I’m writing this “Building Bridges” column on Oct. 31, 2012, "All Hallows' Eve," an appropriate holiday for this week of devastation and destruction on the East Coast. Hurricane/Superstorm Sandy has just blown through, and it’s only fitting that we now celebrate a night that has its mythological origins in opening up to the "otherworld" and recognition of the "souls" who have passed from this world before us. The demons had their way with us this week, and tonight we give them their due. While I had originally written a piece on certain private wealth management industry practices, I have found it impossible to submit that article when more pressing issues are at hand. I am compelled to acknowledge the sheer magnitude of this natural disaster and offer a few reflections on some of the lessons we might learn from our response to it, so that we can "re-build bridges," even if only in the metaphorical sense.
The storm has hit so many bridges along the East Coast that it’s hard not to experience a feeling of loss when thinking about the links that are now at risk and those that have been broken. So many coastal towns have been cut off from the mainland, with bridges washed out or under water. Rapidly, first responders and industrious private citizens are finding ways across the water to provide assistance and to ferry people back safely to the other side. The application of this metaphor to the private wealth management industry might seem tenuous, but I find it striking. The “Building Bridges” column examines ways to improve relationships among advisors, clients and other groups related to the private wealth management industry. Today, I would like to focus on a situation that occurs frequently, but is often ignored: that is, when advisors are faced with clients who are in distress—whether financial, emotional or otherwise—as they work together on their financial and estate plans. It’s hard to know what to do and how to respond to the client's needs, but we must all acknowledge and explore how to handle this challenge. Here are a few thoughts.
Industry Role in Client Welfare
It should first be noted that many who join the private wealth management industry may not have chosen to be first responders, or even see themselves in a "helping profession." However, for better or worse, that’s the position that many, if not most, are put into every day, not just during major crisis moments. If the industry were to acknowledge its role in its client's welfare and establish incentives and practices around that role, it might be able to improve its public image and, simultaneously, provide more rewarding experiences to advisor and client alike.
On a more individual level, for an advisor or family member who sees another in distress, the call to action might easily be overlooked or rejected; this response may be understandable for a variety of reasons that may be known only to that individual. Indeed, in the United States, there’s no legal "obligation" to aid another person. However, as professionals, we must consider what role we find most comfortable and then assess whether private wealth management fits the role we would like to play. We can’t ignore the vital role that members of this industry play in clients' lives.
At a minimum, when a crisis arises, an advisor must assess the situation and consider whether rescue is necessary. And I don't just mean this week. Rather, clients may be hit with crises at any time, often without warning and even when all those around are on high ground. Here are a few examples and possible responses: For a client who has lost his job, the financial advisor could recommend timely adjustment of the asset allocation of his investment portfolio to ensure that the client's savings are less at risk from the vicissitudes of the stock market. The advisor's compensation must reward this behavior rather than punish it. For an advisor with a client who exhibits behavior reflecting substance abuse or addiction, it may mean implementing safety mechanisms through their financial or estate plans and, possibly, making a referral or assisting the client with obtaining help from mental health professionals. This will require more collaboration across professional disciplines. Clients who are suffering from intra-family strife might need an outlet beyond their contentious situation and may need a plan that acknowledges the fault lines and works around them. A multi-disciplinary team is more likely to be able to create that kind of plan.
There are bridges to be repaired, both literally along the East Coast and figuratively among advisors, families and within the industry. By acknowledging that the gaps exist and are exacerbated during times of crisis, and by reflecting upon our roles in responding to them, we may be able to build even stronger bridges to help us get through the crises that lie ahead.