How to help clients be prepared
for the unexpected

Financial planning is all about attaining clients’ financial goals. It’s just as important to prepare clients for, and minimize the impact of, bumps that may occur along the way. Of course, financial preparedness is the focus, but a skilled advisor can help clients to take steps that bring peace of mind in the event of unanticipated challenges or unexpected emergencies.

Having these preparatory conversations with clients are especially relevant now as many begin to reflect on the previous year and gear up for the next one. And, not only is it a new year, it’s a new decade, making the potential for change appear even more symbolic. Challenge your clients to do the hard work because we can’t control when emergencies arise, but we can do our best to be prepared for when they do.

Just as money can be a tough subject for clients to discuss, so are the things listed in this post. Few people would choose to dwell on their own mortality and grapple with big questions surrounding hypothetical disasters. The alternative is to avoid it entirely, which may result in immense stress on the shoulders of those we care most about. If these things were easy, everyone would do them.

Confronting mortality and documenting directives

A lot can happen in a year—marriages, the birth of children or grandchildren, divorces, medical emergencies, personal setbacks and/or professional wins—this makes it a good idea to have an annual discussion with clients to ensure they have necessary paperwork and legal documentation in place.

First, always review beneficiary designations. Toward the end of the year, many companies have open enrollment for various benefit plans and encourage their employees to double check beneficiaries named on life insurance policies and other accounts. Capitalize on this conversation and check in with clients to ensure they have primary and contingent beneficiaries named for all investment accounts. Follow up with clients who may have started the paperwork but never returned it. Remind them to bring it to your next meeting or send it to your office.

Additionally, it’s a good time to encourage clients to tackle other legal paperwork that is critical to have but stressful to complete. Advisors often feel like therapists because they’re skilled at fostering productive communication among clients on an emotional topic—money. For that reason, you’re in a unique position to persuade clients to confront other uncomfortable topics and they will probably listen. Prompt new parents to discuss their will and what should happen to their children if something were to happen to them. Even clients in seemingly good health should be urged to create or review their living will and the medical intervention they would want. Older clients should also ensure they’ve provided you with the name of a “trusted contact person” to help avoid possible financial exploitation.

These can be heavy, emotionally draining topics to broach and often take many months to complete. But they do bring a sense of relief for clients and their loved ones when they are in place.

Establishing an action plan before disaster strikes

Recently, I met an ultra-high net worth advisor who shared a topic that’s very popular among clients: preparing for natural and man-made disasters. In the last two years, his southern California clients have experienced wildfires, mudslides and power outages (not to mention the ever-present possibility of an earthquake). Disasters often get us thinking about what we’d do in an emergency—sometimes exposing our lack of readiness and stoking a cycle of overwhelm and fear. Again, if you are capable of quelling financial anxieties, you can help assuage other anxieties—deepening your relationship as a trusted, valued partner.

National statistics (external link) on individuals’ emergency preparedness reveal widespread weaknesses, reinforcing the relevancy of this topic. For instance, barely more than half of US residents have a prepared emergency evacuation kit and only 36.5% have an emergency meeting location established. The bottom line? There’s a lot of room for improvement.

You don’t have to be an expert on emergency preparedness to help clients. Rather, you can direct them to helpful resources or even summarize tips such as the ones below to get started.

Learn lifesaving skills such as CPR and first aid and know how to shut off utilities in your home.

Have an emergency evacuation kit somewhere in your home or on your property, depending on the type of natural disasters that might be native to the area. For example, I reside in Texas and have a large plastic bin in my garage with hurricane-specific supplies. Check Ready.gov (external link) for a checklist of items or you can purchase a prepacked kit from an online retailer.

Establish an emergency meeting location and a communication plan that has a contingency for disrupted cell phone service. Discuss the roles of each person in your home if evacuation is imminent.

Download the FEMA app or other local resources that provide alerts and safety tips during emergencies.

Lead by example and create your own emergency action plan for your home and office and share it with clients. For example, if power is out for multiple days, where will you be and how can you or your team be reached? Seeing your action plan laid out may motivate clients to tackle their own.

From personal tragedies to natural disasters, the timing of unexpected events is beyond our control. You’ve likely witnessed firsthand the additional turmoil that clients and their families experience when preparation is pushed off into a vague future date and is never completed. It’s a new decade and, the real question is, what kind of role are you going to play in helping clients prepare for what may come?

The views expressed in this article are only those of Rob Richardson and are not necessarily the views of Franklin Templeton. They should not be considered investment advice or recommendations to invest in any security or adopt any investment strategy.

AUTHOR

Rob Richardson

Rob Richardson, CIMA®
Senior Vice President
Practice Management Spokesperson

LOCATION: San Mateo, California, USA
TENURE: 1995

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