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The Opioid Crisis: How Financial Advisors Can Help

October 2019 

Trained, informed financial advisors are uniquely positioned to help clients facing the opioid crisis.

How often do you see newscasters reporting on opioid overdoses?

These news stories feature people from all walks of life—celebrities, mothers, that nice kid from down the block. And odds are, you know someone who has been personally impacted by this crisis. Opioid addiction has been declared an official public health emergency in the United States, with more than 115 people dying from a related overdose every single day.1

What may be most shocking is that you’re probably not surprised by this fact at all.

As a financial advisor, you have a unique position in your clients’ lives. Because of your proximity to their finances, you may be one of the first people to recognize that clients or their families are struggling with opioid addiction. You may be one of the first lines of defense, and if you are properly informed, educated, and trained, you may be able to help them.

 

Why you should care

The phrase “opioid crisis” is ubiquitous now, but the epidemic began in the late 1990s, when healthcare providers began frequently prescribing opioid-based painkillers, believing they were not addictive.1 But because these medications are, in fact, potentially addictive, misuse has increased ever since, snowballing to the current crisis level.

It’s easy at times to intellectualize it and separate the headline words from the real human impact. But two million Americans from the Eastern Seaboard to the West Coast and every inch in between are currently addicted to opioid drugs.2

Of those two million, how many have financial advisors themselves? Or parents who have an advisor? Siblings? Spouses? Children? If you think this doesn’t impact someone you know, think again.

 

From bad to worse

In some cases, addiction to prescription painkillers can lead to heroin abuse. Heroin is a lower-cost way to achieve a similar high, and it’s often more easily available. As many as 29% of patients who take prescribed painkillers misuse them, and about 80% of people who use heroin abused opioid medications first.3

High demand for heroin then spawned fentanyl, a synthetic opioid, which accounted for a sharp increase in opioid-related deaths in 2017, despite the decrease in prescriptions for painkillers.4 It’s estimated that more than 72,000 people (you read that right—an entire football stadium full of people) died from drug overdose in 2017 alone. Of this population, about 30,000 died specifically from fentanyl and synthetic opioid overdoses.4

 

Drug overdose deaths in the United States

Sources: Center for Disease Control and Protection and National Institute on Drug Abuse. Most recent data available.

 

How financial advisors can help

An informed advisor can potentially spot red flags, safeguard clients’ resources, and, when relevant, help them financially prepare for treatment costs. And yet, more than 80% of advisors have had no training, formal or informal, on handling clients’ or their families’ opioid-addiction situations.5

Here are five ways you can help clients who are struggling with their own, or their families’, opioid addiction:

1. Be non-judgmental

The first step for any financial advisor who aspires to help clients facing opioid addiction personally or via a family member is to understand that addiction is a disease, not a moral failure.

Opioid use disorder is a bona fide mental health condition, as identified by the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders. Dependency can begin in as little as three days of first use.6

So even though opioid prescriptions are often legal and intended for a good purpose, it’s not difficult to get hooked. It can happen to patients of any age, gender, race, or socioeconomic background. In fact, users hailing from high-income households are generally able to support (and hide) the habit longer than those from lower-income backgrounds.

Exercise equal empathy in dealing clients who may be struggling with addiction, as well as those who may be enabling children or spouses. Pointing fingers of blame benefits no one.

If you really want to help your clients, the first step is treating those facing addiction with the same compassion you would treat clients impacted by any other critical illnesses.

 

2. Gather a pool of resources

You can’t serve as the sole resource for your clients’ overall financial wellbeing when facing this massive challenge. Your proximity to your clients’ finances affords you a vantage point to spot potential foul play early on, but you can’t go it alone.

Research nearby centers for addiction counseling, detox services, and rehabilitation. Create relationships with these places so that you can best serve your clients. 

The same tells you have already learned to identify in your anti-money laundering training can apply here, like erratic spending or clients making unexpected or unusual changes to their accounts. Clients tapping into their retirement funds prematurely or taking out suspicious lines of home equity may also indicate potential misuse.

Additionally, sudden changes to family structure, such as a divorce or a child moving back home, may indicate that a client or relation of a client is struggling with addiction. On their own, divorces and moves are commonplace, but if these changes are abrupt and potentially part of a larger pattern of uncharacteristic financial behavior, this may be something of note.

It’s not just your clients who could be abusing their accounts thanks to addiction, either. It could be their children, siblings, spouses, etc. For instance, a son or daughter expressing unprecedented interest in a parents’ finances could be a sign of financial abuse and exploitation.

It’s possible the dollar amounts may be small or spread out. Those suffering from addiction often become adept at disguising their habits.

