Are clients ready for what is next?

How you can help clients be better prepared for the unexpected

By: Susan Silma  July 15, 2020

The Boy Scouts’ motto is “be prepared.” But who among us was truly prepared for everything we have experienced so far in 2020?

Roller coaster markets have been paired with months of alarming news about virus surges and financial hardships. Now we are welcoming the tentative steps to reopen the economy and adjust to the new normal. Most will agree that it is unlikely things will return to the way they were pre-pandemic anytime soon…if ever. The new normal may not be normal at all.

Right now, as an advisor, you have an unprecedented opportunity to demonstrate to clients the true value of your advice. Some clients have had to rethink their priorities because of dramatic income or lifestyle shifts they have experienced because of the pandemic.

Canadians are now acutely aware that they should have been better prepared for an economic interruption such as this. In fact, a recent CIBC survey showed that more than half of respondents (55%) said they need to get a better handle on their finances this year, and 63% said they’ve significantly cut their discretionary spending.

This is an opportunity for you to help clients be better prepared for the next emergency. You can work with them to prepare a plan, identify new goals to focus on and develop new savings and investment habits.

What you can do as an advisor

Reconfirm a client’s existing goals

Life has changed in ways clients never imagined. Their goals could have very easily changed as well. Emergency preparedness may have moved to the top of their list. Perhaps installing that new swimming pool is not as important anymore as setting up a charitable giving program.

Take this opportunity to re-evaluate clients’ goals and look at lifestyle changes they can make to support their overall wellbeing and any shifted priorities. Help them identify whether they should add new goals to their plan.

Ensure goals are well-defined

While many clients have goals, they may not be as well-defined as they should be. Whether or not your firm has planning software, all clients could benefit from an advisor helping them to better articulate their goals.

For example, while a client may know that they want to send a child to university or college, most do not know exactly how much that costs — either today or years from now, when their child is ready to attend.

You can do a lot to help clients improve their understanding of each of their goals, and, importantly, what they need to do to achieve them. This also presents opportunities for you to cement client relationships.
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Clean hands, clean house

Work with clients to ensure that their financial house is in order. Understand how the pandemic affected them financially. Perhaps they want to increase the amount of money they set aside to invest. Ensure their insurance needs are being met and that they consulted the appropriate professionals to have an up-to-date will and power of attorney. If they are carrying a large mortgage, help them ascertain how prepared they are to manage their debt when interest rates go up.

The CIBC survey also found that Canadians who do not need to borrow money due to a loss of income are avoiding new debt. Help clients be as vigilant about their finances as they have been about washing their hands.

Set aside emergency funds

In the pre-COVID-19 era, Canadian consumers had racked up a record amount of debt. No one, with a few exceptions such as Bill Gates, expected a pandemic of this magnitude. If clients set up emergency funds at all, they may not have been sufficient.

Encourage clients to create or revisit whether they have a sufficiently comfortable cushion to allow them to weather any future unexpected life events.

Include additional savings

The silver lining for many Canadians who were able to shift to working from home has been the ability to save money during the pandemic.

A recent survey by saving app Quber found that 65% of survey participants have increased their mindfulness of spending, and many have been tucking away money they normally would have spent. Ensure this new money is properly considered as part of a client’s overall plan.

Do not lose sight of the long term

During any crisis, the primary focus is on coping with the immediate situation. But this crisis will be resolved eventually, and the business of daily life will carry on, so it is important to help clients look ahead as well.

As we are more than halfway through the year, it is not too soon to be proactive and start thinking about end-of-year deadlines, such as income taxes, charitable donations, and contributions to registered savings plans. Help clients be well-positioned so that they will be ready to pivot, if necessary, when the time comes.