Financial advisors are used to life emergencies forcing revisions to a financial plan, but sometimes the situations can be especially jarring — for both advisors and the clients.
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Tom West, senior partner at Signature Estate & Investment Advisors in Los Angeles, said that beyond the human tragedy, these situations can require that clients become unexpected caregivers, necessitating major adjustments to financial plans.
Most recently, clients in their mid-70s experienced the unexpected deaths of their son and daughter-in-law in an accident, leaving them responsible for their 7-year-old grandson.
“Finding themselves unexpected caregivers, they weren’t asking about returns on the investments,” he said. “They were asking about, ‘How do we even afford this?’ and, ‘How am I supposed to do this when we might not live to college graduation?'”
Even though no one can predict the future, experts say advisors can help clients prepare for these sudden changes in circumstances before they happen.
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First things first
When emergencies like these occur, advisors should triage the situation for their clients.
For example, when West spoke to his client couple in crisis, he said he reframed it as: “Secure the floor, maintain flexibility and identify and preserve options.”
West said he then explored the new hierarchy of priorities by asking, “What are you most hopeful for now that we are in a new situation?
“By connecting with them at this level, we supported their agency and enabled their ability to make difficult decisions,” he said.
The most important of these was selecting successor guardians in the event they weren’t able to continue in the role, said West. Ultimately, the clients selected friends of their lost son and daughter-in-law who were parents already, rather than another family member.
Behind the curtain, West said they stress-tested living costs, college expenses and conservative withdrawals to cover predictable child-rearing expenses. He also modeled various estate planning options for them, given that their circumstances were more complex without an immediate next generation to inherit.
“We documented each analysis, knowing that we might revisit our recommendations later, perhaps decades down the road,” he said.
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‘Clarity reduces conflict’
Brian J. Lasher, managing director at Euclid Harding in New York City, said in the last year, he has supported several clients who suddenly became caregivers for a spouse.
The most overlooked cost in spousal caregiving is lost time and productivity, said Lasher.
“It’s rarely part of the initial conversation, but it becomes one of the biggest financial ripple effects,” he said. “Even high net worth families underestimate how quickly care-related expenses escalate — equipment, home modifications, in-home support, temporary housing — all at once.”
West said he always asks clients, “Who is your 3 a.m. call?’ and, “If something goes wrong with your plan of care, what would it most likely be?”
“Those two questions typically get more active participation in planning than some esoteric scenario in a financial plan,” he said.
Treating future caregiving as a probability, not an anomaly, helps to make the unexpected more expected, said Lasher. Before a crisis hits, he said advisors should ask families to map their roles by asking: “Who coordinates care? Who manages logistics? Who handles financial decisions?”
“Clarity reduces conflict and speeds up action,” he said. “Documenting values and intentions is as important as documenting assets.”
