Business Innovators Radio - Interview with Jim Phillips, SVP – Managing Director of BRB Wealth Discussing Long Term Care

Episode Date: September 13, 2024

Jim has over 30 years of investment and wealth management experience. Jim started his career with Merrill Lynch in Richmond, and most recently developed and managed the investment program at CB&T Wealth Management. Jim believes in a personalized approach to get to know his clients and their financial goals, and then develops a strategy to work toward achieving them. He helps his clients understand the current financial, economic, and political climate to better position their assets to address their preservation, growth, income, or legacy needs. Jim is a graduate of the University of Florida. He lives in Chesterfield with his wife, Nina. Jim enjoys distance running, travel, and spending time with his family.Learn More: https://www.mybrb.financial/WealthSecurities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Blue Ridge Bank and BRB Wealth are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using BRB Wealth and may also be employees of Blue Ridge Bank. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of Blue Ridge Bank or BRB Wealth. Securities and insurance offered through LPL or its affiliates are: Not Insured by FDIC or Any Other Government Agency Not Bank Guaranteed Not Bank Deposits or Obligations May Lose ValueInfluential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-jim-phillips-svp-managing-director-of-brb-wealth-discussing-long-term-care

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 with us Jim Phillips, who's the managing director of BRB wealth. Jim, welcome to the program. Thanks, Mike. Glad to be here.

Hey, so I know we want to talk about all things financial services and really focus on long-term care, which is a really broad topic. But before we dive into that, give us a little bit of your background and story. And how did you get into the financial services industry? Yeah, I've been doing this for a long time. I started out back in the early 90s with Merrill Lynch in their training program, worked there for a while, had another stint at Smith Barney. and then got the opportunity to work in a community bank. And I really like that. And the reason I like that and what I tell everybody is that's where the money is.

So I have been in the business for 32 years and started here at this position as the managing director for Blue Ridge Bank over a couple of years ago. And right now things are going really well. I'll enjoy it. Yeah, to me, that makes it me feel like when you worked at the big houses, you got a lot of great experience. But you were looking at numbers and looking at just broad picture. But now you're able to, you know, press the flesh and shake hands and get to know people on a relational level. Yeah, yeah. It's a lot different.

When you're working with the big wirehouses, you're really trying to use their brand name to draw in, you know, new prospects and clients. And at the banks, you have the opportunity to meet them in person. They're in the bank. They're making deposits. They're getting loans. So it's a lot more personal feel. And I really like that. It develops a much better situation.

Yeah, 100%. Well, let's dive into long-term care. And I guess just to kind of get us started, explain what long-term care is by definition. And why does it fit so importantly into putting together a financial plan? Yeah, sure. Long-term care, it's really it's a range of services and support to support individuals. And this really goes to chronic illnesses or disabilities that limit their ability to perform the basic activities of daily living. And these activities of daily living include bathing, continents, dressing, eating, toileting, and transferring. So long-term care, the benefits really kick in for long-term care when you cannot perform two of the six activities of daily living.

So I think when people hear that list, maybe depending on what age they're at, but they might think, oh, that that won't happen to me. Or that's just, you know, far-fetched or that, you know, statistically is probably not going to happen to me. What are some of the statistics of how many people actually need long-term care? Well, I can tell you from personal experience, my wife and myself between our four parents, her mother, and both my mom and dad all needed long-term care in one form or another. Well, in that small sample size, that's 75%. That's 75%, which is right in line with the national average, which is basically 70% of people age 65. or older today will need long-term care support. So it's a big number. Now, one thing that crosses my mind, and I'm the newbie just learning and listening from you,

but when you trigger or check off two of those boxes that you mentioned, okay, well, now you can't do this daily activity and this daily activity, does long-term care mean that's the rest of your life you're going to need that? Or is there like periods of time that you might need long-term care and then, okay, now you work through that, and then you're fine for a few years, and then maybe a couple other things crop up, but you might need it again. How does that work? Yeah, typically the chronic illness is something that lasts for at least a year. So if you have something that's short-term, you know, you broke your arm, you can't drive for a few months, but then they take the cast off and you're fine. That really doesn't qualify for long-term care.

but these are going to be things that are going to be more long lasting, a longer period of time. Yeah. And also, there's going to, it's going to look differently in the sense that it might not mean you need 24-7 care. It might mean that you just need some outside care coming in into your home, right? I mean, what are some of those scenarios? Yeah, and that's what a lot of people would like to have is just maybe somebody coming in to my house. I don't want to leave my home and help me out. it could be that you, you know, you had a hard time just getting around. You can't get in and out of a chair.

You might have a hard time, you know, getting dressed. It could be a couple of simple things that you just need a little bit of help with. And that can qualify for long-term care as well. Yeah. So, of course, I think that a lot of times people assume, you know, oh, yeah, yeah, long-term care is this? What are some of the misconceptions that you find when you're having? having this conversation with people where maybe they might think that it's one way, but really when you explain the full breadth of long-term care,

that they understand it to be something different? Yeah, there are a lot of misconceptions. One of them is that their current medical insurance will cover it. The regular health care insurance will cover it. And normally your medical insurance, your health care insurance does not cover it. long-term care. So that's one misconception that a lot of people have. They think I'm covered, but no, you're not covered.

