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Financial Planning > Tax Planning > Tax Loss Harvesting

Long-Term Losses

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Politics aside, the recent diagnosis of Ted Kennedy’s serious illness has sparked an ache of loss in many of us–not just at the prospect of losing an iconic political figure but, irrationally, as if we will also be losing his slain brothers all over again. As we age, we are faced more and more often with long-term loss. This is not the sudden devastation that comes with a phone call at 3 a.m., but a process of sorrow and gradual letting go that may last for weeks, months, or even years. Such painful situations challenge a person’s ability to function, and an advisor’s ability to provide support and relief. Here are some ways you may be able to help clients and colleagues in the throes of loss.

Q: A client couple of mine recently learned that their 28-year-old daughter, who is married with two small children, has been diagnosed with inoperable cancer. Although she’s being treated with the latest therapies, the prognosis is not good. Her parents want to make arrangements for her kids if worse comes to worst, but are too distraught to discuss the options I’ve tried to present. Is there a way I can help them step outside their emotions to think more objectively?

A: Grief often flattens parents faced with the probable death of a child, making rational decisions all but impossible. Furious at God or the universe for putting their child and them in this horrendous situation, they may be unable to concentrate on the smallest tasks of daily life, let alone plan for the future. In this case, your clients must also be worrying about how their grandchildren will handle such a dreadful loss.

Before they can focus on financial matters, they will need to come to grips with their emotional upheaval. Give them an opportunity to air their feelings about what’s happening to their daughter and her family. They should be encouraged to take time for themselves by practicing whatever calms them, such as prayer or meditation. If they have no one else to share their fear and sorrow with, you might suggest counseling, a grief group, or both.

Consider addressing their desire to provide for their grandchildren’s financial (and emotional?) security, once they are somewhat less panicky about this sword of Damocles hanging over their heads. Send them your suggestions via mail or e-mail in the simplest, clearest possible language. This will allow them to review your proposal when they feel ready, re-read it as they wish, and discuss it with each other. You can follow up with a tactful phone call and, at the right time, a face-to-face visit to firm up their plans.

Since the daughter will probably want her husband to know about any arrangements for the kids, you might suggest that the two of them join you and the parents, if possible, at this meeting. Far from upsetting her, it’s likely to ease her mind to know that her children will be able to benefit from a fuller range of opportunities in the future.

Q: My client is hugely proud that his son (and only child) is attending a prestigious university on the other side of the country. However, the boy’s mother misses him tremendously, and has been sending him pocket money to the tune of a thousand dollars a month so he can buy whatever he needs or wants. When my client remonstrates with her, she begins to cry and says she only wants their child to be happy. He (the dad) is becoming exasperated and has asked for my help. What should I suggest?

A: Your client’s wife is exhibiting an advanced case of empty nest syndrome. Mothers are especially vulnerable to being rocked by feelings of loss, sadness, and loneliness when a child leaves for college. These emotions are multiplied many times with an only child.

Your first step should be to tune into each spouse’s feelings and concerns by meeting separately with the wife and husband. Empathize with the mom’s feelings of emptiness and loss. Reassure her that she’s not alone, and tell her about other parents who have struggled to rebalance their lives once their children leave the nest. You might even talk to her about a mother who tried to compensate for separation from her daughter by sending the girl money and gifts. If your client’s wife admits to the same thing, sympathize with her impulse. Ask her to think of some ways she could show love and connection that would not impair her and her husband’s finances.

Also, try to help her husband see that his wife’s response is not unusual. If he is willing to be sympathetic to her pain and patient with her stressed emotions, she may be more open when he suggests better ways to express her caring for their son.

You could then meet with both parents. Listen to each one with sensitivity, and try to build a bridge between them. You might point out that when the last (or only) child leaves the nest, parents are often challenged to find new and deeper ways to connect with each other. If this couple can find creative ways to reinvigorate their relationship (perhaps quality time weekly dates?), I predict that their son’s absence will become far less painful than it is now.

Q: A number of my clients are so upset by the down market that some of them want to put all their retirement money in CDs. A few want to fire me, while the rest are too shell-shocked to do anything constructive. Although they’re all long-term investors who told me they could tolerate risk, I’m having a hard time encouraging them to think clearly about their portfolios. How can I get through to them?

A: Consider hosting a special client event to discuss coping with today’s market turmoil. Whoever addresses the group–whether it’s you or someone else–should try to tune into their unsettled state of mind so they don’t feel alone. Once they know you understand their emotions, you may even be able to inject a little humor to distance what you have to say from the catastrophizing going on in many people’s heads. It could also be helpful to ask them to focus on what is working well in their lives (financially and otherwise).

