How Advisors Can Help Clients Reach Financial Goals

Seasoned advisors know that goals and milestones aren’t the same from one client to the next. However, there are some that are nearly uniform, including home ownership and comfortable retirement.

Indeed, demystifying client goals isn’t a cumbersome endeavor. It’s often a matter of simply asking and that’s an effective, important step in showing clients that you care. Moreover, it’s an important step in today’s turbulent market climate.

With equities having spent significant time in a bear market this year and major fixed income benchmarks close to achieving the same dubious distinction, it’s a fact that the 2022 market environment is taking a toll on investors. Advisors are part of that group. In fact, data confirm registered investment advisors (RIAs) are in somber moods today. Nationwide’s eighth annual Advisor Authority survey underscores the beleaguered tone of advisors and clients alike.

“The current macroeconomic environment has created a stressful situation for investors and advisors, leading to a sharp decrease in their optimism. Just 39% of investors are optimistic about their 12-month financial outlook, a 10-percentage point decrease from last year (49%). Similarly, only 48% of advisors and financial professionals are optimistic, a 15-percentage point decrease from 2021 (63%),” according to the survey.

2023 Goals in Focus

The new year is upon us and with that in mind, some recent surveys, including one from Global X, on investors’ goals and attitudes are worth advisors’ time.

“In December 2022, Global X Research surveyed 312 individuals in the United States regarding their financial sentiments and goals going into 2023. We also gained insight into their macroeconomic expectations for the new year. Topics ranged from individual impacts and sacrifices as a result of inflation, to 2023 income stream prospects,” notes Mayuranki De.

Not surprisingly, client outlooks for a new year are often colored by the prior year’s performance and that’s certainly the case to 2023 from 2022. As Global X’s De notes, 75% of those surveyed by the firm feel rampant inflation in 2022 derailed their personal finances and rising prices prompted a variety of financial coping mechanisms.

“Over 50% of respondents turned to cost-effective grocery shopping and tightened holiday season spending, while nearly 50% avoided purchasing household items/vehicles and cut back on travel,” said De.

On a related noted – and this speaks to the element of psychology so prominent in being an advisor – half of those surveyed by Global X see the economic climate worsening over the next 90 days while fewer than a third believe things will improve over that span.

Income Still a Big Deal

Perhaps it’s the result of the 2022 confluence of rising interest rates and rampant inflation, but the Global X survey confirms income is still a high priority for clients. That’s understandable after the drubbing bonds endured in 2022.

“80% of respondents foresee their income stream staying the same or only slightly improving over 2023. Almost 10% believe it will decrease,” concluded De.

That speaks to the importance of advisors not only discussing income strategies with clients in 2023, but crucial points about maximizing IRA contributions and waiting to take Social Security, among other issues.

Related: Preffereds Could Be Pertinent Again in 2023