Monday, November 29, 2021

At All-Time Highs, Addictions Threaten More Clients 

Financial and estate plans that ignore substance abuse disorders can misfire, says this advisor.

Catherine Seeber
Catherine Seeber

It comes as no surprise that the COVID-19 pandemic has resulted in an unprecedented increase in the use of drugs and alcohol. The pandemic also presents unique challenges for people with substance use disorders and those in recovery because of the difficulty in seeking safe treatment. According to provisional data from the Centers for Disease Control and Prevention, 2020 saw the highest number of overdose deaths ever recorded in a 12-month period: Nearly a 30% increase from 2019.

The catalysts were predictable: social isolation and stress; people using drugs alone; an overall increase in rates of drug use; and decreased access to substance use treatment, harm reduction services, and emergency services. More research is needed, but I would imagine that many other startling statistics will likely surface over the next few years.

As you are a financial advisor, it’s vital to explore virtually all facets of the client and the client’s family or loved ones—including addiction issues. You cannot facilitate conversations around the establishment of trusts, powers of attorney, fiduciary appointments, and other critical components of the estate plan without addressing addiction issues and implications. Nor can you strategically advise on portfolio allocation without understanding the horrific cost of addiction and what resources might be available to protect those assets.

Many advisors, viewing the pandemic as a glass half full, have used this time of crisis as an opportunity to get to know their clients on a deeper level. In addition, clients have become vulnerable and receptive to having more personal conversations that they might have avoided in the past.

Now, more than ever before, make it a priority to put these practices in place:

  • Proactively learn how to ask clients questions to identify whether addiction issues may exist
  • Learn how to identify signs of addiction in clients or their family members
  • Learn how to provide guidance from a planning perspective to protect clients and their family members

Discovery

Create a process that is used for every client as a matter of standard practice.

General Questions:

  1. Are there any past or present medical or mental health issues we should budget for right now?
  2. What are the current stressors in your life and how do you deal with them?
  3. Tell me about your living situation and your relationship with other family members.
  4. In times of need, whom might you turn to for support?
Direct Questions:
  1. Have you ever had addiction issues addressed in your estate plan; if not, do you feel it is necessary to think about incorporating these issues?
  2. Are there any health or other circumstances affecting whom you contemplate naming as beneficiaries or fiduciaries in your estate planning?

Listening to the answers and doing a deeper dive into what you are hearing is key. Learning to manage those difficult conversations and expressing empathy goes a long way in helping clients acknowledge an addiction.

Identifying an Addiction

There is a common misconception that the wealthy don’t struggle with addiction issues as do individuals of much lesser means. On the contrary, addiction issues are more pervasive in wealthy families because of their ability to mask the problem longer. No matter how wealthy the family, these common behaviors are the most telling:

  1. Recurring signs of incapacitation, such as falls or accidents.
  2. Missing calls or scheduled appointments.
  3. Lack of eye-to-eye contact or multiple distractions during a conversation.
  4. Receiving texts or voicemails during unusual hours requesting money.
  5. Hearing story after story in which the facts just don’t add up.
  6. Signs of estranged relationships with a spouse or close family member

These symptoms not only indicate addiction, but they could also point toward dementia or other health-related issues that would need to be treated. There is nothing wrong with addressing this in advance with your client. Set the expectation that if you start to observe unusual behavior such as noted above, you will reach out to and discuss this with the trusted contact whom you have been previously authorized to contact.

Additional Reading: Substance Abuse Among Baby Boomers is Escalating

Legal Must-Knows

In the shadow of the most devastating year for overdose deaths and in the face of growing mental health concerns due to the pandemic, access to care is more critical than ever before. We must become at least vaguely familiar with the laws that have been established to protect mental health and addiction. For example, H.R. 6, the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act of 2018 was made law to address the nation’s opioid overdose epidemic.

