We’ve all been there … a major life event strikes and stress quickly sets in.
If we reflect on our experiences during times of change, many things are running through our head, and sometimes we don’t know which direction to go.
Take a moment to think about a stressful time in your life.
Was your decision-making clouded by the stress you were feeling? Would you have made a different choice if you were in a different mindset?
It’s not surprising that thoughts and feelings can push people to follow a different path than the one they would have chosen if they had been more relaxed and calm during the decision-making process.
However, often the stress and anxiety of a situation can cause people to make emotionally charged decisions.
This is why the role of a financial professional is so important.
As financial professionals, we are the guides to help our clients make strategic decisions during these stressful times.
Many Americans are currently experiencing the stress of losing a job.
Since the beginning of the year, headlines have been filled with layoff announcements from large companies across the country.
This can be stressful, but it’s also an opportunity to highlight our value as financial professionals.
What You Offer
One of the ways we can highlight our value is by creating a structure for our clients to help them make decisions for their next financial steps.
This structure can be as simple as creating a discussion checklist with questions to help ensure they keep their financial goals moving forward.
Here are six discussion points.
1. Evaluate any severance packages.
How long will severance income last?
How long will health insurance last?
Are there any employer benefits that will be portable to the client upon separation of service?
2. Review health insurance options.
Will the client retain any health insurance benefits?
Can the client move to their spouse’s health insurance benefits?
Is COBRA the best option?
Are there any options on the Affordable Care Act public health insurance exchange to consider?
3. Talk about next steps for retirement plans—401(k), SIMPLE, SEP, 403(b), or defined contribution plans.
Employer plans will most likely be less expensive from a fee standpoint, but the plan may have limited investment options.
It may be to the client’s benefit to have a wider array of investment options that suit their risk tolerance in an individual retirement account.
Evaluate the client’s risk profile. Investment products with guarantees may be better aligned with the client’s goals and risk tolerance.
4. Discuss the client’s timeline for retiring.
Money in a qualified plan can be accessed as early as age 55 in certain circumstances.
A qualified plan may provide better liquidity options.
Rule 72t can provide some income if the client is looking for more investment options and guarantees.
The Secure Act 2.0 does offer more flexibility with 72t options, and this may be an area to explore with the client.
5. Assess insurance options.
Did the client lose life insurance and disability benefits?
6. Review income and expenses.
- With a life change, there may be a need to realign the client’s income and expenses.
- Has the client created a list of expenses and looked for cost-saving measures?
In addition to these six topics, there are two resources you could consider using to help keep up-to-date on labor market trends in your area.
LinkedIn can be a way to keep current with individuals who are starting or leaving jobs.
This is a great strategy to stay engaged with clients and prospective clients during life events.
WARN Lists
The federal government requires big employers to notify employees of major changes in the workforce.
These notices must be given at least 60 days in advance and in many states are posted online.
Helping clients through tough times
A major life event can be challenging.
As financial professionals, we can help clients navigate these difficult times with a structured approach to help reduce emotional decisions.
It’s an incredibly valuable way to help clients realign their financial goals with their new situation.
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(Image: Adobe Stock)