September 11 was to be a relaxing day for Rosilyn Overton. Her son flew in from Seattle the day before, and the financial planner and her husband had anticipated a lazy morning before driving to their vacation home in Pennsylvania's Pocono Mountains. As they watched television in bed from their home in Flushing, Queens, the couple saw the unfolding events that shook the world. Not knowing whether this was the start of a concerted attack, they quickly packed their gear and hightailed it out of town-theirs was one of the last vehicles to cross the Bronx Whitestone Bridge before the city was sealed off. "I didn't want to be in the city during those first days after the attacks," says Overton, "but I knew right away I was going to try to help those people. I knew my skills would come into play later."
She wasn't alone in the financial advisory community. When disasters strike, people expect the Red Cross, Salvation Army and similar groups to ride to the rescue. But financial advisors? Decorum suggests that would be ambulance chasing. Yet the devastation left in the wake of the terrorist attacks clearly shows the financial disarray that often accompanies uprooted lives.
The suddenness of 9/11 left both emotions and finances in ruins, with victims' survivors not sure where to turn. In response, several hundred financial advisors in the areas most impacted by the attacks-New York, Washington, D.C., and Boston (two of the four hijacked planes flew out of Boston, and many of the victims were from Massachusetts)-mobilized to work with victims' families on a pro bono basis to help get their financial houses in order. Some are working through the organized efforts of the Financial Planning Association or the National Association of Personal Financial Advisors. Others have wound up with pro bono clients on their own. Regardless, the challenges have been immense. And even a year after the attacks, many of their clients continue to grapple with the unknown.
Part of the problem is that numerous victims' survivors are in denial about the fate of their loved ones and in dealing with their unwelcome new circumstances. One of Overton's 9/11 clients is a young stay-at-home mother with small children whose husband perished in the World Trade Center attacks. He was a well-paid executive, and they had recently purchased a home on Long Island's North Shore that came with a hefty mortgage. When it comes to talking finances "she just doesn't want to hear it," says Overton, a principal at Mid-Atlantic Securities in Little Neck, N.Y. "She was fortunate to have life insurance, but she's going on as if nothing changed. At the rate she's spending her insurance money it will run out in four or five years."
Overton recognizes that it will take time for this woman's emotional trauma to ease, and that she will have difficulty dealing with the big picture until it does. "I always tell widows I work with to not make dramatic decisions within the first year," she says. As for her 9/11 client, "There's a side of her that wants to go on living the same way so as to not traumatize the children, and that she believes that once she gets all this money from the government then she'll start making financial decisions. But I'll believe that other money when I see it. Meantime, I say to her, 'Let's deal with the resources you now have to make sure you'll be okay.'"
One of the lessons of the post-9/11 outreach effort is that grief is a very powerful force that can render money matters insignificant. "Through the grief counselors we've brought to train our volunteers, we've learned it can take six to 18 months before people are ready to deal with this stuff," says Mark Johannessen, a senior planner with Sullivan, Bruyette, Speros & Blayney in McLean, Va., who is the coordinator of the FPA's 9/11 pro bono efforts in the Washington, D.C. area. "That's in a normal grief situation, and we know this one isn't normal."
Karen Altfest, vice president of New York-based L.J. Altfest & Co., is used to working with widows. But she felt that dealing with 9/11 widows was so different that she consulted religious authorities about how to deal with the grief. They told her that with no bodies to bury, combined with the public nature of the tragedy and its aftershocks, made for an unusual grieving situation. "In dealing with these widows, it helps, from my end, to try to understand what they're going through," says Altfest.
Like many advisors, Altfest walks a fine line between allowing time to heal emotional wounds and pressing the need to make sound financial decisions now. "Your best advice might not be what they want to hear," she says. Meanwhile, Altfest is focusing on stopgap measures utilizing existing and incoming funds to tide over her clients until their big government checks come in the mail.
One of the big uncertainties in this whole process-for survivors, the injured and financial consultants-centers on how much money victims will ultimately get. Hundreds of millions of dollars poured in from both here and abroad, and there's no shortage of charitable groups giving out money. Such piecemeal funds have helped survivors and victims buy food and pay utilities, make rent payments and get counseling. Workers compensation provides some relief, and life insurance (for those who planned ahead) has been a godsend.
But the big payout everyone is waiting for is the September 11th Victim Compensation Fund that Congress approved shortly after 9/11. There's no cap to the fund, but the Congressional Budget Office estimates the final tally could top $6 billion. The average minimum death benefit is $250,000, although Charles Miller, a spokesman for the U.S. Justice Department, the fund's overseer, says the average award is expected to be $1.85 million.
