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Saturday, October 23, 2021

5 Money Tips Financial Planners’ Clients Appreciate the Most

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When it comes to managing your personal finances, there’s a lot of advice that gets floated around. You might find yourself asking friends for tips, reading articles for hours, or even scrolling social media to see what your favorite financial influencers have to say. 

I spend a lot of quality time learning about finances and trying to figure out how to optimize and enhance my own portfolio. When I talk to financial planners and advisors, I find myself inundated with so much good information that it can be overwhelming. That’s why I decided to try to find the best tips that financial planners give to their clients by asking them which tidbits of information make their clients thank them again and again. Here’s what they had to say.

Don’t just save for the faraway future 

Many people work hard now and save for their future retirement. But Jake Northrup, a financial planner and advisor, says that it’s not enough to just save for later on in life, and his clients appreciate his strategies that focus on the near future as well.

“You need to save in the right ways to provide you with the flexibility to use money throughout your life, rather than just waiting until age 59.5 when most pre-tax account penalties disappear,” says Northrup.

He encourages his clients to save in different “buckets,” each with a corresponding investment strategy: zero to five years, five to 15 years, and 15+ years. 

“Many people handcuff their ability to enjoy money throughout life because they only save in their 401(k). By also saving into a Roth IRA and brokerage account, you give yourself the flexibility to utilize money much earlier in life,” says Northrup.

Get a financial education

If there’s one thing I’ve learned in my own personal finance journey, it’s that you have to seek out personalized advice along the way. Financial planner Cody Garrett says that personalized education during the financial planning process always garners tremendous appreciation later on. 

Says Garrett, “Unlike financial ‘advice’ that tells others what to do, education provides the clarity and confidence for families to make their own well-informed decisions. Given the uncertainty and financial variables out of our control on the path to and through retirement, having clarity about one’s financial situation and a measurable action plan to refine the plan has greater value than the numbers on the page.” 

What kind of life insurance is needed

A big part of working with a financial planner or advisor is getting help figuring out what types of insurance you need. Charles H Thomas III, a financial planner, says that it means a lot to clients when he can help them plan for big situations that could happen later on.

“I work with lots of families who know they need life insurance to protect their children, but are unsure where to start or how much they need,” says Thomas. “When I work with a family to see what future obligations need to be covered, like college, income replacement, and more, it removes a lot of stress and uncertainty from the decision.”

Treat your HSA as a long-term investment account 

Perhaps some of the best advice involves strategies that aren’t so obvious. 

Financial planner Kevin Mahoney finds that one of his most helpful pieces of advice is to treat your health savings account like a powerful long-term investment account.

“Many of the millennials with whom I meet have not considered how an HSA may fit into their overall investment strategy,” says Mahoney. “For my peers who do have these accounts, they often spend the contributions in the same tax year or don’t take advantage of the HSA’s investment option. But the HSA’s triple tax benefits mean that contributions invested today in low-cost, diversified funds can grow to significant amounts by the time retirement (and our larger healthcare expenditures) arrives.” 

Time in the market is better than timing the market 

When it comes to getting advice on investing in the market, there are varying schools of thought. Financial planner Keith Onto says clients appreciate it when he reminds them that time in the market is more important than timing the market.

“I can’t tell you how many times clients have reached out and asked whether now is the time to sell and move to cash in anticipation of the next correction,” says Onto. “No one can consistently time the market, and more often than not the market has gone the opposite direction of what the client may expect. More importantly, the client needs to be reminded of the time horizon for their individual goals.”

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