While some Americans feel confident about their financial capabilities, there may be room for improvement for others. Some of your clients may want to gain more confidence in one or more areas of their personal finances. Since financial literacy is tied to the success of many financial outcomes, from planning for retirement to being able to meet emergency expenses, you can help.
Making financial decisions
The language of money can be complicated, and a lack of fluency can interrupt financial decision making. With your financial expertise, you can help decipher harder concepts and have conversations to reveal insights into potential roadblocks that may prevent clients from making a decision, as well as short- or long-term implications. Our white paper can help prepare you for those client conversations.
Learning your clients鈥� financial strengths and where opportunities may exist can help you create a gameplan tailored to their needs. Some clients are likely more confident in specific areas but may feel less comfortable in others, like investing, for example. A good place to start is by assessing their comfort with four pillars of financial literacy:
Budgeting 鈥� Do clients have (and stick to) a monthly budget? If they aren鈥檛 retired yet, discussing how their budget may need to change in retirement can be a natural segue way to talk about products built for wealth accumulation or retirement income planning.
Saving 鈥� Are your clients good short-term savers? Offering ideas about the 50 30 20 rule or 鈥減ay yourself first鈥� could help them set aside money for expensive short-term expenses, like major car repairs or a new roof.
Debt 鈥� How do your clients approach debt, are they comfortable managing it and how might debt levels impact them in retirement? These questions could give you insight into potential areas they may want more information or help.
Investing 鈥� People have differing comfort levels with investing. Are your clients experts or just understand the basics. Have they heard of The Rule of 72, for example? Learning what they know and don鈥檛 know can help guide client conversations with information they may need to make informed decisions.
An incomplete understanding of money matters and how they work could affect your clients鈥� financial decisions and future implications of their choices. With your skills, you can help fill a gap with information they鈥檙e missing from someone they trust. Your role in helping build your clients鈥� wealth of financial knowledge could impact how well they manage their finances and their confidence in retirement.
Keep it simple
One way to help your clients become more confident about their personal finances is to address financial topics in simpler terms. Try breaking down the language into easier-to-understand terms and focusing on a client鈥檚 emotional priorities. A more casual approach may help clients feel more open to the discussion and the choices available to them. Here are three tips you could use to help simplify the conversation:
Remove industry jargon and use relatable examples to help clients understand harder concepts and benefits. For example, when talking about annuities, show clients how they can help:
provide insurance against the risk of outliving their money
protect their retirement savings from potential market downturns in the future
provide lifetime income with a guaranteed monthly withdrawal amount if an income rider is elected
Use infographics or other visual aids to help make annuities more relatable. Check out the Sales and Service Tools tab on 麻豆传媒 Connect where you鈥檒l find sales toolkits, client worksheets, tips and illustrations that can help you engage clients and demonstrate value on a variety of topics. For example, this infographic can offer your clients three steps to help ease any anxiety they might have about retirement income.
Use real-world scenarios to help improve your clients鈥� understanding and retention, especially when your examples are customized to their personal objectives. While you never want to betray another client鈥檚 confidence or discuss their situation in detail, you can share success stories related to smart financial decisions others have made. For example, you could use hypothetical client case studies on relevant topics. Or for a fun approach, do an internet search for 鈥渃elebrities and financial issues鈥� to find examples that demonstrate results of different choices. The context could help generate interest and promote retention.
Effective communication can help cultivate trust and may increase a client鈥檚 willingness to consider new ideas. Clients who can count on you to speak their language may feel more comfortable returning to you as their needs change. By empowering your clients to build their financial literacy, you help boost their retirement readiness and equip them with valuable lifetime financial skills.
Simple language can affect the decisions clients make. See what the research says:
Understand the behavioral bias
鈥淔luency bias鈥� refers to the tendency for people to feel more knowledgeable about investments that are described more simply. And it is one of 10 biases that can create roadblocks to making smarter financial decisions.
For more insight on behavior biases, 麻豆传媒 commissioned two industry leaders in judgment and decision making from the UCLA Anderson School of Management to review the biases. They uncovered important behavioral tendencies and provided solutions to help overcome them. Their findings and insights are available to download in an exclusive white paper.
Understanding your clients鈥� perspectives, challenges and goals can help you tailor a retirement strategy suited to their needs. Incorporating these tips and insights into client conversations can help boost their financial confidence, foster loyalty and keep your business thriving.
Insights on 麻豆传媒 Connect. Tips, tools and resources to grow your business by helping clients retire with confidence.
