New Year resolutions make sense. They promote incremental improvement. If you made a few and stuck with them, you should be better off at the end of the year. Many people take on broad ones like exercising more, losing weight or giving up smoking. Here are 10 practical ones in the financial planning area. They can be a good starting point for your first conversation with clients in 2023.
Not all 10 resolutions apply to every client. You can pick and choose ones you feel are appropriate.
1. In 2023…I will pay more attention to my investments. Many of us have short attention spans. If all the client’s investments are in managed money, they may feel their portfolio is on automatic pilot. Put another way, it’s your concern, not theirs. They might feel if something needs attention, you will call and tell them. If viewing trade confirmations requires going through the firm’s security to their online account information, they might not bother. This means they don’t know what individual stocks they actually own. If they take more of an interest, they might invest more money.
2. In 2023…I will consolidate my accounts in one place. There might be reasons they have an account elsewhere. It might be their “fun money” for online trading or involve a product your firm does not carry. As they gather their statements for their accountant, they will realize this takes time. There might be accounts they have forgotten about. Wouldn’t it be better to see all your holdings on one statement, in one place?
3. In 2023…I will decide if I need all those subscriptions. They pay for several entertainment channels. They pay for monthly online exercise classes aligned to the spin bike they bought. They get monthly meal kits delivered. You are billed regardless of if you use them or not. Drop them if you haven’t used them for a few months. Isn’t it a waste of money?
4. In 2023…I will pay attention to my credit cards. Interest rates have been rising. Everyone knows that. The interest rate on their revolving charge card balance has been rising too. They may be paying interest at a rate they wish they were earning in their investment portfolio. Try to pay down debt, starting with the cards charging the highest rates.
5. In 2023…I will make my IRA contribution as soon as possible. They might do it today! Why? If you make the assumption their money will earn something, dollars contributed to their retirement account earn in a tax-deferred environment. Dollars earned in a taxable account are…taxable. It makes sense. It’s an item they can immediately check off their “to do” list.
6. In 2023…I will invest all of my annual bonus. This windfall often comes in the first quarter. If they don’t add it to their portfolio, one of the best alternatives is to use it to pay down debt. When you meet for their annual review, you are likely making the case that saving more is necessary to make progress towards their retirement goal.
7. In 2023…I will take advantage of the benefits my company offers. Clients likely fully fund their 401(k). Their company is providing some sort of match. Does the company have an employee stock purchase plan? They might be able to buy company stock at a discount, maybe 15% and take possession of the stock each quarter. If they sold it immediately, isn’t that an immediate 15% return less fees? What other benefits are off your client’s radar?
8. In 2023…I will find out if the stuff Uncle Walter left me has any value. The PBS series Antiques Roadshow is popular. Local auction houses have picked up on the idea and host appraisal days a few times a month. People bring in items and their specialists estimate their value. Your client might have inherited stuff. What’s it worth? Another approach is to hire a professional, licensed appraiser to prepare a report. These “hard assets” might give their portfolio a boost in cash if they found a treasure and chose to sell it.
9. In 2023…I will establish a budget and live within it. Put another way, “I will live within my means.” It has been estimated only 32% of households have a budget. Many people simply spend and go into debt. Budgeting allows you to “pay yourself first” by taking money off the top through dollar cost averaging investing or payroll deductions at work, then living within the budget you created. The client’s employer operates on a budget. Why can’t they do the same at home?
10. In 2023…I will find a way to give back to the community. Your client is successful. They should find a charity aligned with their interests and contribute money or volunteer their time. If they already do it, they should add one more. Winston Churchill said: “We make a living by what we get. We make a life by what we give.”
Each of these resolutions involves finances. Each can lead to incremental improvement. Which ones would be the best for different clients? They can be good talking points to start the first conversation of 2023.
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.