Managing a Financial Planning Practice in Times of Crisis

For CPAs who provide personal financial planning services to individuals and families, the first six months of the COVID-19 pandemic have been eye-opening. We have seen lives upended within each and every age group of an extended family: day cares closed, children unable to attend school, jobs furloughed or eliminated, locations of employment temporarily or permanently closed, and family members left isolated during social distancing. So, how do we manage our clients’ financial planning needs when the world is in such turmoil?

First, and most importantly, take stock of where you are personally. You likely have been experiencing many, or all, of the issues listed above and feeling the stress associated with them. But you need to be able to provide clients with clear, objective, and insightful advice and guidance. To do this, you need to understand and acknowledge your personal situation and effectively wall it off from your professional life. In other words, to best deal with a client’s financial and emotional angst, separate your own from the equation.

The next step is to empathize with your clients. At my firm, we tell our clients that we remove emotion from their financial plan and decision-making process. While we believe that is necessary, it does not mean we remove emotion from our relationships. To help clients make appropriate decisions, you need to understand and appreciate their situation from their perspective.

Although the clients’ emotions and emotional state are important, decisions should not be driven by these factors alone. Typically, there may be a pressing desire for short-term changes or modifications, but be ever aware of the longer-term or permanent implications. Family illness or death is often the driving emotional factor. While a short-term modification will often revert to an originally established norm over time, it is also possible that an underlying tenet will be abandoned. For example, a long-held client desire to retire into a continuing care retirement community may now be an inconceivable concept if a parent became ill or died while isolated in such a community.

The health crisis, as we all know, became a financial crisis too. Evaluate your clients’ financial plans in light of the pandemic. That may or may not mean a modest or significant change in their investment strategy, tax strategy, or short-term cash flow needs. Has the current crisis changed the fundamental or functional underpinnings of the financial plan? Has earnings capacity been permanently impacted? Have financial or personal goals or objectives been realized, changed, or made unreachable? Has risk tolerance been influenced? Have life, disability, and health insurances been maintained, lost, or otherwise affected by employment changes? Given the extent of the public outlays for community and business support, how may future tax law changes and government fiscal policy decisions affect current and projected planning strategies. The considerations and questions to ask are virtually endless. As an aside, what I have found most interesting is that the first few months of the current pandemic provided clients near or in retirement with an opportunity to quickly and relatively easily determine their minimum monthly cash flow needs as a result of the stay-at-home orders.

Finally, consider operational issues. Since mid-March, my partner, our staff, and I have been working from our homes providing financial and tax planning, tax preparation, and investment management and advisory services. We continue to provide the same depth and breadth of services, so not much has changed, right? Yes … from a general operational perspective. We have continued a push toward paperless operations and meetings are now online, with all the continuing interactions of in-person meetings. We are still able to read facial expressions and most body language since masks are not required on video conferences. But, ultimately, no: everything has changed.

How will all these changes impact our client relationships? Do we understand what is most important to our clients as it relates to our business operations? I think it is communication and availability – the ability to communicate with us when and where convenient - that matter most. In the past, we did not think much about this. We would meet in our office, in our clients’ homes, or at a coffee shop. Clients could stop at the office to drop off something. Now, for many of us, everything is electronic. In some respects, that’s more convenient; for some clients, though, particularly those who may be technologically challenged, it creates a sense of instability. Reassure your clients, especially those in the technologically-challenged category, that your operations are business as usual, just with a new delivery mechanism. Embrace the new normal, as it is likely to be with us for a while longer. Your clients will notice whether or not you are comfortable in your new environment and in your new routine. The more comfortable you are the more comfortable they will be, and that makes for a healthy, ongoing relationship.