Next year will bring acceleration of the great wealth transfer, meaning a massive of amount assets will matriculate from baby boomers to younger generations. That’s yet another, albeit familiar reminder for advisors to improve relationships with female clients and prospects.
As noted in McKinsey’s The New Face of Wealth report, women are widely viewed as the long-term growth drivers of the wealth management industry – a sensible outlook when considering the trillions in assets they’ll control by 2030. That’s only part of what advisors need to know.
To better serve female clients, advisors need to be in tune with traits specific to women. Those include better long-term perspectives compared to men and more willingness to embrace financial advice and education. Women are also willing to invest the time and in the advice and education to thrive when it comes to retirement planning.
Make no bones about it. Women, particularly those in their 40s and 50s, are highly focused on retirement planning, confirming advisors need to have educational tools and strategies ready to best serve these clients.
Start with the Basics
When it comes to shoring up retirement planning for new clients, female or male, starting with the basics is helpful. That includes a comprehensive overview of the client’s net worth and addressing debt issues, if any. In fact, some of this is “homework” clients can do on their own in advance of meetings with advisors.
“One easy way to calculate your net worth is to use an online net worth calculator, which allows you to compile your assets (house, retirement, savings accounts, etc.) and subtract your liabilities (mortgage, credit card debt, auto loans, etc.). The remainder is your net worth. Remember to calculate your net worth annually, as it may change from year to year,” notes Regional Financial.
As for debt, it’s an uncomfortable conversation for many clients to have, but it’s necessary in any planning circumstance, let alone retirement. Start by getting a handle on how many credit cards a client is dealing with and strategize by developing a plan for eliminating the highest interest or smallest balance first.
Moving onto the more compelling side of the retirement planning equation and one that’s critical to women in their 40s and 50s, is ensuring they’re taking full advantage of the retirement accounts at their disposal. This is always an important conversation and one taking on added meaning because recent tax law changes provided for higher maximum contributions.
“Beginning the year you turn 50, you may be able to contribute additional annual catch-up payments of an extra $1,000 into an IRA and up to $7,500 extra into a 401(k) or 403(b), depending on your plan and your tax situation. By maximizing retirement contributions as soon as you’re eligible, you’ll give those additional funds more time to grow before you retire,” adds Regions.
Long-term care isn’t a glamorous conversation. If anything, it’s like debt in that it’s uncomfortable for many clients, but women in their 40s and 50s need to address this topic either for themselves or because they’re taking care of aging parents.
“Long-term care expenses can drastically cut into retirement savings. Long-term care insurance can significantly reduce those costs,” concludes Regions. “But as with life insurance, your ability to secure coverage depends on your health. Some experts suggest applying for long-term care insurance in your early 50s to find out whether you can obtain coverage. Insurers factor in your age as well, so your premiums will most likely be lower if you start coverage earlier.”
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