Financial planners are bracing for the economic pain clients will experience due to the nationwide protesting and looting sparked by the fatal arrest of George Floyd in Minneapolis last week.
As the nation is still in the midst of the coronavirus pandemic and a receding economy, some advisers’ clients are getting hit even harder, specifically, those who have small businesses being looted as a result of the racial injustice in the U.S., said Frank Paré, president and founder of PF Wealth Management Group, and former president of the Financial Planning Association.
“Even with insurance, [clients] are going to have unexpected costs on top of, already, an economic disaster,” Paré said in a telephone interview. “The economic pain is going to be … felt by people already feeling economic pain, and it’s just going to make financial planning more difficult.”
In fact, the Oakland, Calif.-based firm is meeting with clients whose businesses have been looted, Paré said. “I was on the phone with a client yesterday who had her building looted and she is in retirement and relies on the income from that building,” he said. “This is impacting her ability to feel secure — she’s not wealthy, she is not of working age and she cannot afford to lose this income.”
The negative impacts from looting are just one of the immediate implications financial advisers will face amid nationwide protests. However, the issue is a small slice of a larger challenge as the industry responds to institutional racism.
“In recent years, there has been a lot of discussion about how the financial planning profession needs to be more accessible, supportive and welcoming,” FPA President Martin Seay said in a statement. “To many, that talk hasn’t led to meaningful action. For many minorities, the doors of the profession are still closed. We need to do more to equip those in the majority with the necessary resources to fully embrace the challenges facing minority practitioners today.”
While the FPA’s statement is a “good start” to have leaders in the industry share their values, “leaders can’t monitor people’s hearts,” Paré said. “If you have individuals who harbor perhaps biased or racist attitudes and thoughts, no amount of leadership talking about it is going to change that individual’s heart. It’s more than just discussion, it has to be true policy.”