 

Useful resources and contacts:

  • National, confidential hotline
  • Local rehabilitation and detox services
  • Attorneys
  • Psychiatric professionals
  • Insurance specialists
  • Tax specialists

 

3. Identify red flags

The same tells you have already learned to identify in your anti-money laundering training can apply here, like erratic spending or clients making unexpected or unusual changes to their accounts. Clients tapping into their retirement funds prematurely or taking out suspicious lines of home equity may also indicate potential misuse.

Additionally, sudden changes to family structure, such as a divorce or a child moving back home, may indicate that a client or relation of a client is struggling with addiction. On their own, divorces and moves are commonplace, but if these changes are abrupt and potentially part of a larger pattern of uncharacteristic financial behavior, this may be something of note.

It’s not just your clients who could be abusing their accounts thanks to addiction, either. It could also be their children, siblings, spouses, etc. For instance, a son or daughter expressing unprecedented interest in a parents’ finances could be a sign of financial abuse and exploitation.

It’s possible the dollar amounts may be small or spread out. Those suffering from addiction often become adept at disguising their habits.

 

4. Initiate the conversation

Bringing up potential misuse of a clients’ funds isn’t going to be a fun conversation, but it’s an important one, which must be handled with care.

If you suspect a client is using their assets to fuel an opioid addiction, it’s critical to be sensitive. Avoid accusatory or judgmental phrases, and try not to use “you” too heavily. Focus on yourself (e.g., “I am concerned,” “I notice,” “I can see”). Be kind and supportive, but clear.

The same support and judgment-free attitude is required when confronting clients about potential exploitation by children or relatives. Parents may be enabling their children’s habits, perhaps unknowingly, but as an advisor, it is your responsibility to safeguard the assets they have entrusted to you.

Educate your clients on the available legal, tax, and rehabilitation services you’ve researched. If you’ve vetted these professionals and have a trusting relationship with your clients, they’re more likely to be receptive to your recommendations.

No matter how you proceed, make sure your clients realize how much you value your relationship and how much you care.

 

5. Create a plan

If your client is receptive to your open, honest, supportive conversation, the next step is to formulate a game plan. Discuss which options might best fit your clients’ needs and help them create a financial plan for recovery.

If clients are actively funding private rehabilitation, for example, their needs for liquidity may be high. Treating addiction can be an expensive ordeal, especially when you consider that the rate of relapse is high. A secure, long-term financial plan is critical in supporting recovery.

But their financial plan will involve more than just planning for treatment expenses. It is also beneficial to have strong relationships with attorneys, psychiatric professionals, and insurance and tax specialists. The implications of addiction are expensive and far reaching. You may need to leverage your legal contacts to help define clients’ boundaries with their own finances, preventing excessive spending, or creating a distribution system, like a trust.7

It is important to make sure clients are aware of how much insurance, including Medicaid, if relevant, will support recovery. Insurance companies do not generally regard addiction as a chronic disease and usually offer limited support. This makes the role of the financial advisor that much more important.

If you suspect a client’s children are exploiting their parents, particularly if those clients are elderly, it may also be your fiduciary duty to report suspected abuse. You will need to take some steps in your client’s accounts to make sure they are properly authorized and protected. 

The bottom line is you need to help your clients create a plan that is conducive to recovery, but does not enable addiction.

 

Addiction is a highly sensitive topic. Those who suffer from opioid use disorder are likely to deny it and to go to great lengths to hide their addiction. If clients’ children or loved ones are suffering, they may be turning a blind eye, or ashamed to admit the truth. The best way for an advisor to confront any potential defensiveness is to avoid judgment, connect clients with the appropriate resources, and help create a financial plan for clients, without overstepping personal boundaries.

It’s a fine line to walk, and it won’t be easy, but advisors who put in the time to become trusted resources can help their clients on a much deeper level. The opioid epidemic can impact absolutely anyone, regardless of race, education, or socioeconomic status, and the financial strain it places on families is dramatic.

But if you can help clients navigate this exceedingly difficult part of their lives, taking away at least some of the heavy burden, not only will you gain their trust and loyalty, but also, you can sleep more soundly knowing that you made a difference.

 

For more advice on how to handle these difficult conversations, you can call a confidential hotline (1.800.622.HELP) for information about addiction and treatment resources. You can also recommend this hotline to clients. It is national, 24 hour, and staffed by qualified professionals. 



Drugabuse.gov, 3/2018

USA Today, “The Opioid Crisis Hits Home. Mine.” 9/2018

Drugabuse.gov, 3/2018

Drugabuse.gov, 8/2018

5  Investment News, “Law & Ethics,” 8/5/17. Most recent data available.

Pennsylvania Department of Banking and Securities, “Opioid Epidemic: Its Impact on Investment Advisers, their Clients, and Firms,” 2017. Most recent data available.

7 FA Magazine, “The Opioid Crisis: How Advisors Can Keep Clients On Track,” 1/29/18

 

The material is provided for educational purposes only.

 

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