Then you can offer some guidelines about the implications of the current situation for their portfolios. I remember financial planner Peg Downey telling me years ago that she and her partner at Money Plans held client workshops on how to survive investment losses. Afterwards, instead of panicking when the market plummeted, clients would call and say “Remind me of what you said in that workshop!” Mental preparation can make a huge difference in a client’s response to loss and disappointment.

I would advise you to follow up this group event with individual meetings. Don’t forget to leave time at the front end for clients to vent their emotions, and try to be understanding and stay undefensive. Consider using the mirroring technique I’ve mentioned before (see sidebar, Learning to Listen by Speaking), playing back what they said, commenting on what makes sense about it from their perspective, and asking what else they might be feeling.

Once your clients sense that you’ve heard them fully, they may be better able to listen to you explain why they should or shouldn’t reposition their assets. With patience and sensitivity, you can help them cope with financial loss in a way that keeps the connection strong between you.

Q: I work with the daughter of a wealthy family that I’ve advised for a couple of generations. After her marriage broke up years ago, she was given custody of their young son. Unfortunately, the boy has turned into a teenager who alternates between rage and suicidal depression. His mother has no control over him, and he’s bleeding her dry emotionally and financially. His dad, now remarried, is unwilling to get involved. My client’s brother and sister-in-law have volunteered to take the boy in to live with them, but she can’t bring herself to hand off this problem to them. What would you suggest?

A: This burned-out mom is probably operating in the primitive survival mode from stress, anxiety, and the ongoing loss of a good relationship with her child. A change in scenery might help both of them regain their equilibrium.

To help your client come to this realization herself, I would first let her air her frustration, exhaustion, and maternal guilt. Assure her that having a difficult child doesn’t make her a bad mother, and that giving him some time with his aunt and uncle doesn’t mean she’s deserting him. In fact, you might tell her that according to at least one authority (and you can quote me!), it’s often preferable for rebellious teens to live with non-parental family members, or even to swap homes with teens from other families.

Once your client hears this from you, she may be willing to ask her son how he would feel about such an arrangement. She should take care to communicate explicitly that she loves him and has no intention of abandoning him; she only hopes to give him an opportunity to thrive. There’s a good chance that this troubled teen will not only welcome the change, but appreciate his mother for giving him more space with this new living arrangement.

Q: For the past six months, a fellow planner in my office has been taking care of her father, who has early-onset Alzheimer’s. Her productivity has fallen off, and clients who used to be understanding are getting frustrated. What’s the best way to approach her about dealing with this?

A: Alzheimer’s is one of the most devastating diseases for family members to cope with, so it’s no surprise your colleague is having difficulty functioning at work. Her father is disappearing bit by bit, and every day probably brings a new challenge and new losses.

I think your approach needs to start with listening and empathizing. Over coffee or lunch, invite her to share her problems in dealing with her dad’s situation. Let her know you understand how painful it must be to live with the stress of ongoing loss, and how hard she must find it to concentrate on her work. Find out if she is taking care of herself in any way, and whether she has enough support from family, friends, a pastor, or an Alzheimer’s group. Don’t bombard her with questions and suggestions, but take time to explore all this with her.

You may then be able to gently turn the conversation to possible courses of action. Has she considered working part-time, or even taking a leave of absence to care for her father? Is she exploring Alzheimer’s facilities where he might stay when it becomes impossible for her to handle this tremendous burden? Let her know if you have any experience of people in the same boat who found an excellent place for their loved one to live. With luck she, too, will find a good solution to her weighty challenge.

When someone is facing an ongoing, seemingly interminable loss, it’s common for friends, family, and advisors to lose patience with hearing about it again and again. Some well-wishers are all solicitude at the outset, but quit asking how things are going as time passes. As a result, people grappling with a progressive loss think they shouldn’t keep talking about it.

But they need to. That’s why it’s so important to check in often, gently and patiently, to see how they’re doing and what they need. At the beginning, what they need most may be an opportunity to share their grief, anger, fear, and confusion. Then they must learn to reconstruct their lives piece by piece, finding rituals of personal solace, revitalizing activities, and supporters who truly nurture their spirit. Only then can they begin to function again and make rational decisions about their lives and their finances.

There are a host of stress-relieving activities, organizations, and meditative practices to help people in the throes of crisis. If you provide resource lists of these services, combined with a deep sense of presence in listening to your clients and empathizing with their losses, you will eventually be able to guide them from being immobilized to making decisions in their own best interest.

Olivia Mellan, a speaker, coach, and business consultant, is the author with Sherry Christie of The Advisor’s Guide to Money Psychology, available through the Investment Advisor Bookstore at She also offers money psychology teleclasses for financial advisors and for the general public. E-mail Olivia at [email protected].


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