Financial Planning Ideas for Financial Advisors

Aneri Jambusaria:

What a year it has been! Hello, I’m Aneri Jambusaria and I want to take a moment to talk to you about the importance and value of guiding your clients with long-term, comprehensive financial planning.

2022 has featured dramatic market volatility and, for the first time in years, many investors have seen their portfolios shrink – and they’re anxious about what that means when it comes to their financial goals.

We’ve also heard from many financial advisors like you that this is the first time you’ve have had to deal with guiding clients through their financial plans during an extended down market.

So to ease your clients’ minds and take the opportunity to demonstrate your value, consider leaning into financial planning. If you have clients that don’t have a financial plan today, this is a great time to start. And for your clients that do have a financial plan, it’s a great time to showcase your value with a comprehensive review.

Why financial planning? It provides a great foundation for your relationship with your clients and helps reinforce good habits to make you and your client more successful.

Research also shows that clients who stick to their plans in tough times – like the ones we’re in now – are better positioned to reach their goals… and that can translate into a long-lasting relationship with you, their trusted advisor.

Depending on your client’s unique situation and financial goals, you could approach their financial plan differently, but let’s review some of the common ideas.

First, let’s talk process. Every financial plan starts with understanding your client’s goals and analyzing their situation. This can include their assets, liabilities, and cash flow. From there, it’s important to take each goal – whether it’s saving for college or retirement – and build a pathway for how they can get there.

They say that execution eats strategy for breakfast – the same goes for financial planning. The most important part of the plan is implementing and monitoring the recommendations. As the advisor, you’ll be on the hook for some of this; but your client has accountability too, to ensure their savings and spending habits support the plan. And you’ll also need to evolve the plan as conditions change.

The topics you’ll need to understand in order to provide comprehensive financial planning are growing, and include retirement savings, tax planning, estate planning, and insurance planning. You don’t need to be a pro in all of these areas, but in areas where you don’t have as deep expertise, it’s helpful to have a trusted partner on speed dial.

Now, for clients who already have a financial plan, times of market volatility – like the ones we’re in right now – are a great time to execute on some unique and timely planning strategies.

The first is Roth Conversions. Many clients who have a traditional IRA and expect to be in a higher tax bracket in the future could benefit from converting to a Roth IRA. This is a great time to do Roth conversions, especially for clients whose IRAs are lower in value due to market volatility. They’ll benefit form a lower tax liability during that conversion, and the remaining funds could grow tax-free.

Tax-loss harvesting is another important planning strategy for down markets. It’s a great time to harvest losses in your clients’ accounts without meaningfully changing their investment strategy. And those losses could translate into lower capital gain taxes, this year and into the future.

Lastly, take this opportunity to review your clients’ estate plans. For clients who are planning on making gifts to their heirs, doing so in a down market when those assets have depressed value can be beneficial. This will limit the amount of the client’s gift tax exemption used and might even reduce gift taxes owed.

Of course, you should encourage your clients to talk with their certified public accountant for details on the tax implications of these strategies. And we here at LPL are also available to help you and your clients wherever you are in your financial planning journey. 

Our advisors complete over 70K financial plans annually, and many of them receive support from our Paraplanning Services team. In fact, our team has helped LPL Advisors complete 750 plans year-to-date. That translates into more than 2 years of advisor time saved, not to mention the impact on all of the families with even more confidence in their financial futures.

That’s why at LPL, we’re all-in on planning, no matter the market environment. Thank you for watching and happy planning.