By Morey Stettner
You may think financial advisers only want wealthy clients. But some take hardship cases-and even work pro bono.
The stereotypical financial adviser drives a fancy car, has a posh office and serves really rich people. But some advisers are perfectly happy serving people of modest means. They do not impose an asset minimum for new clients; rather, they accept individuals with low savings (and high debt) who face financial challenges.
These advisers make money by charging for their time instead of earning a percentage of assets under management. They won’t turn away a high-net-worth client who wants investment management, but they prefer to serve an often-overlooked segment of consumers who struggle financially and can benefit from an adviser’s expertise.
With recession worries flaring and layoffs spreading across some sectors of the U.S. economy, these advisers now are busier than ever. They help clients grapple with job loss and find prospects for long-term financial security.
Financial advice vs. financial coaching
Personal finance coaches usually market themselves to people suffering financial hardship. They tend to speak in terms of guiding you on your “journey” to financial wellness. They may host podcasts, offer financial coach certification or training programs, publish books (sometimes referred to as “toolkits” or “playbooks”) and charge for their services even if you’re bordering on broke.
Coaches may provide a credible service. But they are not qualified to manage assets or offer comprehensive financial planning as it relates to taxes, estate planning and retirement.
Financial advisers, by contrast, do all those things. “A lot of my clients come to me and say, ‘I lost my job’ and they start freaking out,” said Leyder Murillo, a Denver-based adviser. “90% of financial planning is long term. With a job loss, you have to flip it to short term” and focus on an immediate path to financial recovery.
Murillo adopts an “advice only” fee model for most clients. That means he charges a flat fee or hourly rate based on an individual’s situation. He also offers pro-bono services on a limited basis to those who face financial hardship such as unemployment or medical bills. Providing free service may seem bighearted but it’s also a savvy business practice.
“You’ll get more referrals if you help someone out,” Murillo said. “Once they make it out of whatever they’re going through, they’ll always remember you and stick with you” as their fortunes grow.
Murillo sees opportunity in these clients because he knows them well. After earning his MBA years ago, he launched his financial planning career. Some of his friends from business school asked for his help managing student debt and other financial challenges.
“But I had to tell them no because of my firm’s asset minimums,” he recalled. “Eventually, I left the firm and went independent so I could help anyone. Now I try to be accessible to those who need financial planning the most.”
Advisers who help clients recover from financial difficulties usually follow a step-by-step process. It starts with assessing the client’s short-term needs (to meet expenses and control cash flow), identifying resources (such as unemployment benefits and government assistance programs) and mapping out a plan to find a new job.
“The most challenging part is providing emotional support,” said Steven Calio, a certified financial planner in Dover, Del. “Sometimes, the truth is painful to people. They may have to scale down their lifestyle. Empathy goes a long way to help them stay positive and manage stress.”
To preserve relationships when clients experience a money crunch, Calio might adjust his monthly fee (which ranges from $100 to $500 depending on the complexity of their situation). “When people go through major life changes like job loss, those are the most rewarding types of clients,” Calio said. “The level of help you are providing is that much greater.”
More: Want inflation-protected income for your retirement years? Here’s how to get it.
Plus: The job market is getting tougher for workers – but they may be gaining in the battle over remote work
-Morey Stettner
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
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