From in­sur­ance to cur­ren­cies, you can pro­vide valu­able ad­vice be­fore your clients head off on va­ca­tion.

A lit­tle ad­vice for your clients be­fore they take off for va­ca­tion — on is­sues such as in­sur­ance, cur­ren­cies and cy­ber­se­cu­rity — can pre­vent se­ri­ous prob­lems down the road

Investment Executive - - FRONT PAGE - IL­LUS­TRA­TION BY ALMOOND/123RF

to­day, your role as a fi­nan­cial ad­vi­sor ex­tends well be­yond of­fer­ing in­vest­ment ad­vice. Your ac­tiv­i­ties can in­clude or­ga­niz­ing a fam­ily-friendly client event or mod­er­at­ing a meet­ing in­volv­ing par­ents and their “boomerang” off­spring. So, when your clients are plan­ning a va­ca­tion, they may turn to you for ad­vice on is­sues such as bud­get­ing, cur­ren­cies and in­sur­ance.

“A lot of ad­vi­sors are hes­i­tant to ask clients about their per­sonal lives,” says Noel D’Souza, cer­ti­fied fi­nan­cial plan­ner (CFP) with Money Coaches Canada Inc. in Toronto. “But an ad­vi­sor’s role is help­ing and guid­ing clients to live the lives they want. And part of that in­cludes their leisure plans.”

Although most dis­cus­sions you have with your clients may cen­tre on re­tire­ment goals and in­vest­ments, you also could con­sider how you can help your clients man­age short-term goals and ex­penses. And, as many of your clients head

into re­tire­ment, you can ex­pect ques­tions from some clients about how they can pay for a multi-city trip or a lengthy stay in a for­eign des­ti­na­tion.

Those con­ver­sa­tions, D’Souza says, may come up ca­su­ally dur­ing client meet­ings and pro­vide an open­ing to strengthen your client re­la­tion­ships.

be­gin­ning the va­ca­tion con­ver­sa­tion

Rou­tine dis­cus­sions about your clients’ plans for the year ahead can present an op­por­tu­nity for you to weigh in. If, for ex­am­ple, a client wants to go all out and take an ex­trav­a­gant Euro­pean tour that will cost $20,000, D’Souza says, you could try to gather some de­tails about the va­ca­tion, in­clud­ing its du­ra­tion, the tim­ing and how the client plans to fi­nance it. Even if your client men­tions a less costly trip, you can ini­ti­ate a dis­cus­sion about how such an ex­pense could re­late to that client’s fi­nan­cial goals.

“Some [clients] may have a sense of what they want, but haven’t fully thought about what they’re go­ing to spend and how it’s go­ing to be paid for,” D’Souza says. “Hav­ing that kind of con­ver­sa­tion is im­por­tant to un­der­stand what the client’s mind­set is.”

You may even be called upon to help your clients de­ter­mine whether they can af­ford a trip and whether there will be hid­den costs. Travel can be in­fin­itely ex­pen­sive, D’Souza says: “It can be painful for your clients to end up with a ‘debt hang­over’ if they haven’t pre­pared for it in ad­vance.”

If clients are tight on cash and have to dig into their sav­ings to cover the costs, thus de­rail­ing other im­me­di­ate goals, of­fer to work with those clients to come up with a plan. For ex­am­ple, you could sug­gest putting their sav­ings in an ap­pro­pri­ate in­vest­ment ve­hi­cle, D’Souza sug­gests, or iden­tify which in­vest­ments to sell. When clients have to shuf­fle their in­vest­ments and make tweaks to their goals to re­flect an­tic­i­pated ex­penses, you may have to re­visit their fi­nan­cial plan.

A desire to travel is, for many clients, a strong mo­ti­va­tion to save, ac­cord­ing to Pa­trick Fitzger­ald, fi­nan­cial ad­vi­sor and CFP with Sun Life Fi­nan­cial (Canada) Inc. in Toronto.

“It’s some­thing we al­ways dis­cuss when look­ing at an over­all fi­nan­cial plan,” he says. “We want to make sure clients have [travel] in their bud­get or cash flow.”

Michael Sil­icz, an in­vest­ment ad­vi­sor in the wealth-man­age­ment divi­sion of Na­tional Bank Fi­nan­cial Ltd. in Win­nipeg, works with sev­eral “snow­bird” clients who fre­quently go away for months at a time. Sil­icz some­times of­fers to ar­range to have in­come earned from these clients’ ETF or bond hold­ings routed au­to­mat­i­cally into their bank ac­counts dur­ing their ab­sence. That way, clients don’t have to sell off their in­vest­ments to gen­er­ate cash.

And this strat­egy saves them the trou­ble of fig­ur­ing out how to free up funds. cur­rency ex­change Sil­icz notes that clients should be re­minded that most credit cards, when used to make a pur­chase in a for­eign cur­rency, charge a small spread for the con­ver­sion.

Clients who spend a sig­nif­i­cant amount of time abroad, par­tic­u­larly in the U.S., should con­sider get­ting a U.S.-dol­lar (US$) credit card and open­ing a US$ bank ac­count to min­i­mize those fees. in­sur­ance Of all the ex­penses that your clients ex­pect to rack up while on va­ca­tion — from flights and ho­tels to sou­venirs and mu­seum passes — the need for travel in­sur­ance of­ten is over­looked.

