Simon Hoyle writes that when one of Julie Carson’s clients passed away last year, she learned first-hand that there’s more to financial planning than they teach you in school.
Vince Douglas died on September 14, 2008. It was a mere five months from the day he was taken ill to the day he passed away. While the suddenness of Vince’s illness meant many of life’s choices and decisions were taken away from him, the work of Julie Carson meant that Vince’s final days were at least spent free of the stress of wondering how his family would survive financially.
Vince was referred to Carson through a relationship between Carson’s firm, Mentor1 Financial Planning, based in North Sydney, and a real estate investment firm. Vince purchased an investment property, and was referred to Mentor1 for advice on insurance. Carson says both Vince and his wife, Lorraine (not their real names), were underinsured. Between them, they had about $500,000 of life cover – only just enough to cover their existing mortgage, let alone the loan he’d taken out for the investment property. Vince was on a good income – about $165,000 a year.
The investment loan was about $745,000. He had $42,500 in superannuation, and his existing life, total and permanent disability (TPD) and income protection insurance were all held outside his super fund, so he was paying premiums from after-tax income. An analysis of their liabilities and goals led to Vince buying about $1.7 million of life cover, about $450,000 of critical illness cover, and income protection cover of about $15,000 a month. The critical illness and life cover was shifted into Vince’s super fund, while the income protection cover remained outside. Similar life and critical illness cover was purchased by Lorraine.
By May 2007, the Douglases’ insurance was in place. Vince was a fairly typical 33-year-old, who loved sport – especially rugby – and had a young family – four kids, including twin five-year-olds. At the time of underwriting, Vince disclosed several minor injuries – some sustained playing sport and some sustained in a fight in 1986. In 1985 he’d fallen through a window and suffered lacerations to his arm. Otherwise, he had no previous health issues. In late 2007 Lorraine had a health scare when she discovered a lump in her breast. Vince and Lorraine were obviously both worried about Lorraine’s prognosis.
Carson says Vince was “concerned for his kids’ future”. “He was scared of the unknown,” she says. “It was hard not to get emotionally involved – my client was pouring his heart out about a situation he had no control over. “Vince and Lorraine had placed a lot of responsibility and trust in me as their financial adviser. At a time like this, he was comfortable speaking honestly to me about his fears. I was able to help by listening and providing financial peace of mind.” Carson says Lorraine was given a clean bill of health, but the scare gave Carson a trial run, as it were, for a much more serious insurance situation that would arise soon after.
Only three months after Lorraine’s scare, Vince, a sales rep, was away in Queensland, when he collapsed and was rushed to hospital. One of the first phone calls he made was to Carson – a legacy, she believes, of his experience with Lorraine’s health scare. “I think it was because Lorraine was sick three months earlier, and he wanted to give me warning and notice of what was happening,” Carson says. From now on, she’ll suggest other clients do the same, should they think an injury or illness is likely to lead to a claim. After returning to Sydney, Vince had a lump removed from his liver, and was told there was a 10 per cent to 15 per cent chance of it being cancer.
After the operation, he temporarily stopped working, to recover. This gave rise to an income protection claim. His policy had a one-month waiting period, and benefits were paid monthly in arrears. So it was about two months before he received the first payment, and as fate would dictate, it was around about the same time that he received confirmation that the growth on his liver was cancerous. His liver was removed, and he started chemotherapy. In addition to the income protection claim, there was now also a critical illness claim to get underway.
Carson says the paperwork for the income protection claim had already been submitted and processed by this stage, so all that was needed was an updated doctor’s report. Carson had been a qualified planner for about five years, having completed her Diploma of Financial Planning by correspondence while working as a paraplanner. But paraplanning is “completely different” from dealing with clients face-to-face, she says. Vince was Carson’s first client to claim on his life insurance. Dealing with a dying client and with the volume of paperwork and administration needed to make the claims was traumatic but, ultimately, it taught her a lot about how to deal with clients when they are at their most vulnerable.
When Vince first contacted her, Carson was “quite concerned, but it didn’t seem [at first] like it was going to be life-threatening, just a bit of paperwork. But three months after that, it was confirmed that Vince had cancer.” As Vince’s illness progressed, and the claims process ground on, the situation became fraught. “The paperwork was the problem,” Carson says. “It was more the way the client didn’t fill it out properly. It would come back incomplete, so I would have to go back to him. Obviously, that was stressful: he would ring up and sometimes he’d be angry, because he had to answer another question, and he thought he had done that.”
If Carson knew then what she knows now, she says she would “go and visit them straight away, and have a chat”. “I’d let them know what to expect,” she says. “And I’d just reassure them that there are people available to talk to, to speed the [claims] process up. And that I am here to help. “They were hurting, and they had no control over what was happening going forward,” Carson says. “It was an emotional roller-coaster for everyone”.
“I did not know what to say to someone who was facing death. How do you get a client to fill in forms when he’s facing death? “I am not a counsellor; they do not teach you that in financial planning [courses]. “The bit that they do not teach you is that it will be a lot more emotional than you realise. You put aside your own business when you’re processing these claims, obviously. It takes you over.” On July 4, 2008, Vince called Carson. The cancer had spread through his body, and he knew he had between four and 12 weeks to live. Carson says Vince thanked her during the phone call for all the help she had provided, and said that the financial security that came from her work on their insurance – setting it up and handling the claims – had taken away any financial stress.
He did not have to worry about the family losing their home. The kids could go to school, and Lorraine would not have to return to work. “He personally asked me to look after Lorraine and the boys,” Carson says. “We spoke for about 10 minutes. It was the last time I spoke to him.” Carson says the experience was stressful, and although she was pleased to have been able to help the family, “it didn’t make me feel great”. She also learned that it’s critical for an adviser to have a good support network to help them through experiences such as this. “My boss, Liam Diggan, was a huge source of support in assisting me to deal with the claims,” Carson says. “Liam understood from experience the impact a claim can have on your personal emotions.”
Carson says Diggan made allowances at work to accommodate what she was going through, and helped her prepare for the difficult conversations she had to have with both Vince and Lorraine. The experience means that next time a client makes a claim for a serious illness or injury, Carson will be better prepared, will know what to expect and can help guide the client and his or her family through the process. As a postscript, a Douglas family friend – who is also a financial planner – called Carson to say he believed Vince lived longer than would have been the case had he not had such strong financial peace of mind. This adviser, who had nothing to do with setting up the Douglases’ protection, now wants to advise Lorraine on how to invest the proceeds from the life insurance claim. Carson has not yet been in direct contact with Lorraine about his matter
