A former advisor helps other advisors learn to help those with special needs.
Mary Anne Ehlert has donned many hats in her professional career, but after leaving her eponymous financial planning firm she had to expand her hat rack a few pegs to accommodate her new duties. In 2003, Ehlert formed Protected Tomorrows, an advocacy organization for the special needs community that, among other things, trains financial advisors to become advocates for and provide assistance to people in that community.
Ehlert has other goals, such as lobbying legislators and forming a think tank to help change the way society deals with the special needs population. She made Protected Tomorrows her full-time vocation a year ago and talks about the new venture with a missionary zeal rooted in personal experience growing up with her late sister, Marsha, who was born with cerebral palsy. "We're going to change things," she says. "I really believe we're going to make a difference."
Based in the Chicago suburb of Lincolnshire, Protected Tomorrows currently has a roster of 16 trained advocates who help guide families through an eight-step process that's more about life planning than financial products. These advocates attend an initial three-day training session to understand the intricacies of special needs trusts, Medicaid, Supplemental Security Income (SSI) and other available resources for special needs individuals, along with learning how to market the program to their local communities.
"It was a pretty intense session," says Greg Hill, an advisor with Keating & Associates in Lawrence, Kan., who became an advocate in 2003 after working with his autistic brother-in-law and his mother for years. "It provides the resources to contact people and get established on our own."
Ehlert copyrighted her eight-step program, and is seeking accreditation for 15 hours of training with CFP Board of Standards. That request is currently being reviewed. Her 15-year focus on special needs families taught Ehlert that parents want more than just financial and estate planning. "Their main issue is giving their child the best life possible," she says. "We focus on the abilities of the disabled and what's right about their life."
The eight-step program aims to surround special needs families with all the necessary services and to provide the ability to implement them. This includes finding places for disabled individuals to work and play, arranging for group home care, negotiating with organizations that provide various types of care and getting better-than-average caregivers.
Ehlert's program teaches advocates the nuances about government benefit programs for the disabled, and it incorporates special needs estate planning. It also helps prepare families to transition their child from the special needs education system to the adult world.
For many advisors (both financial and legal), the special needs niche is often an overlooked area steeped in confusion and obscurity. It doesn't come up much in most practices, and few understand the subtle balancing act needed to maintain a special needs person's government benefits.
Other than the very rich, most families with special needs children rely on government-funded programs such as Medicaid and SSI for assistance. Medicaid covers medical costs; SSI handles food, clothing and shelter. To qualify, a special needs person can't have more than $2,000 in assets (excluding a car and a home). Because these programs don't meet all of the financial needs of disabled people, many families create special needs trusts to handle the uncovered expenses required to maintain a desired lifestyle.
These trusts are established by the parents or other family members of a special needs person through a family inheritance, an insurance policy or both. They can also be established through money received from a personal injury settlement. Either way, the funds must be put into a trust and administered by a trustee.
If done right, special needs trusts provide supplemental funds without forfeiting essential government benefits such as Medicaid, SSI or Section 8 housing. But potential landmines exist, such as a trustee unwittingly paying for services covered by the government, or if the special needs person receives money directly and it puts them over the income eligibility threshold for certain government programs. Both scenarios could result in reduced or eliminated benefits.
Another potential complication: state governments regulate trusts and administer federal benefits, so rules can differ depending on the state. Ehlert says millions of Americans have a disability, with many needing long-term care. The need to address this huge market is the premise behind Protected Tomorrows. "We're trying to find people who recognize that this is a huge societal issue and want to be part of the momentum we're trying to build," says Ehlert.
One of the challenges is finding the right people. "I need people who want to do this for the right reasons," she says, adding that she wants those who have a family connection to a special needs individual or have worked in this area. "The authenticity is what families understand," says Ehlert.
Protected Tomorrows has rejected some applicants and has requested others to leave who didn't follow the program, which is fee-based. "They have to do it our way and give our speech," says Ehlert. "We know it works and that it helps families."
John James, a certified financial planner with Lincoln Financial Advisors in Kirkland, Wash., is comfortable with Ehlert's approach. "I understand the need to maintain consistency; otherwise you'd end up with different ways to the do the program."
James has a mentally disadvantaged adult nephew, but he hadn't delved into the special needs area in his practice until he became a Protected Tomorrows advocate. His first case involved a special needs trust improperly drawn up by an attorney. "I reviewed the trust and it was so wrong that it would've been thrown out in a nanosecond by Medicaid when it came time to be qualified," he says. "The value of Protected Tomorrows is that it shows you what does and doesn't work."
