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When Clients Lose a Job, FAs Can Help

May 15, 2015

For many of the 1.7 million Americans to whom it happens every month, job loss is a hardship. But financial advisors can steer at least some of them toward a more profitable termination, Investopedia writes.

Termination for senior or high-earning employees usually comes with benefits like severance pay, continued health coverage, assistance with finding new work or the right to exercise stock options, the website says. For some high-level employees, such benefits will be covered in their contracts. But for others, FAs can help evaluate the terms of separation, negotiate with the employer or direct clients to an attorney, according to Investopedia.

One area where FAs can be indispensable is in overseeing clients’ retirement options when they lose a job. They can help determine whether an early-retirement package is advantageous to the client. They can advise on the best thing to do with a 401(k) plan — an area people often overlook entirely when leaving a job, says Investopedia. Finally, FAs can guide their clients through a pension buyout if one is offered.

There are also broader financial issues that come after clients lose a job. FAs can provide valuable service with these, from analyzing spending habits that will have to be revised, to tax planning for severance payouts, to making bigger life decisions — such as finding alternative career tracks or retiring sooner than planned, Investopedia says.

By Alex Padalka
  • To read the Investopedia article cited in this story, click here.