In times of economic uncertainty, sudden job losses can have a significant impact on individuals and their financial well-being. As a financial advisor, it is crucial to proactively support and guide clients who have been laid off to help them navigate through these challenging times and regain control over their financial future.   

There are various ways to approach sudden income loss, but what are some immediate steps financial advisors can take and what would be the top priority in such a situation? Hear from MDRT members to find out how you can assist clients in managing the financial implications of a layoff.  

 1. Ensure they have sufficient savings 

As financial advisors, you recognize the importance of proactively safeguarding clients' financial well-being, which is why it is key to instill a prudent habit of monthly savings in your clients during annual policy reviews. By encouraging clients to build a robust savings reserve, they can fortify themselves against unforeseen hardships, such as periods of unemployment, and avoid the risk of lapsing policies and subsequent loss of crucial coverage. 

One-year MDRT member from Singapore, Tammy Chen, shares that it’s imperative for financial advisors to arrange a meeting with their client at their soonest availability after a lay-off to assess the latter’s current financial situation as it is important to have a full understanding of the client’s liquidity and savings before giving them financial advice. Ideally, clients should have at least six months of their salary saved up as emergency fund. Chen says, “Having an emergency fund is crucial as it acts as a financial buffer during client’s time of unemployment”. 

Four-year MDRT member Gabriel Fok agrees and adds, “Having six-month worth of salary saved up is a step that needs to be taken even before any possible loss of employment”.   

 2. Readjust their finances 

If the client does not have enough in savings to tide them through the next six months, financial advisors can consider recommending a premium holiday where the client is not required to pay premiums and remains covered by an insurance policy or taking a premium loan to ensure that their policies stay in force. Fok’s approach in this situation would be to identify if there are any retrenchment benefits on any of his client’s policies, and then activate them to ensure these policies don’t lapse during their time of unemployment.  

 Thereafter, Fok says budgeting will have to be done once the client has an estimate of how long they might be unemployed. “One should not be living the same lifestyle while they are in between jobs without a stable income,” he shares. Budgeting can be done by identifying core expenses such as rent, groceries, and transport expenses and miscellaneous spendings such as taking a holiday or buying a new car. This way, your client can immediately implement the necessary financial adjustments they need to make to get through the period of unemployment. 

 3. Help them move forward 

As a chapter closes, another opens. It is important to help clients move on from a lay-off and support them in taking the next steps to seek new employment. At this stage, financial advisors can check in on clients regularly to ensure that they are actively searching for new jobs. One way Chen does this is to evaluate potential career opportunities with her clients. This involves keeping an eye out for job listings that are suitable for her client to help them get back on their feet as quickly as possible.   

Another way to assist clients would be to encourage them to tap on SkillsFuture, a national initiative where Singaporeans can enroll in government-sponsored and subsidized courses to ensure their skills are relevant for the current demands in the local job market. This could mean recommending them to upskill for a higher role in their future job or even to prepare them for a potential career switch to a completely different industry. Furthermore, it will keep clients productive and up to date as they continue to look for new opportunities during unemployment. 

The role of a financial advisor goes beyond just planning for a client’s finances. With the right steps taken, financial advisors can help clients prevent excessive monetary loss during a lay-off and potentially shorten the length of unemployment if they go beyond their expected services and serve clients with genuine care and concern. It goes without mention that helping clients through their lowest moments in life will go a long way in achieving client retainment and satisfaction as well.  

Contact: MDRTeditorial@teamlewis.com