Bill Hortz's picture

[There is no greater value proposition and competitive positioning for financial advisors than to be prepared to help clients through their greatest financial AND life challenges. This is especially true as the two are inextricably linked where a client’s personal and family situation may harbor any number of hidden threats to a secure retirement. Helping provide guidance and chart a course through not just wealth accumulation, retirement planning, and estate planning but also looking for any unforeseen or unaccounted for financial planning disruptions are critical - like supporting your client or their family member in the throes of opioid addiction.

This more diligent approach requires the financial advisor to be more proactive and it begs the question of how well you really know your clients. The common industry standard of “Know Your Customer” needs to be applied at a deeper, more comprehensive level because there can be serious implications in not identifying any destabilizing or challenging issues within the household.  

This kind of holistic financial planning and wealth management service though requires specialized knowledge and resources that need to be compiled and integrated into your wealth management services toolkit through topic experts acting as strategic partners to your firm.

To learn more about these specialized resources and training available for advisors to help their clients and their family members through opioid addiction, we reached out to Cheryl Canzanella, a CLU (Chartered Life Underwriter), LUTCF (Life Underwriter Training Council Fellow), ChSNC (Chartered Special Needs Consultant) and Founder of Coastal Life Strategies, who’s personal experience of losing a husband to an accidental opioid overdose led her to become a leading advocate for opioid addiction resources, training, and support. She has created courses for financial advisors which fills this specific knowledge gap and equips them to know how to spot, advise, and protect their clients’ well-being.]

 

Hortz: What do we have to understand about the opioid epidemic and its impact on families and our communities?

Canzanella: We often associate addiction with poverty and think this does not affect my clients, but this could not be further from the truth. According to the Pew Research Center, almost half of Americans have a family member or close friend who has been addicted to drugs. And it is happening at alarming rates, yet it is a topic that rarely comes up in conversation. How can we effectively assist our clients if we are not aware of the struggles they may be facing?

Without proper planning and guidance, costly and irreversible mistakes can be made. A legacy could unintentionally be passed to heirs who could use them to their detriment. Reckless spending can quickly build beyond control, assets lost, and savings, college, and retirement accounts can be wiped out without adequate time to recover.

The impact extends far beyond what many might realize. Addiction is a massive $1 trillion financial strain on our economy that trickles down to our local communities. From increased healthcare costs, decreased workplace productivity, greater demands on social services, to increased crime, and costs associated with treatment and rehabilitation centers. It is important to know that financial advisors and the firms they work for can and should play a part in this epidemic by helping safeguard clients' financial well-being and providing support.

Hortz: What kind of financial threats can happen as a result of opioid addiction?

Canzanella: Money can buy a lot of things but one thing it can never offer is immunity to addiction. In fact, money can often fuel addiction and create a devastating cycle that impacts the wealth and security of families for generations.  Families tend to take on the financial responsibility of an addicted family member and can quickly drain bank accounts and derail their retirement. Parents allow children to live with them while trying to get “back on their feet.” They pay for lawyers or post bail if legal troubles start. 

Personally, my husband, who was suffering from opioid addiction, and I made very poor decisions with our money. We could not control our spending and had absolutely nothing saved for emergencies. And forget about saving for retirement…we lost years of contributions and compounding. It was so difficult to navigate insurance that we paid out over $10,000 out of pocket for less than 28 days of treatment. Honestly, I was not thinking clearly and could have used some advice and direction.

Add in that many can eventually face bankruptcy with the need to sell assets, experience financial fraud, legal expenses, and the cost of treatment which can easily compound these financial threats.

The consequences can have a lasting impact on families and their future financial security, yet the shame and secrecy of addiction cause many families to hide its true costs.

Hortz: What type of risks exist for advisors and financial firms in not addressing this epidemic and these client risks?

Canzanella: Advisors help clients through many life crises such as a family death, divorce, caregiving, job loss, illness, disasters, identity theft and fraud. Dealing with addiction in the family is just as complex and can take a toll on emotions and disposition, disrupting lives and making it difficult to think clearly and strategically. Financial issues often get pushed into the background as an afterthought.

