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Financial Planning > Behavioral Finance

You, the educator, part 2

By Wendy Boglioli

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Last month, I talked about the value of financial professionals taking on the role of an educator. I have learned a lot over the years meeting with top financial professionals throughout the nation.

This month, I’d like to share some best practices from some of those professionals about attorneys, preparing for major financial events, Social Security and financial environmental changes.

I believe clients should have a written holistic financial plan that includes a focused perspective and evolves over time with the right type of insurance products and investments.

• Long-term care insurance (LTCI) helps transfer the risk of long-term care, can help protect other assets and relieves the financial burden on their own portfolio, children and society.

• Life insurance is not just for the young. Older Americans may enjoy a second home or want to leave money for a charity when they pass. With proper beneficiary set up, a life insurance policy allows money to go exactly where the client wants it to go as part of the plan.

• Annuities are an important insurance product to consider. There are so many different kinds and in this rate environment fixed index annuities may be beneficial for your clients’ situation.

Preparing for major financial events
Do your clients have six months of money in an account set aside just to cover expenses after losing a job?

Best Practice: Suggest that your clients talk with you before the financial event occurs. You may have suggestions they didn’t know were options.

My husband Bernie needed to have his second hip replaced. We consulted our financial professional before and throughout this time. He provided various scenarios to consider and prepared us should we need to pay more than the original budget. 

Surgery ranged from $64,000 to $133,000; our responsibility could be from $4,000 to $24,000.

We knew where that money would be coming from and, if we had to take money out of our stocks, how the landscape of our finances would have changed.

One month after the surgery, we had gone through: A staph infection, a second emergency surgery, and six weeks of using PICC line infusion four times a day. We both had to decrease focus on our independent businesses.

But a lot of anxiety was averted because of our relationship and planning with our financial professional.

Attorneys: preventive insights
In March, I talked about how no single financial professional is necessarily going to be able to provide expertise for the wide variety of clients that they have in their book of business.

I think it is relevant to restate that a key member to your team of trusted experts is an attorney who specializes in elder care law.

Elder care issues range from complex estate planning, nursing homes issues, mental health laws and housing laws to disability insurance, Medicare and Medicaid regulations, plus a wide array of other concerns.

Best practice: An ounce of prevention. Help clients address issues that increasingly concern our aging population and younger people planning for the future

Social Security
Social Security used to be considered a major source of retirement income. Today it is more of a safety net that may provide some money for everyday living expenses.

It is so important to accumulate funds strategically before retirement to cover living expenses during a period of life when we aren’t pulling income from a job. This is where you and your team of advisors are so vital.

People are faced with consuming their money sooner than expected because they are living longer with needs and chronic illnesses. Modern medicine certainly is allowing people to live longer than ever before but that does not necessarily mean living illness free. And let’s not forget – it is estimated that people in retirement will need $250,000 just for regular medical needs. This is just one of the prices of longevity.

Financial environmental changes
We are living in a time when financial matters change quickly. The rising interest rates, falling rates, bull markets and the bear markets have all helped create quite conflicting views both in the press and in homes across the country.

Best practice: As a financial professional, you are in such a great position to help alleviate the anxiety and the confusion for your clients by meeting with them, or even through a simple phone call.

Today and in the future, there are so many choices of banks, credit unions, broker firms, credit card companies, mortgage offers, financial planners and financial services companies. All of them are vying for attention to get business from your clients.

Best practice: Separate yourself from the pack, stand out. Be the “go to source” for help with watching the clients’ back. Hold on to your clients, get referrals and prove you are value added to their financial well being.

For extra credit: Take this survey. You and your clients can use it to benchmark your approach to financial planning.

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