With many experts predicting a slowdown in the US economy in the near future, many people’s minds are turning to the prospect of a recession. And in addition to these expectations, there may be concerns for those still in the workforce about possible layoffs and having to live without income for an unknown period of time. Such periods can be fraught with anxiety because beyond the “just” fear of losing your livelihood, you will find that you have little control over if or when you will be fired. there is. This uncertainty makes it difficult to prepare for potential layoffs. Because they often have little real knowledge of what to prepare for.
Financial advisors for clients who are worried about being laid off can play a role in alleviating those worries by helping clients regain a sense of control over their future. There are many things to consider when creating conversations, and these considerations can be grouped into two different types of conversations.
First, advisors can help clients understand their current situation and assess their current readiness for layoffs. This involves creating an inventory of the client’s “safety net” (i.e. the asset and liability options available if the client is not employed), listing the required expenses, and using those figures Includes estimating potential layoff periods. keep. Additionally, there are some actions that we believe are best taken before the client loses employee benefits. For example, completing a medical procedure, using FSA funds, or purchasing personal life and/or disability insurance.
Advisors and clients can then develop a “game plan” that will come into play if the client is actually fired. These actions can be ordered from most urgent to least urgent: start with the most pressing concern (setting up a liquidity source, finding new health insurance, cutting expenses, etc.) to the less urgent. Shift things to time-sensitive tasks (such as exercising an employee’s stock). option), and ultimately take advantage of potential tactical planning opportunities (such as making loss conversions to take advantage of low-income years or rolling over assets from undesirable 401(k) plans). .
The point is that while advisors themselves cannot reduce the likelihood of layoffs, they can alleviate some of the stress and anxiety that clients feel when they fear layoffs are coming. A game plan for getting fired is ideally never used because a client is never fired in the first place, but it’s reassuring to have a strategy for when things go wrong. Having a plan already in place to keep your client financially safe should the worst happen will help your client focus on finding the next opportunity.
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