Recession Is Coming – How To Guide Clients Through Layoffs

As Recession Fears Spike And Layoffs Soar, Advisors Should Prepare To Address Emotional Needs, Guide Clients Financially And Develop A Prospecting Strategy

Julius Buchanan, Managing Editor, Wealth Solutions Report

Recession fears are mounting as jobs data shows weakness, the yield curve continues to invert and the economy struggles with higher interest rates. Even the Fed predicts a mild recession later this year.

With recessions come layoffs, which have already started at dozens of companies ranging broadly across economic sectors as diverse as tech and consumer staples. While no one can predict the future, it’s a safe bet that layoffs will increase this year, and advisors must prepare to guide existing and new clients through it, including their portfolios, financial plans, emotional needs and life changes.

At the same time, advisors have the opportunity to gain new clients as laid off employees focus on their finances.

Addressing Emotions To Think Clearly

Amy Braun-Bostich, Founder & CEO, Braun-Bostich & Associates

According to Amy Braun-Bostich, Founder and CEO of Braun-Bostich & Associates, each client will react differently to a layoff according to their financial situation. “For clients close to retirement, they may go ahead and retire and supplement income with a part-time job if needed. For younger clients with children still at home, this can be a very emotional event because the fear would be that a new job will not be found soon.”

She recommends to first ask the client how they are feeling without making any assumptions, then listen quietly. “I may also ask them what their biggest fears are at this time.” She also suggests asking the client to reframe the layoff as a temporary event that can be navigated.

Paul Peeler, Financial Advisor, Integrated Financial Group and Founder, The Preparedness Project

Paul Peeler, Financial Advisor at Integrated Financial Group and Founder of The Preparedness Project, agrees that an advisor must listen first. “Facts, logic and action plans will come later, but clients are people and need an outlet to process their anxiety and insecurity.”

He recommends asking questions such as, “What is driving this concern? What evidence supports this concern? Is this concern predicated on predicting the future, reading the minds of other individuals or focusing on catastrophic outcomes?”

Todd A. Scorzafava, Founding Partner & Portfolio Manager of WealthScorz Financial Group

Todd A. Scorzafava, Founding Partner and Portfolio Manager of WealthScorz Financial Group, part of Wealthcare Advisory Partners, recommends the conversation be carried out “either face-to-face or through a medium that they are able to see, hear and real-time interact with you” so clients feel safe, heard and supported.

Steve Branton, SVP and Advisor at Wealthspire Advisors adds, “If you can listen and reflect back what you are hearing that will go a long way to creating a sense of trust with the client which begins to reduce/diminish fear or uncertainty.”

Steve Branton, SVP & Advisor, Wealthspire Advisors

Next Steps For Well-Positioned Clients

If the client has a previous relationship with you and is financially grounded, Morgan Veth, VP and Financial Advisor at Bogart Wealth, recommends running an analysis of the client’s financial plan through different scenarios, such as a scenario with no income for one year. “If approaching retirement already, see if retiring now is possible, or taking a job that is fulfilling but perhaps less financially rewarding. If these scenarios are successful, it takes away the financial pressure and allows the client to define new goals.”

Morgan Veth, VP & Financial Advisor, Bogart Wealth

Scorzafava recommends a review and inventory of the client’s options and strategizing to overcome the obstacle “in tandem with reviewing their well-diversified portfolio, ensuring that their costs for the moment and in the future are balanced and reflective of both short-term needs and long-term growth.”

Braun-Bostich recommends widening the conversation to give the client “positive perspectives to consider such as more time with children and aging parents, more time to hone in on what they enjoy doing or a good time to start that business they have been talking about for years.”

She further recommends a conversation on expenses and sources of income. “On top of unemployment compensation, the client may be able to take Social Security if they are old enough, draw down on cash reserves, portfolio assets or take a part-time job – in addition to cutting expenses. For instance, can they reduce expenses by joining their spouse’s medical plan? Can they let the cash value of life insurance make their premium payments for a while?”

Guiding New, Unprepared Clients

The situation can be quite different with new clients who have arrived at the layoff unprepared.  Peeler points an unprepared client to this guiding principle: Focus on what you can control. “Then we would help them identify an action they can take – something they can control – to move toward solving this problem they are envisioning.”

Branton states that the best way to address the client’s fears is developing a plan for success. “I would do a financial plan as fast as possible that contains elements of coaching and values discussion.”

Scorzafava recommends gathering a list of the client’s goals, reviewing their assets, liabilities, debts, cash needs and resources, then implementing a budget and calendaring debt due dates. “Follow-up check-in meetings are recommended to hold clients accountable for adhering to the plan set forth and offering encouragement and pivot plans, if needed.”

“It is surprising how little a family actually needs to live on, especially if one spouse is still working,” Braun-Bostich adds.

In Crisis There Is Opportunity

As the Chinese proverb says, “In crisis there is opportunity,” and as layoffs gather momentum, the experts we spoke to see opportunity for organic growth. Branton states that uncertainty is an excellent opening to prospect for clients, “particularly if we can help our clients sleep at night and envision their ideal lives and show clearly how they will accomplish these goals from a financial perspective.”

“It seems that now, more than ever, with the recent geopolitical events and inflation, people are searching for long-term quality investments and advisors that seek to work with clients, not just their money,” says Scorzafava, who recommends highlighting your track record through testimonies and recommendations. “It’s not only about having great investments, but avoiding things like Enron, and the recent events such as the FTX meltdown.”

Veth points out the opportunity to reach prospects through organizational layoffs. “A major life event such as unemployment requires them to re-engage or start a dialogue with a financial professional. If there are broad layoffs across a company, and I can add value to someone impacted, they are very likely to share my information with others.”

Peeler shares that his colleague has partnerships with corporate outplacement and career transition companies. “He provides financial planning workshops to their clients – and their client roster spikes during periods of layoffs and economic uncertainty. Many of these laid off individuals eventually become clients and account for a substantial portion of his organic growth.”

Braun-Bostich says that her firm provides free second opinions for clients’ friends and family. “It is during a recession that we get more people asking about our services because of comments and recommendations from friends and family. Life transitions are pivotal points in time where people look for help and the guidance of professionals.”

Julius Buchanan, Managing Editor at Wealth Solutions Report, can be reached at

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