It’s no doubt that managing finances can be stressful. More than a third of Americans reported difficulties paying bills in the latest US Census Bureau household survey.
What about managing finances and saving for retirement? That can seem even more daunting to most. In 2021, Capital One released the results of a survey, which found that finances are the number-one cause of stress (73%), way more than work (49%). Younger generations are even more stressed out about finances than older generations, with most Gen Z’ers (82%) and millennials (81%) saying finances are somewhat stressful.
What’s the way out? Financial empowerment! Being in control of finances by setting financial goals, building and executing plans to maintain a chosen standard of living, and having a way to handle financial challenges. It’s about making better long-term decisions and building the future without stressing over your next paycheck.
So, how can you help financially empower your clients? Here are four ways
1. Help your client understand their money better
Attitudes towards personal finance are influenced by childhood. So, among the first steps in helping a client become empowered is understanding their attitude toward finances. Financial empowerment is about putting their mind to money, so help them align spending and savings with their long-term goals logically. For instance, if they want to start a business after retirement, but are fearful of taking that first step, encourage them to put a little aside into savings each month to qualify for a loan or make the transition easier.
Encouraging them to read books on personal finance or listen to podcasts and watch videos will also help in empowerment.
2. Work with your client to help with goal-setting
Your client may have a destination in mind, but you can help with the road map. SMART plans can help empower them to set and achieve their financial goals. What are SMART plans? They are Specific, Measurable, Achievable, Relevant, and Time-bound goals. These smaller, shorter-term goals can help realize the big dream faster and easier.
One of the first steps in this is budgeting. Helping clients understand what they make and spend each month empowers them to make the right decisions to stay on track with their retirement plans.
3. Show them how to make their money work for them
Clients may be worried about their past mistakes and poor credit history, but as the saying goes, it ain’t over till it’s over.
As you empower clients with budgeting techniques, simultaneously teach them about building diversified portfolios for retirement savings. Help them understand that by investing their money wisely, they can build wealth with little effort on their part. Help them understand how to maximize their 401K and IRA and look out for smart investment opportunities.
4. Help them track their progress
Clients need to understand how to monitor their money and see if their monetary progress is in line with their financial end goals post-retirement. Help clients learn how to track progress regularly, adjusting their investments along the way. Part of this is also helping them learn to cope with financial challenges that come their way, like a sudden expense on the house or car, for example. Planning can help clients make smarter choices when faced with an emergency.
Everyone has to start somewhere. As a retirement advisor one needs to guide and empower clients in making the right choices to help improve economic stability in the long term.
Congruent Solutions is the partner of choice for US retirement plan providers and TPAs for technology solutions and outsourced plan administration services because we understand the changing needs. Give us a call to know more.
