Op-ed: Advisors can help clients manage their human capital

  • Advisors use their expertise to create a personalized financial plan.
  • That same advisor can leverage their skillset to work with a client to manage their human capital to earn income and build wealth.
  • This is a key role because human capital is essentially the future earning powera person has left in their career.

The role of a financial advisor can encompass areas that many people might not expect.

The truth is a financial advisor is not just someone who helps with investments. Quite often, the job is to assist with every aspect of a client's financial life.

Advisors use their expertise to create a personalized financial plan to help realize the client's goals. That same advisor also can leverage their skillset to work with a client to manage their human capital to earn income and build wealth.

This is a key because human capital is essentially the future earning power aperson has left in their career. I believe it is my responsibility to help clients maximize their human capital and plan for it so that its transition into financial capital is optimized.

More from FA Playbook:
Proposed law would offer Americans a retirement recovery plan
You don't have to be rich to need a financial advisor
Tips from financial advisors for getting your Medicare coverage right

Of course, stable income is a necessary piece of building wealth. When a client experiences job loss, the impact on their financial life can be dramatic. The coronavirus pandemic has hit many of my clients especially hard. Because of our established trust, many clients have confided in me, hoping that my expertise can help them evaluate their job options and guide them to a solution.

While I'm not taking on a job as career coach, I am offering tips to clients to navigate the changing job market. My role is to help clients set up their finances to achieve their dreams, and — because of thepandemic —that includes answering questions surrounding job loss.

Before the pandemic, various studies concluded that 85% of jobs were filled through networking. Covid-19 has all but eliminated in-person networking opportunities, creating a significant roadblock to finding employment.

Clients are also struggling to crack the code of the hidden job market. It's no secret that many positions are filled without ever being advertised. With recruiters starting their candidate search within their existing network, the hidden job market proves that word of mouth can make or break your search.

My experience in the financial industry has taught me that successful networking isn't about meeting as many people as possible. Instead, you're actually better off targeting key contacts to meet well-connected people.

To that point, 47% of companies use social media to attract employees, according to a Jobvite Recruiter Nation survey. Even networking events have moved online.

Although in-person networking may be a thing of the past (at least for now), social media and virtual networking present substantial opportunities for job seekers — and I'm sharing tips with my clients on how to get comfortable with creating a virtual version of themselves.

I try to offertips to my clients who are looking for jobs during the Covid-19 pandemic. The use of social media and online events by potential employers means job seekers must clean up their online presence and practice their video skills to expand their virtual network. If they do, it could increase their chance of landing an open position.

I urge my clients to pay close attention to social media. Creating a strong social media presence is the first step. Facebook, Instagram and Twitter are popular platforms that can help my clients connect with people they know. However, LinkedIn is where the magic happens. LinkedIn is my favorite recommendation when I hear of someone looking for a job.

Even former President Barack Obama once joked during a TV press conference that he would join LinkedIn to help him land a job after his term was up.

Hiring managers and employers use LinkedIn to source talent. To that point, 87% of recruiters use LinkedIn as part of their candidate search, according to a Jobvite Recruiter Nation survey.

It's best to start with people you know. If my clients contact me about losing their job, I encourage them not to be shy and to reach out to their friends and family to let them know you're looking for a job. Send a connection request on Facebook or LinkedIn, and be sure to add a personal note.

Another piece of advice I offer my clients is to look up alumni networks you may have forgotten about and get in touch with former classmates and colleagues. It could help you tap into the hidden job market by getting a referral to a position that's opening up.

Professional associations are another excellent source for networking. Joining and connecting with people in a professional association allows you to attend (virtual) events and meet others within your field. You may also connect with members who know of companies that are hiring and may arrange a job interview for you.

Video skills are also very important these days. When it comes to honing those video skills, I tell clients to practice, practice, practice.

Why? Because so many business conversations and events are now taking place online.

Above all, I suggest to clients to get comfortable using video and test their technology. Proper attire is also important — dress as you would for an in-person interview. If you lack video experience, practice with a spouse or friend, so you're more relaxed during the virtual interview.

Just like financial investments require time to grow, job searching won't happen overnight, either.

So much has changed this year. Employers and their human resources departments are still adapting to the pandemic and economic slowdown. Also, many firms are dealing with changes to existing staff and that can lead to longer response times when applying for open positions.

That means the job search and the hiring process itself may take a little more time than usual. That's why I've encouraged my clients to be patient but persistent in their efforts.