Failing to be proactive and address these challenges could not only damage the firm’s reputation but also put you at risk for potential lawsuits from family members, especially heirs. It is not just about legal risks either. Clients rely on your guidance and advice to protect their financial well-being. Neglecting this could lead to questioning competence and commitment to having clients’ best interest in mind. Which brings up the question to others…Do you really know your clients? What did you do proactively to better understand and advise your clients?

Hortz: What is most needed by the financial services industry to be better able to guide and protect their clients affected by opioid addiction? 

Canzanella: Education is key. Comprehensive training to help recognize the signs of addiction, understand the financial challenges, how to offer guidance and provide resources that help both advisors and clients grasp the financial implications. Continuing education can keep advisors updated on best practices, treatment options, and changes in the opioid epidemic landscape.

Financial firms can also be advocates for addiction awareness and support, working to reduce the stigma around addiction and encourage early intervention. Supporting networks for clients and their families affected by addiction can create a sense of community and assistance. Providing clear legal and ethical guidelines for handling client cases involving addiction is crucial, ensuring that advisors and firms act in their client's best interests while following the law. Having crisis intervention plans in place can help advisors respond effectively when clients are in financial distress due to addiction.

By incorporating just a few of these steps, the financial services industry can empower advisors and firms to better guide and protect their clients during a challenging time, demonstrating a commitment to addressing the issue, and supporting those in need.

Hortz: Where can you find the resources available to support clients through this challenging period in their lives?

Canzanella: If resources are not readily available within your financial firm to support your clients, consider networking with local professionals and attending community events to stay informed with relevant information. Maintain a list of reputable resources that include addiction treatment centers, support groups, mental health professionals, and be prepared to offer referrals when needed. Remember, clients may not realize why they need to talk with you so be sure to communicate and make resources available to them through your website, newsletters, emails, etc. You would be providing an invaluable community service.

Hortz: What are some of the essential financial strategies that should be considered in these situations?

Canzanella: Clients may need to make urgent financial decisions that require immediate access to money. Having emergency funds or liquidity is key to avoiding withdrawal penalties or unnecessary taxation. Communication and guidance with budgeting and managing expenses can go a long way. Reviewing insurance policies and helping with legal and estate planning can help as well.

It is important to address addiction-related financial challenges as part of a comprehensive financial plan by adding questions in your fact-finding process and asking again in annual reviews.

Hortz: What are your recommended action items for financial firms right now?

Canzanella: I believe most of us acknowledge the existence of this epidemic although it may be difficult to relate unless you have a personal connection. Too often, advisors are unaware of crises within their own clients’ families because they may not recognize the red flags, struggle with initiating the conversations, or believe it is not their place to intervene.

To address this, financial firms need to incorporate ongoing educational courses into their firm element training. Inviting guest speakers to share personal stories and insights can also provide very powerful lessons.

Coastal Life Strategies (www.opioidfinancialawareness.com ) specializes in providing turnkey, customized curriculum for financial firms, including webinars, presentations, and educational materials. It is my commitment to addressing this ongoing family crisis and providing the needed tools and resources to advisors to help and advise their clients.

A financial firm’s commitment to addressing addiction’s financial implications can be extremely valuable for clients during a challenging period. The essence of “Know Your Customer” becomes paramount, enabling advisors to tailor financial advice and services to meet clients’ specific needs and objectives. Financial firms are in a unique position to empower their advisors to offer comprehensive assistance to clients and their families while navigating the challenges of addiction and recovery. 

 

The Institute for Innovation Development is an educational and business development catalyst for growth-oriented financial advisors and financial services firms determined to lead their businesses in an operating environment of accelerating business and cultural change. We operate as a business innovation platform and educational resource with FinTech and financial services firm members to openly share their unique perspectives and activities. The goal is to build awareness and stimulate open thought leadership discussions on new or evolving industry approaches and thinking to facilitate next-generation growth, differentiation, and unique community engagement strategies. The institute was launched with the support and foresight of our founding sponsors — Ultimus Fund Solutions, NASDAQ, FLX Networks, TIFIN, Advisorpedia, Pershing, Fidelity, Voya Financial, and Charter Financial Publishing (publisher of Financial Advisor and Private Wealth magazines).

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