A couple of years ago, one of Ann Baker Ronn’s longtime clients passed along a referral that wasn’t the sort of referral a financial advisor usually gets. The client, a woman in Dallas, asked Ronn if her firm would help out her cousin who lived in Tulsa, Okla. Ronn, a partner at the AFP Group in Houston, said sure.
“She was almost like a sister to him [the Tulsa cousin], so we were glad to be of service to them,” Ronn says. Ronn flew to Oklahoma with Gilbert Baker (her father and business partner) to meet their new client. What was different was that the cousin had been diagnosed with a brain tumor and was given a short time to live.
“The first time we met him we knew we weren’t going to have a long relationship with him,” Ronn says. “Our job was to make him as carefree as possible so he wouldn’t have to worry about money and that he knew his wife would be taken care of. He told my dad that he thought he lived as long as he did because he didn’t have to worry about money.”
Ronn’s financial planning firm had a one-and-a-half-year relationship with the client before he passed away last September at age 61. She offers that working with clients near the end of their lives can be emotionally difficult. “It can be very sad, especially with this couple because they truly had a marriage all of us would want.”
Yet such client engagements can be emotionally intense experiences in a positive way, too. “It strengthens your relationships with people because you go through something that’s so difficult for them,” Ronn says. “Even though I knew this man for just one and a half years, I felt close to him because he told us everything about his life. He had no reason to hold back.”
Empathy And Human Connection
Financial planning. Retirement planning. Estate planning. Whatever you call it, the main point is to not run out of money before you die. And, if you have survivors, to make sure they’re taken care of. Broaching the D-word directly can be a delicate matter while a client is healthy and death seems like a far-off concept. But financial planning takes on greater immediacy when the client is at the end-of-life stage and the finish line is within sight.
“It gives both you and the client a sense of urgency,” Ronn says. In such cases, advisors should act quickly to help clients get the most out of their existing financial assets and insurance policies. And it’s an emotional time for clients and their families, which requires a healthy dose of compassion on the advisor’s part. “You need empathy and a sense of human connection,” she notes.
Regarding Ronn’s client from Tulsa, she says the man and his wife ran a company where they liquidated jewelry stores around the country––she was the numbers person and he was the sales guy. They were on a job in Philadelphia when the man felt tingling sensations in his hands. He went to the emergency room and was told he had brain tumors that required immediate removal. The man had surgery there and never worked again.
With the husband permanently sidelined, his wife no longer had a job. Ronn directed the couple to use some of their assets to pay off all of their debt, and reviewed their existing life insurance policies to try to take advantage of premium waivers because the couple’s income went to zero while the wife cared for her husband. “We were successful in getting the premium waivers on all of his policies except one,” she says.
Fortunately, the couple had income from an IRA, as well as income from oil and gas investments. Because the man was older than 59½, Ronn explains, she was able to set up a monthly income stream from the IRA––in this case, a 10-year income stream to help support his wife after his passing.
And it helped that the couple had long-term care insurance, which covered in-home care. But Ronn says the missing piece was that they didn’t have disability insurance. “That has reinforced my belief about the importance of having paycheck protection.”
The wife remains a client of the firm. “I think it was great we got to know him because so much of her life was being married to him,” Ronn says. “She mourned him while he was still alive, but she’s doing well now.”
Getting clients’ finances in order before they reach the final inning of their lives is part of the job requirement for financial planners. But it’s not always an easy conversation to have.
Chris Manske of Manske Wealth Management in Houston has worked with both existing clients and new clients at the end-stage of their lives. He says he takes a slow, subtle approach to help healthy, existing clients prepare for the eventuality of death.
“It helps to address that facet of retirement planning in a way that doesn’t alarm them,” Manske says.
He sees the process as an 18-month discussion. “It can be a small nudge like, ‘I know you said this, but what if that were to happen?’” Manske explains. “It’s almost like a side thought to them, but slowly over time you create that picture for them that helps frame the issue.”
And it’s an issue that can have lots of moving parts. “When you address it in detail, it’s probably one of the most complex pieces of the puzzle,” Manske offers. “You need the tools in place specific to that event.”
Those tools include medical directives and long-term-care insurance. Clients must also know how to get the most out of life insurance policies and Social Security benefits both for the policyholders during their end stage and afterward for their survivors.
Manske says advisors like him who don’t have in-house capabilities to handle estate planning, insurance or whatever else is needed must team up with the proper outside experts to help address all of the client’s needs.
The end stage “is an emotionally volatile time,” Manske says. “And it can be even more volatile if you haven’t prepared your client for what life looks like after a spouse or partner is gone.”
Ensuring A Better Outcome
Brad Elman of Elman Insurance Services in Los Altos, Calif., says it’s vital that dying clients have the proper life insurance and that their financial advisors understand how to take advantage of certain benefits available to people who are at the end of their lives. He notes there’s often a living needs benefit that gives policyholders access to some of the benefits before they die.
“In many cases, there’s a waiver of premium benefit on life insurance policies that allows terminally ill people to have their premiums waived,” Elman says. “And in some cases, they can have their term insurance policies converted to longer-term whole life or universal life policies and to have those premiums waived.”
Elman says one of the biggest concerns for people at the end-of-life stage has been health insurance for the survivors, particularly if the person dying is the primary breadwinner and source for the existing insurance. The current COBRA law allows for the continuation of health care for up to three years. But changes under the new health-care legislation will make it possible for survivors to get guaranteed individual health insurance, notwithstanding pre-existing conditions or other underwriting challenges, Elman says.
Ultimately, financial professionals can play a crucial role in easing the worries of dying clients. “The most important thing either a financial advisor or insurance agent can do in these circumstances is not to be afraid of the situation,” Elman says. “Culturally, we sometimes struggle with how to approach people in that stage of their lives because we don’t know what to say. I think the most important thing to realize is you don’t have to say anything. But it’s important to be in touch with clients to find out what it is you can do to help them.”