The advisor can be, sometimes must be, a teacher who helps clients avert disaster.
And disaster is on the horizon of many Americans, who are nearing record credit card debt levels, according to the Federal Reserve.
So, the respected advisor must convince the client to get rid of card debt asap.
How?
Getting out of debt, says an advisor, is like losing weight.
“One must make commitment and say that enough is enough,” says Bernard Kiely, a CFP and CPA with his own firm in Morristown, N.J.
“The advisor needs to convince the client that card debt is dangerous because the average card carries an average 17.11 percent interest rate,” adds Ted Rossman, an analyst with CreditCards.com.
In paying down a card, Kiely says, the card companies want cardholders to make minimum payments. That, he adds, make them rich.
“The interest rate on your credit card is your enemy,” he warns.
Advisors should use compelling examples, Kiely says. He cites the example of a $5,000 card at 13 percent. Make the minimum payment, it takes 26 years to pay off the debt and the client pays $5,500 just in interest.