Financial Planning – The Personal Impact

Celebrating Financial Planning Month

The Business Impact

Financial planning is multi-faceted, with many layers to consider in the eyes of an advisor. We can spend countless hours discussing business impacts such as the “Race to Zero” on commissions and how, as the industry continues to change, planning will become that much more important for advisors to differentiate themselves from their competition. Or perhaps discuss what the average annual GDC is for number of households engaged in financial planning and how the more clients engaged in planning, the higher the GDC.

After a recent visit with my soon-to-be 93-year-old dad, I reflected on how I helped him get to where he is today. Making financial planning personal can prove to be invaluable to clients and their families.

The Personal Impact

My dad, daughter and I all have birthdays in October. We have been officially celebrating all three birthdays together for over 20 years.  Two years ago, we celebrated at our home. This year, we celebrated at my dad’s skilled nursing care facility. He has all of his mental faculties, but needs assistance with all of the activities of daily living. Because I was in the industry and had studied the gaps in long-term care coverage should this need occur, I encouraged my parents to purchase long-term care insurance policies in 1992.  After nearly 30 years, my dad is utilizing the benefits. On paper, the decision is great; however, the personal impact is immeasurable. 

  • After my mom passed, my dad was able to live on his own for five years. After one too many falls, we finally decided as a family, dad included, that it made since for him to move to assisted living.  He eventually would require skilled care.   
  • When he first arrived, he asked me when the elimination (waiting) period was over for his long-term care policy and when would the benefits kick in.  That period was 100 days, and I think he asked me about it 99 of those days!  I finally made a chart for him that he could look at any time he wanted.  He was an economist, and has always been numbers-focused.
  • Once the benefits kicked in, he stopped asking about his bank account balances daily. Although he was in good financial shape, he still worried about his finances.
  • He felt more comfortable buying gift cards for peoples’ birthdays and Christmas.      
  • He doesn’t have a roommate, so he can watch his TV whenever and as loud as he wants, and he can watch college football with my son.

This planning conversation and my parents’ concerns 30 years ago made today’s difficult decisions easier on all of us. 

Cindy Nagel, her dad Jack, and daughter Emily.

Financial advisors can conduct risk tolerance conversations with clients and formulate investment strategies that help clients feel comfortable with how they invest… but do we know if their investments will last as long as they do?  Even Financial advisors who are engaged in financial planning don’t always discuss or include the “protection” areas of life or long-term care insurance.  Many clients who engage in planning are over 50. According to the CFP Board*, 48% of Baby Boomers state that health care is one of their greatest concerns. Yet, according to a 2020 Kehrer Bielan study, on average, only 35% of advisors included a health care goal in their retirement plans.  

Think about that for a moment. Healthcare costs are a top concern for clients, but even advisors who are engaged in planning don’t always look at this aspect of planning.  SHOWING the impact versus solely DISCUSSING the impact that an unexpected life event can have on clients can often help them see the importance of truly understanding their potential impact to them and to their families.

What Financial Resources Group Financial Advisors Say

Gina Lindsey, CFP®, with Lindsey Planning Group in New Jersey, says she engages in financial planning in some manner with every client with whom she meets.  She shared, for example, that income distribution planning should be the primary focus of a retirement conversation, as opposed to rates of return.  She also consistently has the health care conversation with her clients. She believes financial planning allows her to “take a broader view of the life her clients want to live”, and sees her job as helping them get there in the most efficient way possible. 

Kendrick Hardin, with Discovery Partners Investment Center in Union City, TN says that as their clients prepare for retirement, sell their businesses, or begin that final life-style transition, they are generally concerned with three things: income, legacy, and trust.  While growth, yield, inflation, and longevity worry clients in this phase of life, Kendrick says “We’ve found that a true familial relationship accompanied with the certainty of leaving specified amounts to their heirs, charities, and churches is what is most important to alleviating client fears”.  The team at Discovery Partners show clients Monte Carlo simulations, risk analysis reports, and cover investment details, but says, “the financial plan really can bring all of the most important pieces together: it shows clients what dollar-amount of income is predictable, helps them understand the legacy they could leave to their families, and the planning process reminds them that our office is always looking out for their family’s future”.

The recurring theme is… what is important to your clients? Focusing on the “why” such as a comfortable retirement; leaving a legacy to family, church or charity; or protecting a hard-earned nest-egg from being spent on long-term health care – rather than rates of return and down markets – helps you keep clients for life, and more importantly, helps increase their chances of living the life they envisioned. 

To learn more about the Financial Planning tools and resources available, reach out to your dedicated FRG Director of Business Consulting.

  *Cost of Health Care is Americans’ Top Financial Concern: CFP Board December 9, 2020

Picture of Cindy Nagel, CFP®, Director of Business Consulting

Cindy Nagel, CFP®, Director of Business Consulting

Making financial planning personal can prove to be invaluable to clients and their families.

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