With one out of 10 people consuming illicit drugs, it is highly likely some of your clients are at least occasionally smoking up, popping pills or getting high one way or another. Even rare drug use has potential for legal, medical and financial complications. Should financial advisors ask their clients about drug consumption? And what — if anything — should an advisor do if they find out a client is abusing substances like marijuana, cocaine, opioids or others?

Just like we can’t command clients to not waste money, it’s also not our place to tell them not to use drugs. In my practice, I don’t specifically ask about illicit drug use, especially early in the relationship. Most people don’t use drugs and even fewer have serious problems with drug use where they might need an intervention. I don’t want to go there unless I see a need to address the situation.

What do I do when I identify an issue? There are a number of ways drug use may come up, and when it does, I grab the opportunity to discuss it.

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I’ve had a couple of clients share that while they are visiting Amsterdam or Colorado, they plan to enjoy some legal marijuana. Since legal recreational marijuana use has little risk, I don’t worry. But if they work for an employer who may test for drug use, I humorously remind them to not let their employer find out. Although recreational marijuana is now legal in eight states and the District of Columbia, it is still illegal on a federal level and employers can hold a failed drug test against workers or job applicants.

Clients most likely will not bring up the fact they are using illegal drugs. In our practice, we ask about health issues early on, but we do not specifically ask about drug use. Instead, chronic substance abuse is revealed through an event such as a hospitalization or arrest, through a discovery process of realizing “something isn’t right” with the client, or through a family member sharing their concern.

If a client is hospitalized for abuse, I immediately reach out to offer help. Advisors can help clients with the plan to get treatment, address cash flow needs, and remind the family to keep up with the costs for future tax deductions. I’ve had this happen two times with clients, and the main concern is how they will pay for treatment not covered by insurance. We helped them come up with cash to pay for the help they needed.

"If a client is hospitalized for abuse, I immediately reach out to offer help."

If I recognize “something isn’t right” with a client, and I’m concerned about drug use, I ask. Authenticity, concern and willingness to have hard conversations create better relationships. Approach the concern with open-ended, non-judgmental questions. My clients know I have a sense of humor, and a phrase I often use is “Everyone has their poop. Is there something going on that I should know about?”

The book “Fierce Conversations” by Susan Scott is a great resource for advisors who want to improve their ability to have hard conversations about tough subjects with clients. I purposefully reread this book every few years to reinforce my communication skills.

I do not go to family members or trusted contacts directly about my concern. Although we have letters in place to contact trusted people in the event of concerns around incapacity, most drug use is not an issue of incapacity. I owe it to clients to be direct and get their input about my concerns, plus it is a breach of confidentiality if I talk to other family members.

If I find out a client is using drugs illegally, which would include marijuana in states where use isn’t legal, I share my concerns about the legal and employment complications that may occur.

Legal issues may occur if the client gets arrested for trying to obtain drugs. I’ve never had a client arrested, but I have a network of attorneys I can reach out to on behalf of clients if this happens. The cash flow needed for their defense may be significant, so we would plan ahead for how to get the cash needed in the most tax efficient way possible.

Addiction is the main medical issue of concern. This often leads the client down the path of health issues and financial ruin. Ideally, a financial advisor will help the client and their family get help early in the process. Helping clients find appropriate treatment facilities, referring family to 12-step programs and support groups like Al-Anon and Nar-Anon, and planning for the finances around their new reality are services clients and their family will value highly.

There is no legal obligation to provide this type of service to clients with addiction issues. But as robo advisors continue to commoditize the typical work of financial planners, helping clients solve problems in their greatest time of need will go a long way toward cementing the relationship. Additionally, helping a client stay physically and mentally healthy will reduce the chance they run out of money and will no longer be good clients.

People with drug problems are often paralyzed by fear, so we do as much as possible to get them where they need. When it is all over, the client and their family are grateful for your help and you’ve ideally kept a good client for life.

Drug use and other lifestyle issues may not be a field where advisors are comfortable, however, knowing how to deal with these issues in advance will prepare you for the day when it happens. Not only may you save a great client relationship, you may also help save your client’s life.

Carolyn McClanahan

Carolyn McClanahan

Carolyn is a CFP and M.D., and is the director of financial planning at Life Planning Partners in Jacksonville, Florida.