If you have a chronic illness that lasts a long time, you're not going to get covered with your current existing traditional health insurance. Another one that I hear a lot of is that, well, I'll just let, you know, I'll just let Medicaid cover my long-term care insurance. And it will, but you basically have to be destitute. You can't have any assets to speak of. And the facilities are not really where you want to be for long-term care. So those two are at the top of the list. And the other one that I hear a lot.

And the reason why people don't or shy away from long-term care is they think that the long-term care insurance is just like any other insurance, like life insurance. You pay premiums. And then when you need it, it's available. But the biggest concern that a lot of people have is, well, what if I don't use long-term care? Something happens and I never need it while it's a way. So that is not the only option out there. But a lot of people think that's the only option. And I'm not going to do that because I'm going to be the 30 percent.

Right. I'm going to be the exception. Yeah. I'm not going to need it. So why am I going to do that? So there are a lot of other types of insurance that will, you know, address those needs, but there are a lot of misconceptions that people have about long-term care. You know, and I think that sometimes we all find ourselves just wanting to take care of herself in this sense.

I heard about long-term care, and so I Googled it, and now you're going to get into the realm of all kinds of confusion. And that's going to tie into some of those misconceptions, like what you mentioned, like, oh, well, I'll just get this long-term care policy right here. and it could be either super expensive or it could be super cheap, which you get what you pay for. So what are some of the types of policies that people should know about and then start considering? Because I think what you just said a second ago is so powerful. What if you pay for long-term care and then you don't use it? Well, then all those premiums are gone, but maybe there's some ways that you can compensate for that. Yeah, so the traditional long-term care policies that came out originally were the kind that you paid premiums, and if you needed it, you got it.

If you didn't need it, you know, sorry, the money goes to the insurance company. So almost 95% of those companies are gone because people did not like that model. So in their place, a lot of insurance companies have come up with a hybrid model for long-term care. So it's a hybrid between life insurance and long-term care benefits. So the way that it works is you, most of it, you pay a lump sum amount of money. And it will usually leverage that amount of money two to three times. So if you put in $100,000 or $50,000, you know, you're going to get two to three times that amount in long-term care benefits if you need them. Okay.

Now, let's say you are the one of the people that, you know, I'm fine and I never needed to go to a facility. I never needed long-term care. I passed away. That money will then be paid to your beneficiaries as a life insurance payout. So the money is not going to go away. And then I guess the other question that a lot of people always have is, well, what if I need it? What if I changed my mind? I put all that money in there.

You know what? I'm feeling pretty good. Or something else came up and I need some money. you do have the ability to take some of that money or if not all of that money back if you if you decide to change your mind. That's really powerful because it kind of covers all of your bases. And sometimes when people are, you know, talking about, well, I don't want to waste my money. Well, in this case, like what you just mentioned, if you need it, it's there.

If you don't, then it's just there for a different benefit, which is the life insurance side of things. Yeah, and you can really leverage it, too. Like I say, if you put in $50,000, which is usually the minimum on those hybrid policies, you're looking at $100 to $150,000 of benefits. So that's nice that you can be able to leverage your money that way and still have the other benefits of, you know, the life insurance pay out to your family or, you know, taking the money back if you change your money. Yeah, yeah, that's really important. And let's just also talk, I know we mentioned it, but let's talk.

a little bit more about the getting care in home because I feel like the biggest cliche of like, I'm not going to go to that home or that facility or a nursing home or assisted living. You might not need that because if you have the policy set up the right way and you need those two or three of those daily functions covered, you can have people come to your home. And then the other question that I would have related to that would be, is it like in your health insurance plan where it's like, oh, you can only call this company or you can only call this one and now it limits the people that could come to your own. How does that work? Yeah, most people would love to just stay in their house and have someone come and care for them.

I can give you an example of my parents. My mother had Alzheimer's and dementia. She needed care, 24-7, basically. She couldn't do a lot of the things for herself. And so she was lucky that her, you know, her husband was able to take care of her at home. Okay. So it didn't really cost. It didn't have to bring anybody in. So my wife took care of her mom at our house for about three years, but at some point, it was really difficult. And we needed to take her somewhere else where she could have 24-7 care. Yep. So, you know, those of the options are usually, you know, if you have a spouse, the spouse takes care of you for a while. If you don't have a spouse, then it's usually your, it's usually the eldest daughter. She gets the, she gets the nod to come in and help mom or dad.

But a lot of times that's just not, that's just not available. It gets to the point where that's not enough. But for a period of time, the thing that I find interesting is it's acceptable. Meaning, you know, I want to have care in my home, but I don't want to call, you know, Acme in home care service. I don't know who they are. And you're going to allow my daughter, my son, my, my, you know, whoever family members. So they don't need to be certified, trained, medical professional. They can just take care of that person. And I think that's really a helpful point to people to keep in mind, too. Yeah, there's a couple different ways that long-term care insurance is paid. So if, yeah, if you want to have someone and your family or friend come in and take care of you in your home.

