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Experiencing COVID-19: An Advisor’s Health + Wealth Journey

Experiencing COVID-19: An Advisor’s Health + Wealth Journey

Editor’s note: Recently, the Coronavirus pandemic hit close to home for the Genivity team. Fabrice, a close advisor to the Genivity team, is now recovered from COVID-19, but his experience has motivated us, even more, to drive conversations about the interconnectedness of health and wealth. The following article is Fabrice’s personal experience around the intersection of health and wealth with important takeaways for financial advisors during this challenging time.

Two years ago, I retired from a 34-year year career at JPMorgan Chase where I was a Vice-Chairman in the JPMorgan Private Bank.  I retired to pursue my interest in health and wellness.

I write this piece having just recovered from a bout of COVID-19. My experience with the disease lasted about a week: 2 days of buildup, three days of feeling pretty exhausted, and then three days of getting better. Not fun, but not a disaster either. You can hear more about my experience on a podcast I recently recorded with Erica Ballard, host of the Health Coach Hotline.

As I understand it, this virus disproportionately punishes the metabolically unfit, the obese, and the hypertensive.

I am 58 years old and was hit by the virus in as good shape for it as anyone could want. On the eve of my infection, I had very low levels of inflammation, very good blood pressure, low body fat, good vitamin levels, and a very flexible metabolism (i.e. it is easy for me to switch over to burn fat from burning carbs).

None of these things were matters of luck or genetics; they were the result of careful planning and preparation. I have a very defined health routine and I do extensive blood testing with my integrative medicine doctor to identify areas to support. Likewise, my financial portfolio has been similarly resilient, so much so that I made my biggest lifetime “risk-on” trade at the end of March 2020 (in the middle of my illness). Time will tell if it was a good one. Planning over many years put me in a position to do it, it was no whim.

I think there are lessons to be drawn from both the health and financial crises of the Spring of 2020 (COVID-19 and the associated economic setbacks). I’ve addressed the financial planning aspect in a separate note. Let’s look here at the health aspect.

I like to take a “belt and suspenders” approach to planning my (and my clients’) portfolios and I have long done the same on the health side. Like a financial portfolio, your health portfolio needs a diversity of “asset classes”.

Fabrice Baking

My “Asset Classes”

Asset class number one: food. For many years now, I have been trying to optimize my nutrition via a whole food, no sugar, low carb, high “good” fat approach.  Doing this is made easier by being a competent cook, which is also a learned/trained skill that I have worked at over the years. I know what food ingredients do for my body and I shop by reading the ingredient label (not the misleading nutrition label).  More than 5 ingredients and it is unlikely to go in the cart. No label is even better.

Asset class number two: sleep.  I follow rigorous sleep hygiene.  I do not eat three hours before bed. I have a cold, dark room, a regular bedtime, and an 8-hour average sleep time. I spent more on my bed than on many of my car purchases.

Asset class three: exercise.  I do “superslow” weight training to complete muscular failure once a week and get a ton of walking distance movement the rest of the week.  I add short, intensive cycle sprint and stair climb sessions.  My chance of injury is almost zero and my mitochondrial density (a measure of ability to produce energy) is relatively high.

Putting It All Together

So what? I did this when I worked full-time so that I could be as mentally and physically resilient at a demanding client-facing job as possible.  My colleagues were interested in what I was up to and so were my clients.  I took an open interest in their health and discussed my approach and findings with any of them that would listen.  Many did.  I wanted colleagues who could keep up and who were sharp.  I wanted healthy clients.  The statistics on advisor turnover at a client’s death should terrify you. The flip side is a client who knows that you are part of their health team, as well as their financial team, is a loyal client and friend and therefore more likely to include you in their family. This is the antidote to client turnover.

Knowing your clients’ health issues and playing a part in supporting them creates trust and intimacy. Waiting until a crisis is too late. After all, many were blindsided by the COVID-19 pandemic. Make sure that your client’s health (and that of their spouse and even parents if appropriate) is included in the financial planning and goals setting you do for them. The HALO questionnaire that your client takes captures key lifestyle data that results in a highly customized output that you can use to tailor the plan. Without this, you may be working with a false sense of security. A further benefit of the HALO process is that it allows your client to see what happens if they make some positive lifestyle changes. This can be powerful motivation and a good way to earn their trust.

The Gifts You Can Give with a Good Plan

The Gifts You Can Give with a Good Plan

Clients reward advisors who give them valuable gifts with their loyalty with more assets to oversee and with referrals. A good financial plan is just such a gift.

Throughout the market volatility during Q1 of 2020, I have heard from a number of financial advisors that the clients who are in the best financial and mental shape are the ones that had well-crafted, conservative “goals-based” plans in place coming into the crisis. I am not surprised. And those that had no plan at all are flocking to financial advisors for the first time in droves. A new report shows that 1 in 4 Americans are seeking out the aid of a financial advisor for the first time in their lives due to the pandemic. 

