What the pandemic taught us about helping clients navigate shocks

The Covid-19 pandemic has challenged us all in many ways. Those of us who entered the pandemic with a financial plan likely fared better than those without. However, those of us with a plan were not immune to the shocks, and many of us navigated the challenges with the help of frequent contact with our trusted financial planners.

I recently read the Covid-19 special issue of Financial Planning Review, the CFP Board Center for Financial Planning’s peer-reviewed academic journal. Dr. Jonathan Fox and Dr. Suzanne Bartholomae from Iowa State University argue in their article, "Household finances, financial planning, and COVID-19," that larger destabilizing shocks, such as the pandemic, increase stress and undermine feelings of financial security. This is especially true for those most adversely impacted by the pandemic, such as people of color and women.

This important paper raises the question of what financial planners can learn from the Covid-19 pandemic to help their clients better prepare for and respond to the next macroeconomic or client-specific shock.

After reflecting on this article and my conversations with other financial industry leaders, here are three actions to consider:

Advise clients when and where they want. Similar to nearly every industry across the country, financial planners were forced to pivot away from in-person meetings with clients to video or phone meetings when pandemic lockdowns began last March. One year later, these tools are still widely used daily, and they will continue to be used in our society for the foreseeable future.

While the adoption of technology in client communication may be permanent for some, it is important to realize that others still prefer face-to-face interactions. Just as financial planners tailor their advice to their client’s unique situations and goals, they can also tailor their communication approach to each client and be available to meet them where they are and provide advice in the way they prefer to receive it —over Zoom or Teams or across a desk (when it's safe to do so).

Alleviate client anxiety. Part of a financial planner’s role is to address each macroeconomic or client-specific shock and the resulting stress that clients feel. Stress levels soared during the pandemic — 64% of CFP professionals reported that their clients were experiencing high or very high levels of stress. In times of stress, clients may struggle to make decisions. A financial planner can play a role in reducing their clients’ stress by helping them revisit their foundational goals and sort through the major stressors — from health to financial or familial — to help them identify positive choices.

For example, clients may want more resources set aside for emergency funds, have their wills reviewed and go over their retirement plan to see the impact of shocks. Encourage them to avoid making financial decisions based on stress and emotions that could negatively impact them long term.

Counsel, don’t just transact. Fox and Bartholomae share that during the pandemic, some financial planners served more as a counselor than a planner as they helped clients focus on what matters most. That means acting as a surrogate therapist and listening to their clients’ concerns and emotions. It also means moving beyond a technical or transactional focus with clients. A financial planner can help clients look at the shock and determine whether the fundamentals of their plans must be changed entirely or if only slight adjustments will let them weather the current storm.

The Covid-19 pandemic is a unique macroeconomic shock because financial planners were often pressed to help clients navigate not only their finances, but also the health and emotional aspects associated with a prolonged global pandemic. We can hope that the world never experiences another pandemic, but there’s no doubt that unforeseen circumstances will arise in the future that will require financial planners to again wear all those hats to support their clients.

As the world calibrates to a “new normal,” clients will continue to require the help of financial planners to adjust to macroeconomic and client-specific shocks. I look forward to seeing how financial planners apply their own learnings to help prepare their clients for future bumps in the road.

Kevin R. Keller is chief executive of the Certified Financial Planner Board of Standards Inc.