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Many millennials had yet to fully recover from the financial repercussions of the 2008-09 global financial crisis when COVID-19 hit last year.CasarsaGuru/iStockPhoto / Getty Images

The economic fallout from the COVID-19 pandemic has hit younger Canadians harder than other generations. That has required financial advisors to offer some unique solutions to help these clients weather the storm.

A Carleton University School of Journalism and Communication poll conducted last May found that pandemic-related reductions in family income affected Canadians under 30 years of age more than any other generation, with those aged between 29 to 44 being the next most affected. Similarly, a report that global consulting firm Deloitte published in late June found that almost 30 per cent of Generation Z and a quarter of younger millennials, aged 25 to 30, lost their jobs or were placed on unpaid leave in April or May – larger proportions than any other age group.

The financial difficulties younger people have faced in their lifetimes is summed up in a Credit Suisse report published in late October that says millennials, in particular, “have experienced the second major economic shock of their adult lives. They share the experience of unemployment and a lack of stability. Their prospects in terms of wealth accumulation are gloomy.”

In effect, many millennials had yet to fully recover from the 2008-09 global financial crisis when COVID-19 hit, the report states. Some are saddled with debt, others are burdened with job insecurity, and most have had difficulty building their savings over the past decade. Millennials have long since gotten the short end of the financial stick – and COVID-19 has only exacerbated that.

As result, providing financial advice to a generation hit particularly hard by the pandemic requires a different approach from advisors. Kurt Rosentreter, portfolio manager and senior financial advisor with Manulife Securities in Toronto, who specializes in working with millennials, says he’s given “a pass” to his younger clients who have been laid off or are otherwise struggling to make ends meet through these trying economic times.

“I gave them all a holiday on financial planning for 2020 and called it a ‘just-get-through’ year,” he says. “I tell them, ‘Look, don’t get upset if you don’t save this year, Who cares? If you don’t make your essential debt payments, don’t worry about it.’”

Part of taking that approach has involved walking younger Canadians through the various government support programs available to them – from the Canada Emergency Response Benefit to student loan and mortgage payment deferrals. Mr. Rosentreter says he’s encouraged his clients to take advantage of everything at their disposal.

“You should be playing defence,” he says. “Make no major new purchases, save cash where you can, and just get through it.”

Jackie Porter, a certified financial planner at Carte Wealth Management Inc. in Mississauga, says this period of economic tumult has brought about a back-to-basics approach in the way she provides advice. She’s focused on helping clients deal with more immediate priorities like cash-flow management and responsible use of credit than longer-term concerns like investing or retirement savings.

“The financial advice industry, as a whole, has to engage with people based on more real-world financial issues [during COVID-19],” she says. “Canadians are really concerned around cash flow, financial literacy, understanding how to get rid of debt, and figuring out how to innovate with the finances they have.”

Shannon Lee Simmons, a fee-only financial planner with The New School of Finance in Toronto, says she has also prioritized basic cash-flow and savings strategies amid the pandemic. For the few clients who do have the means to save at the moment, this period of instability has underscored the importance of establishing rainy day funds. She’s helped several of them reassess their savings strategies to prepare for the possibility of unemployment or further uncertainty in the future.

“For those who didn’t have emergency accounts, I suggested redirecting savings earmarked for registered retirement savings plans to emergency accounts for several months to build up a cushion just in case,” she says.

Ms. Porter and Ms. Simmons both take a lenient approach in helping clients learn to save. For example, Ms. Porter has shied away from telling her clients exactly how much to put into savings. Instead, she’s used this time to help clients study their spending habits and make cuts where logical. Any other approach just isn’t as effective, she says.

“My only hesitation about giving rules is that it forces people to not look closely at what they’re doing with their money,” Ms. Porter says. “I think at this moment, in particular, people need to become intimate with where their money is going.”

She adds that the hardships millennials have faced since the global financial crisis have also helped them build resilience and self-sufficiency. As members of the “startup generation,” her younger clients are typically comfortable taking the reins on their finances once empowered with the knowledge to do so.

Indeed, the Deloitte report also deemed these younger people as the “resilient generation,” noting that there’s a unique sense of optimism among the same survey participants who have been burdened with financial duress. Around three-quarters of millennial and Gen Z survey participants said the pandemic had inspired them to take action to improve their own lives; the same proportion said it had also inspired them to give back to their community.

“They have the opportunity to innovate themselves out of this,” Ms. Porter says. “Millennials are people who like to ‘do it yourself.’ They want to understand, so I give them agency on financial literacy and help them figure out how to solve real-world money problems.”

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