Financial plan

What to ask clients to start their financial plan

Clients are often concerned about the past, such as filing last year’s tax returns, rather than the future. Accountants can be of tremendous benefit to these clients by providing them with cutting edge services. It means financial planning.

There are many reasons why clients often think they don’t need financial planning services. They may think the good times will last forever, that retirement is too far away, or that they should focus on immediate concerns rather than future events like college education or weddings. Even if your client thinks they don’t need financial planning, you can take a proactive approach that shows you are invested in your client’s future success.

Showing your client that financial planning is critically important begins by asking them the following questions:

How confident are you that you will have a comfortable retirement?

You can also ask them how long they plan to work or if financial independence is a goal.

Why: The bottom line is that most people are unprepared for retirement. According to Synchrony Bank, the average retirement savings for an American aged 50 to 54 is $ 146,068. The 80 percent rule is often used to determine retirement income based on a person’s current income, while four to five percent is often considered a prudent level to mine retirement assets.

How? ‘Or’ What: You can use Monte Carlo simulation programs to examine your client’s current retirement assets as well as planned future savings and growth and compare it to planned spending, adjusted for inflation over time. This will give you a good idea of ​​how long your customer’s money will last.

What is your plan for eliminating credit card debt?

Many Americans have revolving credit card debt. According to, the average credit card interest rate is 16.2%. Now compare that to what your customer is making in cash, which is next to nothing.

Why: According to, the average credit card debt for Americans aged 45 to 54 is $ 7,670, and 51.7% of people in that age group have revolving credit card debt. Personal interest is not tax deductible. Many people make minimum payments while increasing their balance. If the Fed raises its interest rates, those rates will rise as well.

How? ‘Or’ What: Start by determining the extent of the problem for your customer. How many cards do they have? What rates do they pay? Look at their monthly statements showing how they could pay off the balance quickly using the examples provided. Can they make balance transfers to other cards with lower introductory rates? Help them develop a debt reduction plan.

How much will it cost to prepare your child for a career?

Most people ignore the overall cost of raising a child to college age. Some assume that their child’s school fees will cost the same as what they paid for their own education, but they may not be wondering if their child’s career will require a graduate degree.

Why: According to the most recent USDA figures, the average cost to raise a child to age 17 is $ 233,610. US News & World Report says the average cost of tuition for in-state students at a public school is $ 10,338, while outside students pay an average of $ 22,698. Private college tuition fees average $ 38,185.

How? ‘Or’ What: As the costs of a university education will continue to rise, your client needs a tax-efficient savings strategy. They should also develop a thorough understanding of how financial aid programs work.

What would happen if you suddenly suffered a career setback?

While this question can be difficult to ask, it is important to think about it. What would happen if your client lost their job due to the downsizing of the company? Even if their spouse is employed, they might need two incomes to make ends meet.

Why: Millions of Americans have been made redundant during the pandemic and businesses have closed. Many companies are looking to rehire, but often for low paying positions. Maybe your client realized that his “permanent job” might not be that permanent.

How? ‘Or’ What: Your client needs a reserve fund, which is usually made up of six months of income. Since this can be difficult for many customers, they should consider what they have on credit. Having a home equity line of credit is a good idea. Your client should also understand the rules governing retirement account loans. Most importantly, they need to plan ahead and have a strategy for finding a new job.

How would your family be fed if you were no longer in the picture?

You may have young clients who are just starting their careers and married life. Often they have young children. They may own a home and have mortgage debt. When we are young, we assume that we will live forever. What if we don’t?

Why: CNN reports that a young family should purchase insurance that covers at least 10 times their annual income, while 20 times is even better. Your client will need a reserve of cash to generate income to replace lost income.

How? ‘Or’ What: Start by discussing the importance of being able to replace income. Think about “what if” strategies and discuss the pros and cons of term and whole life insurance.

What are your long-term plans for your business?

If your client owns a business, most of their wealth is likely tied to the business. Their children may not want to continue their legacy, so they need an exit strategy.

Why: In 2015, the Vancouver SW Washington Business Journal reported that 90 percent of US businesses are owned or controlled by families. Of these, 30 percent belong to the second generation and 12 percent belong to a third generation. Your client must either prepare the business to move on to the next generation or plan to sell it.

How? ‘Or’ What: Let your customer do the talking. Will their family inherit the business and, if so, how are they preparing for this day? If the business is to be sold, it must be put in optimal conditions to get the best price. Start talking about ratings and how they’re calculated.

By itself, financial planning does not appear to be an immediate need. But the more in-depth and specific the discussion, the more pressing the need becomes.

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Louis R. Hancock

The author Louis R. Hancock

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