Financial Advisory Guide & Case Study: How to Help Your Clients Prepare for the Unexpected

Oct 20, 2023

Let’s start with digging into the reasons why Financial Advisors and Planners should be helping their clients plan for the unexpected. Because the video case study addresses 4 specific client questions that are based on planning for those unexpected “what-ifs”, this guide will be broken down into those same 4 questions.

If you find that some of your clients are not asking these questions, or they are struggling to understand why you are attempting to have these conversations — or fail to see the value in planning — you can use some of these ideas as talking points and conversation starters.

In the second part of this guide, you will have access to a comprehensive financial planning webinar replay that shows how to model all 4 questions using Snap Projections financial planning software. CE Credit was provided for the live recording of this session but is not applicable to replays.



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1. What if we don’t get the rates of return we’re expecting?

Financial Advisors & Planners should help their clients explore what happens if they don’t achieve the expected rates of return because:

Risk management: One of the many responsibilities of a Financial Advisor is to assess and manage the risks associated with their clients’ investment portfolios. Discussing potential scenarios where expected rates of return are not met allows clients to understand the risks involved and prepare for them. You can learn more about what specific tools many Advisors are already using to Stress Test their projections here.

Realistic expectations: By addressing the possibility of not achieving expected returns, Advisors can set realistic expectations for their clients. Unrealistic expectations can lead to disappointment and hasty decisions if things don’t go as planned. Realism ensures that clients are mentally and emotionally prepared for various outcomes.

Asset allocation: Understanding the potential consequences of lower-than-expected returns can prompt a reassessment of asset allocation. Advisors can work with clients to diversify their investments and choose assets that align with their risk tolerance and long-term goals.

Long-term planning: Financial planning should consider various scenarios, including less favourable ones. By exploring the impact of lower returns, Advisors can help clients refine their long-term financial plans, ensuring they remain on track even in less favourable market conditions.

Mitigating actions: Knowing the risks allows clients to take proactive steps to mitigate potential financial challenges. These steps might include adjusting their savings rate, reevaluating retirement goals, or exploring alternative investment strategies.

Stress reduction: Uncertainty can cause stress and anxiety. Discussing the possibility of not meeting expected returns helps clients mentally prepare for such outcomes, reducing the emotional impact of financial setbacks.

Financial education: This discussion presents an opportunity for Financial Advisors to educate their clients about the inherent uncertainties in investing. Building financial literacy helps clients make informed decisions and feel more in control of their financial future.

Building trust: Openly addressing potential challenges and discussing contingency plans fosters trust between clients and Advisors. Clients are more likely to trust Advisors who acknowledge the uncertainties and demonstrate a commitment to helping them navigate various financial scenarios.

Improved decision-making: When clients understand the potential risks, they are more likely to make rational decisions during market volatility. Emotional decision-making, driven by panic or fear, can have detrimental effects on their financial well-being.

Customized solutions: Each client’s financial situation is unique. By exploring the consequences of different return scenarios, Advisors can tailor their recommendations to suit the client’s specific needs and risk tolerance.

Helping clients explore the potential impact of not achieving expected rates of return is a fundamental part of responsible financial advising. It empowers clients to make informed decisions, manage risk effectively, and will build trust in their Advisor’s guidance, which ultimately contributes to their long-term financial success.



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2. What if I can’t save what we’ve planned?

Financial Advisors and Planners should help their clients model what happens if they can’t save as planned because:

Realistic planning: Financial planning should be grounded in reality. Life is unpredictable, and there may be circumstances where clients are unable to save as originally intended due to unexpected events like job loss, medical emergencies, or economic downturns. Modelling these scenarios allows for more realistic financial plans.

Stress reduction: If clients face the prospect of not being able to save as planned, it can lead to financial stress and anxiety. By modelling these situations, clients can mentally prepare for such contingencies, reducing the emotional impact and stress associated with falling short of their savings goals.

Contingency planning: When clients understand the potential for not meeting their savings targets, they can work with Advisors to develop contingency plans. These plans might involve adjusting spending, reevaluating financial goals, or identifying alternative income sources. Having a plan in place can mitigate the financial impact of not saving as planned.

Adaptability: Financial plans need to be adaptable to changing circumstances. Modelling what happens when savings goals are not met helps clients understand that adjustments may be necessary, and it encourages flexibility in their approach to financial planning.

Setting priorities: Sometimes, clients may need to prioritize certain financial goals over others. For example, they might need to prioritize an emergency fund over retirement savings during a challenging period. Modelling these scenarios helps clients make informed decisions about where to allocate their resources.

Risk assessment: Modelling different savings scenarios allows Advisors to assess the potential risks associated with not saving as planned. This risk assessment can inform discussions about insurance coverage and other risk management strategies to protect against unexpected financial setbacks.

Educational opportunity: Exploring the “what if” scenarios offers an educational opportunity for clients. They can gain a better understanding of the importance of savings and the consequences of not meeting their goals. This increased financial literacy can lead to more informed decision-making.

Alignment with goals: Clients have unique financial goals and values. Modelling various savings scenarios helps ensure that the financial plan is aligned with their individual goals and priorities, even when they can’t save as originally intended.

Long-term perspective: By considering potential setbacks in the savings plan, clients can maintain a long-term perspective. This encourages them to continue their financial journey even when faced with short-term challenges.

Enhanced client-Advisor relationship: Openly discussing the possibility of not meeting savings goals fosters trust and transparency in the client-Advisor relationship. Clients are more likely to seek guidance from Advisors who acknowledge and address the realities of financial planning.

Helping clients model scenarios in which they can’t save as planned is a fundamental aspect of responsible Financial Advising. It enables clients to prepare for uncertainties, make informed decisions, and adapt their financial plans to their individual circumstances, ultimately contributing to their long-term financial well-being.

3. What if I get sick and need to take a leave of absence from work?

Financial Advisors and Planners should assist their clients in preparing for the possibility of needing to take a leave of absence from work because:

Financial resilience: Sudden illness can have a significant financial impact due to medical bills, reduced or lost income, and other associated costs. Preparing for such a scenario ensures that clients have the financial resilience to weather the storm without sacrificing their long-term financial goals.

Risk management: Part of a Financial Advisor’s role is to assess and manage risks. Illness and the resulting loss of income are financial risks that should be addressed in a comprehensive financial plan. By preparing for this scenario, clients can have strategies in place to mitigate the impact on their financial well-being.

Financial Security: Being prepared for an illness and the potential need to take a leave of absence provides clients with a sense of financial security. This peace of mind is valuable in reducing stress and anxiety during challenging times.

Budgeting and emergency funds: Advisors can work with clients to establish and maintain emergency funds that can cover essential expenses during a leave of absence. They can also assist in developing a budget that ensures clients are financially prepared for such situations.

Insurance planning: Advisors can help clients assess their insurance coverage, such as health insurance, disability insurance, and life insurance, to ensure they have adequate protection in case of illness. These discussions can highlight the importance of insurance planning and identify any coverage gaps.

Retirement and long-term goals: Understanding the potential impact of a leave of absence on retirement and long-term financial goals allows clients to make informed decisions. Advisors can help clients adjust their savings and investment strategies to account for temporary changes in income.

Return-to-work planning: Advisors can help clients create a plan for returning to work after an illness. This plan might involve a gradual return to work, potential career changes, or exploring disability accommodations. Having a plan in place can reduce the financial and emotional challenges associated with returning to work after a leave of absence.

Family and dependents: Clients with dependents need to ensure their loved ones are financially protected in case of their illness. Advisors can help clients plan for the well-being of their family members in such situations.

Long-term financial well-being: Preparing for an illness is not just about managing immediate financial challenges but also about preserving long-term financial well-being. Advisors can help clients strike a balance between addressing short-term needs and maintaining their financial goals.

Financial Advisors and Planners should help clients prepare for the possibility of needing to take a leave of absence from work because it is an essential part of comprehensive financial planning. It ensures that clients are financially protected, helps them make informed decisions, and provides peace of mind during challenging times, ultimately contributing to their overall financial well-being.

4. What if I want to retire early?

Financial Advisors and Planners should assist their clients in exploring the possibility of early retirement because:

Goal alignment: Early retirement is a significant life goal for many individuals. By addressing this goal, Advisors can ensure that a client’s financial plan aligns with their aspirations, and they can help clients create a roadmap to achieve it.

