Clients in their 40s are in one of the most important times of their lives.
For the first time, they’re becoming more aware and concerned with retirement, preparing for their children’s education and other important milestone decisions.
A client’s lifestyle needs are very closely related to age and that of their family.
When it comes to clients in their 40s, are you giving the right financial advice?
Advisors can start by helping their clients understand where they currently stand as it pertains to their savings and investment goals.
Your 40s are typically a hectic time with kids still in the house, a full time job and plenty of day-to-day obligations to keep you busy. Work with your client to identify their long- and short-term goals are, as well as the progress they’ve made so far.
Awareness makes goals more tangible and accessible.
You’re never too old to learn a new skill — an “old” dog can learn new tricks!
Encourage your clients to pursue goals they’ve long ago brushed under the rug. Taking a class, getting a certification or applying for a new job can help them earn more money and provide new opportunities if their circumstances change.
“Keeping up with the Joneses” is about more than just money; it also includes adapting and acquiring new skills, which will keep your clients marketable and employable no matter what.
Individuals in their 40s, especially affluent ones are typically well-established in their current lifestyles. They usually have a home, cars, a family, a reliable career and are living well within their means.
However, clients should also be aware of how easily circumstances can change and not to get too comfortable with their spending, just because it works today.
Clients shouldn’t be pressured to deny themselves their spending habits, but erring on the side of modesty is never a bad idea.
Parents in their 40s may not have updated their investment strategy in a while and are investing more riskily than they ought to.
A well-balanced portfolio should be reflective of your client’s lifestyle, as well as their realistic needs in the future.
Clients with debt from student loans, credit cards, medical bills or other expenses should focus on reducing their debt, before investing.
By eliminating debt, their income can be funneled towards savings and investments.
Advisors can help clients find lower interest rates on their debt, as well as tax breaks on things like student loans. The sooner debt is eliminated, the sooner funds can be allocated towards investments.
People in their 40s should be taking full advantage of employee benefits, particularly their 401(k).
Encourage your clients to contribute at least as much as their employer matches and to find out how to maximize their contributions up to the pre-prescribed limit.
It is better to be more aggressive sooner rather than later.
Encourage your clients to do an insurance-needs analysis. Individuals in their 40s usually have high life insurance needs due to children, homes and cars.
An umbrella insurance policy adds an additional layer of protection, in addition to individual health, home and auto insurance policies. If a client has assets in excess of $1 million an umbrella policy is an especially good idea.
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