Financial planners in the greater Washington area are telling their clients to stay calm, review cash reserves and make a plan as the coronavirus has ground many businesses to a halt.
“I will say generally that the greater D.C. area has typically weathered recession much better than other major metropolitan cities because we are the seat of government and many employers are government contractors in our DMV area,” said Chris Detmer, a financial planner with Washington Wealth Group.
Jennifer Berman, a compliance consultant for health care brokers, said the region might even be better prepared for something like this because of the recent government shutdown.
“This is not the first time in recent history that we have seen a substantial slow down with respect to the workforce,” Ms. Berman said. “I don’t know if that makes us more prepared or unlucky.”
The Department of Labor data from the week of March 8 shows that 3,700 people filed for unemployment in Maryland and 2,800 in Virginia. The District, which maintains its own data, reported that 21,500 residents applied for unemployment as of March 24.
A spokesperson for the Maryland Department of Labor said analysts are seeing thousands of unemployment claims every day.
Mr. Detmer said he and his partners have been on the phone with clients nonstop. As he listens to their worries and changing situations, he advises them that the first step is to remain calm, because “nobody makes a good decision when they are full of fear.”
This is a good time to reevaluate household budgets and shop for lower interest rates for anybody who has debt, mortgages, credit cards, student loans to try to lower the cost of the debt and increase cash flow, Mr. Detmer said.
Maura Schauss, a financial planner with Washington Wealth Advisors, said she is advising clients who are able to “weather the continued volatility” to employ dollar-cost average in the stock market, which means investing more when the stock market is down.
Ms. Berman’s clients are calling her from 8 a.m. until 8 p.m. to figure out ways to continue offering their employees benefits, specifically health care, even if they are forced to stay home.
Typically, if employees are not at work, they don’t qualify for the group plan their employer offers, Ms. Berman said. But many insurance carriers are changing their contracts to allow employers, if they are able, to continue paying for their employees benefits while they are furloughed.
If employers aren’t able to afford the benefits for their employees, they will have to turn to COBRA, which allows people to continue their coverage after they lose their jobs.
As for the long term effects of the pandemic on the region, Ms. Schauss said there are many unknowns and unemployment will be high, but the policies that are implemented now will impact how long the recovery takes.
“The markets and the economy are reeling from a fast and severe economic shock and, unlike the great recession of 2008, it has been caused by something outside of the economy,” Ms. Schauss said, adding that economists are predicting recovery by the end of this year or early 2021.
Mr. Detmer said any cash the government can put in the pockets of individuals and businesses is meaningful however, he hopes that people will be ready to fulfill their patriotic duty and return the favor to the government when they come asking for an increase in taxes.