Response to the fund has been surprisingly quiet-only about 630 benefit claims were filed through July. One reason is grief-induced indifference. The other is that pending lawsuits questioning the expected size of the final payments has led many to take a wait-and-see attitude. Factors determining final awards include the victim's age, earnings ability, salary at the time of death or incapacitating injury, and the number of dependents. Money received from workers compensation and insurance is deducted from the final amount.
Anthony DeVito, the principal at ADV Investment Management in Pelham, N.Y., is among those advocating higher victims awards. "I understand they don't want a situation where people are making a financial windfall," he says. "but there's a sense of unfairness in some cases." DeVito is working with a 9/11 widow who lost a husband who made a lot of money and had ample life insurance. Because of the couple's financial situation, DeVito expects the widow to receive only the minimum payout from the government. Since she's not in dire financial straits, he advised her to hold back on applying for her government payout since the deadline isn't until year-end 2003, and he's hopeful the awards will increase. "You can look at it from a societal point of view, but my job as a planner is to look at it from the client's point of view."
Of course, not everybody can afford to wait and hold out for government money. Among the 9/11 victims were low-wage service workers with little, if any, company benefits or insurance. Many of these survivors have poor English skills, adding to their difficulties. Answering a call for financial advisors who could speak Spanish, Claudia Jacques-Soto got involved with two immigrant families on a pro-bono basis. In one case, the deceased man supported a family of five in Brooklyn on a food-service worker's salary of under $20,000. The couple lived together for 25 years, although they never married. Lacking a marriage certificate or a will, the woman had to be appointed the personal representative for her common-law husband to be eligible for his victim's claim.
Jacques-Soto, a co-founder and partner at Capital Strategies in Bloomfield, Conn., helped the woman file for Red Cross money, and reviewed the issues associated with the Victim Compensation Fund. Jacques-Soto estimates the woman's final payout at $600,000. "That's like winning the lottery for people in that situation," she says. "They think it'll last a lifetime."
The woman talked about buying a $300,000 home. "She had no concept," says Jacques-Soto. "We had conversations about paying the taxes and mortgage on the home." They also discussed the final payout and the need to back out enough money to cover basic living expenses, then invest the rest into something safe that pays decent returns. "It wasn't the appropriate time to recommend specific investments, but we did talk about the pros and cons of things like CDs," Jacques-Soto continues. "I could see somebody like this fitting well with an immediate annuity with a period of certainty that guarantees a monthly check."
At this point Jacques-Soto's work with the woman is done, although she'd like to continue the relationship on a pro bono basis even though it takes about two hours to travel from the Hartford area into New York. "I hope to stay with her through this process, but if not I hope she works with someone who really looks out for her best interests," says Jacques-Soto. "If she doesn't work with someone who's reputable, she can really be taken advantage of."
Mobilizing Advisors Wasn't The Hard Part
After 9/11, the Financial Planning Association knew it wanted to help. But how? "We didn't have prior pro bono experience, so it was difficult opening doors" to legal and charitable groups that had access to victims, said Mark Johannessen, the organization's point man on 9/11 assistance in the Washington, D.C. area.
The doors opened after the FPA placed a full-page ad in the October 24 New York Times and Washington Post that listed a national financial planning 800-number hotline. Leads came in, planners signed up, and the program was off and running in New York, Washington and Boston.
More than 450 financial advisors volunteered their services between the three metro areas, with roughly 75% coming from New York, the area hardest hit. The goal is to provide financial planning services to help people get through this ordeal and get situated for the long haul, sans the investment pitch. To some extent, the response hasn't been overwhelming, mainly because many survivors are still too grief-stricken to worry about finances. "To be honest, not much has been happening," says Richard Fingerman, a CFP at Financial Planning Solutions in Medford, Mass., and president of the FPA chapter in Massachusetts. It's hard maintaining volunteer enthusiasm when there are few people seeking help. "I've told my people to be patient, that it'll take time before people are ready," he says.
Slowly, though, survivors are coming forward for help, and that number should increase after people get their payouts from the government's September 11 Victim Compensation Fund. The latent need for financial assistance among survivors means help will be necessary for some time, and the FPA says it doesn't plan to cut out before the job is through.
The organization received a $175,000 grant from the Foundation for Financial Planning to set up a national financial planning support center, along with a $230,000 grant from J.P. Morgan Chase to hire a pro bono coordinator for the New York tri-state area, where most of the victims lived. Funding runs out next April. "We'll want to go back for more funding because there will probably be more work to do next April than now," says Clara Lipson, the New York tri-state area's volunteer point person.