But she isn't talking about the U.S. financial system. She's counseling clients on how best to help family members who are struggling financially.

Similar discussions are taking place in financial advisers' offices around the country as companies cut jobs, home prices fall and investment portfolios flounder. Clients are wondering how to help siblings, aging parents and adult children - without compromising their own financial future or straining relationships.

"The first thing financial advisers want to do is help the client understand their own foundational principles," says Krysty, chief executive of wealth management firm Laird Norton Tyee in Seattle. "Most people want to give a hand up rather than a handout."

Education, health and social capital are three key areas where clients can provide meaningful assistance - but writing a check to a family member is rarely the best solution, Krysty says.

In some cases, paying directly for day care, private school, health insurance or long-term care might make more sense. Direct payments can seem less like charity, and expenses paid directly to an educational or medical institution for someone else's benefit aren't subject to federal gift tax. "There's a face-saving mechanism here," Krysty says. "A lot of this is about what you can do to help someone preserve their dignity and respect."

One of Krysty's clients paid for job retraining for a relative in a shrinking industry. The client also volunteered to act as a mentor and meet with this family member once a month to discuss the job search.

Financial advisers caution against making loans to family members in need, as they are rarely repaid and can damage relationships. Making gifts with no expectation of being repaid is a more straightforward strategy. Loans to relatives for estate planning purposes continue to make sense, however.

(A separate Practice Management story, also published Wednesday, addresses lending money to children.)

John Fichera and John Hoidas, financial advisers with Brewer Financial Services in Chicago, suggest parents who plan to make gifts or leave money to their adult children in the future advance the money now if a child needs help.

Karen Schaeffer, of Schaeffer Financial in Rockville, Md., offers to speak briefly with family members of clients. She asks about the relative's personal balance sheet, monthly cash flow and gives them the "once-over lightly" about their job, likelihood of finding a job if they're unemployed, and other financial demands.

She advises against paying off the credit card of someone who's been living beyond his means, as that won't change his behavior.

Instead, she helps families consider alternatives, which could include an adult child moving back home, an elderly parent moving to a less expensive or safer home or researching social service programs.

Diahann Lassus, of Lassus Wherley, which has offices in New Providence, N.J., and Bonita Springs, Fla., has met with the recently unemployed adult children of clients to revise their resumes and discuss job offers. She has also circulated resumes to her network of contacts.

Determining how much a client can afford to give away is a critical issue. Lassus warns clients against overextending themselves.

"Does your child have room [in their home] for you?" she asks. "If you exhaust your funds helping your kids, they're going to have to help you sooner or later."

(Kristen McNamara writes Practice Management, a column that looks at ways financial advisers can build and improve their business. She can be reached at 201-938-5392 or by email at kristen.mcnamara@dowjones.com.)

For more information visit http://brewerinvestmentgroup.com or call 312-896-3930.

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