Five Ways Financial Advisors Can Better Serve Clients with Chronic Illnesses

When was the last time you sat down with your clients and asked: “What are your health challenges?” If my hunch is right, the answer is probably “never,” unless there was an obvious visible sign of disability or illness.

According to Martin Shenkman, a New Jersey–based attorney and financial planner, “Only 7% of those with disabilities use a walking aid, and in 96% of the cases the symptoms of chronic illness are invisible. So you cannot only inquire about health issues when there is an obvious sign.” Wealth advisers who don’t confront the question head on are not only doing their clients a major disservice but also ignoring a major practice growth area. Think about it: An estimated 130 million individuals in the United States alone have at least one chronic illness (including conditions such as Alzheimer’s, Parkinson’s, and multiple sclerosis). And 26% of those ages 64–75 have had their lives significantly affected by chronic illness. This is a large and growing component of any practice.

Given the magnitude of the problem, it is almost assured that many of your clients, or their loved ones, have a chronic illness.

Shenkman knows a thing or two about this subject. When I caught up with him a few months ago, he was just setting off in his Airstream RV with his wife, Patti, a physician who was diagnosed with MS in 2006, on a speaking tour to help educate professional advisers. Over the course of a month, they added 6,200 miles to the odometer and delivered 18 presentations to CPAs, financial planners, attorneys, and insurance consultants. Shenkman’s seminars covered such topics as estate and financial planning for chronic illness, income tax planning for chronic illness, integrating care managers into the planning process for chronic illness, and planning and drafting revocable living trusts for clients with chronic illness.

“One of the misconceptions is that chronic illness is a challenge only of the elderly. It’s not — 60% of those living with chronic illness are between the ages of 18–24,” Shenkman said. “I don’t think most advisers realize the magnitude of younger clients affected.” (As an aside: Here are some insights on the subject of health care and assisted living for the elderly.)

Another misconception, he said, is that many professional advisers erroneously assume that those living with a chronic illness have similar challenges and planning needs. The reality is that each illness is very different. Even more puzzling is that clients with the same disease can have very different symptoms, disease courses, and planning needs. Some diseases, like Alzheimer’s, lead to significant cognitive impairments. Others have no impact on cognitive ability. For those living with a chronic illness, a common symptom is neurological fatigue.

Shenkman cited his wife, an anesthesiologist, for whom fatigue is a significant challenge. “When it kicks in, it’s very difficult for her to do anything. It’s nothing like the fatigue many people may feel after a late night out. It is crippling.” The fatigue is described by some as if they are drowning in quicksand.

He added that the cognitive impact of certain illnesses can affect certain spheres and not others. “For example, somebody may have difficulty with what’s called executive functioning. In other words, it may be hard to balance a complicated brokerage statement, but they may remain perfectly capable of making major life decisions.” This is important for advisers to understand so that they can protect their clients with proper planning. “Disease disempowers, but proper planning can empower,” is one of Shenkman’s key messages.

So what’s the point of all of this? Proactive advisers can make a tremendous positive difference in the lives of clients living with chronic illness or who have loved ones living with chronic illness.

“Clients often don’t communicate to their advisers the health challenges they or loved ones have,” Shenkman said. He gave a personal example: “A close friend who has also been a client for the past 20 years didn’t tell me he was living with MS until after he heard that my wife was diagnosed.” Many clients simply won’t share their challenges unless practitioners begin the conversation.

Shenkman said the reason clients often won’t disclose health issues is because they believe no one cares, or no one can help, or they don’t want to confront the realities. “They don’t understand that if only they explain their challenges and anticipated disease course to their wealth manager, their financial planning and asset allocation could be better tailored to fit their needs.”

Many people presume that if someone has a chronic illness, investments should be lower risk, more liquid, and with a shorter time horizon. That might be reasonable for a client in his late 70s diagnosed with Alzheimer’s disease. But someone diagnosed in their mid-40s with Chronic Obstructive Pulmonary Disease, or COPD, or multiple sclerosis might best secure their financial future by investing aggressively for the long term since in most cases life expectancy is not significantly affected.

“Clients diagnosed with MS or young onset Parkinson’s disease (YOPD) may already have been working for 10–15 years before the diagnosis. They may have savings, disability and permanent life insurance, and may have several more years of work expectancy,” said Shenkman. “If you choose to invest the way you would for the client with Alzheimer’s — short-term, liquid, lower risk — you may destroy their financial future. In contrast, what might be more appropriate for a client with MS or YOPD would be to recommend an aggressive investment allocation to achieve the additional returns that may enable them meet their financial targets for the long term.”

Some advisers are uncomfortable asking personal health questions. But to the contrary, not only do you have every right to ask, you have the obligation to ask, Shenkman said. “You need to gather the really critical information so you can best help the client. Understanding current challenges, anticipated disease course, and longevity can be critical to developing a realistic budget and plan.”

Conducting meetings may require some additional preparation and perhaps sensitivity. “Be careful not to make an assumption that because somebody has a physical impairment there is a corresponding cognitive impact,” Shenkman said.

Here’s an example: A symptom of Parkinson’s disease may include a blank facial expression (Parkinsonian masked facies). “The lack of expected expression or response should not be assumed to indicate any cognitive impact. It may not,” Shenkman said.

If you are not sure if the client is following the conversation, or if there are steps that can be taken to make the meeting more comfortable, ask the client. Ideally, have staff making the appointment ask in advance: “Are there any accommodations we can make so that your meeting will be more productive?”

Insurance planning can present a significant opportunity. When most people are diagnosed with a disease like Alzheimer’s, Parkinson’s, or MS, they assume there is no insurance planning to do. “This is dangerously wrong. If a client was just diagnosed with MS or YOPD and has a disability policy, immediately review the policy to see if there are any requirements, such as notification of the carrier,” Shenkman said. Failing to address policy requirements could jeopardize the recovery.

And when it comes to life insurance, Shenkman said that if the client has term coverage, there may be a conversion option to a permanent policy. Long-term care coverage is another consideration. “If you are diagnosed with Alzheimer’s, young onset or regular, you will not qualify for long-term care coverage — so most consumers assume there is no planning to do. This may not be correct.”

If a client has a spouse or partner, they should evaluate buying long-term care coverage if they can get it. Why? “The average life expectancy of a spouse caregiver for someone living with Alzheimer’s is reduced by 4 years,” Shenkman said. “The stress of being a caregiver can be significant. So have the spouse get it as the stress of caring will have a negative impact on his or her life expectancy and health.” (Here is more on the pros and cons of long-term care insurance and a new way to pay for long-term care insurance with favorable tax treatment.)

In sum, here are some tips to help you better serve clients with chronic illness:

1. Proactively inquire about your clients’ health and anticipated disease trajectories.
2. Summarize meetings and to-do items for the clients to follow up on.
3. Hold regular meetings at times optimal for the clients.
4. Consider involving care managers.
5. This is perhaps most important: Modify traditional assumptions and techniques when appropriate to tailor planning to your clients’ unique circumstances.

Here are some additional resources from Shenkman:

• His book: Estate Planning for People with a Chronic Condition or Disability
• An archive of resources for professionals: ChronicIllnessPlanning.org
• Online courses: Lawline.com