Grant Rawdin spends a lot of time helping his clients cope with children with disabilities, typically the type that do not include severe physical or mental handicaps. He estimates that about 10% of his clients have an adult child with an atypical issue from substance abuse to autism that presents a lifetime of financial planning challenges.
When you ask a client whether they have any special-needs issues, theyre likely to say no. But when you get into talking about each of their children, there is a good chance that one of them has a situation that they need to make special provisions for, he says. Its a recurring theme that can take up to 10% to 20% of our meeting time or more.
Rawdin, founder of Wescott Financial Advisory Group, says his Philadelphia-based financial planning firm has developed a series of resources that can help from providing treatment referrals to setting up ironclad estate planning documents.
Its that detailed, customized service, he says, that has helped his firm grow to almost $2.1 billion in AUM as per an ADV form filed in March; Rawdin says assets have since climbed to $2.3 billion.
ADDICTION WOES
The problems presented by a dysfunctional child can be lifelong and even transcend death.
Alcohol and substance abuse problems are the most common and most difficult, Rawdin says. Addiction often leaves the user incapable of self-support or supporting a family. That forces family patriarchs to grapple with murky and wrenching choices, such as when and how to pull financial aid from the substance abuser and how to potentially support grandchildren without enabling the parent.
Estate planning also becomes a challenge. Even if that child is currently sober, bequeathing cash can prove devastating, Rawdin says. Setting up a trust and naming a more responsible sibling to dole out cash can be equally destructive.
The whole conversation about who the trustee will be is a minefield, Rawdin says. You cannot put a sibling in charge of another sibling that has a drug or alcohol problem. The child who is in charge is going to be personally attacked. By controlling the purse strings, they will be viewed as controlling the abusers life.
Finding the right professional trustee is imperative. But so is setting up an ironclad trust that cant be tapped, borrowed against or used as collateral for a loan.
If the abuser has children, the trust may also need to provide financial support for the education or care of grandchildren, without opening the purse strings to the substance-abusing parent. These are extremely vexing situations, Rawdin says.
Naturally, he wishes his clients didnt have to deal with such painful problems, but solving that type of complicated puzzle is the type of planning he likes the best.
We like big, thoughtful, difficult, smart projects where you can really dig in, he says. With something like this, your client is going to come in feeling helpless. Its not easy, but you keep working on it, asking questions and putting things together. If youre able to solve a problem thats been pulling a family apart ... well, that feels really good.
EMPATHY IS IMPORTANT
Feeling a clients joy and pain is actually a key part of Rawdins practice. We want our planners to feel unsettled when their clients are unsettled, he says. Empathy is an extremely important quality to us.
It may not be the most common business plan, but it seems to be working. Formed as a one-man operation in 1987, Rawdins Wescott now employs 35 people, including 17 planners many of whom have backgrounds in law, accounting or insurance and operates five offices in three states.
The services the firm provides to clients are wide ranging, from traditional asset management and personal financial planning to business planning and legal consulting.
For example, one former CEO came to Wescott complaining that he should have received a large parting payment from his company, but his board claimed the company didnt meet the necessary targets. The CEO disagreed, so Wescotts accountants dug into the details of the agreement; connected the CEO with a good employment lawyer and facilitated a favorable settlement.
Another client, an entrepreneur, wanted to bring his company public. Wescotts planners brought in several investment bankers to interview; explained how the process worked; and helped the client tap his corporate equity and reinvest it.
While about 20% of the firms clients are business owners, theyre otherwise a disparate group that have little but wealth in common. Wescotts typical client has $2 million in liquid assets and may have several times that amount in illiquid corporate equity.
The firm accepts clients with less in its Entrada program, but takes those smaller accounts strategically, Rawdin says. Even if the clients dont have sufficient liquid assets to manage, they must be on that path.
The entrepreneur that took his business public is one such example, says Rawdin. He didnt have the liquid assets initially, but needed the firms help and certainly met the minimums after his company went public.
These are people who are very much like our other clients, but theyre not as far along, Rawdin says. But theyre going to be very important to the firm in the future.
PERSONALITY TESTING
Developing both clients and planners is key to Wescotts future, Rawdin says. The firm is actively adding young planners and has a program in place to turn them into future leaders. Getting the right hires and training them is such an emphasis, in fact, that the firm hired a Ph.D., who had been running his own Fortune 500 consulting firm, to head organizational and talent development.
Harold Weinstein, who helped develop the employee personality test called Caliper that Wescott uses to screen new hires, is also charged with evaluating potential acquisition candidates. Wescott is in acquisition mode, expecting to use its capital to both hire and acquire, Rawdin says. The key is finding the right people planners who are accomplished, empathetic and collaborative.
Planners work in two-person teams with each client. But theyre also encouraged to seek help from other Wescott specialists, where appropriate.
Wescott doesnt sell insurance products, for example, but big policies are sometimes advisable for entrepreneurs. If a team determines that a client needs a policy, theyd tap the firms internal insurance specialists to determine the right type of policy, the amount of coverage needed and what it should cost all with the goal of making the client an informed buyer.
Likewise, if a client has a legal issue, the clients planning team would tap one of Wescotts many lawyers for advice. They wouldnt take a case to court, but theyd recognize the legal issues and find the right people to resolve them, Rawdin explains.
You have to guide the client in a very literate way, he says. We specialize in having specialists.
Kathy Kristof, a Financial Planning contributing writer in Los Angeles, contributes to Kiplingers and CBS MoneyWatch. Follow her on Twitter at
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