Advisors: The Four-Part Formula for Financial Confidence

financial-confidenceAs financial professionals, we are more successful in helping clients reach their financial goals when we understand the motivations and rationale behind their decision making. A national study, From Concerned to Confident by Guardian Life identified links to and behaviors of overall life satisfaction and financial confidence.

The research revealed that 79 percent of workers are significantly stressed and much of the stress is related to financial concerns. By studying the habits of financially-confident respondents, the study uncovered specific steps that lead to greater financial confidence, reduced stress, and increased satisfaction with life.

Surprisingly, household income levels had little to do with the quality of financial decisions and levels of stress. The mean income level of respondents ranged between $100,000 and $145,000. Responses reveal that wise financial decision-making was only slightly influenced by income.

Four model behaviors

What are the four model behaviors that create financial confidence? Planning, Education, Ownership and Strategic Relationship. Each behavior is learnable, can be incrementally adapted, and takes a long-term view of financial stability. For each model behavior, the chart below suggests steps for both the client and the advisor.

  Client Action Advisor Action
Planning

>Adopt a long term financial view

>Live within means

>Prepare a written plan with specific goals

>Help clients understand financial goals & worries

>Document goals and priorities

>Conduct an annual progress check with clients

Education

>Establish and review a budget

>Develop an understanding of financial products insurance, 401(k), annuities)

>Estimate expenses in retirement 

>Guide clients through budgeting process

>Provide financial educational resources

Ownership

>Maximize retirement savings options(401(k), employer matching, IRA accounts)

>Eliminate credit card debt

>Cover basic risks, e.g. premature death, income-interrupting injury or illness, long-term care expenses

>Recommend products to address common risks (life, disability or long-term care insurance)

>Advise on 401(k) investment allocations

Strategic
Relationship

>Find a trusted financial profession

>Develop a long-term partnership

>Share financial goals and concerns

>Achieve goals one step-at-a-time

>Create a holistic plan with client

>Emphasize client / advisor partnership

>Identify unaddressed risks

Your role

The financial advisor has a key role in all four of the model behaviors. More importantly, consumers express a desire for holistic counsel and guidance on their financial plans. Professionals have the choice to 1) serve clients directly relying on a broad knowledge of financial planning, investments and various lines of insurance including disability, long-term care and life insurance or 2) act as the quarterback handing off to trusted specialists within professional networks or by partnering with an organization like Brokers Central. Either way, trust levels increase when clients are confident that all their financial concerns and goals are addressed.

Whether you are a life, DI or LTCI expert, or you rely on Brokers Central to fill in where needed, your clients benefit from our combined expertise and broad product portfolio. Contact us to learn more about making Brokers Central your back-office insurance support team.

Paul is the Vice President of Sales at Brokers Central, with more than 20 years of financial services experience under his belt, most recently as a Regional Marketing Specialist for Prudential Insurance.View Paul’s bioContact Paul.