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How exposed are financial advisors and financial professionals overall to a potential recession in 2023? Is this a profession that would specifically be vulnerable to cutbacks and layoffs, or would it be “recession-proof?” Why/why not?

 

Layoffs have already impacted and will likely continue to impact many industries this year, and financial services is no exception. But while a certain amount of risk seems unavoidable for most positions, financial advisors can make the most of a unique silver lining — their services and guidance become especially important during times of high fear and uncertainty and can actively help those affected by recessions adapt to their new financial circumstances. Part of their role is to help clients create plans that are as “recession-proof” as possible, so while they may not be immune to economic downturns, their offerings for individuals and households can add extra security.

 

During a recession, people tend to get particularly worried about protecting themselves financially. Does this help protect financial advisors? Can they expect these worries to drive in business during a downturn, or would people not want to spend money on financial advisors?

 

Financial situations can change drastically during a recession, and many households will have to adjust their budgets, savings priorities, and investment strategies to adapt to changes in income and expenses. And when there’s less money to go around, that’s when it’s most important to make sure you’re creating a financial plan that saves and spends every dollar intentionally. Many households recognize the importance of using guidance when it matters most, and for this reason we often see many new and returning customers seeking advisors during recessions. While it may stretch their budget a little thinner, those with an advisor tend to view this expense not as a cost or fee associated with managing finances and investments, but as an investment in itself that can help them lay a strong foundation and create a plan to weather short-term downturns while still keeping their focus on long-term goals. 

 

For financial advisors, and financial professionals overall, what are steps they can take to protect themselves? If someone is worried about their job security during a potential recession, what should they start doing in advance?

One perk of being a financial advisor or professional is that you already have a wealth of knowledge about savings, spending, investing, and protecting yourself from risk. Applying the same principles of financial management to your own life — like creating a security fund, diversifying investments, and saving and spending intentionally — can help lay a solid foundation for the unexpected.

 

Additionally, many financial advisors and professionals offer a level of personal service to their clients that can’t be found in online services and digital advisors. Focusing on each unique relationship you hold with your clients can help ensure customer confidence and build trust in your relationships that stand the tests of time and uncertainty.