The Foundation for Financial Planning is pairing planners with
Americans suffering from the financial fallout
April 1, 2020 By
Liz Skinner
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.
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.
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.
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