People talk about the “dog days of summer” and the “summer doldrums.” If the heat wave had broken in your part of the world, you might be thinking this is the time to spend time with your children. Things are likely slow for your clients too.
Let us look at eight topics that are each worth a conversation with different clients.
1. What if…the Federal Reserve is done with raising interest rates? Maybe they might raise them a little bit again, but consider the following scenario: If the world decided interest rate were not going any higher and plowed money into bonds, wouldn’t that mean yields would fall? Wouldn’t banks say: “Money is flowing in, so we don’t have to offer such attractive interest rates?
Message: Perhaps it is time to move money out of cash and lock in some of these high rates.
2. Have you been wearing out your credit card booking vacations and weekend getaways? According to The National News global air travel has rebounded to 90% of pre-covid levels. Hospitalitynet.org indicates the hotel business in 25 major markets should be up 8.2% in 2023 vs. 2019.
Message: As interest rates crept up, credit card companies kept pace. How much are you carrying in revolving charge card balances? The average credit card interest rate is 24.58% as of 7/31/23, according to Forbes. Where are you going to find an almost 25% rate of return on your money? Pay down those cards!
3. What is the best stock you ever owned? Every investor has one. They either bought and held that stock or traded in and out over the years. If you ask them why it is a favorite, they will tell you.
Message: Where is that stock trading now? What should be do? Do you think it is a good buy now?
4. How much of your own company stock do you own? Let’s look in all the nooks and crannies. If your client has their employer’s stock in the 401(k) plus their deferred compensation plan, some stock units that have not vested yet and in their personal account, thanks to the employee stock purchase program, they might own a lot! The S&P 500 is near a high.
Message: It this a concentrated position? Assuming this is not control stock (Rule 144), what steps can you take to protect yourself?
5. Have you taken your IRA mandatory distribution yet? If your client is 72 or over, this is something they need to do. Hopefully you have all their retirement plan assets in house. If not, you might have addressed the distribution from their in-house assets, but they still have an additional obligation.
Message: The historic high on the S&P 500 is 4,796.56, reached on 1/3/22. As of 8/3/23, the index is at about 4,505, about 94% of its historic high. If you have money in equities in your retirement accounts, some stocks might be at historic highs. This might be a good time to take that distribution.
6. Where do we stand on realized gains and losses YTD? This is typically a year-end conversation, but you have your client’s attention now. They will have other things on their mind when December comes around. If they want to “pretend” its December now, get them to turn on one of the Christmas movies on the Hallmark Channel that are currently playing.
Message: It is good to keep track of where they stand. It shows they are paying attention. If they have a tax-loss carryforward from previous years, is there a profit they might want to take now?
7. Are you planning on gifting any money to the grandchildren this year? According to getintocollege.com college tuition payments are typically due in the first week of August.
Message: Your children might be looking for that money about now.
8. Where do we stand on financial planning reviews? Years ago, advisors talked about performance reviews. The client wanted to know “Am I making money or not?” Today, there are several types of review they should be expecting. One is the traditional performance review, including assets held away and asset allocation. Another is their retirement planning review. How are they doing towards hitting their goals on schedule? Are they ahead of schedule? Is early retirement a possibility? A third analysis is wealth reporting. Where does your client stand in terms of total assets? How much do they owe? What is their debt costing them? How much is their real estate worth?
Message: I’m with you for the long-term journey. We should look at each of these reports as a separate review session, spreading them out through the year.
Your client is relaxed. They have some time on their hands. Now is a good time to focus their attention. Not all these topics will be relevant, but some will be timely.
Bryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book, Captivating the Wealthy Investor is available on Amazon.