How important is it for financial advisors to understand the economic and societal impact of the Great Resignation? The significance of this tumultuous labor force disruption is validated by its 2021 entry in Wikipedia, and the 10 million Google hits for that phrase. Over 40 million Americans quit their jobs in 2021. Some employers are so desperate for staffing, they are advertising “Apply today, work today, get paid today.”
The resignation wave was initially highest in the 30-45 age cohort, primarily in the tech and health care industries. But the demographic trend of those quitting changed as 2021 progressed, and is likely to further change over time; October 2021 data indicated that employees in hospitality and food services were most likely to have quit in that month, and over 3 million workers over the age of 55 permanently retired.
We should not be surprised that financial advisors also experience the allure of resignation. Some financial advisors are undoubtedly leaving for personal reasons, and others because of decreased revenue and increased demands from those clients who joined the Great Resignation.
Advisors who stay on board will necessarily confront two major challenges when advising a client contemplating or actually quitting a job/career: rethinking financial advice and financial plans, and the increased need for nonfinancial coaching and counseling. Successfully meeting these challenges will separate advisors who thrive from those who don’t.
Rethinking Financial Advice and Financial Plans
The impact of clients’ resignations on their financial plans and life plans depends on their vision for the future. It’s one thing to quit because a client has, or anticipates quickly having, a new job. It’s another thing to quit for an extended period. Also, advising a client who quits a job at age 35 will entail very different planning than advising a client who quits a few years before receiving social security.
Ultimately, the Great Resignation requires financial planners to hit a moving target. Financial plans reflect a time horizon and assumptions about a projected income stream. A client who quits a job severely tests these assumptions. If no new job is lined up, a new financial plan is crucial. The original plan was created assuming a salary trajectory based on a job that no longer exists. A new job may come with a new salary (higher or lower), different employer-offered retirement plan, new medical benefits, and a different career ladder. A client may believe a new and better job is right around the corner, but the employment market can quickly change, leaving the client unemployed or underemployed longer than anticipated.
Even more attention must be paid to clients who quit their jobs with no intention of ever returning to the work force. These clients must plan on funding a desired lifestyle, and if years away from social security, must also plan on funding medical expenses.
Increased Need to Coach and Counsel
Although the specific reason why people quit a job varies, we feel confident in the following generalization. The trauma of the COVID-19 pandemic brought issues of quality of life and work balance to the fore. Many are raising questions of purposeful living they may not have raised before, and the answer for many is to get off the corporate ladder.
More than ever, financial advisors will deal with psychological and spiritual issues such as personal fulfillment and purposeful living. Some advisors will feel comfortable doing so, others will not. Those who feel unqualified and/or uncomfortable coaching and counseling, can still provide a valuable service to their clients. Competent referrals to accredited and vetted life coaches will ultimately enhance the advisor’s credibility and strengthen the bond with the client.
The Great Resignation is a reality, as is the need for financial advisors to adapt their assumptions and approaches. Advisors must address financial matters, concurrent with empathic listening to fully understand and facilitate their clients’ life journeys.
David Dubofsky, PhD and Lyle Sussman, PhD are both speakers, authors, consultants and retired academics.
I have read so many content on the topic of the blogger lovers however this piece of writing is genuinely a pleasant piece
of writing, keep it up.