With the tough economy leading to layoffs and salary reductions, advisors are increasingly being called upon to offer advice on employment issues. Helping your clients with financial preparations concerning employment changes can instil feelings of greater security and peace of mind.

Clients who feel their employment position is insecure may want to set up a line of credit while they are still working to help cover expenses should they find themselves unemployed. It may be wise to top up an emergency cash fund, or switch an investment portfolio to more conservative or liquid holdings in case some securities will need to be cashed in.

Clients may need advice on whether to accept a severance package, and they might ask for a referral to a reputable employment lawyer. Or they may need to decide whether to leave their pension plan with the company or transfer accumulated benefits to their own RRSP.

“We may have to revisit the financial plan if a person who was making $100,000 is facing a significant income reduction,” says Bill Bell, president of Bell Financial Inc. of Aurora, Ont. “The advisor can help clients look at numbers and determine what a lower income actually means, in terms of contributions to a retirement plan. Maybe the client will need to work a few years longer, but the train is still on track. Fear of the unknown can be debilitating, but if we shed light on the areas in which people are most frightened and devise realistic solutions for achieving goals, the client will feel better about the future.”

Clients are often offered a financial package if they lose their job, says Ted Rechtshaffen, president of TriDelta Financial Partners Inc. in Toronto. You can play an important role in helping to determine both whether your client can retire today and the future growth potential of a settlement. There could also be tax advantages in spreading a severance package over a two-year period.

“There are times in a client’s life associated with significant stress, and job loss is one of them,” Rechtshaffen says. “If the advisor is there for the client during a traumatic time, in terms of financial planning and otherwise, it is greatly appreciated and builds loyalty. It separates the advisors who add real value from those who simply give the client whatever the market gives them.”

RBC Wealth Management Inc. also provides counselling on job transition issues, and has assembled a kit to take employees through the process. It’s all part of the firm’s program to help clients with complex life events and offer services beyond financial products.

“Advisors need to be more to their clients than ever before,” says Tony Maiorino, vice president of high net-worth strategy and services. “Clients are looking for more robust solutions to help them grow and manage their wealth. It’s not just about how much money they make in their portfolios, although that’s a key piece. It’s also about how much they can legitimately save in taxes, or whether they could benefit by a family trust, spousal loan strategy or insurance solution. Our clients are counting on us to make available the appropriate expertise and solutions to help them through important life transitions.”

— JADE HEMEON