When an advisor sits down with his clients, he might go over investments and insurance coverage as part of a holistic retirement plan. According to Dave Henderson, if the advisor wants to provide the full breadth of financial advice to clients, then he needs to address life events like weddings and college tuition as well.
Henderson, CFP, ChFC, CLU, based in Greenwood Village, Colorado with Client One Securities, has long given advice on life events to clients, but it hit him on a personal level earlier this year, when planning for his own daughter’s wedding.
According to the Wedding Report, the average wedding in 2015 cost $26,601, which does not include the cost of the honeymoon. Henderson helps clients prepare for expensive events well in advance of their occurrence in order to eliminate emotional, possibly bad decisions that can wreck their retirement … before they even get there. Retirement Advisor discussed the process on how he approaches these topics with clients and what the consequences are if not thoroughly planned for.
Retirement Advisor: So how do you bring up the topic of a wedding, what does that fall under when helping someone plan out their finances?
Dave Henderson: It’s in the general financial planning realm. You have college costs, retirement costs and wedding costs. When I first meet with clients, we discuss their income, assets and when they want to retire. I’ll ask: “Do you have any future assets that you expect or any inheritance? What about future expected expenses?”
RA: Do you think parents, who don’t work with an advisor, don’t think to save for a wedding?
Henderson: A lot of parents who I talk to already have that thought in their mind. Some will say “I want to pay for college so my child will come out of school debt free.” Others say they want to pay for their child’s wedding as a good send off. Others will say “I find my retirement more important so I’ll contribute a little bit.” So I think it’s in the back of their minds.
RA: Do you bring it up with all of your clients?
Henderson: It’s something I bring up, and I council my clients to set the budget. It really removes a ton of stress.
RA: Why do you think parents are willing to give to their kids at the expense of their retirement?
Henderson: It certainly depends on the family. But I think a lot of parents want to make sure their kids, particularly their daughters, have this dream wedding they’ve always wanted. Unfortunately, there are examples of parents pulling money from their
retirement accounts or actually stopping contributions to the accounts in order to pay for the wedding. I think that’s a terrible idea.
Ultimately, you want to make sure you can take care of yourself and you’re not going to be a burden on your kids. And people know spending a lot of money on a wedding is not a good way to make sure your retirement is going to be secure.
RA: Have you seen someone run into trouble from spending too much money?
Henderson: We know someone who had an $80,000 wedding — that’s just crazy for one day! We know the daughter as a friend, but I don’t know exactly where the money came from. I have to imagine it created some kind of financial drain. If you take $80,000 out of any pot of money, the potential of what it could have grown to is much larger than the $80,000.