3 Reasons Your Clients Fall Short of their Savings Goals

I'm sure you’ve heard about the dire need for Americans to start saving more...

We’re not here to beat that drum any more than you want to hear about it… again. What I WOULD like to point out are reasons why even the most diligent savers, many of them your clients, fail to reach their desired savings goals during the income taking phase of their investing lives due to factors completely within their control.

Sometimes, a saver is stuck between a rock and a hard place of paying their bills and saving for the future. This, unfortunately, is a reality for many Americans today. However, there are three hidden traps even the best savers fall into, all of which are preventable.

First, market risk. Savers today have most likely experienced the rollercoaster ride of the market returns over the previous two decades. As a result, even the smallest event can send the markets tumbling and your clients heading for the exit door. It doesn't matter if historical averages tell us to expect high single or low double digit returns on most equity indexes, average investors can’t help themselves when emotion takes over.

This, as we all know, can result in disaster for an investor’s overall portfolio. How do we as financial professionals prevent this flood of emotion from taking over before it happens?

Second, tax risk. The single greatest tax bomb awaits the average saver whose majority of assets are in their 401k or IRA. Sure, they’ve enjoyed the small tax deduction while their savings go in to their accounts, but they are in for a rude awakening upon retirement. The question must be asked to your client, “What happens when you withdraw money from your 401k/IRA?”

If you’ve never asked that question to a client, try it out. You will be shocked in regards to the number of clients who have no idea the tax implications of a withdrawal or leaving those assets in their estate.

Finally, liquidity risk. Life happens. Even the most solid of financial plans can implode due to an unexpected event. An untimely death or unexpected illness can be devastating. On the flipside, a new child or an increase in working salary would be great changes.

Whether positive or negative, the only thing constant in our lives is change. The plans we design for our clients must be able to adapt to new worlds, both on a micro level and macro level.

When it comes to a client’s portfolio, there is one word that can seldom be used as a negative: diversification. It’s hard to argue that a truly complete financial solution must address all three risks we’ve discussed and deliver a diversified approach to market risk, tax risk and liquidity risk.

We at DMI represent a number of financial institutions that can provide the exact solution that may be appropriate for your clients’ needs. It is our goal to provide you, the advisor, with the tools you need to guide your clients to financial success, and avoid the three traps that threaten all of your clients, no matter their savings rate.

For more information on how we can help your clients achieve their goals, please email me at SWildman@DMI.com, or call 610-357-1611

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Steve Wildman, CFP & CHFC & DMI Sales Consultant

Steve Wildman has spent the past 14 years in various roles within the financial services industry, focusing primarily on insurance and income planning. Steve has spent time on both the retail and wholesale sides of financial planning, which provides him with a unique perspective on how to help grow our advisor partners’ book of business and generate revenue for their practices. Steve is a resident of Havertown, PA, where he lives with his wife Claire. Steve is a DMI Sales Consultant and can be reached at SWildman@DMI.com, or 610-357-1611

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DMI was founded in 1989 to provide financial advisors three dynamic elements for success: marketing services, sales consulting and business management.