In my opinion, there are two critical features of any well-devised plan. The first is that the plan gets your clients to the end of their lives with money to spare. The second feature is that even under heavy stress, there is never a need to “sell low”.  Having several years’ worth of spending in cash helps immeasurably here.

A plan that provides for conservatively assumed future expenses, including reasonably anticipatable medical expenses such as long-term care costs, is a real gift from the advisor. The peace of mind that comes from this, in the depths of a financial meltdown, is highly valuable as it can help avoid any precipitous sales or untimely deleveraging. These are very hard to recover from.

Proper healthcare and long-term care are not considered negotiable by most high net worth clients, crisis or no crisis. I have seen financial plans that had standardized assumptions for life span and long-term care costs show a high probability of success, only to collapse in failure when customized assumptions about clients’ real costs are included. The HALO questionnaire provides advisors with this level of personal detail. Advisors are then in the position to make a further gift of advice to protect against negative outcomes. Buying long-term care insurance is often a technique to consider in this case and the HALO process allows advisors to specify premium levels to get the job done and re-test the plan.

The advantages of a good plan are not just defensive. If your plan keeps everyone calm and rational, and if there is “dry powder” in the form of excess cash, fixed income to reallocate or even borrowing capacity, then you can go on the offensive. While others hunker down, or worse yet become forced sellers, you and your client can go shopping for assets that have gone on sale. The same is true of advising on Roth IRA conversions, which are best done during dips. Irrevocable intergenerational asset transfers are also best executed at market lows and can be highly significant ways to increase after-tax family wealth.

The confidence to buy, convert, and transfer is another huge gift an advisor can give, thanks to a good plan.


Advisors Provide more than Financial Advice

Advisors Provide more than Financial Advice

The world has turned on its head this past month and the financial markets are experiencing wild volatility.  It is during these times that clients lean heavily on their financial advisors for advice. Traditionally, advisors often rely on historical data and averages accumulated over long investment periods to determine how best to allocate their clients’ portfolios.   Despite periods of volatility and inevitable bear markets, properly managed portfolios generally perform over time.   

These past few weeks have caused significant stress on everyone. Not only are we dealing with a global pandemic and the related effects on our day-to-day lives, but we’re also watching our collective net worth go on a wild roller coaster ride.  As all of us do our part to ‘flatten the curve’, we are hoping at some point soon that a new normal will set in, and all modes of volatility – whether it be market, emotional or stress-based – will start subsiding. At this point, we hope that we can settle into and adjust to a new normal’ for the next weeks or months until we make it through to the other side. 

 Transitions and Opportunities

During this transition period as we wait for the corona crisis to pass, there may be opportunities for advisors to further solidify their relationships with their clients. This recent market turbulence has likely increased your clients appreciation of you, and has made them realize how important you are to helping them achieve their life goals. Perhaps take this opportunity to address various planning initiatives. Examples include: 

  • Everyone’s health is front of mind right now. Does your client have a living will? A healthcare power of attorney? Do they need to be updated? Who is named as agent? Does that still make sense? Do you and your client know where these documents are? Remind your clients to locate them, know what they say, and make sure other family members know where they are and how to access them. Does your client have college-aged children? Do they have appropriate HIPAA waivers to allow parents to have access to their children’s medical issues and care decisions? 
  • Cybersecurity is extremely important during this time when everyone is at home, often alone. It’s important that your clients be extremely vigilant during this time, as cyber-scams and phishing expeditions are on the rise in an effort to take advantage of people during this time. These include messages that appear to be from the CDC and WHO. Everyone should ‘think before they click’ and avoid opening attachments to text messages and emails.  If they’re from someone they know, they should call that person and confirm before opening.  
  • Lower asset valuations as a result of this recent market volatility may provide significant planning opportunities. These lower valuations – coupled with the current favorable tax laws, estate gift tax exemptions and historically low interest rates – may provide your clients with unique windows for, among other things, gifting assets to children, creating Grantor Annuity Trusts (GRATs), and refinancing loans to family members.   
  • All of us are doing our part by social distancing and complying with our local shelter-in-place ordinances. Many of your clients may want to do more, but are struggling with how to help make an impact. Check out National Center for Family Philanthropy for ideas. Perhaps also identify local causes that your clients can contribute to, whether it be through their time, talent or treasure. Remind them how important it is to support their local small businesses.  
  • Remind your clients about the recent extensions to tax filings and how that may benefit them.  

Hopefully these examples are helpful and allow you to offer some silver linings to your clients during these difficult times.  We continue to send you and your families our best wishes. Stay safe and let us know how Genivity can continue to help you and your clients navigate these new and unchartered waters.     

Early Retirement can be Derailed by Health Care Costs

Early Retirement can be Derailed by Health Care Costs

Many of your clients are dreaming of retirement. It’s the final phase of their life that they’ve been diligently working toward and saving for. Suffice it to say, it would be unfortunate if something derailed that dream, especially if the reasons it was derailed were preventable. However, that predicament is happening more and more across the United States. The culprit? Rising health care costs.

