Finra joins effort to help the unemployed

The financial advisory industry is reaching out to workers who have been laid off or forced to retire and are desperately in need of help with navigating the shoals of unemployment.

The number of people who claimed jobless benefits during the first week of March rose by 185,000 to 5.4 million, according to the Department of Labor, which is the highest total since it began tracking unemployment claims in 1967.

“Individuals can’t control when they may face unemployment,” said John Gannon, senior vice president for investor education for the Financial Industry Regulatory Authority Inc. of New York and Washington. “But when faced with a sudden job loss, they may be able to ease the financial impact on themselves and their families.”

In a novel initiative to educate investors, Finra and the Better Business of Bureau of Metropolitan New York late last month published “Managing Your Job Transition: Making Smart Financial Choices After a Job Loss.”

The brochure offers a list of tips, including advice to “avoid taking out loans against retirement savings plans” and a guide to employers’ benefit plans.

It is being distributed by state work force agencies in states suffering high unemployment, such as California, Texas and Indiana, Mr. Gannon said. The text is also available on Finra’s website and on newyork.bbb.org/jobloss.

Health insurance and retirement savings plans are the two key benefits newly unemployed workers need to scrutinize, according to Mr. Gannon.

“They need to find out the terms of the plans and what covers them,” he said. “For retirement savings plans, workers need to find out if they are vested and when they can have access to the money.”

Laid-off workers should also consider rolling over their 401(k) retirement funds to their individual retirement account, said Nicholas Yrizarry, chief executive and founder of an eponymous firm in Reston, Va.

“401(k)s may be a liability,” he said. “There’s a lot of evidence that they are subject to corporate assets and that investment selections are very limited.”

Mr. Gannon agrees.

“Workers who are now unemployed need to look at the economic health of the company, and if they are concerned, they should definitely consider rolling over their 401(k). They should also assess the quality of their 401(k) plan, and if they don’t have enough choices, they may want to roll it over,” Mr. Gannon said.

If workers have health coverage in their pension plan and are laid off, Mr. Yrizarry suggests that they see if the plan allows them to continue coverage if they are hired by another company.

“They may be able to preserve that benefit,” he said. “Some pension plans have that window. People should look into it.”

Unemployed workers are also being advised to consider volunteering at non-profit organizations.

“Volunteering has a number of benefits,” said Aaron Spevacek, an analyst for Strategic Philanthropy Ltd. in Chicago, who from 1998 to 2003 ran a volunteer center in Alexandria, Va.

“It can lead to a tangible job; it can be a networking resource, and it can be a place where you can polish your skill set,” Mr. Spevacek said.

When choosing which non-profit to assist, he added, workers should make sure not only that their skills match the organization but that the non-profit has the capacity to use the skills and the ability to manage them.

“If you have tech skills, for example, and can create a website, you want to make sure the non-profit has the means available to put up a new website,” Mr. Spevacek said.

E-mail Charles Paikert at [email protected].