Financial feasibility: Early retirement often requires careful financial planning to ensure that clients have the resources to sustain their lifestyle and cover expenses throughout their retirement years. Advisors can help clients assess whether early retirement is financially feasible and recommend strategies to make it a reality.

Savings and investment planning: Achieving early retirement typically involves more aggressive savings and investment strategies. Advisors can work with clients to create a tailored plan that maximizes savings, optimizes investments, and balances risk to achieve their early retirement objectives.

Risk assessment: Advisors should help clients understand the potential risks associated with early retirement, such as outliving their savings, healthcare costs, and market volatility. By identifying and mitigating these risks, Advisors can increase the chances of a successful early retirement.

Tax planning: Early retirees may have unique tax considerations. Advisors can help clients plan for tax-efficient withdrawals from retirement accounts and other tax strategies to minimize the impact on their savings.

Income sources: Early retirement often means a shift in income sources. Advisors can help clients explore various income streams, including pensions, Government benefits, part-time work, and passive income from investments, to support their retirement lifestyle.

Healthcare planning: Healthcare costs can be a significant financial concern during retirement. Advisors can assist clients in evaluating healthcare insurance options and estimating potential medical expenses in retirement.

Longevity and inflation: Early retirees must account for the possibility of an extended retirement period and the impact of inflation on their purchasing power. Advisors can incorporate these factors into financial projections and planning.

Lifestyle choices: Early retirement may involve lifestyle adjustments, including downsizing, relocation, or changes in spending habits. Advisors can help clients make informed decisions about these choices while considering their financial implications.

Legacy and Estate planning: Early retirees often want to plan for their legacy and ensure that their estate is in order. Advisors can help clients with estate planning, including wills, trusts, and beneficiary designations.

Retirement drawdown strategies: Clients planning to retire early may require advice on accessing their retirement accounts without incurring unnecessary penalties. Financial Advisors can assist clients in examining various decumulation and drawdown options.

Ongoing monitoring: Achieving early retirement is a long-term process. Advisors play a crucial role in continuously monitoring and adjusting the financial plan to ensure that early retirement goals remain on track.

Financial Advisors and Planners should help their clients explore the possibility of early retirement to address their specific financial needs and goals. By considering early retirement as part of the overall financial plan, advisors can provide guidance, support, and strategies to help clients achieve their dream of retiring early while maintaining financial security and peace of mind.

What were the common elements when we combine reasons for addressing each specific question, as it relates directly to the client experience?

  • Stress reduction
  • Easier time adapting to change and weathering volatility
  • Building a transparent, trusted relationship with their Advisor
  • Improved decision-making
  • Reduction in risk for self and family
  • Long-term goals more likely to be met

Helping your clients plan and prepare for the unexpected and the “what-ifs” helps them in countless ways, and I hope we’ve been able to articulate both the tangible and intangible benefits that your clients stand to experience.

Now that we know why, let’s talk about the how.

How can you help your clients prepare for the unexpected? I’m so glad you asked!

Today’s case study client is Linda Gill. Linda is 53 years old and resides in the beautiful province of British Columbia.

We’ve been working with Linda for years but after conducting a check-in with her to see how she’s doing, we realized she was starting to have some questions and concerns about potential what-if’s. We’ve called Linda into the office today so that we can address her concerns and also re-confirm we have everything in place to ensure she meets her long-term goals – regardless of what may or may not happen.

Her questions today are:

✅ What if we don’t get the rates of return we’re expecting?
✅ What if I can’t save what we’ve planned?
✅ What if I get sick and need to take a leave of absence from work?
✅ What if I want to retire early?

We’re going to use Snap to help Linda plan for the unexpected.

This CE Accredited financial planning webinar was reordered on October 17, 2023. Snap Projections regularly hosts Accredited webinars to help educate Canadian Financial Advisors & Planners. If you’d like an invite to the next webinar, you can opt-in to receive financial planning tips and resources.

If you’d like to try modelling these questions and scenarios, Financial Advisors, Planners, and Investment Managers are eligible for a 14-day Free Trial of Snap Projections.

The Financial Advisor's Marketing Guide


The Financial Advisor’s Marketing Guide

Learn how to build an online presence, create and share valuable content, and engage with prospects and clients through email marketing.