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In one of the most oft-used quotes of all time, founding father Benjamin Franklin once said “If you fail to plan, you are planning to fail.” In what amounts to good news for advisors, it appears that many clients are getting that memo.
Obviously, that’s a positive for advisors because financial professionals are the most effective avenues through which “ordinary” folks can establish and stick to effective financial plans. Moreover, advisors can and do help clients with an array of planning, ranging from estate to saving for a home and/or college and the financial implications of starting/expanding a family.
There are clear benefits in putting pen to paper and establishing solid financial plans, regardless of what the endgame is. Notably, concrete plans can foster client confidence while mitigating risk and potentially diminishing the odds of financial regret. Data confirm advisors play pivotal roles in establishing and thus, nurturing more confidence among clients.
Planning Is Crucial
The latest edition of New York Life’s Wealth Watch survey confirm the efficacy of having a financial plan in place. For example, 81% of those polled with a plan feel confident in meeting financial goals compared to just 41% without a plan.
Additionally, 83% of those queried that have a plan believe they’ll be prepared for a financial emergency compared to 43% of those lacking a financial strategy.
“Our data clearly show that having a financial strategy is a key factor in not only feeling confident about reaching one’s goals, but in actually reaching them. Younger generations are reporting strong engagement with their financial strategies. Gen Zers and Millennials were more likely to report reviewing their strategy on a weekly basis and seeking guidance from a financial professional in 2023 than other demographic cohorts,” said Donn Froshiesar, Head of Consumer Insights at New York Life.
Froshiesar’s comments on Gen Z and millennials are particularly noteworthy to advisors for multiple reasons. First, those coveted demographics in the advisory community. Second, much has been made about the lackadaisical attitudes toward long-term finances held by younger generations, but the New York Life survey seems to refute that notion while affirming that Gen Z and millennials want to work with advisors.
Debt Ideal Place to Start
Financial planning is often framed through the lenses mentioned above: Estate, long-term investing, savings for a big purchase, etc. However, budgeting and debt reduction should be part of the equation. Think about the student loan burden clients across all demographics are dealing with.
Add to that, credit card delinquencies are at all-time highs, indicating many Americans are going to be contending with lower credit scores and still outstanding obligations. Helping clients develop strategies for shedding consumer debt is worth the lift for advisors.
“Although most adults with credit card debt are contributing the same or more each month than they did in 2022 to pay off their debt (77%), around a quarter (23%) report contributing less,” notes New York Life. “On average, those with credit card debt report contributing $363.07 per month toward paying it off – slightly less than what adults reported in 2022 ($430 per month).”
Related: The Reasoning Behind Maintaining Separate Finances in Relationships