Here’s how financial advisers can help Americans impacted by COVID19


This feature is part of InvestmentNews’ April financial literacy series in observance of National Financial Capability Month.

The COVID-19 pandemic’s impact on the global economy is still playing out, but it’s already clear that low-income families, and even many of those with moderate wealth in the U.S., will soon be suffering from the financial fallout.

Jon Dauphiné, CEO of Foundation for Financial Planning, said financial advisers are uniquely positioned to help with the unfolding crisis by providing financial education and guidance as more Americans lose livelihoods and deplete meager savings.

Those struggling will need help deciding which bills to pay first, what loans to accept and even understanding what government aid they might qualify to receive. “When you have such a limited margin for error, it’s especially important that you have a plan,” Dauphiné said.

Liz Skinner: What is the COVID-19 pandemic showing you about the financial literacy of Americans?

Jon Dauphiné: The data point that stands out is that 40% of Americans have less than $400 for an emergency expense. COVID-19 is definitely like a Category 5 storm for people’s finances. Weaknesses in the levees, weaknesses in our structure as Americans in our personal finance, are really tough at this point so as you are starting to see mass layoffs and unemployment, you are starting to see people who have had no cushion say, “I can’t pay my rent, I can’t pay my mortgage, I can’t put food on my table.” It’s really unfortunately turning up the volume on the problems 100 fold.

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I think a lot of the measures coming from Capitol Hill and in the states are very necessary.

LS: What are you seeing happening in the non-profit sector?

JD:  I’m seeing a kind of whiplash. There’s so much going on and a lot of non-profit grantees that have one-on-one programs can’t have people come into their offices right now. So, in addition to trying to navigate all the new provisions in the law that may help people who are economically vulnerable, they are also having to go virtual. It’s sort of a perfect storm. We are starting to see some of our programs adapting to provide virtual service, but it’s going to take a little while, and it’s a very challenging time.

Services have to be provided virtually so we are making emergency funds available to help our grantees deliver services virtually.

LS: What role can financial advisers play at this time?

JD: One thing I think advisers need to do is to stay abreast of all the new benefits and new provisions in the laws that are coming out because these will impact both the paid client base and the pro bono client base. On retirement for example, RMDs, that type of thing, including cash payments to lower income Americans who are really struggling and might need an adviser to help them prioritize with the scarce resources they do have, or that they might have coming during the next couple months. On our website we have a COVID-19 resource center so advisers have a one-stop place for advisers.

We also are recommending advisers register to be a pro-bono volunteer at www.CFPVolunteerMatch.org, and for these advisers we will automatically email you when opportunities become available either in your location or virtually. We are asking nonprofits go on here too and populate opportunities for advisers to help. We are hoping to see that expand in the next weeks and months.

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LS: Could it be used as a stimulus to show the importance of improving finlit in this country?

JD: I would like to believe that it will become a catalyst for more of a nationally coordinated effort to help with financial literacy and the broader term of financial capability. I do think that when we are swamped by a crisis of this magnitude, it lays bare the very significant gaps in our social safety net and in the way families can prepare and can access help in a crisis. It’s really important to really look at all of that and assess it and come up with a range of policy interventions, education interventions and ways that nonprofits like ours can really come together.

We are seeing an impulse to really support each other and financial advisers want to help. Financial advisers as experts have a great role to play as volunteers and leaders in our communities on advancing financial capabilities and financial literacy, and bringing pro bono planning to people as well. We have a bias in our society that lower and moderate-income people don’t need to plan because they don’t have enough.

This is showing that the opposite is true. When you have such a limited margin for error it’s especially important that you have a plan.

LS: What is the foundation putting in place to help advisers provide pro bono services?

JD: We know programs have to be virtual over the next number of months to keep everybody safe, but we also know everybody is really hungry for information, so we are working with a partner to set up live national digital events that will bring information and education to at least 14,000 people, and the opportunity to do one-on-ones for very complicated situations with volunteer CFPs.

We also are developing a webinar on how to deliver virtual coaching because we know that with these grantees and non-profits that are used to having in-person engagements between their volunteer planners and the client.

Written by Investors Wallets

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