Advisors: Prepare Yourselves for the Opioid Crisis

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When people think of a financial advisor, what comes to mind are Roth IRA conversions, tax planning and investing your 401(k). Nobody thinks a financial advisor has the power to save somebody’s life.

Until now.

There’s a new market force on the scene, and it’s more powerful and far reaching than any recession. It’s made its evil entrance and it is here to stay, although many people don’t realize it is even here until they feel its jagged edge. This invisible monster preys upon rich and poor alike, taking its toll on every race, color, and creed. It can decimate an account in minutes and bring the most well-off of families to financial ruin. It is threatening the fabric of our society. Silently, ruthlessly and fatally it destroys the wellbeing that Americans have taken decades to accumulate.

It is the opioid crisis.

This epidemic hit home for us here at Vanderbilt Financial with one of our advisors losing his son to an overdose.

Financial advisors are being called upon to put down the graphs, charts and calculators and open their hearts as it is inevitable that at some point this devastating epidemic will come upon them and their client base.

According to Blue Virginia, 60,000 people died of drug overdoses in 2016. That is over 20 times the number of people who died in 9/11. Drug-related fatalities are growing at an alarming clip with fentanyl and heroin overdoses over 70% higher in 2016 than the year before.

Advisors must keep their clients safe

Some financial advisors, especially those with hundreds of clients, run their practice mechanically and can get by without knowing their clients that well. Others take a more personal approach, even spending time together outside of the work environment.

Either way, the advisor is the keeper of the client’s future, and the first line of defense from catastrophic events that a person may go through. As such, advisors will have to be prepared to deal with this issue, and at the present time very few are ready. Most aren’t even aware of how large a problem this is going to be, and how big an impact it is going to have on their client base.

Just like you have to be calm when your client calls you in a market slide, you must remain unflappable, empathetic, and logical. You must be the beacon of light in the storm.

Having the conversation

The first thing that advisors must do is to be astute about recognizing the signs that either a client or someone in the client’s family has an addiction. Sudden withdrawals of money that are unexplained, for example, should set off an alarm bell.

Financial advisors who don’t acknowledge addiction are part of the denial process. On the other hand, those who act quickly can help the client get help before it is too late. You could save somebody’s life by getting them into the right hands.

How do you, as an advisor, confront someone about a drug addiction? When you have the conversation, use a gentle and supportive tone. Try to avoid using the word “you.” Instead, phrase your wording in a gentle and sensitive way. “I am feeling a bit concerned that…” or “I’ve been noticing…” and “I will be here to support your family and do everything in my power to help.”

Managing money differently

Advisors must bring different resources to the table. Instead of just having a great estate planning attorney and accountant on your team, you must add a whole new set of qualified support professionals to your roster. You’ll need to know who to recommend for detoxification services, rehabilitation centers, support groups, health insurance consultants, and even a licensed addiction therapist.

Money must be managed differently for a client who is dealing with opioid addiction. It is likely they will need high liquidity, multiples of what a sober client would. In addition to recommending a much larger “emergency fund” of cash, it would make sense to employ vehicles that allow the client access to cash or the ability to borrow against their holdings, such as cash value life insurance. This may save them from having to liquidate IRAs or 401(k) accounts that are intended for retirement and pay fees for early withdrawals.

Lastly, be prepared for the client to exit due to the inevitable deterioration of their portfolio. Treatment is expensive (costing tens or even hundreds of thousands), relapse is common, and for these reasons the relationship value may drop below your firm’s minimums.

Joining the war on drugs

Impact investing is about more than just investments; it is connected to a larger purpose of doing “good” in the world and helping others. Take, for example, the case of our advisor John Browser. We have helped him raise awareness and even start a foundation dedicated to supporting rehabilitation services for addicts.

As an organization that strives to act for the good of society, we are a resource for any advisor who is interested in doing good with their business. If you’d like to join us in making a difference, please contact Vanderbilt Financial Group, the industry’s only sustainable broker dealer, by emailing [email protected].

Stephen Distante is CEO of Vanderbilt Financial Group, the Sustainable Broker-Dealer & RIA, and President of EO New York.

This information is not intended to be a solicitation to offer for sale any securities products The information contained in this blog site is for general guidance on matters of interest only.

Vanderbilt Financial Group is the marketing name for Vanderbilt Securities, LLC and its affiliates.

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Advisory Services offered through Vanderbilt Advisory Services, LLC

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