diff --git a/electrum/gui/qt/wizard/wallet.py b/electrum/gui/qt/wizard/wallet.py
index 6d0926b6e..8397b7ba3 100644
--- a/electrum/gui/qt/wizard/wallet.py
+++ b/electrum/gui/qt/wizard/wallet.py
@@ -1275,19 +1275,40 @@ class WCWalletPasswordHardware(WalletWizardComponent):
         self.layout().addLayout(self.playout.layout())
         self.layout().addStretch(1)
 
-        self._valid = True
+        self._hw_password = None  # type: Optional[str]
+        self._valid = False
+
+    def on_ready(self):
+        _name, info = self.wizard_data['hardware_device']
+        device_id = info.device.id_
+        client = self.plugins.device_manager.client_by_id(device_id, scan_now=False)
+        if client is None:
+            self.valid = False
+            self.error = _("Client for hardware device was unpaired.")
+            return
+
+        def retrieve_password_task():
+            try:
+                self._hw_password = client.get_password_for_storage_encryption()
+                self.valid = True
+            except UserFacingException as e:
+                self.error = str(e)
+                self.valid = False
+            finally:
+                self.busy = False
+
+        self.busy = True
+        t = threading.Thread(target=retrieve_password_task, daemon=True)
+        t.start()
 
     def apply(self):
+        if not self.valid:
+            return
         self.wizard_data['encrypt'] = True
         if self.playout.should_encrypt_storage_with_xpub():
             self.wizard_data['xpub_encrypt'] = True
-            _name, _info = self.wizard_data['hardware_device']
-            device_id = _info.device.id_
-            client = self.plugins.device_manager.client_by_id(device_id, scan_now=False)
-            # client.handler = self.plugin.create_handler(self.wizard)
-            # FIXME client can be None if it was recently disconnected.
-            #       also, even if not None, this might raise (e.g. if it disconnected *just now*):
-            self.wizard_data['password'] = client.get_password_for_storage_encryption()
+            assert self._hw_password
+            self.wizard_data['password'] = self._hw_password
         else:
             self.wizard_data['xpub_encrypt'] = False
             self.wizard_data['password'] = self.playout.new_password()