Scott and Pat talk to advisor Barbara Healy about a terminally ill client whose last wish is to take care of his wife.

The case study presented is intended to illustrate the types of investment advisory services available through Hanson McClain Advisors. The example does not represent specific facts of any individual Hanson McClain Advisors client. Examples are intended to be representations of our client types and services. The case study is in no way meant to be an endorsement for Hanson McClain Advisors as an investment adviser or as a testimonial about our clients’ actual experiences with us as an investment adviser. Case studies do not necessarily represent the experiences of other clients, nor do they indicate future performance. In fact, we do not discuss or detail performance or outcomes because investment results always vary. The investment strategies and services discussed are not appropriate or applicable for every investor and should be considered given a person's investment objectives, financial situation and particular needs.

Read Full Audio Transcript:

Pat: Barbara Healy, thanks for joining us.

Barbara: Oh, pleasure. Thanks, guys, for having me.

Scott: Barbara is a Certified Financial Planner^TM professional, also a Chartered Retirement Planning Counselor (CRPC^®). She's been with Hanson McClain since 2005. She works out of Roseville, in the Northern California office. Barbara, thanks for joining us for real advice.

Pat: So tell us a little bit about your clients; you wanted to talk about a client in a particular situation. And we have about five minutes to talk.

Barbara: You got it. A client of ours brought in some friends who had never worked with an adviser before.

Scott: What do you mean brought them in? Like walked them in literally?

Barbara: Well, set the appointment ahead of time.

Scott: Okay, got it. All right.

Barbara: And so the four of them came in, and we sat down. They'd never worked with an adviser. He's employed, and she didn't receive a paycheck. Here's the unique part of it. They were young. He is 53 with stage four cancer. So you can imagine, a little rough. Their whole concept was, "What do we do?" And his number one theme was, "Will my wife be okay?" So they essentially came in, brought in their file cabinet.

All five of us are sitting around, and they had stacks of paperwork on disability, long-term disability, social security, life insurance, medical insurance, 401(k), their trust, their bank statements, everything laid out. We literally went through each of the papers to make some decisions on what to do with them. You know, what should we do with each of these benefits. And you guys know, we've been doing this a long time. I've been doing this a couple of decades. The recommendations we make at a time like this will affect the surviving spouse for the rest of their life.

Pat: And the living spouse for the rest of their life because they need to be able to feel good about this. That they did their best and that they didn't leave a mess behind. Right?

Barbara: You're getting to the punchline, without a doubt. They basically, I mean, think about the awesome responsibility we have when clients come in with this situation or any other situation. They turn to us in their most dire point of their life for recommendations on what to do.

Scott: And what did you recommend for this couple?

Barbara: Well, fortunately, she knew what her expenses were, so she knew we could work the calculations and make sure she was going to be all right. The first decision was to stay on payroll for him. Some companies, it's better to get off the payroll, right, before one comes out. In this case, it's better for them to stay on.

Pat: Some, it depends on the company.

Scott: And sometimes the company will advise one thing because it's in the company's best interest, not necessarily the employees. I've seen that, too.

Pat: So in this particular situation, it was better for them to stay on payroll?

Barbara: Yes. Second thing is, we paid off the mortgage with one of their life insurance proceeds. They had two policies, we took one of them, paid off the mortgage, so she was debt-free. Then you and I know that they bought...

Pat: Well, they hadn't obviously hadn't been paid out yet, but that was the design of it.

Barbara: Yes.

Pat: Okay.

Barbara: They refinanced or purchased this home recently, so the mortgage was around 30-year fixed, 3 percent. Right? We know that over the long run, investments could, after tax, outperform that. But why take the risk? See, this was just too important to her. She wanted the peace of mind to know that "my investments don't have to work extra hard or take extra risks to be able to make this mortgage payment." So we paid off the mortgage. We set aside sufficient cash for emergencies, you know, a year's worth of expenses, and we ran the calculations and figured out that she can have the financial lifestyle she wanted.

Pat: Without returning to work?

Barbara: Without returning to work.

Pat: And children at home?

Barbara: No, kids are grown. With all that set-aside, she had the flexibility, and she didn't have to worry about the markets. And Pat, you said it before, both of you guys did, at the end of the meeting, I mean, there were tears, as you can imagine. But at the end of the meeting, he just looked at me and said, "Did I take care of my family?" Yeah, it was pretty powerful. I mean, it gives me chills just talking about it. And he did. He did. And to be able to... You know, you guys know this as well as I do, this business is about sure, knowledge, skills, good advice, solid, direct advice, but it's also about compassion and putting yourself in their shoes and say, "What makes the most sense for these folks?" And it was pretty powerful for me.

Pat: That's actually why you're so darn good at this.

Scott: Yeah, I know.

Pat: I'm just listening to her. I'm listening to you thinking this is why you're good at this because you recognize the money stuff comes easy to people that have been in the industry as long as we have, it's how we deliver the advice and the compassion, and actually hearing what their objectives are, not what our objectives are, not what the adviser's objective is or the firm's objectives, it's what the client's objectives are.

Scott: And I have to tell you, that was very prudent and wise for them to come in while he was still ill. I'll never forget a time when it was a recent widow, young with young kids in the house, it was a long battle with cancer, and unfortunately, there was really not enough financial assets for her to be self-sufficient forever. And I was honest with her, and I said, "Look, here's what's realistic for you, you're going to need to get a job in x years," and she didn't like that advice and went and found some other broker who's sold her a story that...

Pat: It's like index annuities.

Scott: I don't know. Well, I'm sure it didn't work out.

Pat: Anyway. Well, thank you, Barbara for being on this show, and we are so glad from the bottom of my heart that you're part of this organization, really.

Scott: Thank you, Barbara.

Barbara: The pleasure's mine.