And as straight­for­ward as some in­sur­ance plans may seem, your clients should be ad­vised to in­ves­ti­gate the terms of their cov­er­age and check to see whether an up­grade is needed, D’Souza says.

Eric Fournier, travel in­sur­ance ad­vi­sor at Des­jardins Fi­nan­cial Se­cu­rity Life As­sur­ance Co. in Que­bec City, says clients should con­sult their in­sur­ance provider about their plan’s lim­its.

“Call first be­fore in­cur­ring the ex­pense for [re­plac­ing lost] lug­gage or for med­i­cal costs,” D’Souza says.

There may be re­stric­tions on how long a client must wait be­fore buy­ing new clothes, for ex­am­ple. Or there may be ex­emp­tions for pre-ex­ist­ing med­i­cal con­di­tions.

If your clients plan to be away for an ex­tended pe­riod, D’Souza says, you could ad­vise them to look into their home in­sur­ance as well. He sug­gests your clients ask some­one to check on their home reg­u­larly. If the home is left unat­tended for a cer­tain length of time, a claim for dam­age in­curred as a re­sult of a gas leak or a burst wa­ter pipe could be de­nied or limited.

Although Fitzger­ald doesn’t pro­vide travel i nsurance, he fre­quently refers his clients to other ad­vi­sors who do, ad­vi­sors with whom he has de­vel­oped re­la­tion­ships.

“Our view is that we want to make sure we’re the fi­nan­cial quar­ter­back,” Fitzger­ald says. “We’ll point clients to­ward a trusted re­fer­ral, so they can get the ap­pro­pri­ate ad­vice and ser­vice they need.” cy­ber­se­cu­rity Warn your clients of cy­ber­se­cu­rity risks while abroad, and avoid mak­ing fi­nan­cial transactions with them over the In­ter­net.

Ex­chang­ing emails with clients re­gard­ing fi­nan­cial mat­ters while they are trav­el­ling could com­pro­mise the se­cu­rity of your clients’ fi­nances. A client might log into an un­se­cured Wi-Fi net­work or use a public com­puter, thus un­wit­tingly leav­ing in­for­ma­tion about their ac­counts vul­ner­a­ble to hack­ers.

Sil­icz once re­ceived a sus­pi­cious email from a client who was out of town. The mes­sage was in the same font and car­ried the sig­na­ture usu­ally as­so­ci­ated with the client’s ac­count, but it was rid­dled with spell­ing mis­takes and other ty­po­graph­i­cal er­rors, which raised flags for Sil­icz. More im­por­tant, the mes­sage con­tained an odd re­quest: to trans­fer a cer­tain amount of money to an un­known ac­count in an­other prov­ince.

In­stead of re­spond­ing, Sil­icz no­ti­fied his firm’s com­pli­ance depart­ment and tried to reach his client by tele­phone.

“Given the na­ture of the re­quest and the fact that the client wasn’t re­spond­ing to our phone calls, we knew some­thing was up,” Sil­icz says.

Be­fore pro­ceed­ing with any re­quest to move money, Sil­icz says, en­sure that your clients have signed off on the trans­ac­tion or dis­cussed those plans in per­son. Although Sil­icz’s team was able to trace the source of the breach, he sus­pects that the client had used a weak email pass­word.

To avoid such breaches, Sil­icz rec­om­mends clients use a pass­word-man­ager ap­pli­ca­tion (such as Zoho or Dash­lane), which aids users in keep­ing track of all their pass­words, vary­ing the com­plex­ity of each one without the user hav­ing to worry about re­mem­ber­ing them.

For an ex­tra layer of se­cu­rity, ac­ti­vat­ing a two-fac­tor au­then­ti­ca­tion fea­ture for emails re­duces ex­po­sure to hacks. Any time the user logs into an un­fa­mil­iar de­vice, a se­cu­rity code is sent to a de­vice as­so­ci­ated with that ac­count, such as a smart­phone, and that code then is re­quired to un­lock the ac­count. es­tate plan­ning Pre­par­ing for a ma­jor trip can trig­ger a con­ver­sa­tion with your client about his or her es­tate.

Although few peo­ple die while on va­ca­tion, D’Souza says, travel may in­spire thoughts of mor­tal­ity among some clients: “[An im­pend­ing va­ca­tion] is a use­ful op­por­tu­nity for an ad­vi­sor to make sure that the client’s es­tate plan is prop­erly set up in case he or she be­comes in­ca­pac­i­tated or passes away.”

If your client al­ready has an es­tate plan in place, D’Souza says, ask if it’s up to date and sug­gest that he or she touch base with his or her ap­pointed ex­ecu­tor or next of kin to in­form that per­son where all the doc­u­ments re­lated to the client’s es­tate are stored.

Ex­ecu­tors need to be aware of their re­spon­si­bil­i­ties, Fitzger­ald adds. He tries to raise es­tate is­sues in the early stages of cre­at­ing a fi­nan­cial plan, in an ef­fort to in­stil their im­por­tance among his clients.

Scram­bling to sort out these af­fairs just be­fore your client de­parts for va­ca­tion hardly is ideal. Hav­ing a well-crafted, com­pre­hen­sive fi­nan­cial plan — and an es­tate plan — in place can help pre­pare your clients for un­fore­seen cir­cum­stances, in­clud­ing those en­coun­tered while en­joy­ing a well-de­served va­ca­tion.

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