How to help clients cope with inflation

As inflation and interest rates continue to climb, many Canadians are feeling the impact on their financial well-being. 

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Carissa Lucreziano, vice-president with CIBC Financial and Investment Advice, said it’s important in this environment to encourage clients to focus on what they can control. 

“Nobody can control inflation, but we can control how we respond to these economic changes,” she said. 

According to a recent poll from CIBC, Lucreziano said roughly two-thirds of Canadians are concerned about inflation and its impact on their personal financial situation. That concern was even higher among retirees. 

With this in mind, Lucreziano said the onus is on advisors to provide their clients with timely insights, advice and additional resources. To help clients manage their financial situation, she said advisors can also share their insights on the market and its impact on their personal situation, with a focus on “simplifying the noise.”

“Especially during times like these of rising rates, inflationary pressure and concerns of a recession, clients will benefit from your guidance and your expertise, helping them build confidence,” she said. 

According to Lucreziano, there are a few opportunities advisors can consider. 

First, in terms of investments, advisors can check whether or not clients have enough exposure to broad-based Canadian equities. For fixed income, she said to look at the short- to medium-term and assess where high-interest cash funds or GICs can be used within their overall portfolio strategy. 

Next, in terms of wealth, Lucreziano said advisors can remind their clients that old age security (OAS) and CPP payments are inflation adjusted and that they can defer either or both programs for additional inflation protection.

Advisors can also help their clients determine whether or not their workplace pension is inflation protected, as many private sector plans aren’t, she said. 

Advisors can also look at the inflationary impact of clients’ income and expenses. For clients who have high exposure to inflation, Lucreziano suggests maintaining part-time employment to offset higher costs. Even for clients with income properties, she said rent increases could be capped depending on what province they reside in and may not be able to fully offset higher inflation.

Lastly, Lucreziano said if a client is just about to retire, or has recently retired, an advisor can help them review their lifestyle goals and determine whether their financial situation will continue to support those goals. 

“Taking a good look at goals, as well as assessing the budgets associated with those goals, will help clients really see clearly and into the future of their retirement,” she said. 

At the end of the day, Lucreziano said if an advisor can help build clients’ financial confidence and well-being, it will in turn build trust in their relationship.

This article is part of the AdvisorToGo program, powered by CIBC. It was written without input from the sponsor.