Skip navigation
conversation mixformdesign/iStock/Thinkstock

Seven Conversations to Have with Clients

Exceed their needs by offering more than investment advice.

As you begin the year with client meetings, it’s easy to get lost in a deep discussion of the Dow, the clients’ asset allocation or where interest rates are headed.

But it’s just as crucial that you talk with your clients about issues that matter as much as investments—and probably more urgent to the clients.

Here are some subjects to address after you’ve gone over the basics.

Monthly Spending

If you haven’t updated the clients’ financial plans recently (or ever), one of the first items to review with them is what they’re spending, especially if they’ve retired. Too much going out the door every month means hundreds of thousands of dollars or more to support that lifestyle in retirement. Forcing clients to quantify their spending also helps them identify where the money is going and what expenditures can be reduced or eliminated. Conversely, frugal clients who have reached financial independence may want to spend more money now (and/or later), invest more conservatively or retire earlier.

Upcoming Big Expenditures  

Naturally, a conversation about the clients’ regular spending should include a conversation about looming larger outlays, such as a new vehicle or a big home remodeling project.

Don’t be surprised when middle-class millionaires get anxious about spending five figures or more on something that you may view as relatively affordable and practical. Their attitude is likely what helped them achieve their financial independence in the first place. Your job is to reassure them that the big sum they’re contemplating spending is reasonable and won’t jeopardize their long-term financial security. Or, if you have some actual concerns about the size and purpose of the expense, you should talk the clients down to a more sensible amount.

Spending Strategy

Once you and they have reached an agreement on a suitable spending figure, their next question will likely be, “[w]here is the money going to come from?” Often, the best place to start is with a chunk of change sitting in a non-retirement money market or checking account. However, if using those funds will reduce their liquidity, the clients may instead want to tap retirement or other tax-deferred accounts, which could invite a big tax hit. You should weigh the tax costs versus the potential interest expense if they were to borrow the money, especially in this low-rate climate. 

Freezing Credit Reports

The panic over the Equifax hack in 2017 has subsided, but the risk to your clients’ identity has not. And it’s only a matter of time before the next large or small security breach exposes their identity and information to theft and fraud. There are some ad-supported financial information companies that purport to monitor the credit and identity information for registered users, for free. Two of the more prominent ones are WalletHub and CreditKarma. 

Concerned clients can also sign up for a paid monitoring service, like LifeLock, or ones offered by various credit bureaus. But the greatest cost-to-benefit ratio may be achieved by clients when they freeze their credit reports with the three major bureaus. It’s a bit of a hassle to freeze one’s credit report, but not nearly as much as recovering from a case of stolen identity. Depending on the client’s situation and state of residence, there may be a small fee to do so. You can give them more specific relevant information by sending them to the Consumers Union’s Guide to Security Freeze Protection.

High Interest Debt

According to figures compiled by the financial website ValuePenguin, in 2017, almost 40 percent of American households carried some credit card debt. The average balance of those accounts was over $16,000, and the average interest rate charged on those balances was about 14 percent. Credit card debt is not only a problem for those just getting by.

The average credit card balance for households who carried a balance and earned more than $160,000 annually was $11,600. Eliminating those balances will earn an instant and guaranteed rate of return for the cardholders, in the amount of the interest rate. But, it could also save clients’ money by raising their credit scores, which could then lower other expenses, such as premiums charged by auto and homeowners insurance providers.

In fact, if you and your clients believe in a future of higher tax rates and lower investment returns, it may be better for them to temporarily stop contributing to their retirement accounts, and instead redirect those contributions towards paying off the credit card accounts. At a bare minimum, homeowners can scare up a lower-cost source of funds to pay off high-interest credit card balances when they ... 

Open Up a HELOC

The new tax laws mean that clients can no longer deduct home equity loan and line of credit interest. But that doesn’t mean homeowners should forget about these potential sources of funds, especially the home equity line of credit, or HELOC, which clients should establish now while lenders are in a good mood and real estate prices are generally on the upswing.

There may be a small fee to establish the HELOC, and a smaller fee to keep it open, but it can provide quick cash to clients in an emergency, without having to go through a loan application process, tap retirement accounts or sell appreciated securities. The added cost might be inconsequential in the big picture, but that doesn’t mean clients aren’t worried about it. 

How Are the Kids?

Even if your older clients are in good financial shape, their adult children may not be. Make sure the parents pass your contact information on to their kids, and offer yourself as a free confidential resource the younger generation can use to ask questions, get advice and even get second opinions on what the kids’ current advisor is doing for them. The parents will be eternally grateful to you and it will make it more likely that their money stays with you even after the parents are gone.

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.