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With just two months remaining in 2024, it’s an ideal time for many people to assess their financial outlooks and positions. For advisors, it’s also a good time to take the pulse of clients and see how they’re feeling about the economy – broader and personal – and markets with 2025 right around the corner.
Don’t be surprised to hear the word “regret.” Yes, even against the backdrop of the S&P 500 being up 21.3% (as of Nov. 1) and the Federal Reserve recently lowering interest rates for the first time in four years, folks are expressing 2024 financial regrets.
As advisors know, financial regrets can pop up at any stage of life and these issues don’t discriminate on the basis of age, race or other demographic factors. Baby boomer and Gen X clients may be apt to be dismayed that they didn’t save more for retirement sooner while younger clients, including millennials and Gen Z, may be dismayed about consumer and student loan debt.
In order to best assist clients, advisors need to what the primary forms of financial regret are. From year-to-year, those issues shift, but in 2024, folks from all walks of life are expressing dismay that they didn’t save or invest enough. They’re also perturbed at themselves for spending too much on discretionary items and not working on improving their credit scores.
How Advisors Can Help
A recent NerdWallet survey indicates 29% of those polled regret not saving enough for emergencies this year while 27% are irked they didn’t save enough for financial goals such as buying a house or retirement. Acknowledging that regret is the first step. Next up is putting a plan into action that can help clients avoid future regret.
“Set up automatic transfers to a savings account. Many of us try to save by seeing what we have leftover at the end of the month and transferring that over to savings,” notes NerdWallet. “But with an endless array of things and experiences to spend on, it takes an immense amount of willpower to end the month with a chunk of money to throw into savings. Instead, flip the order by automating your savings first, and spending what’s leftover.”
A similar strategy can be employed with employer-sponsored retirement plans, such as 401(k)s. Many such plans have auto-enrollment features, but not all do and even when that offering is in place, it will direct small amounts of the employee’s pay to the plan.
Translation: encourage clients to take advantage of auto-enrollment in their workplace retirement plans and do so to the tune of more than the bare minimum. For clients whose employers offer retirement plans, but no automatic participation, encourage them to get on the ball, enroll in the offering and contribute as much as they can.
Credit Woes Lingering, Too
For all the talk about wage growth, U.S. credit card debt is at an all-time high and delinquency rates are at levels last seen during the global financial crisis. Some months those rates are even higher. From that, it can be inferred many people are leveraging credit just to get by.
It’s logical that amassing too much consumer debt spurs regret because it causes tangible near- and long-term financial damage and undue stress. Fortunately, there’s light at the end of the tunnel when priorities are reassessed and the right plan is put into action. Automation helps, too.
“Ensure your payments are on time and your credit utilization is in check,” concludes NerdWallet. “Generally there are five main factors that go into calculating your score, but on time payments and credit utilization are the most important ones. On time payments are self-explanatory and you can ensure you pay on time, every time, by setting up automatic payments or reminders to pay your bills by the due date.”