When clients lose their jobs, this can be a traumatic experience for them. They abruptly lose their income and must scurry to find employment — not to mention the emotional stress of facing an uncertain future.
As a financial advisor, you can play a role in helping a suddenly unemployed client get through this difficult period by offering financial advice. You can go much further, however, if your professional network includes career counsellors, who are likely to be more adept at helping on the emotional front and in providing advice on finding another job.
“[A client] working with both a financial advisor and a career counsellor is really two sides of the same coin,” says Pat Dunwoody, general manager of the Toronto-based Canadian ETF Association, who has used career transition consulting service Verity International to help her find a position. “Getting your head together on both the financial and emotional sides of the equation can be key when people find themselves suddenly out of work.”
Making sure a client is physically and emotionally healthy following a job loss is Step 1 for career coach Barbara Symmons in Toronto, who has both helped the clients of financial advisors deal with job loss and referred her career-counselling clients to financial advisors. Many people, she says, go through stages of loss and acceptance upon losing a job, in much the same way as people experience the loss of a loved one. It is a process that cannot be rushed. “You’re really running a marathon,” Symmons says. “It’s not a sprint anymore.”
Some people use the loss of a job as an opportunity, Symmons says, to rejig their careers. A conversation with a career counsellor can help your client reassess his or her interests, skills, personality and values — on issues such as the importance of money, family time and working independently.
In the end, it’s about “teaching job-search skills for life,” says Rose Minichiello, director of client services with career counselling service Optimum Talent in Toronto.
Minichiello, whose company also can provide financial planning advice, acknowledges that even before a client updates his or her resumé and receives networking tips, budgeting is of primary concern; finding a new position or changing careers can take months.
“If the finances are there, people can pursue an adequate job search,” says Minichiello. “What happens if the finances aren’t there is that people tend to gravitate to the first job that comes along and they won’t be happy in that job.”
Blake Griffith, a certified financial planner with Sun Life Financial (Canada) Inc. in Calgary, agrees that the emotional and financial sides of a job loss go hand in hand. He cites a client who, upon finding himself suddenly without work, took his family on a round-the-world trip for a year. “When you’re in a state of shock,” Griffith says, “you don’t always think logically. [Advisors should counsel their clients to] be as conservative as possible and think things through.”
It may be difficult for a client who has lost a job to reduce debt, but debt is a major problem for many clients. Household debt as a proportion of annual disposable income in Canada hit a record 152.98% in the third quarter of last year. Further, per-capita net worth is shrinking. Advisors should be recommending that their clients avoid splurging on items they can’t afford.
Some advisors believe a rainy-day plan should be one of the first strategies you arrange with a new client. But, Griffith says, that’s not always the case: “Planning for the unexpected is not usually on the top of most advisors’ minds, because you don’t know what to plan for. In my practice, I have found that that’s being left out — having that rainy-day fund in place. It doesn’t necessarily have a stated purpose; but the purpose is, in fact, the unexpected.”
A recent RBC Canadian Consumer Out-look Index study confirms Griffiths’ observation, noting that more than half of the people surveyed don’t have any savings set aside for an emergency.
Griffith suggests a new budgeting plan be created for a client who has lost his or her job. Advise your client to cut out spending on non-essentials and determine what other cash resources may be at hand, such as a spouse’s income or a severance package.
Encourage your suddenly jobless client to check his or her finances with you before signing any separation papers. That step will allow your client to go into any final negotiations armed with essential information, says Evelyn Jacks, president of the Knowledge Bureau in Winnipeg and coauthor of Financial Recovery in a Fragile World. (See story on page B9.)
You can make suggestions to your clients that will help relieve both the financial and the emotional strain, Jacks says, and put needed cash into their pockets.
For example, you might recommend annualizing taxes on the severance package, so your client won’t be hit with a huge tax bill at once. You also could urge your client to investigate whether his or her workplace life and health insurance packages can be converted to a personal plan. Your client will have to pay for this change, but it might be worthwhile. “You would be surprised,” Jacks says, “at the number of people who don’t think they will have to pay for these things once they’re gone from the company.”
You will not have the expertise to provide advice in all areas. That is where your network of professionals comes in.
“At the Knowledge Bureau, we advise an ‘inter-advisory’ approach,” Jacks says. “There are financial advisors who work closely with tax advisors and insurance specialists, legal advisors — a team approach, either within their firm or with external experts. I think that’s one of the situations in which this can really pay off for the client, because it is a multi-disciplinary team that has to get involved.” IE