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FAs as Info-Getters for Clients with Sudden Disabilities

By Miriam Rozen September 24, 2015

Advisors should have a host of resources and planning strategies at their fingertips in case clients’ medical conditions signal their earning potential might change dramatically.

To start, FAs should review their clients’ employee benefits and make adjustments, says Mark Scherzer, a lawyer in New York who handles such matters from — obviously — a legal perspective. “When people come in with potential disabilities, my priority is to know what benefits they are signed up for,” he says.

This process includes a review of how clients pay for their disability-insurance premiums. “If the employer pays the premium with pretax dollars, then all the benefits will be taxable. If you pay the premiums yourself, then all the benefits you get will not be taxable,” says Scherzer.

The savings from reducing the tax burden this way can be enough to make employees whole if they stop working and receive only disability benefits.

In general, Scherzer recommends that clients with a pending disability “reset” to maximize all health-insurance benefits. He encourages clients to start looking at insurance plans that cover out-of-network care. They may have previously dismissed these because of high premiums. Without hesitation, clients whose medical conditions make working more difficult should check the boxes to maximize disability insurance, he says.

Scherzer also encourages clients to be forthcoming with their employers about their disabilities, even though for some that seems counterintuitive.

“Some people keep trying to work at the same level, and then they get demotions,” Scherzer says. If an employer is not accommodating clients’ disabilities, Scherzer refers them to an employment lawyer who might help negotiate accommodations to provide enough time for an orderly process of transitioning.

Evelyn Zohlen

If clients want to get a snapshot of their rights under the Americans with Disabilities Act, but want to avoid additional lawyers’ fees for as long as possible, advisors should refer to the website of the Job Accommodation Network. Known as JAN, the service is one of several provided by the U.S. Department of Labor’s Office of Disability Employment Policy.

Although JAN representatives don’t give legal advice, they share information with employers and employees on the options for employees and obligations of employers under the Americans with Disabilities Act and related legislation. They also offer ideas about how an accommodation or modification to a work setting can help disabled people do their job. They also assist people wanting to start their own businesses.

Though one JAN official tells us advisors don’t use JAN very much, FA Evelyn Zohlen of Inspired Financial, an RIA in Huntington Beach, Calif., says they should — along with other resources to help them advise clients with disabilities. After all, advisors are information gatherers by trade. And they are wonderfully positioned to help clients who, facing disabilities, must wade through a maze of bureaucracy, employment concerns and financial choices — often quite suddenly.

As Zohlen, whose RIA manages about $110 million, puts it, “If we don’t have the answer, we usually know where to ask."