Close Close

Financial Planning > Tax Planning

The Year to Talk About Money

Your article was successfully shared with the contacts you provided.

We all made it to a new year. No one thought the pain and suffering of 2020 would ever end but gladly it did. (Especially for my Philadelphia Eagles.)

(Related: 6 Industry Sales Opportunities for 2021)

We now have a reset opportunity for all things money.

I think we should take advantage of turning the calendar’s page and highlight 2021 as “The Year to Talk About Money.”

For most all of your clients and prospects, if there was ever a time to pause and rethink their relationship with money, it’s now. Let’s just take a look at the money areas that have or may change in the twelve months ahead. Even a cursory glance at this list should drive all of us to the realization that we need to reach out to clients and prospects to have a money talk. Here are the key areas screaming for attention:

1. The Uncertain Economy

What type of economy will exist in the new year? How will it impact employment prospects, salary levels, interest rates and stock market returns? When will the positive impact of the vaccines be felt? Which businesses will not come back? Which new businesses will prosper? There is much uncertainty related to the economy here and in the developed world. How will it impact households?

2. The Savings Rate

As a result of the pandemic, the household savings rate has climbed to 13.6% from 7.6% in 2019 according to Statista Research’s Dec. 3, 2020, release. For those lucky households, the question is how they will deploy these increased savings to improve their financial futures–protection, savings or investments?

3. Financial Plans

As we read in the financial media, approximately 30% of households have a written financial plan or budget of some kind. This low number continues to surprise me. Like my childhood hero Yogi Berra used to say, “If you don’t know where you are going, you’ll end up someplace else.” How can we help households get a plan in place to guide their efforts?

4. Replenishment of Emergency Savings

Many households will need a plan to replenish their emergency funds they used during the pandemic. How will they get back to where they were financially?

5. Changing Income, Property and Estate Taxes

At some point this year the reality that all the pandemic related and projected stimulus spending and tax revenue shortfalls will need to be repaid will set in. This will likely result in many jurisdictions proposing increased taxation of higher income, estate and asset households. How should consumers act to minimize these increased tax burdens?

6. Changing Product Landscape

Consumers may be looking for product solutions that will no longer easily exist. Many companies are exiting lines of business that provide long-term guarantees. Many consumers could use these guarantees in their planning efforts. Where will consumers find alternatives?

7. The Scope and Health of Government Social Programs

The financial state of Social Security, Medicare, Medicaid and the Affordable Care Act will move to be front and center. Either through the political process or just plain necessity our country will need to address solvency and benefit issues for these programs. How should households prepare for these changes?

8. The Need to Upskill or Reskill

Households are beginning to realize that they get paid for their skills today. How should they invest in improving their skills or in skills that will qualify them for a position in an entirely new field? How should they fund this need? What employment opportunities will yield the best return for the investment?

9. Adapting to Technological Change

The pandemic brought forward the need to digitalize business models by a number of years. We are also just beginning to see impacts of the Fourth Industrial Revolution, including artificial intelligence technologies. These new technologies are and will continue to change how business is conducted and what worker skills they will need. How should households embrace these changes on how they conduct their financial lives?

10. Changing Focus to Income Versus Accumulation

The time is now to help consumers near or in retirement with how to generate protected or guaranteed lifetime income. They are finding that they cannot live on interest received on their savings at their local bank. For the most part households have been almost fully focused on accumulation. They now need help in generating income. Where do they go to find expertise to help them?

You Can Help

If you consider all of the above areas that will impact money in 2021 and look at them against the reality that most Americans have little financial literacy, they scream out the need for consumers to talk more about money and get financial advice.

Americans need to talk to financial professionals about their financial needs, challenges and long-term goals. We, as an industry, need to highlight all that has happened to create financial uncertainty and collectively reach out with our services and solutions.

The time could not be better for this initiative. We need to talk more about money in 2021. The financial futures of millions of Americans can benefit from our services.

— Connect with ThinkAdvisor Life/Health on FacebookLinkedIn and Twitter.

Harry N. Stout (credit: Stout)Harry N. Stout has been the president of Fidelity & Guaranty Life, deputy chief executive of Old Mutual Financial Network, and managing director of Insurance Insight Group. He is also the author of The FinancialVerse personal finance books and of a new book, Today’s Annuities — A Tool to Create Protected Lifetime Income.