I Couldn’t Sleep at All Last Night: Client Fears and How to Soothe Them

I Couldn’t Sleep at All Last Night: Client Fears and How to Soothe Them

In the roaring wake of the Russian financial crisis of 1998, as one of the few foreigners remaining in Moscow, I managed to find a job.

I joined one of the country’s top independent pollsters, a well-regarded, trustworthy group. On my first day, I faced a meeting with the security chief, a former KGB colonel. He wanted to meet the American.

It turned out there was nothing to fear from Dmitry Alexievich – he thought us  Yanks were swell. Dmitry shared some tales of the old days, speaking as if the Cold War was college hijinks.

“If only the CIA had recruited me – I would have loved the opportunity!” Say what, Dmitry? “Nothing is worse than bad information and I often was feeling they didn’t quite…” Have a clue? “Neither party had very much to gain from nuclear annihilation,” he sighed. “I felt, if they knew correctly, there wouldn’t be sloppy mistakes.”

At the firm, I was eventually let in on a secret: the Kremlin itself was their top client. Our company was a hive of liberal thinkers – how could this be so? The powers that be, it seemed, wanted the straight dope, no matter how harsh, not the palliatives of da-men: adversaries could be trusted to tell the truth. From our side, we wanted them to face facts. A curious, but sensible relationship.

This week, we also have an honest poll to consider, assembled by the brain trust at Lincoln Financial Group. In December, they polled nearly 2,000 citizens, limiting respondents to those experienced in investing and financial planning. The key questions: did respondents believe they had their financial houses in order? Which issues caused them to lose sleep? The poll was run just before the pandemic struck, suggesting it portrays a ‘normal’ state of perception among potential clients.

Most respondents indicated unconcern over income taxes – 82%. This may seem odd, given the conflicting visions among political forces today. When polled, employment was high and taxes low, and so was anxiety. Taxes also form a ‘devil you know’ phenomenon. The economy could cool – certainly, it does that; taxes could rise – they often do. These concerns are eternal, so there’s little use in losing sleep.

We should wonder, though: do clients really lie in bed, worrying about taxation, longevity risk, elder care and life insurance coverage? It’s a common construction in the reports and articles from our industry. I can assure you they do – at least, my ex-wife did. The bright light of her phone made me aware of the fact, whenever it struck my no-longer-restful eyes. Whether she literally shone the light against my lids, I cannot say, but her technique of 2:00 am surfing was unquestionably sound.

Liz really did have trouble sleeping, concerned about investments, the wide-swinging market, how to take care of her aged, extravagant, martini-sipping, octogenarian mother. Should we bump up my life insurance? – a discomfiting question from one’s spouse. The maintenance fee on our Manhattan condo gave her fits – it equaled the rent for our old Moscow flat. What if it skyrockets, she worried – which it did. Should we move somewhere less pricey, I’d ask? Perhaps Connecticut, nearer to your family… “No! No! Don’t panic! I’m just thinking,” she’d say, tactically retreating.

I asked, more than once, why she didn’t wait until morning to raise talk things out. “Why, I do it for you. I know you’d never want to sleep if you knew I was worrying.” So you see, she had a sense of humor.

We separated over more fundamental issues and are now Facebook friends, very modern and amicable: it’s a better course than a manslaughter rap, she says. I think Liz’s case proves the point: sensible people do lose sleep, and in her case, it wasn’t just talk: if the portfolio needed adjustment, say, we’d act. I let my life insurance stand pat: I’m an enthusiast for coverage, but there’s no need to unbalance the portfolio, or tempt fate.

Lincoln Financial’s poll shows that most respondents are confident they can handle inflation, medical costs and a prolonged old age. The threat of the latter two has been widely reported, so respondents’ sanguinity may be a hopeful sign – they’ve listened and made plans. As professionals, we wonder if this is a case of the ostrich syndrome. With this in mind, cast an eye over your client files to see how they stand and counsel action, as necessary.

Two anxiety triggers stand out: 33% said they don’t feel prepared to manage estate tax issues, while providing long-term or elder care worries 44%. Perhaps deceptively, the majority are happy here. I see cause for another review and sense opportunities to help clients, current and prospective, while drumming up business for ourselves.

Estate taxes really shouldn’t worry so many people. Even the most draconian campaign proposal, the one from Bernie Frank, would take the estate-tax exclusion down to $3.5 million, hardly a fearful number for most affluent Americans. Currently, only the super-rich need get into much of a sweat, with the exemption at $11.4 million and double that for married couples. If your high net worth clients are jittery, confirm their awareness of the ‘doubling down’ effect of marriage. Some may simply be unaware of the true scope of the available benefits.

The long-term care issue points to new business potential with current and new customers alike. This worry is real: longevity is a trend, medical costs are rising, LT care is already very expensive and most of us will eventually need it. Many tools, including life insurance products, are in the planners’ toolboxes.

My proofreader suggests that divorce talk might upset some readers. Nonsense: the ex and I have a happy friendship, bolstered by our informal non-recrimination agreement – an estate-planning tool of considerable promise, in my estimation. I’m even pals with her husband, though when I bring up life insurance, he seems uneasy – a typical response, in our world. Never mind, he’ll come round – I’m sure Liz has woken him to the need.

For more information, please read:
This Threat Scares Investors More Than the IRS: Lincoln Financial | ThinkAdvisor

SALES SPARK: The Tax Freeze Strategy

No Guillotine Talk Just Yet: CA, NY Propose Tax Hikes for Millionaires Long Term Care Planning: Taking a New Look at Life Insurance