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One for the Books: Closing 2020 the Right Way

Year-end conversations with clients can serve many purposes.

2020 has been a challenging year, but as the country embraces hopeful news on the vaccine front and looks ahead to a path for a wider economic recovery, this time of year also brings us back to the natural rhythm of closing out one financial planning year and beginning the next.

Year-end conversations with clients can serve many purposes: It’s a chance to reconnect and build deeper relationships, address essential tasks, and tune up next year’s strategy. To hit the ground running in the new year, addressing a few essential points can help you lead more targeted and purposeful conversations—and deliver greater value for your clients.

1. Highlight what you’re already doing to add value

Clients want to know what they’re getting in exchange for the fees they pay, especially in uncertain times. Year-end is the perfect opportunity to raise awareness about what you bring to the table.

The good news is that research has been conducted that assigns an objective value to working with an independent financial advisor. According to a Vanguard study, receiving professional investment advice can result in a net portfolio return more than 3% higher than the do-it-yourself investor over the long term. This is how it breaks down:

  • Professional portfolio management advice can lead to an additional 1.2% in returns. Advice materially alters equity risk-taking for two-thirds of clients, reduces cash holdings for about three out of 10 and, for 9 out of 10 investors, eliminates “home bias”—the tendency to invest domestically.
  • An advisor’s ability to help clients better manage financial goals, savings, spending, cash flow, debt and rebalancing, as well as helping them avoid unnecessary taxes in retirement, can yield an additional 1% of gains.
  • Behavioral coaching can make up an additional 1.5%—as well as more peace of mind for the investor—as advisors help steer clients away from making emotional investment decisions and instead stick with a thoughtful long-term strategy.

This type of information is compelling and great to share, but it’s also general—so you may also consider creating a capabilities brochure that clearly lists the unique services you provide, making it easy for your clients to see what makes you stand out from the crowd.

2. Ask about any changing goals—especially retirement and estate planning

This year has been all about disruption, and it’s possible your clients may have found themselves shifting from short-term problem solving and crisis management to long-term lifestyle questions. Do they want to retire early? Move? Start a new venture? Downsize?

Year-end is always a useful time to vision-cast for the year ahead—to revisit an existing financial plan and make sure it’s still relevant. In 2020, it’s especially important to stay connected with clients and ask, “Do you still want to go where you’re headed? Do you want to get there another way?”

Retirement and estate planning are two key areas where you can add value and help protect your clients, whether through reallocating their assets for retirement, opening trusts to help keep their assets out of probate, or providing other investment options for legacy planning.

3. Get ahead of tax planning

Taxes are an ever-present pain point, and as the year draws to a close this is an area to be proactive. For example, offering to set up a collaborative meeting with tax advisors, providing support and education, and assisting with any tax-loss harvesting or charitable giving transactions can reduce stress for your clients and highlight potential opportunities for savings.

Also, tax-loss harvesting and managing trades in non-taxable accounts are ways you can help offset your fees and potentially increase after-tax returns for your clients. Speak with your technology provider about whether they can help you support this strategy.

Finally, as the country looks ahead to 2021 and a new presidential administration, you may want to highlight how any potential legislative changes may affect your clients’ current financial and tax-planning approach. Discuss their current plans and how they might want to respond to different scenarios that may arise. Having the conversation now can help you lay the groundwork for money moves or strategy adjustments down the line.

Financial portfolios don’t exist in a vacuum. Year-end conversations give you an opportunity to sync your asset-management efforts with all other components of your client’s financial and wealth picture and invest in other aspects of your relationship with them. Seize every opportunity (and every medium) to spread the good word about the value you provide—and end the year with stronger ties, mutual understanding, and refreshed strategies for the future.

Gabriel Garcia is Managing Director, Advisor Client Experience at E*TRADE Advisor Services.

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