Helping clients make decisions in tumultuous times

For many clients, market volatility has taken a backseat to other concerns as pandemic-induced lifestyle changes resulted in a greater focus on health and relationships, meaningful work or living spaces in need of upgrades.

“We’re looking for ways to take control back in our lives, and to make up for that which we can’t control — which is the pandemic,” said Andrea Andersen, a financial advisor with Edward Jones in Calgary.

Clients are “re-prioritizing” during the pandemic, said portfolio manager and investment advisor Michelle Vickers of Hayes Vickers Private Wealth, RBC Dominion Securities, in Hamilton, Ont.

Health has been a big consideration, she said. Given the Covid-19 impact on seniors in long-term care, some clients are worried about the costs of aging at home for themselves or their parents.

Clients have also renovated homes, accelerated or delayed their retirements, and sold U.S. vacation properties in favour of buying in Canada, Vickers said.

Andersen said job changes (the #GreatReshuffle) have been common in recent months. Also, as a financial divorce specialist, she’s had “a little bit of an uptick” in client conversations about spousal relationships.

To make life changes successful, clients need to be well prepared, she said.

Andersen explores with clients the emotional, physical (such as stress and energy levels) and financial impacts of a potential change, so that clarity emerges about their reason for the change. To uncover these impacts, she asks the client if they’re running from, or to, something.

“Are you making this change because you’re really upset with where your life is right now?” Andersen said. “Or are you excited about […] something new, and is that new thing going to make your life better?”

Having that conversation helps the client identify the change’s risks and rewards, which in turn gives the client a greater sense of control, she said. The conversation also helps the client identify whether preparation is required ahead of making the change.

Natasha Knox, a financial planner and founder of Alaphia Financial Wellness in New Westminster, B.C., regularly serves clients who are considering life changes — and did so even before the pandemic. Her mission, as stated on her website, includes creating “emotional harmony” among a client’s life purpose, finances and relationships. Because of her branding, people who choose to work with her tend to be reassessing such things as career and retirement timing, she said.

For those clients, Knox acts as a coach, helping them organize their thoughts. The process includes refraining from making assumptions and instead probing the client’s answers for clarification. “The client is 100% the expert on their life,” Knox said.

She also asks the client to explain how their desired change will improve their life. Their answer is explored for a couple rounds, with Knox asking how the improvement will subsequently change the client’s life. These deeper insights, accompanied by a quantified range of financial outcomes, help the client confidently make a decision, she said.

Financially, clients need stress-tested financial plans so they can move forward with their decisions, Andersen said; otherwise, a positive change becomes a burden. Some clients may need to consider financial trade-offs, such as less monthly income in retirement, she said, and planning software allows her to work through various scenarios.

For those considering aging at home, advisors can help by showing how much flexibility their portfolios can provide to cover costs, and the decision’s effect on wealth transfer goals, Vickers said. As part of the discussion, she suggested asking the client what they worry about — such as the cost of round-the-clock care at home. “Leaning in to those conversations is where we add a lot of value,” she said. (Also, advisors with the firm have access to an elder-care expert who helps them and their clients navigate care options.)

Further, advisors can include family members in the conversation so that the client’s priorities are understood, she said.

When asked how the pandemic has affected advisors, Andersen said she’s never been more energized at work, despite the challenges.

“Conversations are even more meaningful now,” she said, as clients make life changes and take the time to consider such things as long-term care.

In this new year, she plans to make a change of her own.

“I probably haven’t taken enough time off,” Andersen said. “That’s one thing I’ve committed to in 2022.”