Common Traits of My Most Successful Clients
In my travels as a financial advisor, I’ve had the opportunity to meet a wide variety of people from all age ranges and backgrounds. After being in the business for over a decade now (where does the time go?), I’ve noticed some common traits that separate clients that have a secure financial future and clients that may struggle. Here are the top 5 traits of my most successful clients:
They are Good Savers
If you take nothing else away from this article, take this. Saving is one aspect of financial planning that a person has total control over. The clients that have the best balance sheets are the ones that consistently save. On top of that, they save utilizing different investment vehicles. 401(k)s are great tools, but they limit flexibility. Successful clients will invest in 401(k)s, ROTH IRAs, Investment Accounts and Insurance products.
Stay Invested
Most clients will get themselves into trouble when they overreact to markets. I had a discussion with someone that sticks out to me. She was very proud of the fact that she moved her money to cash in 2007 right before the stock downturn. She said she didn’t lose anything. I asked her when she got back into the market. As of May, of 2017, she still hadn’t gotten back in missing out on tremendous growth over the past several years. The best clients will stay invested and continue to invest in the market. Missing out on even a couple of the good days in the market can severely hinder your investment return.
Paying off mortgage
Successful clients pay off their mortgages slowly and clients that struggle in retirement try to pay down their mortgage as fast as possible. Eliminating or reducing debt is a good thing, so the previous sentence may seem counter intuitive. Clients have issues in retirement because they don’t have enough cash flow from their investments to support their lifestyle. When extra savings goes to pay off a house, debt is reduced, but the equity in the home can’t be accessed easily to pay for living expenses. Successful clients will find a balance between the two, but make sure they invest enough to support their lifestyle later in life.
Value Insurance
Nobody wants to pay for insurance, but the best clients understand it’s importance and role within a financial plan. Anything can happen and some things are more significant than others. If you lose the ability to earn an income, you’ll have to take money from your retirement plan or other assets which will drastically change your retirement plan. The best clients have built themselves a bullet proof financial plan utilizing the proper amount of insurance.
Open Minded
Close minded people don’t usually experience growth and will stay in the same place. Clients that are open minded and willing to learn tend to have the best outcomes. The clients that look to understand the “why” behind the financial decisions will typically make smart financial choices on a consistent basis.
What can you learn from them?