1. “I want to retire early.”
The pandemic has gotten plenty of people reconsidering their priorities. There’s been talk of the “Great Resignation” although the reality of it has been in dispute. Take your client’s request seriously.
Advice: Sharpen your pencil for financial planning. Where does your client stand now in terms of achievable retirement income and desired lifestyle? If they want to retire early but the numbers don’t work, are they OK with reducing their desired income level or saving aggressively over the next few years to bring their retirement date forward?
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2. “Interest rates are rising. I just discovered all my debt is variable.”
Many people carry revolving credit card balances or owe lots on their home equity line of credit. A rise in rates will cost them.
Advice: They can look at switching their HELOC to a fixed mortgage, locking in a rate while they are still low. They can look at consolidating higher-rate credit cards to one at a lower rate through balance transfers. Paying them off is even better.
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3. "The stock market is no longer returning 10%. Who knew?"
If the stock market has historically returned 10% over decades and it suddenly has several good years, it makes sense there will be lean years to bring the return back to the mean.
Advice: Sectors rotate. Industries go out of favor while others perk up. The S&P 500 index isn’t a faceless blob; it’s a collection of 11 sectors, each getting a different return. We should look under the hood and see what’s doing well.
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4. "We want to buy a bigger house, but prices are so high."
Everyone wants to sell in the current real estate market, when prices are high, and buy in the previous market, when prices were lower.
Advice: Prices being higher works in your favor, too. You should be able to sell your house at a better price than at that time in the past when your desired larger house was cheaper. Just be sure you do everything necessary to present your house in optimal condition.
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5. "Prices are rising; my income is not."
Inflation is in the news. Clients realize this when they go grocery shopping or dine out. Everyone complains about higher prices. It’s a national sport.
Advice: Like sector rotation with stocks, you need to look for opportunities. When grocery shopping, if beef is up and chicken is stable, eat more chicken. On a higher level, there are many supermarket chains competing for your business. Check out the others. See if they compete on price. Work within a budget.
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6. "Employers are getting selective. My child needs an advanced degree."
You thought you were done paying for college when they threw their hat into the air. Think again.
Advice: Let's assume this is the field in which your child studied and trained. Do all employers require an advanced degree? They might be able to do the job while studying in their spare time. Can the college’s alumni office help get your child placed in their field with the degree they’ve earned? If not, how confident is everyone the advanced degree will make the difference? If that’s the answer, start talking about loans with the school.
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7. "Health insurance premiums are going out of sight."
This isn’t news. The government has wanted to get this under control for years. Many people stick with one provider out of habit.
Advice: What do you do when gas prices jump up? You shop around for better prices. You find websites that track local prices. You ask friends where they buy gas. Use the same logic when shopping for health insurance. There are agents who can help too.
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8. "I want to plan a family vacation, but COVID isn’t going away."
The year 2021 was better than 2020. Then came omicron. The TV news constantly warns about flying. Countries overseas are closing borders or adding restrictions.
Advice: There are a few ways to go. This could be the year of the road trip. (OK, that was 2021.) It could be the year to rent a beach house within driving distance. Another option could be a Caribbean cruise, assuming the islands visited have COVID protocols that ease your mind. Check out how your favorite cruise line is handling protocols.
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9. "My accountant is retiring."
People rarely change accountants. It’s one of those professions with a high stickiness factor. We hope they put financial advisors into that category.
Advice: First, learn their needs. Is their situation simple or specialized? Assuming it’s simple, ask if their accountant made any suggestions. If not, consider giving your client three or more business cards from accountants in your network. Suggest they interview each before choosing.
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10. "I’m concerned the threshold for estate taxes will be lowered dramatically."
Perhaps the first step should be to congratulate yourself on having that much money. Well done.
Advice: There are many steps you can take to reduce the size of your estate. One is giving money away to family members. Explain the gift tax exclusion rules. Another is giving money to charity. This can be done directly or through a donor-advised fund. You can help them set one up. You can have discussions or bring in the experts when it comes to talking about trusts.
These may be big concerns in 2022, but many of them have been concerns for a long time.
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December 21, 2021 at 01:03 PM
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