We plan for weddings, vacations, retirement, education, concerts, dinners, errands and appointments. We plan for just about everything in our lives, but no one plans on getting sick or becoming disabled. Ironically, this highlights the importance of preparing clients for potential life-altering events.
Experiencing an unexpected death or debilitating illness suffered by a family member or close friend is likely to conjure up some immediate questions: Who is the first person to contact? Who has the authority to make medical decisions or funeral arrangements? Did this person oversee their family finances? If so, who now has the authority to make these decisions? Is there an inventory of all financial accounts and legal documents?
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Making decisions and delegating responsibilities in light of a sudden situation can be incredibly daunting. Contemplating these kinds of scenarios is difficult enough for our clients, let alone the considerations that need to be made and documented. The flip side, however, is the extreme distress of an unforeseen tragedy, along with the overwhelming anxiety that comes with quickly getting a loved one's affairs in order without any direction. The outcome often is hasty and panicked decision-making, which differs from the actions otherwise taken if only afforded more time and a clear mind.
As your clients' trusted financial adviser, you can play a large part in helping them feel better prepared in such situations
before they happen. This also gives you the confidence that if something should befall your client, you have the tools at your disposal to make informed decisions while protecting your practice.
The first step is identifying a primary contact should there be questions or concerns about a client's health status or cognitive ability to manage their financial affairs. This point person can be an immediate family member, close friend, attorney, an accountant or clergy. A contact authorization form can help you identify this key decision-maker so you know whom you should call first.
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The second step is asking the
right questions, as difficult as this may be. Consider these three questions to begin the discussion on how your client will handle challenging scenarios:
1. How will you maintain your current home in the future? (housing)
2. How will you ensure your ability to come and go as you please? (transportation)
3. Will you live in a community near family and friends? (social networks)
Many times, these three questions lead to deeper, unanticipated discussions around topics your client was unaware that you, their trusted adviser, can help address. By incorporating these questions into your general planning conversations, you are enhancing your value in the eyes of your clients while identifying issues that have real financial consequence.
The third step is adding substance around these questions by walking through the most essential documents that will impact a client's medical and financial affairs. Take stock of the pieces that matter most, and keep a running log of when changes have been made. This way, if the unexpected happens, you'll have an updated list of legal, financial, health care, insurance and legacy documents.
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Preparing your clients for the future can be challenging, particularly when the possibility of disability and/or diminished capacity seems remote or unreasonable. By having these invaluable conversations upfront, those gut-wrenching choices in a tragedy can be somewhat eased with the knowledge that decisions have already been made. While illness and death cannot be controlled or predicted, you can improve your clients' confidence in knowing they are prepared for the inevitable — and so are you.
Francis J. McAleer, Jr. is director of retirement solutions at Raymond James.
