Even the Smartest, Healthiest DIYer Needs a Plan B

This blog was authored by Ryan Malec

Here’s a story that illustrates why everyone who has a family or dependents, even if they’re doing a great job handling their financial affairs on their own, should have a backup plan.

All Good — Until It Isn’t

As a wealth advisor, sometimes I am called upon to work side by side with clients who want to manage their own money. I once worked with a couple who had about $2MM in assets. The husband managed all of the assets and did so quite competently. His wife was completely uninvolved in the process, assuming that he would always be there to take care of that aspect of their life.

While the family was responsible for making investment decisions on their own, I provided the financial planning framework that laid out a roadmap for their future savings and spending. I also assisted them in finding a proper attorney to set up their estate.

The Red Flag

Having one side of the relationship checked out of their own financial situation is a huge red flag for an adviser.  If I’ve learned anything in this business, it’s that life throws everyone curve balls.

Well, lo and behold, a few years into our working relationship he was diagnosed with a terminal illness and told by doctors that he had only a short time to live.

One of the most potentially devastating things to a family’s wealth is the loss of the spouse who manages all the finances, especially if the surviving spouse has been out of the loop for one reason or another.  Not only is the surviving spouse left dealing with the loss of their life partner, but while they are going through their grief, they have to take on the very large responsibility of managing their wealth or deciding who will.

In this case, it was beneficial to the family to have a relationship with me as their advisor because upon hearing this news they contacted me right away. Imagine if they had been doing it all alone, and hadn’t even established any kind of a resource to support them in this situation?

The moment when your world falls apart is the worst possible time to be looking for a financial advisor. Not only are you likely to fail to find the right person, you’re also susceptible to being preyed upon by the many unscrupulous “ambulance chasers” who will try to hawk high commission products at you without taking your best interest into account.

Finding Resolution Quickly

I sat down with the couple and highly encouraged them to come up with a “Plan B”.  I proposed that either they figure out a way to create a portfolio the wife could manage going forward, or begin researching asset managers they could hire to take over when he passed.

We worked swiftly to find a manager to handle the account.  This gave the husband a great deal of peace of mind. He took a lot of pride in managing his assets, and was glad that we found a suitable person to take over once he passed.  His wife felt better, knowing both that he approved and that she no longer had to worry about shouldering this responsibility.

According to the couple, “We were just trying our best to enjoy the early years of our retirement by traveling and visiting family.  We never thought this far ahead and certainly never expected something like this to happen.”

The Takeaways

What I learned from this experience is how much stress was alleviated by identifying the asset manager ahead of what was going to be an emotionally difficult few years. But it shouldn’t have taken a terminal illness to convince them that a Plan B is necessary.

Every family needs a backup plan, as we never know what the future holds.  Even if you are perfectly healthy, I have seen too many couples reject the idea of hiring a third party asset manager for various reasons: fees, control, because they believed they’d always be around to do it themselves, etc.

The stress and confusion I have witnessed in surviving spouses, and the mistakes they make because of that stress, has made me believe that all couples need to either identify an adviser or have hired one before issues arise.

If you have questions about how to find a suitable financial advisor, please email rmalec@acgwealth.com.

Jared Gold