FA Magazine May 2023 - Page 40


Being Prepared For The Worst

Disaster can take forms both meteorologic and financial . Advisors can help clients prepare .
By Ben Mattlin

ALMOST BY DEFINITION , PART OF AN advisor ’ s job is to help clients prepare for financial setbacks , retirement hurdles , the expenses of long-term ill health and other unforeseen events . But if the recent news flow hasn ’ t made it plain enough , disaster can take many forms and strike at any time . This makes the job all the more challenging .

Bank failures and catastrophic weather-related calamities scarcely figure into most financial plans . Even if they do , there can always be a new wrinkle , an unprecedented complexity , that scuttles the best intentions . So how can advisors better guide their clients through an unprecedented variety of potential perils ?
Here are a few suggestions from seasoned advisors .
Beyond Cash For Living Expenses
“ Supply-chain disruptions and geopolitical events have added a new wrinkle to the planning process ,” says Rochelle Odesser , a financial planner at Madison Planning Group in White Plains , N . Y . “ The idea of being prepared has evolved .”
For instance , the conventional wisdom holds that you should keep enough cash on hand for at least six months of living expenses — more if you ’ re retired or have health problems . But what happens if those savings are suddenly out of reach ?
This could happen if you ’ re combating identity theft , say . Those affected by recent bank failures certainly found their funds temporarily locked up as federal authorities scrambled to make everyone whole . Extreme weather could also leave you short , stuck at home or even without a home , and unable to access your savings .
“ Since each emergency is different , it ’ s challenging to always be fully prepared ,” says Odesser . “ If your account is frozen or you cannot get access to your money for any reason , I recommend keeping about one-half of one ’ s monthly living expenses in cash on hand .”
Convenient And Secure
Where and how you keep that handy cash can matter , too . It needs to be kept secure , says Matthew Marini , associate director of planning at Coastal Bridge Advisors in Westport , Conn . He suggests using a fireproof or flood-proof safe for cash and other valuables .
“ Have ready access to credit ,” he adds , “ whether it be a credit card with a high spending limit or lines of credit secured by your home or investable securities .”
The central point is not just security but convenience . “ Always keep cash hidden in your home and your car for emergencies ,” says Carina Berlin , a wealth advisor at Kayne Anderson Rudnick in Santa Monica , Calif . “ If there are major power outages ,