Until now, most financial advisors have avoided discussingnegative interest rates with clients.

The concept seems too complex and counter-intuitive to supportprinciples of sound planning and investing.

However, as media coverage about negative interest rates grows,some of your clients will want to know how they could be affectedand what they can do to prepare.

Read: Interest rates good, returns bad forretirement income

A negative interest rate policy (NIRP) is a step beyond the zerointerest rate policy (ZIRP) the Federal Reserve pursued from 2008through December of 2015. Under NIRP, central banks lower theirtarget rates paid for deposits below zero.

The idea is that NIRP will force commercial banks to make moreloans while savers will spend more rather than save. This willincrease economic activity and spur inflation and stock marketshigher.

NIRP became reality in mid-2014 when the European Central Bankcut its target deposit rate from 0% to -0.10%. That rate wasreduced to -0.30% in December of 2015, and there is a good chanceit will be cut further in March of 2016. The Swiss National Bankcurrently has a deposit rate of -0.75% and Sweden is at -0.35%. Inlate January, Japan surprised markets by cutting its deposit rateto -0.10%.

In December of 2015 the ZIRP concept crossed the Atlantic whenthe Bank of Canada (BOC) indicated: “Recentexperience indicates that negative interest rates are indeed aviable policy tool.”

First, clients should understand that NIRP makes sense only inan economy where growth is stagnant and traditional monetary tools,including ZIRP, haven’t worked. Even then, NIRP is a radicalexperiment, unimagined a decade ago.

Second, NIRP is as much about altering consumer/saver/investorpsychology as it is about monetary policy. To work, it depends oncentral banks’ ability to encourage consumers to buy and borrowmore, savers to save less, and investors to take more risk.

The influence may seem subtle but can become powerful andcontagious once NIRP is embedded in an economy and the media starts echoing central bankmessaging.

Now is the best time to help your clients commit to savingsgoals and evaluate a comfortable risk tolerance. Since NIRP impliesweak economic growth and central bank desperation, this is not agood time to increase personal borrowing.

Currencies of NIRP-leaning jurisdictions, including the euro,yen, and Canadian loonie, may continued to weaken vs. the dollar.However, if NIRP makes its way to Canada, it’s possible the FederalReserve also might adopt it eventually.

If and when that appears likely, clients may want to increaseallocations to hard assets that could help to protect purchasingpower--e.g., real estate, commodities, and precious metals.

Finally, to make NIRP work, central banks recognize that theymust prevent hoarding of currencies, perhaps by restricting accessto it.

If clients like to go to the bank and withdraw cash from ATMs,it may not be a bad idea to have a small stock of currencyhandy.

Increasing liquid assets (banks accounts, money market funds andlife insurance cash values) also may be prudent until the NIRP eraends, one way of another. Here’s the best online resource forincreasing your NIRP IQ.