Source: Read Full Article


Biden Will Have to Heal Economy With Little Congressional Help



There’s conflicting evidence about the buoyancy of the U.S. economy. On one hand, cases of Covid-19 are spiking as winter approaches, and with a Democratic president poised to take office, Republicans are showing no willingness to spend the kind of money on a relief package that Democrats say is necessary. On the other, the news isn’t all bad—employment is recovering from pandemic-induced lows and the manufacturing and housing sectors are thriving.

Since all that makes it difficult to know what kind of economy President-elect Joe Biden will inherit on Jan. 20, the best you can do is consider scenarios. The median forecast of 62 economists surveyed by Bloomberg News is for the economy to grow at an annual rate of 3.7% in the first quarter. But the median of the five most recently updated forecasts is only 2.7%. And Bloomberg’s own economists see an air pocket ahead, with the economy shrinking at an annual rate of 0.5% in the first quarter before accelerating for the rest of the year.

The pandemic is a big potential negative, of course. The seven-day average of new cases in the U.S. has more than doubled in the past month, to 117,000 a day as of Nov. 9. The daily death toll has risen by a third, though it’s still less than half its peak in April. Federal Reserve Chair Jerome Powell warned at a press conference on Nov. 5 that “the outlook for the economy is extraordinarily uncertain and will depend in large part on the success of efforts to keep the virus in check.”

What’s unclear is whether the U.S. can survive the wave of infections without shutting down again. Most state and local authorities are taking a surgical approach, stopping only activities that are known to be problematic, such as indoor dining in some states. “It’s not going to be the widespread lockdown that we saw earlier in the year,” says Blerina Uruci, senior U.S. economist for Barclays PLC.

But this pandemic has fooled people more than once. Laissez faire may not be possible if the cases and fatalities continue to build. “Europe today is the prime example of how quickly a resurgence of the virus can reverse economic gains,” Steve Blitz, chief U.S. economist of TS Lombard, wrote in a client note on Nov. 6.

Senate Majority Leader Mitch McConnell said the day after the election that he hoped “partisan passions” wouldn’t prevent a coronavirus relief package from being enacted by yearend. But on Nov. 9 the Kentucky Republican reiterated his reluctance to go big when he said “targeted” relief should be sufficient, pointing to favorable news from Pfizer Inc. on its Covid-19 vaccine and the drop in the unemployment rate in October to 6.9%, from 7.9% in September and a high of 14.7% in April. Republicans are talking about a $500 billion package, while Democrats want $2.4 trillion, including aid to state and local governments.

Economists agree that manufacturing and housing should remain strong at least through Inauguration Day because demand is robust and inventories are low. There’s disagreement about consumer spending. Jim Paulsen, chief investment strategist for Minneapolis-based Leuthold Group LLC, wrote in a note to clients on Nov. 2 that during the pandemic consumers have built up more than $2.5 trillion in extra savings that’s “the fuel for a growth bomb waiting to explode.”

Even if there isn’t another relief bill this year, “personal income will rise 6.5% in 2020, which is the largest annual gain since a 7.4% increase back in 2006, and the peak of that cycle’s housing boom,” Michael Englund, chief economist of Action Economics LLC, wrote in a Nov. 6 email.

But Aneta Markowska, chief economist of Jefferies LLC, worries consumption spending will eventually be dragged down. “The 20+ mln individuals collecting unemployment benefits have experienced a 60% drop in income in the past 3 months, and we believe they are close to running out of savings,” she wrote in a Nov. 9 client note with her colleague, money-market economist Thomas Simons. The economy isn’t out of the woods yet.
Read next: Cheap Credit Is Widening Wealth Inequality Across America’s Racial Lines

Source: Read Full Article


A 'blue wave' in U.S. elections could bring forward Fed rate hikes, says Morgan Stanley

  • A Democratic sweep in the coming U.S. elections will likely unleash more fiscal stimulus, said Jim Caron, a fixed income portfolio manager at Morgan Stanley Investment Management.
  • That could boost U.S. growth prospects beyond 2021, but could also cause the Federal Reserve to hike interest rates earlier than expected, said Caron.
  • Caron warned that a "blue wave" might not be all good for the U.S. economy.

A Democratic sweep in the coming U.S. elections will likely unleash more fiscal stimulus, but it could also cause the Federal Reserve to hike interest rates earlier than expected, said a Morgan Stanley portfolio manager.

The first rate hike by the Fed could be brought forward from around 2024-2025 to 2023-2024 — depending on how other policies, such as taxation, turn out in the event of a "blue wave," said Jim Caron, a senior member of Morgan Stanley Investment Management's global fixed income team.

A "blue wave" refers to an election outcome where Joe Biden defeats Donald Trump in the presidential race, and Democrats win a majority in both chambers of Congress.   

