Advisors Can Help Clients With New Year’s Resolutions

It’s early January and that means New Year’s resolutions are in full effect. Of course, it’s always about follow through.

For some, it might be just a matter of time before the new Peloton turns into a coat rack and plans to read more or spend more time with friends and family fall by the wayside. Advisors can’t help with those issues and they probably shouldn’t get involved with them.

However, for advisors, there’s ample relevancy when it comes to resolutions because data confirm more folks are prioritizing their financial health this year. That makes a lot of sense when considering the following ominous statistics: 2022 was the worst year on record for the Bloomberg US Aggregate Bond Index, the seventh-worst year for the S&P 500 since the 1920s and the third-worst year for the 60/40 portfolio.

Chicago-based Numerator , a data and tech company, recently published a survey, noting that 50% of those polled are making New Year’s resolutions, up from 43% last year. Of interest to advisors, physical fitness goals are declining – though still significant at 73% -- while financial goal-setting is rising with 53% of respondents saying that will be a point of emphasis this year.

Why It Matters to Advisors

As is often noted in this space, advisors are also part psychologist. When it comes to financial goal setting, New Year’s resolutions and otherwise, clients, particularly those in younger demographics, demand more when it comes to budgeting and help with spending.

In fact, broader budgeting and spending plans should be viewed through the lens of value-add service, potentially with revenue possibilities. Bottom line: Data confirm clients want more than being told to rein in their Starbucks habit or to stop eating lunch out.

“The top financial goals of consumers for 2023 are to save more money in general (57% of those making financial resolutions), track spending more carefully (48%), reduce spending in general (43%), reduce spending on non-essential items (42%), and pay off loans (40%),” according to the Numerator poll.

While clients are clearly making resolutions, advisors may be doing the same and that might include resolving to work more with younger clients, including millennials and Gen Z. Data bode well for advisors prioritizing those demographics, particularly millennials.

“62% of Millennial resolution makers are opting for money-related goals, the highest among all generations (the others being Gen X and baby boomers),” adds Numerator.

Inflation Still Top of Clients’ Minds

As 2023 unfolds, advisors should be aware that some of the issues that vexed clients last year are still in play, including inflation and the specter of a recession.

“57% of consumers making financial goals are doing so because they think inflation and rising prices will impact them. Nearly half (48%) are being cautious of a possible recession. This sentiment is seen across all generations but is slightly higher among Boomers+,” concludes Numerator.

Even with those headwinds, 84% of respondents are optimistic about what this year will bring concerning their finances, confirming that advisors will play crucial roles in keeping clients measured while preventing emotional swings tied to market gyrations.

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