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Written by: Aaron Kane | EK Financial Group
Financial advisors often find themselves in the challenging position of helping clients navigate competing financial goals. Whether paying off debt, saving for children's education, or planning for retirement, modern clients face a myriad of financial pressures that can feel overwhelming; our role goes beyond just working with numbers. As advisors, we act as financial coaches, helping clients prioritize their goals in a way that aligns with their values and life stages. By providing clients with a sense of security during goal-driven times, we reinforce our position as trusted and reliable guides in their financial journey.
Identifying Client Goals
When working with clients to prioritize their financial goals, it's essential to take a holistic approach. It can be tempting for clients to focus solely on short-term objectives like paying off debt, so we must help them see the bigger picture. A balanced strategy often involves making progress on multiple fronts simultaneously.
For clients in their 30s and 40s, the focus is often on juggling mortgage payments, saving for children's education and kickstarting retirement savings. Success in these cases often comes from strategies like debt recycling, a method where clients use their home’s equity to borrow money, invest in income-generating assets like shares (direct equities), EFT’s or managed funds, and then use the returns to pay down their mortgage faster. This approach can accelerate mortgage repayment while building an investment portfolio, potentially cutting a 30-year mortgage term in half while also growing a future nest egg.
For clients closer to retirement, priorities change. Many in their 50s and 60s find themselves needing to catch up on their savings to meet their retirement goals. At this stage, it’s essential to have open, honest discussions about lifestyle expectations and potential trade-offs. For example, let’s say a 63-year-old client expresses concern about needing to postpone their retirement date to increase their savings. It’s up to you as the advisor to analyze their current financial situation in comparison to their goals, then provide honest, quality advice. Facilitating these candid conversations helps clients understand how their current financial choices impact their future.
Evaluating the ‘Now’ and the ‘Later’
Navigating the tension between the immediate desires and long-term goals of our clients can be one of the most challenging aspects of our job. For instance, a client may express a desire for an expensive luxury item while also worrying about their retirement savings. In these situations, it's crucial to approach the conversation with both empathy and objectivity.
As advisors, we shouldn't shy away from having difficult conversations. Clients rely on us to provide honest, sometimes uncomfortable, feedback. Whether it's advising against an unnecessary, extravagant purchase or encouraging increased retirement contributions, our role is to keep clients accountable and focused on their long-term financial health.
The art of financial goal prioritization requires understanding our clients' values, fears, and aspirations. By fostering open and honest dialogue, leveraging our expertise and maintaining a long-term perspective, we can guide our clients through life's financial trade-offs and help them achieve true financial freedom.
Related: Young Investors Are Moving Fast: How They're Flipping Cash Into Investments