The word “tasks” implies equal parts boredom and tedium, but tasks also have to get done. Fortunately for registered investment advisors, many client-facing tasks can be intellectually stimulating.
Moreover, conversations about these “chores” can be fruitful on multiple fronts. For starters, even mundane topics can be excellent avenues for reconnecting with clients, adding value and showing them that you care. Importantly, accomplishing what may appear to be perfunctory financial tasks can go a long way toward helping clients avoid mistakes and regrets.
Then there’s the notion that checking off rudimentary tasks can keep clients on the positive path and get those that have been derailed back on the right track. What’s not to like about that? With those factors in mind, here are some of the seemingly small tasks with big potential dividends advisors should help clients with sooner rather than later.
Focus on IRAs
Many clients have access to 401(k) plans through their jobs, but those that are self-employed, freelancers and business owners may not have that luxury. That highlights the importance of individual retirement accounts (IRAs), which are important tools for all clients.
Currently, clients under 50 years old can contribute $6,500 annually per IRA. That figure jumps to $7,500 per year for those over 50. Focusing on those under 50, the catch-up provision is nice, but many younger clients are struggling to take full advantage of IRAs. Advisors can help with a simple premise: Automation.
“To make hitting IRA contributions more doable and palatable from a budgetary standpoint, put them on autopilot, instructing your investment provider to deduct whatever amount you can swing from your checking account on a monthly basis,” notes Morningstar’s Christine Benz.
On a somewhat related note, advisors may want to consider the benefits of backdoor contributions to Roth IRAs. “Backdoor” basically means contributing after-tax dollars that are later excluded from conversion tax tabs.
“To make sure you don’t forget, schedule the conversion date on your calendar at the same time you make the contribution. You don’t need to block off a bunch of time; executing the conversion will likely be a matter of a few mouse clicks,” adds Benz.
One more thing that’s important with IRAs, and any other account for that batter, is staying up-to-date on beneficiary designations. In theory, this is a point of emphasis for older clients, but it’s also relevant for clients that just got married and/or are welcoming children into the family. Think of keeping beneficiary declarations fresh as preventative medicine with the prevention being the client’s heirs avoid probate court.
Healthy Savings Idea
Hopefully, all clients have health insurance through their jobs or affordably accessing it on their own. What many don’t realize is that when they retire, Medicare and Medicaid aren’t full-proof solutions, particularly for long-term care needs.
Enter health savings accounts (HSAs). HSAs can function as investment vehicles and data confirm that a paltry percentage of working Americans are taking advantage of this tool. Capitalizing on these perks is valuable for any client, particularly married couples.
“While it might seem that your HSA should be your longest-term investment silo—the better to harness its prodigious tax benefits—bear in mind that HSAs tend to not be great assets for nonspouse beneficiaries to inherit.,” concludes Benz. “Thus, you and your spouse should prioritize spending HSA assets during your lifetimes. A balanced asset allocation—or even a bucket-type approach in line with your planned spending—makes sense.”
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