When Hurricane Harvey hit Southern Texas, few could be truly prepared for the destruction brought on by the never before seen deluge of rain. Two weeks later Hurricane Irma destroyed several Caribbean islands and swamped Florida as the biggest hurricane to ever strike the Atlantic islands. Lives were turned upside down overnight as homes and cities confronted once unimaginable weather events.
There are few models that anticipate a once-in-a-lifetime event, so when they happen, no one is really prepared for what might transpire. In some ways, people's financial lives are similar. We can prepare and plan for many outcomes, but few of us can ever really be ready when an unimagined event actually occurs.
PREPARING FOR THE UNIMAGINABLE
The best laid plans can very quickly be derailed by life getting in the way. It is highly unlikely any person had built a financial plan to accommodate for 50 inches of rain falling in their city. Despite preparations, few in the Caribbean could have imagined a storm of Irma's magnitude coming along. As advisers, our job is to help our clients prepare and adjust financially for their entire lives, and yet there is literally no way to plan for all possible circumstances. So here's three important things to remember when it comes to helping clients navigate unexpected life events:
1. Every single person experiences many once-in-a-lifetime events.
Though most people want to avoid thinking about or discussing the things that can go wrong in life, helping our clients prepare for the most likely situations they might face is one of our most important roles. Unfortunately, though, from car accidents to winning the lottery, life is filled with unpredictable events. There is no way to predict what set of specific circumstances any one person might experience throughout their life, nor when they might occur. That means any plan we build is a temporary assessment of how life might transpire for our client. Even though there will be circumstances we didn't prepare for, the more we've dealt with the uncomfortable situations in advance, like getting ill or losing a job, the better prepared our clients will be.
2. Being prepared matters, but reacting the right way matters more.
Because of the unpredictable nature of life, most financial plans are wrong the day they are written. That means we aren't being paid for certainty, but for helping people adjust to uncertainty. Conceptual preparation is different than the actual execution of a plan. In California, most of us have an earthquake kit, but it's another thing entirely to experience a major catastrophic event. That is true for many events in our lives. Adjusting and implementing a recovery plan once an unexpected event occurs is the most valuable role an adviser can play. Having the expertise to help our clients course correct —and adjust to their new reality — is how any adviser becomes indispensable.
3. Understanding and expertise win the day.
Knowing what needs to be done is crucial and so is understanding your clients' unique perspective and needs. Only then can an adviser help their clients prioritize what really matters and what doesn't. In the fog of an unexpected situation, an adviser's composed and caring guidance delivered personally can literally be life altering to a family in crisis. Yet an adviser can only play that role if the client knows that their adviser's job is to help them with their entire financial life, not just investing.
THE INDISPENSABLE ADVISER
Many of the people who have suffered in these two hurricanes have advisers, many do not. The lucky ones have an adviser who goes way beyond investing and financial planning. These advisers help their clients rebuild their lives one important decision at a time. Our thoughts and prayers are with all of those individuals and families that are starting the important work of rebuilding.
Joe Duran is chief executive of United Capital. Follow him @DuranMoney.