Advising Clients in Tough Times

We are experiencing an unprecedented financial crisis with access to credit virtually at a standstill, record numbers of people losing their homes, investments and retirement savings being slashed or even wiped out by stock market swings and financial frauds, and the unemployment rate up to a very high level. At the same time, energy concerns that were front page news only months ago have receded as the price for gasoline dropped dramatically. These and other money matters may still concern or even cause panic among clients of all ages and financial levels. Clients are looking for guidance and reassurance to help them get through this tough economic period with as little downside as possible and to plan for their and their family's future. Who do they turn to for answers to their questions on money matters and reassurance about their concerns? You, their CPA. How to do you answer them? That's what you will find out in the chapters of this e-book.

In providing responses to client questions, recognize some new realities. Many clients may be embarrassed by their current economic situation. For instance, if a client has experienced a recent job loss, he or she may be reluctant to seek out your help or fully share personal concerns, if help is sought. Those caught up in the Madoff scandal have lost significant sums, all or most of which will never be recouped; this fact can affect their estate plans and, for some, their retirement income. Other clients may be struggling with income challenges because of reductions in their portfolios. A retiree, for example, may be relying more heavily on Social Security benefits than ever before as distributions from retirement accounts diminish. Clients of all ages and income levels may even be reticent about paying for your advice and assistance. Here's when your sensitivity to their plight and the need for communication comes in. You'll have to show how your fees will save them money and put them in a better position in the long run by helping them make better financial decisions.

This e-book is organized by topic—homes, jobs, businesses, investments, retirement savings, and so on. Throughout each chapter you'll find some of the most common questions that clients are currently asking their CPAs. Many of the questions are actual ones put to CPAs who are members of the AICPA Personal Financial Planning (PFP) Community (and reported in the AICPA PFP Section Survey, "Advising Clients in Tough Times," conducted over an 18 day period from December 30, 2008, to January 16, 2009).

In the answer to each question we suggest various strategies that can be conveyed to clients to address particular needs. Of course, the key point for you, the trusted advisor, to remember is that each client's personal and financial situation is unique and the answers to questions must be tailored accordingly. Also, aspects of the economy will undoubtedly change after publication of this e-book. The stock market will recover (probably months before the economy as a whole recovers); the unemployment number may be reversed by new job creation as a result of the massive American Recovery and Reinvestment Act and business recovery; new federal and state laws may help (or hurt) various tax and financial matters; and, over time, things will undoubtedly get better. Continue to tailor your answers to client questions according to changes in the economy.

Recognize that not all clients will reach out to you for assistance; you probably want to contact your client base to offer guidance. You may want to provide this help for free or at a reduced fee. The help you can provide to clients during this critical period will undoubtedly translate into

029885PDF