In today's financial climate, clients may feel additional pressure to ensure that they're protecting a strong financial future for themselves and their families.
Rising life insurance premium costs and other inflation impacts can lead clients to shy away from lofty goals and make their financial plans more down-to-earth.
This is where an advisor's value truly shows: By guiding clients toward solutions that both achieve the clients' goals and continue to shield clients from market fluctuations, advisors can cement themselves as the go-to resource for clients in all financial situations.
Get the ball rolling.
The first step in goal management is creating a strategy based on a client's situation and the goal the client is trying to reach.
To strengthen this process, advisors can create "buckets" designated for achieving various goals.
The clients should focus closely on using the buckets to meet short-term goals first.
For example, let's say a client with children expresses concern about securing the family's future. The client wants to increase life insurance contribution from $5,000 to $15,000 annually to increase the death benefit. The client would also like to begin saving for the children's college education.
How can an advisor help the client achieve these goals while still maintaining the client's desired budget?
Start by segmenting goals based on timeframe, how much the client values each goal, what the client is trying to accomplish and the associated costs.
The short-term goal of increasing the life insurance contribution to $15,000 will likely require a more aggressive strategy than the long-term goal of college savings, especially if increasing the death benefit is the goal the client values most.
Determining the goals clients put the most weight on will help shape the buckets the advisor creates and set the framework for achieving each goal.
Stay ahead of the curve.
Market fluctuations are bound to happen, so it's up to the advisor to guide clients during more difficult times and shield clients' financial plans from market impacts.
To avoid adjusting plans every time the market shifts, pre-build potential impacts into the plan.
Preemptively accounting for inflation and market volatility lets clients feel more confident that they can continue accomplishing their goals during uncertain times, but the accuracy of pre-building is hinged on clients' honesty about their monthly expenses.
Let's say a couple tells you that they only need $2,000 per month, but the couple actually needs $6,000 after inflation impacts their life insurance premium costs and overall spending.
This will likely cause anxiety around the clients' short-term and long-term goals, potentially leading them to make drastic decisions and adjust their goals to account for the money lost.
Advisors can prevent clients from being affected by volatility by ensuring that clients know that they're safe to discuss their situations with comfort and truth, and that the clients will be in the best position to exceed each of their goals when they are transparent.
Go beyond.
It's not uncommon for clients to feel like some of their goals are out of reach, forcing them to dial the initial goal back to what they may consider more reasonable.
In my experience, younger clients tend to set their goals relatively low, as they want to wait until they're older to contribute more or to wait until inflation dies down.
Many of my younger clients say they want to save $1 million for retirement without realizing that this amounts to about $50,000 per year once they reach retirement age.
Considering the rising costs of everything in the current economy, it will likely be unsustainable for those clients to maintain themselves with just $50,000 per year.
In these cases, I remind clients that they have to adjust their mindsets.
I tell them that they're investing in themselves to grow their income, education, etc. If they aren't investing in their personal advancement or education, they should invest in their families' future.
Working with clients to build, manage and exceed their goals in a volatile market can be difficult, but a proper foundation will ensure those goals are attainable.
Clients can become easily discouraged during initial goal meetings, so advisors must be prepared to encourage clients with realistic, manageable accomplishments.
Remind clients to congratulate themselves on reaching things like their life insurance premium and retirement contribution goals, just like they do for car and home purchases.
Having honest, reassuring client conversations to understand their values will help advisors develop well-thought-out goals, shielded from market fluctuations.
Nathan Sebesta, CFP, CLU, ChFC, RICP, CAP, is the owner of Access Wealth Strategies. He is a three-year Million Dollar Round Table member and has earned Top of the Table status.
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