Disability Financial Planning: What’s at Stake for Advisors

wealthmanagement.com Midyear Outlook

By Lisa A. Cohen

Link to article on wealthmanagement.com

According to the CDC, one in four people in the U.S. are disabled. The Census Bureau reports that statistic at 1:7. In total, that’s somewhere between 44 million and 80 million people. If we assume that each person with a disability impacts one other person, then each cohort of 100 clients of an advisory practice will likely include between 28 and 50 clients directly or indirectly affected by disability. The numbers are big, so the stakes are high.

Why isn’t everyone paying attention to this now? That’s the right question if we assume that many people doing something simultaneously signals the most meaningful opportunities. A better question is, now that this opportunity is on the table, what’s the best way to engage with it, and does it make sense to be a leader or a follower.

Debunking Disability Market Myths

Outdated notions can hamper visibility into this market, including:

  • We don’t see many disabled people in our lives, so can these numbers be real? Yes, the numbers are real, and it is possible to see people with disabilities infrequently because we are not looking for them, or because we are not in places where they are.
  • People with disabilities don’t have financial resources, so why should we consider them an attractive market segment? Some people with disabilities are indeed impoverished. It is also true that some people with disabilities are or were high earners or have other financial resources, and that funds to care for people with disabilities can come from inheritance, contributions, insurance settlements, family, friends, and communities.
  • What if I say the wrong thing and my client takes offense? That could happen. Or clients could already be feeling distance in the relationship because they have not shared a deeply personal need. Ask clients if their lives are affected by disability, acknowledge that people talk about disabilities differently, and ask that your clients share how they feel comfortable talking about it.

The Stakes

We know the risks of inadvertently overlooking the needs of market segments, illustrated by the challenges of retaining clients’ children and former spouses, both situations where there is some distance in the client/advisor relationship. Similarly, disregarding a significant financial need – known or unknown – creates a relationship disconnect that can spur a search for an advisor who will pay attention. Why go there when you don’t have to?

The stakes are high for clients, too. Access to disability health and income benefits requires specific treatment or exhaustion of funds. Today, there are only a few products to choose from that simultaneously preserve assets and access to disability benefits, including ABLE (Achieving A Better Life Experience) savings accounts and pooled and individual special needs trusts. Using these products together is often ideal as they have different features and benefits. More information about the disability market and product options is available from the Special Needs Financial Services Institute (SNFSi).

While the current product toolkit for advisors to use with clients is limited, there are some solid solutions to present that don’t require deep specialization in special needs planning. More solutions are coming. And most importantly, addressing this profoundly personal and intergenerational need is an opportunity to deepen advisor/client relationships and accumulate financial resources to care for people with disabilities.

Lisa A. Cohen is the President of the Visible Foundation and the CEO of Capital Motion LLC, home of the Special Needs Financial Services Institute (SNFSi).

Learn more at www.visiblefoundation.org and LinkedIn.