4 ways to plan for worst-case scenarios

Global economies are showing signs of growth, but your clients are still wary of the future.

Not to mention, an increasing number of retirees are growing anxious about their savings.

Read: Retirees offer advice for Boomers

So, what should you tell them when they’re faced with faltering markets and uncertainty? Bob Stammers, director of investor education at the CFA Institute, suggests you urge them to plan for common worst-case financial scenarios.

This starts with asking how they’d cover expenses if their income were reduced due to unemployment or forced, early retirement. He adds they have to map out how they’d deal with things like plunging investments, so they avoid market panic.

Read:

• Panicked clients? Here’s help

• 3 steps to calming clients

Stammers also offers the below tips:

Create an austerity plan: People often pay more for luxury services, items and activities that could be cut during a period of unemployment. They should list both necessities and wants in advance so they’re aware how much their budget can be reduced.

Read: Help clients cope with unemployment

Review financial obligations and goals: Determine which obligations can be restructured, renegotiated, or deferred. Some service providers will even provide temporary cost reductions to keep you as a client while you get your finances in order, such as insurance companies, banks and student loan services. Be prepared to shop around for better deals if you can’t make payments.

Line up opportunities: You should network continuously with any potential employers and with past managers who can refer you to open positions. You never know when you’ll need them, so keep in touch.

Build a side business: Protect your current lifestyle by creating an alternative income stream. Provide freelance services or capitalize on marketable hobbies.

Read:

Small business death and taxes

Keep clients during a crisis

Goodbye retirement?

Advising a laid-off client