Making decisions about when to take Social Security or when to stop working full-time are pressing needs for near retirees, but they often come with more questions than answers for financial advisers and their clients.
Health care has become a top financial concern for most Americans heading into retirement and will likely be the largest expense they take on in their golden years. According to recent research from Fidelity Investments Co., the average retirement-age couple needs approximately $300,000 to cover health-related expenses, but the vast majority of people still struggle to understand basic insurance terms, like premiums, deductibles and out-of-pocket costs.
Caribou Healthcare Advisors, a health care planning fintech, aims to make those complex decisions easier. The technology, which is designed to mimic financial planning tools already on the adviser desktop, collects data about clients’ health care enrollment plans, how much coverage is needed and what kinds of medications are prescribed to look for the best possible strategies.
“Advisers told us time and time again, ‘My clients are coming to me with these questions, and I don’t know what to say,’” said Christine Simone, CEO and co-founder of Caribou, adding that some advisers avoid the conversation altogether. “We were really surprised to learn that their financial adviser was actually their first point of contact.”
Priced on a subscription model, Caribou ranges from a bronze package starting at $4,999 per year for up to five users to a gold package at $9,999 annually that includes up to 10 users, according to the company’s website. The white-labeled platform also includes archiving that’s compliant with Securities and Exchange Commission rules.
“We were really approaching this from the health care angle,” said Simone, who originally planned to study to be a doctor. “And a lot of what I’ve learned in those roles is that there’s this big disconnect between receiving care and paying for care.”
A major issue is that doctors’ offices are efficiently designed to give out care to patients, but not to help them understand the actual costs, she said. What’s more troubling is that some insurance providers may push more expensive plans on customers, instead of finding the most cost-effective options.
“The financial adviser is perfectly incentivized, and positioned, to help their clients plan for these costs,” Simone said.
Led by Simone, co-founder Cory Blumenfeld and founding engineer Giorgio Delgado, Caribou recently landed a $3 million funding round and is looking to significantly boost growth, with plans to double the size of the company by year-end.
The company helps tens of thousands of end clients through small to midsized RIAs with approximately $200 million to $2 billion in assets under management, and says it has saved hundreds of thousands of dollars in unnecessary health care costs. The company is working with dozens of financial services firms, including Jackson Square Capital, BLB&B Advisors and CapSouth Wealth Management.
Caribou, which was founded during the pandemic in 2020, now includes 12 employees working in locations around the world, including Europe and Africa.
“We’ll plan meals together,” Simone said. “What’s breakfast for me, will be lunch for someone else — or even dinner in some circumstances.”
The Miami-based firm is perfectly situated to help advisers and clients, with Florida already home to almost 20% of all Americans who are 65 years or older, according to a study. Miami also has a burgeoning fintech scene and thousands of financial advisers.
“The crazy thing about startups is you’re wearing like a million hats,” Simone said. “That’s kind of like financial advisers too. It requires you to always be on your feet, flexible — but resilient too.”
While most advisers understand the importance of discussing health care with clients, having those conversations can be difficult, she admits. Only one in 10 Americans have talked to a financial professional about health care costs, according to research from Nationwide Financial Services Inc.
“Some of these decisions are pretty complicated for people,” Simone said. “It’s about the stress and anxiety of making those decisions but also wanting to tap an expert, so you can feel confident moving forward.”
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Andrew is half-human, half-gamer. He’s also a science fiction author writing for BleeBot.