Caron told CNBC's "Squawk Box Asia" on Wednesday that the U.S. economy, under pressure from the coronavirus pandemic this year, was already expected to rebound in 2021. Additional stimulus that's likely to come with a "blue wave" would boost that growth potential further, he added.

"That means the growth impact could go into not just 2021, but also 2022," he said.

"The effect that this has though — that we need to be wary of — is that this could bring the first rate hike, nobody wants to talk about rate hikes right now, but this could bring the first rate hike by the Fed in from 2024 to 2025 to maybe 2023 to 2024," he explained.

The Fed has maintained its policy rate near zero since March and indicated that rates could stay at that level through 2023. That has kept Treasury yields low, even though they rose on Tuesday on a potential stimulus package ahead of the November elections.

But Caron warned that a Democratic win in the November elections might not be all good for the U.S. economy. He said there could be "more questions than answers" on issues such as the Democrats' tax policy and their approach toward regulation, which could create uncertainties.

Many investors fear that a Biden win could result in higher taxes and tighter regulations — which could lead to lower corporate profits and less economic growth.

"I think the markets are being a little bit complacent about, just thinking that: 'Well on Nov. 3, the day of the election, we're going to get all the answers and everything's going to be great going forward'," said Caron.

"I actually think there's going to be more questions than answers after the election than there is right now."

Source: Read Full Article


1 billion kids in developing nations may be out of school due to pandemic, says World Bank head

  • World Bank President David Malpass told CNBC the organization estimates 1 billion students in developing countries may be out of school due to the coronavirus pandemic.
  • He said a second wave of Covid-19 cases that prolongs shutdowns is a real concern for children.
  • The economic recovery also is transpiring more slowly in developing nations, Malpass said.

World Bank President David Malpass on Wednesday expressed concerns about the consequences of the coronavirus pandemic on school-aged children in developing countries, especially if there is another spike in infections that prolongs the health crisis.

In an interview on CNBC's "Closing Bell," Malpass said there also are educational challenges in wealthy countries like the U.S. as schools shift to virtual classes that potentially keep parents from returning to work. However, he said his worries are more pronounced about other nations.

"The learning goes backward. That's a particular problem in the developing world," Malpass said. "We think there are …1 billion children out of school in the developing world waiting, really, for the recovery to take hold. So if there's the second wave, that's a concern."

Malpass is not the first to sound the alarm about the detrimental impact of the pandemic on children. Last month, the United Nations warned that at least 24 million students across the world could drop out of school as a consequence of the Covid-19 outbreak.

"The longer children remain out of school, the less likely they are to return," Henrietta Fore, executive director of the U.N.'s Children's Fund, said during a press call in September. "That's why we are urging governments to prioritize reopening schools when restrictions are lifted."

Malpass, a former U.S. Treasury Department official who became World Bank president in 2019, emphasized the need to control the pandemic through the development of therapies and vaccines. The damage it has caused already is significant, he said, with an additional 150 million people now projected to be in extreme poverty next year.

That represents "a giant worsening of the poverty conditions in the world because of the pandemic and the shutdowns," he said. The number of people living in extreme poverty — meaning on less than $1.90 per day, per the World Bank — had been declining for about a quarter century.

While the pandemic-induced recession has eased in wealthy countries, Malpass said that has not been an experience shared across the world. "Apart from China, many of the developing countries are worse than had been earlier expected, so it's this unequal process of recovery going on," he said.

High-population, poor countries such as India, Ethiopia and Nigeria are especially facing "grave challenges," according to Malpass. He also referenced Zambia, whose government has been requesting delays to its bond payments, including again this week.

There needs to be long-term solutions to help developing nations that have been set back by the pandemic, Malpass contended. He said the World Bank, which has provided billions of dollars in coronavirus support to countries, continues do its part to help foster an economic recovery.

"We're focused on providing additional net resources. That helps. Also helping the countries find ways to attract private sector investment and then, very importantly, this debt-reduction process," he said. The organization is "trying to get the creditors to recognize that it's in their long-term interest and the world's interest to reduce the actual stock of debt in order to create a brighter future for some of the poorest countries."

Source: Read Full Article


Coronavirus mortgage bailouts fall below 3 million in pandemic's sharpest decline

  • The number of mortgages in active pandemic-related bailouts plunged as the first wave of forbearance plans hit the end of their six-month term.
  • Over the past week, active forbearances dropped by 649,000, or 18%, according to Black Knight, a mortgage technology and data analytics firm.
  • That brings the total number of plans below 3 million for the first time since April.
  • As of Oct. 6, 2.97 million homeowners remain in pandemic-related forbearance plans, or 5.6% of all active mortgages, down from 6.8% the previous week.

