When people have financial questions, what do they look for? According to a recent survey most people are looking for someone with experience. We want to take advice from people who are familiar with the issues we face and know what to do about them. We all know people with experience, but financial problems, like medical problems, are personal. Most people we know would rather not go into detail about their personal finances with family or friends. They are more comfortable sitting down with a financial professional to discuss their finances, their debts, their financial concerns, and their financial goals in both the short and long term. Professionals will provide advice without being judgmental and are required by their code of ethics to keep your information confidential.
Once people find someone who has a track record of giving good, professional advice, they want personalized advice and “holistic” planning.
No two people have exactly the same problems. A good financial advisor listens attentively to learn the goals, the concerns and personal history of the people who come to him for advice.
People have specific issues and questions. For example: a couple, aged 39, is seeking advice about their path to retirement. They give their financial advisor a laundry list of their assets, their investments, their savings rate, their debts, and the ages of their children and ask if they should be doing something different or are they on the right path. That’s a very specific question and the advisor’s response is going to be personalized for them.
The plan that the advisor comes up with is going to involve much more than money. It’s going to take their personal characteristics into account. This includes personal experience with investing, their risk tolerance, and their closely held beliefs and ethical values. This is what is referred to as “holistic” planning; taking personal characteristics into consideration.
There is a fairly big difference in the advice sought by
“Millenials” say that among their top three concerns are saving for a large expense such as a car or a wedding. Too many are saddled by debt acquired to pay for higher education and are finding that their degrees are not necessarily an entry into high paying professional jobs. Their next largest concerns are saving for their kids’ education and putting money aside for retirement.
“Generation X” is primarily focused on saving for retirement. They are married, own their own home and may have children in college. Concerns two and three are tax reduction and paying for their children’s education.
“Baby Boomers” have finally reached retirement age. More than a quarter million turn 65 each month. As a group they are a large and wealthy generation, but a vast number have not saved enough for a comfortable retirement. Many are forced to continue to work to supplement Social Security income. Their number one concern is the cost of health care. Concerns two and three are protecting their assets and having enough income for retirement. The three concerns for Baby Boomers are inter-connected. For many Boomers, Medicare helps them with the costs associated with most medical issues. However, as people live longer, there comes a time when they are unable to care for themselves and live independently. Long-term-care insurance was once believed to be the answer but insurance companies found that costs were much greater than anticipated. The result is that many insurers have stopped offering the policies and those remaining have hiked premiums beyond the ability of many to pay. The cost of long term care is so high that many Boomers are afraid that their savings will soon be exhausted if they are forced into assisted living facilities or nursing homes.
Each generation has its own problems and at a time when the world has gotten much more complicated. Getting experienced, personalized and holistic financial advice is more important than ever.
Arie J. Korving, a CERTIFIED FINANCIAL PLANNER™ professional, has been delivering customized wealth management solutions to his clients for more than three decades. Prior to co-founding Korving & Company, he was First Vice President with UBS Wealth Management and held management positions with General Electric.