Unemployment Benefits Expansion: What Advisors Should Know

Advisors who are self-employed, or who have clients who are, or are independent contractors or otherwise not typically eligible for unemployment benefits, may be covered now through the recent stimulus package, the Coronavirus Aid, Relief and Economic Security (CARES) Act. It may take time via the internet to apply, but the efforts will pay off for those who are stretched thin for income.

Through Dec. 31, the Pandemic Unemployment Assistance program will provide payment to many individuals not usually covered by unemployment insurance. Those include the self-employed, independent contractors and those "who have limited work history because they were unable to work as a direct result of the coronavirus public health emergency." To receive benefits, they must provide self-certification that they are otherwise able to work but for:

Being diagnosed with COVID-19;
A member of an individual's household has been diagnosed with COVID-19;
The individual is providing care for a family member diagnosed with the virus;
A child is unable to attend school because it is closed due to COVID-19;
The individual is unable to get to work because of a quarantine order or is self-quarantined based on health care provided advice;
The individual quit his/her job as a direct result of the virus;
The individual's job was closed as a direct result of COVID-19;
The individual has become the breadwinner or major support for household because the head of the household died as a direct result of COVID-19.

These benefits apply to up to 39 weeks, and includes any week a "covered" person received regular pay or extended benefits under any federal or state program.

However, not all self-employed individuals are applicable, including those who have the ability to "telework" with pay or are receiving sick leave or other paid leave benefits.

Other benefits include:

An additional $600 per week to any recipient for up to four months;
An addition 13 weeks of unemployment benefits through the end of year to help those whose state unemployment benefits run out.

Each state administers separate unemployment insurance. This guide can help.

Advisors' Input

Many advisors already have worked with clients to whom these benefits may apply.

"Our firm has created a CARES Act guide for individuals and business owners, including how-to-apply instructions," Danilo Kawasaki, vice president and chief operating officer of Santa Monica-based Gerber Kawasaki Wealth and Investment Management, told ThinkAdvisor in an email. "We are encouraging our clients who qualify for these benefits to act fast as we expect many of these benefits to be oversubscribed." (He was referring to the $349 billion allocated to the law's small-business loan program, though the program's funding will likely be increased soon.)

He noted that his firm has all employees, and "though our revenues are definitely being impacted, we vowed to keep every single employee we have, at their current pay."

Finally, he said, if an advisor is an independent contractor who has been affected by the pandemic and falls within income limits for unemployment benefits, "it is certainly within your right to apply."

Vance Barse, founder of Your Dedicated Fiduciary, remains upbeat, stating "The unprecedented situation in which we've found ourselves is replete with opportunities for financial advisors to show value to clients in ways that enhance the comprehensive financial planning process. It's common for clients to think about their advisor in the context of portfolio management and various types of insurance, but risk management comes in many forms, and helping clients through unemployment issues falls into that category."

— Related on ThinkAdvisor: