Life can occasionally deliver sudden personal or financial setbacks. Whether it’s an unexpected job layoff or the passing of a loved one, loss is an inevitable and usually emotional part of life. But it’s also an opportunity for emotionally savvy RIAs to help their clients in a different way.

“I certainly have had many people who have had disruptions in their lives,” says Karl Wagner, senior wealth advisor at Biondo Investment Advisors. “The important thing is that you already have a plan in place.” Having an agreed-upon financial plan can help minimize the number of awkward questions an RIA needs to ask during a sensitive time. Instead, they can focus on offering support to their client. But what might that support look like?

Advisor as counselor and coach

When a client faces a loss, sometimes the RIA’s role shifts from advisor to counselor. “I don’t have a degree in psychology, but I probably should because we are constantly counseling people,” Wagner says. While this support may not be something that RIAs promote as part of their services, it can have a significant impact on their clients.

Wagner shares an example of a client who had recently lost her job. She had cash reserves to cover a year of expenses but was still anxious about an upcoming interview. “We actually counseled her and coached her,” he says. That even extended to some interview role-playing. “It definitely put her at ease,” he added. After meeting with the potential employer, she got the job.

Of course, this is not to say that RIAs should put their fiduciary duties on the backburner. Depending on the nature of the setback, the client’s financial plan may need to be altered. “When something happens along the way, we go back to the plan and say we need to make adjustments,” Wagner adds. That may mean restructuring investments or reducing living costs. Such changes typically involve RIAs listening carefully and responding with sensitivity to help the client adjust to their new reality.

Loss during unusual circumstances

Sometimes unusual circumstances can lead to a client’s financial setback. For example, Julia Carlson, CEO of Financial Freedom Wealth Management Group, shares how one of the firm’s clients lost his job as a medical professional after refusing to get the COVID-19 vaccine. “He is now in this tailspin of making life decisions,” she says. The RIAs at her firm found meeting with him challenging.

The client’s refusal to get vaccinated might seem odd or even reckless to some people, given the nature of his employment. But the advisor should display empathy and emotionally support their clients, regardless of their own personal views. “Whether we agree with it or not, we still have to be that partner,” Carlson adds. 

Dealing with the death of a spouse

One of the most difficult things that RIAs must navigate is helping their clients when they’ve lost a loved one. “I just had a client who retired to spend more time with his wife,” says Richard Rosso, director of financial planning at RIA Advisors. The couple enjoyed 55 years of marriage, but just four weeks after retiring, the man’s wife died. “Now he’s retired and alone,” says Rosso.

That man reminded Rosso of every uncle and grandparent he’d ever had. “I looked at him and I said, ‘I really don’t know what to say, but I know one thing, you’ve lost a piece of your heart,’” Rosso says. There was no discussion of money or portfolios in that conversation.

Similar conversations with bereaved clients often involve extended periods where the advisor simply listens to their client. “I’ve been on the phone with people, and I haven’t said a word in an hour. But I’ve listened,” Rosso says.

It’s important to remember that there’s now a void in the client’s life, which can leave them particularly vulnerable. “That’s a very dangerous place for anybody to be,” Rosso adds.

After listening to his clients, Rosso will shift to asking open-ended questions that can help guide them in their decision-making. That approach ultimately led to one client telling him how helpful he was during a period of emotional turmoil. “It comes back to the raw caring and empathy you have for someone,” he says.