What You Need to Know
- Focusing on any one piece of a client's finances will soon become the old way of planning.
- Forward-thinking advisors help clients set short- and long-term goals, and then teach them how they all interact with one another.
- October, National Financial Planning Month, is an ideal time to broaden your financial planning conversations with clients and empower them.
Your clients’ finances are complex. While a good financial planner discusses short- and long-term goals when helping clients build a financial plan, the best advisors today are beginning to take these discussions one step further beyond the traditional buckets and helping clients connect the dots across their entire financial life, which also involves day-to-day financial decisions.
Staying focused on any one piece of a client’s finances will soon become the old way of financial planning. Clients today are looking for financial advice that ties everything together so they can make more-informed decisions. The most forward-looking advisors are delivering it.
For example, helping clients see what buying a morning coffee or paying for a Netflix subscription means for their big-picture financial goals can empower them to feel more connected to their financial future. The same goes for paying annual premiums for health care plans. How might financial decisions like this influence long-term plans?
Clarity such as this is priceless, and advisors who are delivering it are leading a new disruption in financial planning.
Think about the popular apps that help users stay focused on saving for short-term goals, such as a vacation. We may see Johnny get five stars for saving up for that trip, which keeps him motivated and engaged in meeting his goal. But how will that affect his goal to retire at age 55?
The Bigger Picture
Forward-thinking advisors are connecting these dots for their clients today. They are helping clients build short- and long-term goals, and then educating them on how they all — like dominoes — interact with one another. This lets clients see for themselves why they need a dynamic financial plan that connects their entire financial life. Modern financial plans can shift and can be reshaped in line with your clients’ lives. Think of your client’s financial plan as being played by an orchestra. Imagine if the flute section were set up separate from the orchestra pit outside of the building. This would lead to one lousy overall performance. The same holds true for your clients’ finances.
Financial Plans Should Adapt as Humans Do
To complicate matters further, consumers are making major financial decisions faster than ever before. This was happening before COVID-19 as a result of the shift to a digital economy. The pace has only continued to intensify. As the person who guides them on their financial journey, it is important to help ensure that your clients have the most up-to-date data when making any financial decision.
We saw many financial plans shift and change as a result of the pandemic. For example, weddings were canceled and rescheduled, then rescheduled again. Some are still on hold. Some couples decided the traditional ceremony was no longer as important as simply saying “I do.”
People decided to buy that vacation home today instead of waiting 20 years. There is also a new trend known as “the Great Resignation.” According to NPR, people are leaving their jobs “in search of more money, more flexibility and more happiness.”