Today, Scott's six-member team has wholeheartedly embraced that new side of the business, he says. Three of Scott's team members are on the board of NAMI's Metrowest affiliate. Last year, the team recruited about 15 financial advisors to do the NAMI Massachusetts Walk.
Scott's colleague, Sheehan, remembers how he had doubts at the outset. "I tried to keep an open mind," he says. "The question at hand was, 'Is this going to be something we devote a lot of resources to, or just a small niche of the practice?'"
The new special-needs focus actually turned out to be serendipitous with the behavioral finance approach the team was already practicing, Sheehan says.
Like many families, clients with special-needs issues are working to find balance with a finite amount of resources, Sheehan says. And many of those families Scott's team sees suffer from a shared dilemma—that spending money on themselves would take away from resources they can devote to their family member with special needs.
Scott's team usually reminds those clients that they need to use the airplane safety rule: ensure your safety by putting on your mask first; then secure a different mask on your child.
"That concept also exists in finances," Scott says. "If parents shell out all of their money for all of these things and all of a sudden become financially impoverished themselves, what's their ability now to take care of their loved one? They will never be able to take care of themselves financially."
Addressing behavioral finance attributes starts from the very first meeting with clients, with the team asking each individual to take a Kolbe Assessments test and identify their top five values. From there, the team helps the clients come up with their top goals and what it will take to achieve them. For a family with special needs, for example, Sheehan says, that could mean asking them if they are willing to devote 20% less to their special-needs family member in order to have a successful retirement.
From there, wealth planning for families coping with mental illnesses requires a lot of attention around estate plans and supplemental and special needs trusts to ensure affected family members are cared for. That includes careful consideration of whether or not their loved one will be able to achieve financial independence in the future.
Designing a trust requires striking a careful balance, Sheehan says. If the trust does not provide enough financial assistance, a family member might not be able to function on his or her own. Providing too much financial assistance could lead to a lack of motivation to strive to do better, Sheehan says.
To help resolve that issue, a partnership can be formed between an estate planning attorney, financial advisor and someone to oversee the individual, Sheehan says. An aunt, uncle, cousin or other family member who knows the individual well can gauge their financial needs at different stages.
Creating an investment strategy for these families also requires planning for the unexpected emergencies that can quickly add up.
"It is very common for our families that we work with to come to us and say: 'Jeez, last year we spent $30,000 completely unexpectedly because Johnny went through X, Y and Z,'" Scott says. "'He had a manic episode, he lost his job, he was homeless for a week, and this was the money that we shelled out.'"
For some families, that means setting aside funds for those emergencies. For others, it means coming to terms with not being able to help in all of those situations. Families also need to understand what government benefits might be available to them.
As clients weigh their options, Scott's team also regularly bounces their ideas for clients' wealth plans off of each other in Friday meetings. One of those discussions in a recent meeting prompted the team to change their approach with one family client. Scott talked about his upcoming work with that family in the meeting, and explained that he planned to have them buy a certain level of insurance coverage. But other members of his team, who knew the family's situation and the values they had identified when they first took them on as clients, argued that that might not be adequate for them.
When Scott went back to the family, he presented them with two options: one for the lower level of insurance he had originally intended they sign on for, and another higher level of coverage that his teammates felt might suit them better. The client opted for the higher coverage option, because it provided them with more assurance that their $2.7 million in assets would protect their children when they died. Scott says he might not have presented the family with that choice if that team discussion had not happened.