Another law to be familiar with is the Mental Health Parity and Addiction Equity Act of 2008. An investigation and litigation by the federal Department of Labor and the New York Attorney General found United Behavioral Health and United Healthcare Insurance Co. violated that law by paying reduced reimbursement rates for out-of-network mental health services. These companies overcharged participants for those services and flagged participants undergoing mental health treatments for a utilization review, which led to many denials of payment for those services. As a result, many participants and beneficiaries did not receive the mental health and substance use benefits they were entitled to under their ERISA-covered health plans.

If the addict is still employed, make sure that you understand their employment benefits. Drug addiction, including an addiction to opioids, is a disability under Section 504 of the Rehabilitation Act, the Americans with Disabilities Act, and Section 1557 of the Affordable Care Act, when the drug addiction substantially limits a major life activity. State and local governments are prohibited from discriminating on the basis of disability.

According to the ADA National Network, examples of major life activities include caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating, and working. Major life activities also include the operation of a major bodily function, including but not limited to functions of the immune system, normal cell growth, digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine, and reproductive functions.

Building a Resource List

Build a list of resources to make available to your clients. It does not have to be a recommended list of just mental health and substance abuse assistance; it could simply be part of a bigger list that just happens to include specialists that could assist.

For example, recommend an estate attorney who you know has helped others in a substance abuse situation. If the attorney thinks a trust should be established, they’ll likely suggest the appointment of an outside trustee who is familiar with addictive behaviors and knows how to respond to those issues. In contrast, friends and family appointed as trustees may add more emotional baggage and will not have the expertise to deal with addictive issues.

Don’t forget to also include on your resource list a defense attorney who is familiar with addiction and drug court and can help if the situation escalates.

No matter where a family is in its recovery journey, some common and important factors are self-care and support from others. Addiction does not impact just the person who is addicted; it also affects the family system. Know where the best support groups are and become familiar with local therapists and addiction counselors. Residential treatment centers—a home-like setting with psychological and medical professionals to treat addiction and mental health disorders—are a great option for times like these.

The Inner Circle

Clients who are addicted or have a family member suffering from addiction often isolate or close off from their outside supports for many reasons, including trying to protect their loved one in keeping the secret, and because it is difficult to reveal what is going on. Know that you, as the advisor, are just one of those people.

Brian, and his struggle with his son, Sam, is a perfect example. Early in our relationship with Brian’s family, we finalized a very detailed cash flow. Their income had been severely reduced, but they would only have to live more frugally for a couple of years when pension monies would ensue. Then, I started getting requests for money out of the blue that did not make sense, and the excuses were even more absurd. I had a suspicion, and it needed to be addressed.

I began inquiring more about the family and how they were doing. One son was doing quite well. They were paying more attention to the other son and, for no expressed reason, were visiting him more frequently.

On the next call, I dove into their estate planning documents and ask the pointed questions above. While nothing was exposed during that call, it got the client’s wheels turning. On the very next call, allowing for moments of uncomfortable silence, the story unraveled.

Unfortunately, the following week, Brian’s son fell out of a window while under the influence and shattered both feet. While this was extremely devastating, we had to proceed with what we knew to protect him. He was still employed, so we were able secure short- and long-term disability. We discussed additional resources and implemented updates to their estate planning documents.

Final Thoughts

No one taught us how to have these conversations in our graduate courses or within our various certifications, but these issues are real and pervasive. We pride ourselves in creating financial plans, but if we don’t address these personal issues, in the end any recommendations or plans for long-term financial security can misfire.

“No one is asking that you solve the problem, but your acknowledging that an addiction exists is the first step in helping ensure it doesn’t implode their financial future.”

With the staggering statistics escalating, you can no longer ignore your role in assisting your clients and their families as it relates to addiction. No one is asking that you solve the problem, but your acknowledging that an addiction exists is the first step in helping ensure it doesn’t implode their financial future.

Catherine M. Seeber, CFP, CeFT, is passionate about blending both financial and nonfinancial needs and desires of her clients to make the most of their resources, time, talent, and energy as they transition through life. Cathy is a vice president and financial advisor with CAPTRUST

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