Why you should check client lists for those needing federal “cost-of-living” help

Rising interest rates still greatest concern, especially for those who didn't invest in the '80s

Why you should check client lists for those needing federal “cost-of-living” help

While the federal government’s cost-of-living support package for these inflationary times may look very skimpy and appear to be aimed at people with less income than advisors generally support, advisors should review clients’ files to see if any of its provisions will support some of their clients, says one advisor who’s finding that a useful exercise.

“A minority of the clients that I happen to have the privilege of working with are touched by this,” Chris Sievert, an Edward Jones financial advisor who serves about 300 families in Guelph, Ontario, told Wealth Professional.

“Each family is different. So, I certainly have clients for whom this won’t have any impact – they won’t receive the benefit – and then I deal with families who absolutely will see the benefit. They are in a financial situation as part of a family unit where they will qualify for some of these programs. So, it’s going to affect each of my clients differently.”

When the federal government announced its support package last week, it said it would top up the housing benefit for renters, double the sales tax rebate that low-income earners receive, and start funding a previously promised dental-care plan.

Read more: Trudeau’s cost-of-living help

“You’ve got to consider people’s specific situation and plan for that. To draw a broad conclusion about what somebody should do is difficult,” said Sievert. “You really need to sit down with a client and talk through the overall situation. That’s what I’m recommending to my clients so we can sit down and look at all aspects and determine how it affects them and what action they should take.”

While Sievert is in the middle of reviewing his client list and triggering those meetings, he said he’s getting far more questions from clients about inflation and rising interest rates, especially from those who are “trying to organize for their last chapter” as they prepare for retirement.

He’s already been calculating the rising rate of inflation into their projections, but said clients are concerned about things like the cost of transportation to visit children and grandchildren in other placess or whether they should pay off car loans or mortgages before they retire. He works through their questions with them, looking at whether they can pay off more of their variable-rate mortgages faster, particularly if they’d previously opted to earn more in their investment portfolios.

Read more: How to help clients combat inflation

Sievert noted that his greater concern right now, however, is the group of clients who started investing while interest rates were low.

“This is a bit more shocking for them, so it’s been more of a learning curve for them,” he said, comparing them to those who were investing in the 1980s, so are more familiar with high interest rates. So, the younger clients are learning more about what they should, or shouldn’t, do right now.

“My recommendation for them is to pay really close attention to what’s going on. Learn as much as they can about it and be thoughtful about how they approach their saving and their spending going forward. To learn is to understand it and to put more thought into their financial planning.”