How financial advisors can find simple opportunities for their clients to save

How financial advisors can find simple opportunities for their clients to save


Wouldn’t it be great if there was a retirement-industry equivalent of Smokey the Bear? Someone always ready to tell pre-retirees, “Only YOU can protect your financial future!” and encourage workers to begin saving for retirement—and whatever else the future might hold? Unfortunately, there is no retirement-industry equivalent of Smokey. But financial advisors can have the same effect on pre-retirees that the fire-preventing bear has on America’s youth, and it starts with encouraging better behaviors.

At a high level, the basic principles that lead to better long-term financial outcomes are relatively simple. What’s more, most people already know a few easy ways to increase the size of their savings but struggle to follow through. And that’s where the advisor comes in. Encouraging clients to utilize simple savings solutions proves highly effective; in fact, 67 percent of Americans who have a financial advisor believe they know how much to spend now and how much to save for later—whereas 34 percent of those without an advisor say they are “not at all confident” that they have the balance between the two right [1].

Simple ways financial advisors can encourage clients to save more money

Changing a learned behavior is never easy, but undoing years of a client’s “Treat Yourself” mentality and instead installing a financially literate mindset may be one of the most valuable things a financial advisor can do for a client. And luckily, there are simple ways to do it.

· Support clients on a personal level

Human-to-human connections are powerful (to say the least), and as a financial advisor, you have the unique ability to act as your client’s partner, mentor, and right-hand man when it comes to enacting better everyday money behaviors. Build a relationship with your client and be there to support them every step of the way—especially if the client struggles to meet their savings goals. Creating a “partnership” with the client will show them you truly care about what happens to them long-term and have their best interest at heart.

Plus, since social tendencies are powerful, the thought of disappointing someone who has been an important influence in life (whether that be a parent, a friend, or a mentor) can seriously motivate clients to hold themselves more personally accountable. After all, there’s a reason that Weight Watchers’ “Support Squad” or Alcoholics Anonymous’ “Sponsors” are as effective as they are in changing the learned behaviors that members are fighting to overcome. Just keep in mind that harsh or judgmental feedback isn’t needed—but kindness, empathy, compassion, support, and the ability to speak the “hard truth” when necessary is.

· Start off small

If your client is just starting to save for the future or has struggled to build a sizeable nest egg in the past, it’s probably a good idea to remind them to start out slow. When developing a savings plan, encourage clients to save an amount they feel comfortable with. At the very least, if their place of employment offers a company match for retirement savings, encourage them to save enough to get the full match. Then have your client regularly bump up their contributions by one or two percent—on a yearly basis or when a raise is earned.

· Automate it

If your client is forgetful or has failed to follow through on savings goals in the past, you may want to consider automating savings contributions—whether that be to a retirement savings account or just a general savings account. Have your client set up regular and automatic deposits into their 401(k) or their personal savings account directly from their paycheck. They can’t miss money they never had the chance to see, after all! Automation is a great, easy way for clients to get the savings train back on track.

· Develop specific “action items”

Experts have long since said that vague goals don’t lead to tangible results, and the same principle can be applied to money-saving goals. Realistically, setting a goal to “save more” probably wouldn’t yield the same results as setting a goal to “increase 401(k) savings by $5,000 by the end of the year” would. Setting SMART (specific, measurable, attainable, realistic, and timely) goals will give clients a roadmap and better overall understanding of how to get their savings from Point A to Point B.

Correcting everyday money behaviors that clients have practiced for years or even decades won’t happen overnight, but luckily, there are easy ways for advisors to align themselves with clients and help them reach their savings goals. Growing your relationship with your clients and encouraging them to follow through on all the goals they’ve never been able to before will show your worth and make your clients feel more financially secure—both now and in the future.

So, although you’re teaching clients to protect their financial future rather than prevent forest fires, we’re sure your clients will appreciate your guidance and support just as much as they appreciated (and learned from) Smokey the Bear’s advice way back in the day.