Planning for health care costs – effectively

Even with good insurance, there’s no telling how a health episode may spiral out of control and leave your clients’ wealth in jeopardy. It’s not likely that something common like the flu or a broken bone will sink your clients’ chances of retirement, but rather it’s the chronic illness or preventable diseases that could cause your clients to hemorrhage savings. 

Diabetes, stroke, heart disease all have long-term consequences and can eat up a large portion of retirement savings. Talking to your clients about their health must be part of your strategy in talking about their funds for retirement. These can be uncomfortable conversation to have, but need to happen in order to attain the best outcome for your clients’ wealth.

It’s not just chronic, preventable diseases either. Genetic components often play a role in what type of illnesses develop and how serious they are. With Genivity’s HALO assessment, we can tell you more about your clients’ risks and, more importantly, the amount of money it may cost them. 

Help your clients make the most of their retirement

Money is a finite resource and needs to be managed as such. The last thing anyone wants is for a retiree to re-enter the workforce because their medical costs have depleted their funds. The best way to avoid this scenario is talking about it today.

There’s no magic bullet to disease and no one can tell the future perfectly, but there are things you can do today to make sure your clients vision of retirement isn’t derailed by health care costs. 

The Role of the Advisor for Aging Clients

The Role of the Advisor for Aging Clients

There are certain professions that come with high levels of trust. Doctors, Lawyers, and even barbers need to be trusted by their clients to make sure the outcomes are positive. As a financial advisor, you’re right up there with the most trusted of professions. After all, what could be more important than managing assets and making sure there’s enough money to last into retirement?

How the advisor’s role is changing

Baby Boomers will soon make up the largest cohort of retirees in the nation. They will also be the wealthiest members of society and that wealth will need oversight. The role of the financial advisor is changing from simple “consultant for hire” to a member of close circle of trusted individuals.

In situations where you have high net worth retirement accounts, you may find yourself answering questions and consulting on situations that you never dreamed of. Wearing the hat of not only financial advisor, but other roles that deal with family, health, money and all the details that come with it.

As your clients age, serious life events, familial issues, medical problems, are certainly in store for you. While these undoubtedly can be intimidating, remember: make decisions for your clients as if it were your own money. How would you like your finances handled in tricky situations? While this may not be perfect for every situation, it’s a good rule of thumb to build and retain trust with clients and their families.

Build relationships with the family

Spouses, children, friends and other family members are relying on you to make sure that their loved one’s assets are around for the intended recipients to enjoy or even survive off of. It’s no small task nor are they decisions to be made lightly. Who knows how many people your management will affect?

It’s becoming strikingly evident that the role of the financial advisor for aging clients is the role of trusted confidant. Someone who can advise on multiple situations and understand how they affect wealth and happiness in the sunset years, while understanding the impacts on those in their will and other recipients of their money. Building trusted relationships with your client and their family will be a pivotal part of your practice moving forward. Make sure you’re up to the task of taking on such responsibilities before you find yourself in too deep.

Conventional Retirement Planning Isn’t Working

Conventional Retirement Planning Isn’t Working

Much of the financial world has changed dramatically over the last 30 years. Stocks and bonds, IRA’s and even Social Security are far different today than they used to be. It should come as no surprise, then, that retirement planning needs to change from its traditional methods to strategies more adapted to our modern world.

Pitfalls of traditional planning

The rule of thumb used to be that a withdrawal rate of 4% would suffice retirement needs. Now experts are saying that this might not be enough given various states of healthcare and the U.S. economy.

Conventional financial planning is no longer working, so as a financial advisor you need to be thinking about a Brave New World when it comes to managing your clients’ wealth. Stock buy-backs are at an all-time high, inflation is projected to increase, and as we’ve mentioned before, health-care related costs are surging. Planning with today’s numbers will not suffice for future expenses. Adding extra padding to any and all health-care related planning should be your norm.

We are living longer than ever, but we’re also spending more than ever. These health care costs will impact how far their money goes in their golden years. On the flip side, one of the benefits of modernity is that we can project what kind of health care your clients will need in the future and how much it will cost, a simple hedge against ever increasing expenses.

How to refresh your planning strategies

What should be the strategy moving forward for your clients then? While save often and save early is undoubtedly the most effective and straightforward strategy that you can recommend to your clients, you can also leverage the technological advancements and solutions available to make better projections for how much money your clients truly need to save for retirement.

From portfolio risk analysis tools to our own HALO health and longevity optimizer solution, there are many data-driven solutions available to advisors now that can move the needle for improving your overall client recommendations and relationships. 

When it comes to building those relationships, it’s also important to have frank, honest discussions with your clients about how they see their retirement unfolding. The lifestyle they have imagined may not line up with the reality of their financial situation or projected wealth in retirement. Gone are the days of figuring out retirement as it happens, a plan needs to be put in place and adhered to if your clients want retirement to run smoothly.

This new era of financial planning is sure to be challenging, but it’s also an opportunity to give your clients peace of mind and tools to help them make the most out of the final years of their life.