From the January 2013 issue of Investment Advisor • Subscribe!

December 21, 2012

Storm Urges

Here are some ways you can help clients cope with unimagined stress and trauma

“Expect the best, but plan for the worst” is advice you’ve probably given your clients for years. But what happens when the worst is worse than their most awful fears?

For many people in the Northeast, the deadly storm surge of 90-mph Hurricane Sandy and the nor’easter in its aftermath exceeded all expectations of hardship and sacrifice. Dozens died, hundreds lost their homes, and millions were left in the cold and dark.

At times of trauma like this, people tend to revert to their primitive survival mode. If your clients have been suffering from similar loss and damage of any kind, here are some suggestions on how to handle unusual behavior that may spring from their storm urges.

A client couple I work with has been struggling diligently to pay off debt they incurred when their child needed surgery. Last August, the wife was so moved by the suffering of Hurricane Isaac victims that she put a big donation to the Red Cross on her credit card. Although her husband feels bad for the victims, he is livid at her spontaneous decision. She is upset and resents his attitude. How can I help them get back on track financially and emotionally?

Stress and trauma often cause both partners in a relationship to stop communicating well. To navigate the intense emotions the wife’s gift has aroused, I would suggest that you meet with her and her husband separately, perhaps with the support of a psychotherapist or coach.

In addition to feeling betrayed by his spouse’s unilateral decision-making, the husband probably has a sense of being abandoned because she put caring for strangers over her own family’s well-being. I would not be surprised if he also feels guilty, at least to some extent, for being angry with her generosity.

You may find that the wife feels survivor guilt and simply wanted to help any way she could. Her decision to donate perhaps more than they could afford was made while she was in her primitive-survival stress mode. In other words, she wasn’t calm or rational enough to think how her choice might affect the family’s financial stability.

From a practical standpoint, you could also gently mention the downside of putting a charitable contribution on a credit card. As I was reminded by my friend Gerri Detweiler, director of consumer education for Credit.com, “While the donation is going to help hurricane victims, the interest these clients pay will just go to the bank. It might be helpful for her to understand that once their old medical debt is paid off, she’ll be able to give more to the causes she believes in.”

Try to focus on empathizing with each partner’s perspective. If you can help them gradually open up to each other’s feelings and show them how to repair the damage to their finances, I wager they will be able to rebuild their connection and move forward as a couple.

A client of mine was so alarmed by Hurricane Sandy that he bought a $6,000 standby generator. His wife wasn’t happy about the cost, but agreed that it would be important to have power if the electricity failed. However, the storm surge was so massive that it reached their home and destroyed the generator. While there was some damage to the house, his wife only seems to care about the generator. What would you advise to help mend fences between them?

A few sessions with a good therapist would help this couple share their deep feelings: her anger, disappointment and anxiety; and his shame and humiliation about having made an expensive decision that ended badly.

If they won’t seek this kind of counseling and you’re willing to be a true “therapeutic educator,” you might step in. I’d begin by sitting down with each of them individually, so they can air their feelings without becoming defensive in their mate’s presence. Then I’d get them both together to see if you can help them build a bridge back to one another.

Remind them that a trauma like the imminent arrival of a deadly storm will put most people into their stress mode, which is at least somewhat dysfunctional. The wife feels upset by having wasted so much money on top of the other losses and peace of mind that they suffered. Her husband’s impulse to buy the generator came from his deep desire, as the family “hunter” and provider, to protect his loved ones. Of course hindsight is 20-20, but the wife would surely agree that there’s no way he could have predicted what happened.

Ask each of them what they usually do to restore peace and harmony in themselves when they encounter serious difficulties. Do they cope by talking with a trusted friend? Meditating? Journaling? Going on a “date” to reconnect with one another? 

Once you help them step away from the brink of their super-stressed mode, they may be willing to brainstorm creative ways to restore financial and emotional balance.

My client accidentally let his homeowners insurance lapse while going through a divorce. When a tornado ripped off part of his roof, he had to dig into his retirement savings to make repairs. He has become completely risk-averse since then, insisting that I invest the remainder of his portfolio solely in government bonds. This is way too conservative for a man in his 50s who needs to replenish his retirement funds, but I can’t get him to think rationally.

This client appears to be still in shock, which means he is in no condition to make decisions that will affect his future security. Your role is to listen and to slow down the decision-making process so he has time to return to a more rational, non-emergency mode of thinking and feeling.

I asked for further suggestions from Lauren Locker, principal at Locker Financial Services in Little Falls, N.J. and chair of NAPFA, who has been through some severe weather herself.

 “Generally speaking, men are more comfortable dealing with facts and figures,” Locker said. “So one approach would be to show him historical market data that reflect patterns similar to what we are experiencing now [...]. It would also be important to show him the difference between a $100,000 investment that earns 1% versus one that earns 5%. You can discuss his current lifestyle and health and explain how longevity is going to affect his ability to maintain his status quo financially, going forward perhaps 30 or more years.”

She added, “This is also a perfect time to suggest the value of an emergency fund. And his risk aversion suggests that he would be open to establishing the proper level of insurance coverage against future perils.”

My client owns a small artisanal bakery in a resort town that was flooded by Hurricane Sandy. He hasn’t been able to reopen yet; he’s burning through his savings and a $10,000 college tuition payment for his daughter is coming up. He’s furious with me because I didn’t overcome his objections and persuade him to buy business interruption insurance. Can this relationship be salvaged?

I discussed this with NAPFA’s Locker and liked her advice: “A lot of times, planners just want to ‘fix it’ and don’t let clients vent,” she said. “He’s angry, and you want to let him vent. Then, gently”—she emphasized “gently”—“you can point out why he made the decision not to insure. Was it because he really couldn’t afford it, or was he just making a bad business decision?”

Locker went on, “Then you want to suggest a plan to him—that he replenishes the savings, maybe takes a loan for college, and most importantly, that he explores his FEMA options for a low-cost loan to help stop the bleeding from his savings. By providing him with a plan going forward, you will make him less angry and ease his mind.”

When we face unforeseen catastrophes that disrupt our normal lives, most of us are thrust into our high-stress survival mode. We may feel overwhelmed and helpless, or struggle desperately to control what’s happening. That’s the time to slow down decision-making.

When this happens to your clients, make space to hear their feelings and empathize as fully as you can as they grapple with their challenges. Remind them of stress management tools that have worked well for them in the past.

Once they feel heard and soothed, they will begin to return to normal. You can then take them through your planning and advisory process to revisit their goals. By paving the way from primitive survival to thriving again, you will help them move forward feeling as safe and secure as possible in a world that is turbulent with uncertainty.

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