People are always seeking ways to see into the future. Some great literary works center around a plot of having a character with advanced knowledge of things to come. While this would certainly help plan for your clients future, as we know, no one knows exactly what the future will hold. So how do you help your clients with financial planning for life events that are yet to pass?
Divorce and Marriage
While “expect the unexpected” might be an overused trope, its core message should be taken seriously. We’ve seen recently that surprise life changes can happen to even the wealthiest of individuals. Divorce among couples, while a sad event, can have a major financial impact on either spouse in retirement. It’s not your place to ask the health of your client’s relationships, but you certainly can run scenarios showing what would happen if couples were to divorce and how their wealth would be affected, if not for them, for yourself as a hedge against an unfortunate situation.
On the flip side of that scenario, it’s not unusual for couples to get married, start new relationships or cohabitate late in life. This can impact living expenses, retirement funds and other financial preparations that were made earlier. Again, it’s obviously difficult to predict if this will happen, but if a client is entering retirement single, with a spouse near death, or actively going through a divorce, you may be able to broach the topic and plan for a new romance.
Illness + Chronic Disease
It’s fairly certain that at some point in retirement that your client(s) will fall ill. For how long and the severity of the illness are the variables that are difficult to predict unless you use solutions such as HALO to better understand your client’s personal health risks. Either way, you should assume that illness will happen and you should dedicate money for helping with that scenario.
Though having conversations about long-term care can be difficult, it’s a critical part of planning. Nick Dragan, a financial advisor with Mass Mutual says that bringing the entire family together is an important part of having those conversations:
The most successful plans bring the families together and help them make decisions they would normally avoid like the plague. It’s tough to have these conversations sitting around the Thanksgiving table.
Loss of Income
Loss of income is a real possibility for many. Most likely, the entirety of your client’s wealth will not be wiped out, but it could vary wildly depending on market and political conditions. Very few people saw the 2008 crash coming, yet it certainly impacted everyone, including retirees. There will always be rumors of “the next crash,” try to rise above hysteria like this and plan a conservative, stress-tested investment that your clients will be able to rely on in a worst-case scenario.
Whatever the scenario, all the aforementioned topics are difficult to talk about. Remember tact and professionalism when discussing these scenarios with your clients. Getting the conversation started, however, is the most critical component of helping your clients create a financial plan for significant life events.