The number of mortgages in active pandemic-related bailouts plunged in the past week as the first wave of forbearance plans hit the end of their six-month term.

It was the largest decline since the crisis began.

Over the past week, active forbearances dropped by 649,000, or 18%, according to Black Knight, a mortgage technology and data analytics firm. That brings the total number of plans, both government and private sector, below 3 million for the first time since April. In addition, the decline was noticeably larger than the drop of 435,000 when the first wave of forbearances hit the three-month mark in early July.

As of Oct. 6, 2.97 million homeowners remain in pandemic-related forbearance plans, or 5.6% of all active mortgages, down from 6.8% the previous week. The loans represent collectively $614 billion in unpaid principal.

These plans allow borrowers to delay their monthly payments for at least 30 days and up to one year. The plans are generally administered in three-month blocks, with the option to renew at the end of each period. The payments can be made up when the loan is refinanced or the home is sold. Lenders are also doing some loan modifications, lowering interest rates, as well as allowing some borrowers to add the payments to the end of the loan. Most are not requiring any lump sum payment immediately after borrowers exit forbearance.

"As the first wave of forbearances from April hit the end of their initial six-month terms, we've seen the strongest decline in the number of active plans since the pandemic began," said Andy Walden, Black Knight economist and director of market research. "Though the market continues to adjust to historic and unprecedented conditions, these are clear signs of long-term improvement."

An additional 800,000 forbearance plans are slated to reach the end of their initial six-month term in the next 30 days.

The improvement in mortgage bailout numbers was across all investor classes, but portfolio-held and private-labeled security loans saw the greatest reduction, with active forbearances falling 24%, or by 228,000.

Forbearances on loans backed by Fannie Mae and Freddie Mac declined by 16%, or by 213,000. FHA/VA loan forbearances declined by 15% — by 208,000.

About 78% of the mortgages that remain in bailout plans have had their terms extended at least once since March. Since there are 800,000 forbearances hitting their six-month term over the next month, expiration and extension activity is likely to remain high throughout October.


Source: Read Full Article


Restaurateur Danny Meyer on stimulus need: 'We cannot reemploy people if we go out of business'

  • "We cannot reemploy people if we go out of business," Danny Meyer said of the need for restaurant industry aid. 
  • "I think that the country needs to understand that this is an industry with 600,070 members. We are too broad to fail," the Shake Shack founder told CNBC. 
  • Meyer called the near-term end to coronavirus relief negotiations a "crushing blow." 

Famed restaurateur Danny Meyer told CNBC on Wednesday that the dining industry desperately needs government aid due to the coronavirus pandemic, warning of significant economic damage without it. 

"We cannot reemploy people if we go out of business," Meyer said "Closing Bell," one day after President Donald Trump put an end to broader Covid-19 stimulus negotiations "until after the election." Trump later expressed support for smaller bills targeting the airline industry, small business and stimulus checks for individual Americans.

Meyer, who is CEO of Union Square Hospitality Group and founder of burger chain Shake Shack, called the halt to relief talks a "crushing blow" for those in the restaurant business. He said that is especially true as restaurants grapple with the uncertainty around colder weather, complicating the pandemic-era lifeline of outdoor dining.  

"I think that the country needs to understand that this is an industry with 600,070 members. We are too broad to fail," he said. "We're not like the auto industry or airline industry, where you can get your arms around just a small handful of carriers." 

Last week, a $2.2 trillion coronavirus relief package passed by the Democratic-led House of Representatives included the so-called RESTAURANTS Act, which offers $120 billion for independent restaurants to help cover payroll and other operating costs. 

Restaurants have faced significant challenges during the health crisis, with many having to stop on-premise dining in March as governors implemented restrictions designed to slow transmission of the coronavirus. Upon reopening, restaurants have faced capacity restrictions and other pandemic-related challenges that add to difficulties in an already low-margin business. 

As of Aug. 31, Yelp data showed that 32,109 restaurants in the U.S. had closed during the pandemic, 61% of which were classified as permanent. The other 39% were considered temporary. 

In February, before Covid-19 upended daily life, there were 12.3 million people working in restaurants or bars on a seasonally adjusted basis, according to the Bureau of Labor Statistics. In April, that number plummeted to about 6.2 million. It was at just under 10 million as of September.

"They can't be hired back unless restaurants can reopen," said Meyer, whose New York City establishments include the Union Square Cafe and Gramercy Tavern.

He emphasized the role restaurants play in cities and neighborhoods as the U.S. economy tries to recover from the lows of the pandemic. 

"We are part of the psychological and emotional fabric of communities, and restaurants have just been heroic in trying to hang on," he said. 

Source: Read Full Article