There is a couple of different ways. One's an indemnity policy, and that is great because you can have, you know, that paid to anybody. So that's a nice feature. The other feature that long-term care benefits can pay is just they're just going to pay as a refund or a reimbursement. So you send in the receipts and they pay you back. And a lot of times they're looking for professional nurses or caregivers.

So you can't necessarily get someone in your family to be reimbursed. So there are a couple different ways that you can get it paid. And you want to make sure that you're looking at the right one for your situation. You know, and it reminds me, too, of you see. see statistics these days of people just are living longer. You know, we're taking better care of yourself, doctors, we're eating better, we're getting out exercising and walking. So this long-term care need those statistics that you mentioned, you know, it's actually more amplified because our lifespans are getting longer, right? Oh, yeah. I mean, if you went into a nursing home now,

it's very expensive. And if you're saying, okay, let's go with the least amount of expense to take care of someone that needs long-term care. And that's an in-home service. Right now in central Virginia, where I am, it is over $60,000 a year just to have somebody coming to your home to take care of you. If you wanted to go to or needed to go to a long-term care facility, it's north of $140,000 a year. So it can. can be very expensive to cover those costs. And that's now. So if you look at, I think in 10 years, it's projected to be about 34% higher in 10 years. And in 20 years, it's probably 80-something percent higher. So just like everything else, it gets more and more expensive to cover the costs.

And you're right. If you're living longer, you're either going to live long enough that the expenses just kept on going up, or you're going to need the long-term care benefits for a greater length of time. You know, and I know this statistically, we as humans, hear something that we should do and we're like, I don't know. So not everyone that hears that 70% number goes, oh, I need to take care of this.

So if those people, whatever percent that they are, that don't set up, you know, precautions for long-term care, now all of a sudden they get into some of these expenses like some of the numbers you were mentioning, and now that's impacting their retirement savings. So talk a little bit about what can be done, you know, ahead of time to make sure that these high, high costs aren't going to drain their retirement plan. Yeah, and that's the biggest risk for your retirement plan is since we're looking at 70% of the people need long-term. care, then you're going to have to plan for that. Because if you have your retirement plan, it looks beautiful. Here's the money I need for a nice retirement. I've got it all set. I've got my income. I've got my assets. And then something happens along the way and you're going to need an

additional $60,000, $100,000 a year. That could wreck your financial plan. It could really drain your assets really quickly. And if something happens to you, then you're not leaving money for your spouse for her to survive or you're not leaving money for your kids if that's one of the things you wanted to do. So it's really important to consider that because it is a major risk to your, to your retirement. And I know that if you were to sit down with, if we pulled someone on this conversation right now and said, okay, let's just do a hot seat. Tell us about your situation. and what are your retirement goals and list factor in long-term care and you would put together and maybe they didn't say their name and I'm just being facetious.

But whatever plan you put together or recommendations is going to be different for every single person you talk to because everyone's different. Everyone has different needs. They're in different states of life and stages of financial needs. So I guess my question is comment on how far ahead of time people should be thinking about factoring this in. and realizing that there's not a one-size-fits-all plan. Yeah, like most things, you want to do it sooner rather than later.

You want to do it when you're healthy. Usually people start thinking about this in their 50s, maybe 60s. You're still in good shape. And you know, you still have to qualify for benefits. So if you wait too long and you have some health issue and you go, oh, my gosh, something happened to me and what if that happens in the future? I better go check out long-term care and you apply and they say, I'm sorry, you know, based on your health records, we cannot cover you.

So then, you know, you have a regret. And I did see this and I thought this was very interesting. This was a insurance company. They did a survey of people over the age of 50. I think the average age of these people were in their 70s, and they asked them, you know, about their financial regrets. What's something that you really regret about, you know, something that you did or didn't do in your financial life? And, of course, the biggest one was, you know, I wish I would have saved more money. That was 57%.

And the number two, financial regret for these people over 50 was I did not purchase long-term care insurance. So it is on the minds of people and that is a big regret. And that is one of those things you're right. You don't think about. You think about saving money. I've got the money. I've got the income. I'm set.

I'm great. Oh, my gosh. I didn't think about long-term care. And I think the regret comes when you need it or you have a health issue and now you can't qualify for it. And you realize, oh, my gosh, I should have looked at this a little sooner. 100%. Well, if anyone is interested in alleviating their fear of regret and just checking it out well ahead of time to see what options they have, what's the best way that they can learn more and reach out and connect with you, Jim?

You can go to our website. It's myBRB.financial. And you can just click on the wealth tab and you can find further information, how to get a hold of us. Excellent. Well, Jim, thank you so much for coming on today. It's been a real pleasure chatting with you. I appreciate it. Thanks, Mike. 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.