the time they kind of understand what they have, but they don't remember all of the nuances.

Yeah. So we will break into that policy and show them exactly what they own. And once again, once they understand it, they will have been a better place to make a decision about it. But, you know, I've helped people's other advisors put plans together because the other, advisor doesn't really work in this area. They don't have the designation. They don't want to do. And it's like a neat second opinion too.

And like you said, some of the older plans decades ago might not have had the, you know, as good as today's plans are. So maybe your second opinion, you're looking at their policy, their plan and go, oh, well, we could polish this up or tweak this. And it's just good just to kind of have that peace of mind for that second opinion.

Yeah. It's all about accurate information. If they have an old plan and it's got holes in it, they deserve to know that. It doesn't mean they're going to replace it. They might keep it. But if they can improve it and fits into their lifestyle, then that would be their choice. But they can't make a rational choice without accurate information. So that's what we provide to both them and their other advice.

Yeah, excellent, Dan. Well, thank you so much. It's been really interesting hearing some of these nuances. is if someone is wanting to learn more about their long-term care considerations, what's the best way they can learn more and reach out and connect with you? My website would probably be the best place, which is Ease Planning, EASE-Dash planning.com. E-A-S-E-T-Planning.com.

Excellent. Well, thank you so much for coming back on, Dan. It's a real pleasure talking with you today again. You too, Mike. Take care. You've been listening to Influential Entrepreneurs with Mike Saunders. To learn more about the resources mentioned on today's show or listen to past episodes, visit www.com.