That particular client is a 16-year-old boy whose parents are unsure about how to handle the next phase in his life. "We want to understand the steps that'll transition him from childhood into an adult," says Kathy Barr of West Richland, Wash. Her son, Eli, suffers from Hurler Syndrome, a rare genetic disorder caused by the inability to break down certain byproducts of normal metabolism, resulting in mental and physical impairment.
An attorney recommended Protected Tomorrows to Barr, who contacted the company and was put in touch with James. They're putting together all of the pieces to make sure Eli is provided for and can access his benefits, while at the same time planning for their own future. "Doing both is a huge job," says Barr. "One of the things I like about John is that if he doesn't know something he can call Protected Tomorrow for help."
Costly, Yet Rewarding Specialty
The cost of becoming a Protected Tomorrows advocate isn't a drop in the bucket. The first-year fee of $15,000 entails $10,000 for the initial three-day training and a follow-up two-day session within a year, coupled with the $5,000 annual licensing fee. Second year fees total $10,000, comprising a two-day training session and the annual fee. Afterwards, there's just the annual fee. There are two teleconferences per year to share experiences, provide updates on current trends and issues, and brainstorm ways enact positive change. Plus, the phone line is always open.
"I've had more than ten reps contact me about this program, and they always ask, 'Isn't that a lot of money?'" says Greg Hill, the advisor and registered rep at Keating & Associates. "But I covered all of my expenses the first year."
When he decided to join Protected Tomorrows, Hill perused the list of his top 20 clients and found six families with special needs family members. "I never thought about it," he says, adding that he finds it easy to fold the Protected Tomorrows approach into his regular practice. "The process is the same; you just have to plan for a much longer timeframe."
Hill says being a Protected Tomorrows advocate adds value to his practice, but that during the first 18 to 24 months he felt like he was doing two jobs because it takes time and effort to develop relationships within the special needs community.
The genesis for Protected Tomorrows began in Ehlert's childhood with her sister, Marsha, where she saw first-hand the all-consuming nature of being a caregiver for a special needs person. "We never went out to a restaurant," she relates. "My first time in a restaurant was on my first date at 16."
But Ehlert was inspired by her sister, and planned to major in special education in college until she realized that wouldn't pay enough money. She gravitated toward computers, and spent five years designing computer systems for banks.
Ehlert gained financial expertise during the course of her work, and after she was hired by Heller Financial to revamp its computer system she landed in its marketing and strategy division. She spent subsequent years in the world of mergers and acquisitions, and wound up at Citicorp trying to make consolidations profitable. She eventually realized that's not what she wanted out of life, and in 1990 formed the Ehlert Financial Group.
Her first clients were her parents, a sort of on-the-job training in the field of special needs estate planning. Ehlert Financial Group eventually became a sizable operation, with 18 employees handling 500 current clients with $150 million assets under management (some of that is held with outside money managers). Roughly 60% of its clients have a special needs child, 20% have a disabled adult (either a parent or a spouse), and the rest are special cases such as divorced or widowed women. "We're a firm that does a lot of hand holding," says Ehlert. "That's good for families who don't understand money and need some help."
Ehlert planned for her eventual departure from the firm, and both Ehlert Financial Group and Protected Tomorrows recently moved into a converted 17,000-square-foot warehouse. Ehlert is renting the rest of the space only to outfits that provide services for special needs individuals.
To promote Protected Tomorrows, Ehlert speaks at various conferences and seminars throughout North America, and she's hired an outside company to help with marketing. Protected Tomorrows' full-time staff of five provides back-office support that includes a database and specialists to help advocates do their job and keep up with changing regulations. Ehlert is slowly expanding her staff and her organization's offerings, such as a Web-based search tool to help families find needed resources for special needs individuals.
Ehlert has big plans, such as lobbying state-and then federal-legislators for more favorable tax rates for special needs trusts. She's also in the process of forming a think tank among some of her wealthier and influential clients to tackle some of the issues facing special needs individuals.
Ehlert's business background taught her the need to plan carefully, and to expand only when she can handle the next step and deliver on her promises. "We are pacing my business plan and meeting my objectives," she says. "This is very personal to me, and I've seen a lot of businesses grow too fast and fail."