Planner offers free consultation to tech layoff victims

Brandon Chapman issues LinkedIn invitation, vows to help them through 'bad times'

Planner offers free consultation to tech layoff victims

As investors in tech firms feel the sector’s struggles in their portfolios, the situation is even more dire for workers in the space. In response, Brandon Chapman, a B.C.-based certified financial planner, has issued an open invitation on LinkedIn, offering a free consultation to anyone who’s lost their job at a tech company.

Since last year, tech companies have been forced to restructure and streamline their workforces amid continuing challenges to their profitability. Layoff messages from several CEOs, including Meta’s Mark Zuckerberg and Shopify’s Tobi Lutke, included mea culpas admitting they overstaffed as they over-estimated their companies’ growth prospects during the heady pandemic-driven tech honeymoon.

To call the headline numbers for tech layoffs striking is an understatement. In December, Meta laid off 11,000 employees – 13% of its workforce. That came several months after Shopify slashed 10% of its staff in July. More recently, Google parent Alphabet said it was handing out 12,000 pink slips, while Amazon announced 18,000 layoffs.

The toll of Canadian workers hit by tech layoffs is unclear, but surely significant.

“I think a lot of advisors focus on growing their books and getting more profitable, which are important,” says Chapman. “But ultimately, the reason we get into this business is to help our clients get ahead financially and make smart financial moves, and that means being there during the good times and the bad times.”

Aside from running his advice practice, Chapman is also the founder and CEO of Advisor Flow, a digital online onboarding platform for advisors. He says he’s received a great deal of kudos from industry professionals working in the sector, though only a few individuals have taken him on his offer so far.

The conversations he’s had – generally with people less far along in their tech careers – have been very hopeful. Alongside countless Canadian investors, most have watched their investment portfolios go down recently, while those with variable-rate mortgages are seeing massive increases in their debt costs. The natural upshot has been an increase in belt-tightening through less spending and delaying large purchases.

“The business owners I know in the tech community are really focusing more on profitability, not so much on growth at all costs,” he adds. “In the longer term, I think that’s going to mean larger opportunities once there’s more clarity around the cost of borrowing. But in the short term, it’s frankly going to mean less spending and less overall economic activity.”

The advice he’s given to people affected by tech industry layoffs doesn’t stray too far from what he tells other clients. Maintaining emergency savings is paramount: ideally, someone would be able to set aside three to six months’ worth of their expenses in cash or cash equivalents. More broadly, he preaches the wisdom of “paying yourself first,” making sure they’re saving for a rainy day and building for the future.

“Don’t assume your paycheque will continue forever,” Chapman says. “And have some insurance in place, in case something happens to you medically.”

For those who are still in the industry but vulnerable to the risk of future job cuts, he says economic challenges should also be front and centre in their financial planning. He also encourages people to pay attention to their unique situation, particularly their spending routines and emergency funds.

He finds members of the tech community in particular may choose to rely on their group benefits plans through work instead of self-insuring, which puts families who may have young kids at risk should the family breadwinner go through the hardship of unemployment. It’s also not unusual for someone in the tech industry to have stock options as part of their compensation package, which Chapman agrees can be a good form of partial compensation but also come with caveats.

“The strike price, essentially how much of a discount you’re getting versus the share value, will be a big factor in determining whether it was worth taking them or not,” he says. “If it’s a company that’s profitable, and the prospects are continuing to lean toward profitability, then options might be a viable source of compensation.

Stock options also come with some potential tax benefits, depending on how they’re structured within the company and how those options are exercised,” he adds. “Some will have a cliff, or a certain date by which the options need to be exercised.”

While there’s no cost to holding on to options, Chapman says it could make the most sense to exercise them during a low-income year, as they’d incur that taxable income when their overall tax bill would be potentially lower. The best thing, he says, would be to speak to an advisor or accountant about their unique situation.

The current backdrop of economic gloom may feel discouraging, particularly for those whose jobs have come to an untimely end. But as Chapman notes, most of the top tech businesses today were established during a recession, and there’s always the possibility of using a juicy severance package with several paid months off to think about what’s next.

“A lot of the most innovative companies have come out of times like this, because smart people got laid off from their jobs. So this is a great opportunity for people who want to start their own business or solve a problem,” he says.

“Recessions are good for the economy longer-term, as they push companies to get leaner before growing in the next expansion,” he adds. “So, I’m sure that as the community comes together and folks lean on their networks, there are likely going to be better opportunities for tech workers to return in the future.”