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Advisors are helping clients prioritize and budget expenses to ride out the impact of the pandemic.

FatCamera/iStockPhoto / Getty Images

As Canadians struggle to address personal financial constraints amid the coronavirus pandemic, financial advisors are scrambling to figure out how best to serve clients affected by the health crisis and economic devastation.

Volatile markets, shuttered businesses and employee layoffs have left Canadians reeling and searching for ways to reduce the financial impact of COVID-19.

“Financial advisors are not often in a position in which they’re helping somebody who can’t make ends meet,” says David O’Leary, founder and principal at Toronto-based Kind Wealth, a fee-for-service financial planning firm. “So, with the types of issues someone faces during a financial emergency, traditional advisors are not well equipped to handle that. Their experience is around how to help people earn money. So, there’s nervousness among advisors, who want to help but feel ill equipped.”

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To help address the personal financial issues that Canadians are facing during this time, Mr. O’Leary launched free consultations for people struggling with financial stress and anxiety. About 20 financial planners from different firms have since joined the initiative.

Small-business owners, gig economy and contract workers and single mothers make up the majority of the people who have scheduled sessions with the advisors. Their concerns are wide-ranging and complex, further convoluted by current circumstances, Mr. O’Leary says, including business owners navigating revenue loss, self-employed workers losing income and laid-off employees looking to defer mortgage payments.

“We’ll likely see a wide gamut of people who are in really destitute positions and then some people with anxiety not necessarily related to wealth,” he says.

Prime Minister Justin Trudeau unveiled an $82-billion relief package, including an expansion to the Canada Child Benefit, the creation of the Canada Emergency Response Benefit, extensions to the tax-filing deadlines and additional credit available to small businesses to help people survive the severe economic downturn.

Since the announcement, Canadians have flocked to apply for the government relief. More than 500,000 applications for Employment Insurance were submitted last week compared with 27,000 in the same week last year. “Service Canada and many government agencies have received an historic number of calls from concerned Canadians,” Mr. Trudeau said during a recent news conference.

advisors are also receiving the same influx of questions. Spring Planning Inc. has received calls from self-employed clients trying to understand the government support available and soon-to-be retirees assessing whether they can still afford to retire in a few years, according to Sandi Martin, partner, chief operating officer and financial planner at the advice-only financial planning firm.

For those with extra cash on hand, Ms. Martin says advisors are helping clients prioritize and budget expenses to ride out the impact of the pandemic. But many business owners and individuals don’t have the luxury of an emergency fund – and these clients who need to take on debt are asking how to limit the damage while also reducing the anxiety around the burden that awaits them when life returns to normal.

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“For these people, the advice that we have is that we have to wait and see, which is very unsatisfying,” Ms. Martin says. “So much of what we can do depends on what the government decides to do. Let’s wait and see what’s available, let’s take advantage of any of the things we already know exist, and then let’s not hold ourselves to a standard of success where you think you need to come out of this better off than you were before.”

Spring Planning has been holding conference calls in which it provides clients with a forum to ask its advisors broad questions and express concerns. The firm recently held a call about market volatility and investments and is planning another on cash flow and budgeting.

But for some people, the government support may not be enough, says Natasha Knox, founder and financial planner at Pax Financial Planning and Education Inc. Small-business owners who were forced to close shop temporarily and renters who lost their jobs are also concerned about monthly leases and are hoping for deferrals or discounts from landlords. Canada’s Big Six banks announced mortgage payment deferrals for up to six months for customers struggling to make payments as a result of the pandemic.

“It’s hitting small-business owners the hardest and they’ve had to close, so some of the mortgage relief programs are of the most interest,” Ms. Knox says.

advisors will need to be prepared to provide more granular advice for clients who are affected severely by the current situation. Some people will need to defer their mortgage while others will benefit from dipping into their savings or tightening household cash flow, she says.

“An advisor should be going through the individual circumstances with a fine-toothed comb and then make a concrete plan for at least the next six months,” Ms. Knox says.

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