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Investing for Independence

Independence means something different to each of your clients. By getting to know them and understanding their intentions, advisors will be in the best position to provide financial and life guidance that’s in line with their specific goals.

By John Diehl

Independence Day is a time when we celebrate freedom and the birth of the United States, and while most people associate the holiday with fireworks and barbecues, it has me thinking about what role financial advisors play in their clients’ independence. Advisors have always primarily helped with investment recommendations that allow their clients to be financially independent. However, the advisor of today should also be helping their clients live independently by providing insights and connecting them to resources.

Independence is not just about having the assets to be financially secure. It’s also about using those assets wisely to live an independent life. However, it’s important to recognize that each client is unique and most likely has their own version of what “independent life” is. By getting to know each client and understanding their intentions, advisors will be in the best position to provide financial and life guidance that is in line with their specific goals.

Take, for example, clients who are of retirement age. They’re facing a new set of challenges that comes with exiting the workforce and entering their golden years. While they’re gaining the freedom of time off, they also may be struggling to find new purpose during the change. Some may be developing age-related health issues that require new routines or lifestyle shifts. Retirement can be a big adjustment, and clients that are approaching or just beginning this phase of life may need help to figure out what to do with all of their newfound free time, as well as deciding where to live and determining if they can safely live in their own home.

Rather than limiting their retirement advice to investments, advisors can take this opportunity to demonstrate their value-add by easing their clients’ retirement fears and guiding them through this unknown terrain. For clients who are concerned about living independently, an advisor can provide information on technological advances that can make the home age-friendly, such as pressure sensors in carpeting in case of falls, or stove cooktops that time out if they’re left on, as well as introduce these clients to on-demand service apps that can help with their transportation and nutritional needs. For retired clients who are trying to decide whether to stay in their home or move to an assisted living facility, an advisor can connect them to a Certified Aging-in-Place Specialist or can contact an occupational therapist to weigh their options.

On the other end of the spectrum from retired clients are millennials, who are in the midst of navigating completely different circumstances. These clients range from those still living in their parents’ homes and spending their disposable income on avocado toast to those who are getting married, buying homes and having children. Despite the wide range of ages and life stages that make up the millennial cohort, one thing that many of this generation have in common is student loan debt, which reached $1.5 trillion in 2018. Many clients or prospects that fit into the millennial bracket may be looking for freedom from this burden.

Putting the time and effort in with millennials before they’re financially established can help position the advisor as a trusted coach. Advisors that take the time to teach them about money management, empathize with and relate to their situation, and offer tailored guidance on how to become more financially secure will become the go-to resource in the long term. Since student loan debt is at a peak, advisors may want to understand and be able to explain the options for paying off debt while still being able to enjoy life, such as refinancing loans or extending payment plans. At the most basic level, advisors can also help these clients look at their overall spending habits to get a sense of where their money is going, or even help them create a budget, to further cement the relationship in hopes of creating a long-lasting partnership.

Advisors also have the opportunity to become a trusted resource for women, who also tend to face their own distinct obstacles. Research tells us that compared to men, women earn less money, spend less time in the workforce, live longer, tend to be less prepared for retirement, and more commonly take on the caregiver role. All of these can mean that women clients have fewer assets that they need to stretch further, especially those in the sandwich generation, who are taking care of both their children and aging parents.

Women wear many hats, so a “one-size-fits-all” approach won’t work. Advisors may want to focus on ways for their female clients to balance—and afford—all their responsibilities: to prepare them for the possibilities, by building into their budget caregiving expenses, giving them tips on how to cut costs elsewhere, taking them through what to expect in retirement, and connecting them with peers or groups who could offer further advice or support. Not every woman will face every one of these challenges, but by helping to maximize their assets while managing their costs could make them feel more prepared to live—and age—independently.

The primary purpose of the financial advisor was always to help clients with financial advice to reach a pinnacle. Now, advisors are expected to do more than just that; they provide life guidance, so that their clients can live their best lives at all times. As we celebrate our nation’s Independence Day, be reminded to ask clients what independence means to them. No matter who the client is or what their answer will be, just asking the question allows the advisor to become an indispensable asset in helping clients navigate all facets of life.

John Diehl is the Senior Vice President of Strategic Markets at Hartford Funds.

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