When COVID-19 hit, so many Americans were faced with unexpected personal and financial challenges. Business owners, retirees, newlyweds — to name a few — were confronting serious questions regarding their short- and long-term financial goals: Will I be able to retire as planned? What will this mean for my employees? Is this still the right time to purchase a home? 

As all of us work to navigate the pandemic’s financial implications, the advisor-client relationship has become an increasingly critical partnership. And, while every client brings their own challenges and opportunities to the table, there are several pandemic takeaways that transcend personal financial situation for advisors to keep in mind to empower clients in planning for what’s next.

Adaptability Is Key

If there’s anything that 2020 taught each of us, it is the importance of being adaptable to life’s unexpected challenges. However, the “right” way to adapt during this time has undoubtedly looked different for everyone.

For so many, the pandemic shifted previously established financial plans and priorities. Many people went from planning for the future to planning for right now. According to a recent Northwestern Mutual Planning and Progress Study, 20% of Americans say they have revisited their financial plans and made significant adjustments in response to the pandemic.

Given market uncertainty and questions of job security throughout this year, important questions for clients to consider when making adjustments have included:

» What options do I have for quickly accessing cash?

» How can I protect my income during these uncertain times?

» What types of loans and financing am I eligible for?

» Looking ahead, how can I financially prepare for what’s next?

Advice in action: These questions guided a conversation on adaptation with a long-term client of mine, Melvin Gonzalez. The owner of a painting business and a portfolio of rental properties, Melvin lost $110,000 worth of business in two weeks when COVID-19 first hit. He was facing the very real concerns of how to support both his employees and his family.

Our first step was to take a look at his assets, which included enough savings to keep his businesses running for six months and significant cash value in his life insurance to tap for additional funds. These foundational conversations helped to set the tone for making future decisions.

Stay Up To Date And In The Know

Clients often look to advisors for real-time, personalized planning, tools and advice to help them regain control over their financial futures — and this has been especially true during the pandemic.

Especially in the early part of 2020, there was a great deal of consumer anxiety fueled by the uncertainty of the economy, which resulted in an overwhelming amount of recommendations on how to financially prepare. With so much (sometimes conflicting) advice, it has been challenging for clients to stay current with the decisions and programs available for support.

The market fluctuations and governmental measures precipitated by the pandemic have only heightened the importance of staying up to date on the most current information to aid in client decision-making. Even beyond this, it’s crucial to have the ability to interpret this information for clients, delivering it in a tangible way that makes sense. We can be the bridge between the information and the individual, which can make all the difference in the world.

Advice in action: With Melvin, we worked together to apply for and receive funding through the Paycheck Protection Program. I also encouraged him to reach out to his bank and ask about the ability to defer mortgage payments if his renters were unable to pay. With the variety of options available, it was important to sit down, explain and work with him to determine the best next steps for moving forward.

Build On Trust And Teamwork

Beyond the challenges, the pandemic also has served as a reinforcement of many life lessons, including the importance of collaboration — whether at work, home or in our communities. Teamwork has been an essential aspect of moving forward during this time.

Working with clients on their finances — something that touches nearly every aspect of their lives — creates a natural partnership. It’s important to lean into this to continue building a stronger connection. Our business is truly about building relationships and earning trust.

This teamwork mentality is especially crucial during times of uncertainty. Making good financial decisions requires knowledge and thoughtful consideration. However, it’s human nature to make decisions that are often dictated more by emotions than rational thought. As advisors, we can help our clients objectively weigh the risks and rewards of financial decisions for clients, guiding them through the process of determining what makes the most sense for them.

Advice in action: Supporting Melvin throughout his challenges was made more natural by the strong foundation of friendship we’ve built through our partnership over the past five years. During this time, I’ve grown to better understand his personal goals, motivations and dreams for the future. The decisions we made together in response to the pandemic aimed to keep all of these on track.

The past year was a time to start making choices, plan and take control of our financial futures. Although everyone’s experiences during the pandemic have been unique, we’re all in a similar position of asking, what’s next?

As advisors, we are here to guide our clients through these difficult times. By providing them with both a partner and a plan, we will enable their recovery and empower them to make the choices that will help protect their dreams. 

The Forecast: Anxiety With A Chance Of Optimism

84% of U.S. adults aged 18+ expect the COVID-19 pandemic and subsequent economic downturn will have an impact on their ability to achieve long-term financial security. Six in 10 (59%) say that impact will be moderate or high.  

At the same time, confidence in a robust recovery — both personally and for the country — is strong. 

83% of Americans believe they will ultimately achieve long-term
financial security. Among them, 44% say it will be in a year or less
and 32% say between two to five years.

76% are confident the country will return to full employment. Among them, 47% say it will be in a year or less and 39% say between two and five years.

79% are confident the country will return to economic growth. Among them, 47% say it will be in a year or less and 38% say between two and five years.

SOURCE: Northwestern Mutual Planning and Progress Study 2020

Osmar Garcia is a financial advisor with Garcia Wealth Management, an affiliate of Northwestern Mutual, Conway, Ark. Osmar may be contacted at [email protected].