Many clients will experience changing jobs during their working years, either voluntarily or not. The change can be uncomfortable. Sixty-nine percent of optimists put better habits in place and learn from setbacks.
A key to weathering these transitions is to make sure clients have an emergency fund. Advisors should encourage clients to have money set aside to cover three to six months of essential expenses, if possible.
Retirement requires long-term planning, which 90% of those who consider themselves optimists are doing.
“No matter the client’s age, begin fostering a conversation on saving for the future,” Holliday said. “Planning for retirement starts with understanding your client’s current financial situation and creating a path that’s unique to their goals and saving capability.”
Advisors need to encourage clients to participate in workplace retirement plans. According to Holliday, ”Believing they don’t have enough money to participate is one of the biggest misconceptions when it comes to smart money behavior..”
Even the optimists should prepare in case the economy takes a downturn, Holliday warned.
“At Frost, we would recommend that clients pay down debt, control spending, build up savings and review investments in order to prepare for a recession,” she said. “To help clients control spending, urge them to revisit their budget and find monthly expenses that are discretionary, such as subscription services and dining out. By cutting out these expenses, clients can use these funds to build up savings.”
“Next, encourage them to pay down debt. More specifically, pay down credit card debt first then focus on loans. Once clients tackle debt, they can use the former monthly payments to add to their savings,” she said. “Lastly, encourage them to consult you, as an advisor, to ensure investments are well diversified and match the level of risk that’s tolerable for the client.”