What's a Single Change You've Made to a Client's Financial Plan?
Financial planning can be a complex and daunting task for many individuals. This article explores key changes that financial experts have implemented in their clients' plans, leading to significant improvements. From mitigating risks to maximizing investments, these insights offer valuable strategies for enhancing financial well-being.
- Mitigate Worst-Case Scenarios for Client Peace
- Pivot to Retention Boosts Startup Success
- Improve Credit Scores to Maximize Investments
- Debt Reduction Unlocks Compound Interest Potential
- Side Business Ownership Creates New Income Stream
- Diversify Investments for Stronger Retirement Fund
Mitigate Worst-Case Scenarios for Client Peace
The single most impactful thing we do is usually showing clients what the absolute worst-case scenario could be. We do this deliberately, so they are not only aware of it, but it also allows us to take the necessary steps to mitigate it. Once those solutions are in place, they can rest easy knowing that even if things out of their and our control come to fruition, the absolute worst case will never happen, and that gives them peace. From there, we structure things to make what they actually want to happen, happen. Clients feel much more confident moving forward, knowing they've proactively taken steps to make their and their family's future better.
Pivot to Retention Boosts Startup Success
One time at Spectup, we had a growth-stage startup approach us with what they thought was a decent financial plan. They were grinding hard, pouring every euro into customer acquisition, assuming that was the golden ticket to securing their next funding round. But when we dug into their numbers, we noticed their unit economics were deteriorating with every push for scale. It turns out they hadn't properly accounted for diminishing returns on their marketing spend.
We helped them pivot their plan, rebalancing their focus toward improving customer retention instead of just acquisition. One small adjustment we suggested was reallocating 20% of their marketing budget to enhance post-acquisition touchpoints, like onboarding and loyalty programs. Within six months, their churn rate dropped significantly, pushing their customer lifetime value up by more than 30%. This not only stretched their runway but made their metrics far more compelling to investors. I'll never forget the founder calling me after they closed a round, saying, "We wouldn't have even been in the room without that shift." It's always exciting to see how one thoughtful correction can reshape a company's trajectory.
Improve Credit Scores to Maximize Investments
When it comes to financial wealth, credit is often overlooked. When you calculate the impact of a 15 or 30-year mortgage, you might find that your client, who may not have had the best credit score at the time, could be wasting money on interest instead of investing that money. As a credit expert, I have helped thousands of high-net-worth individuals understand how important credit can be in saving money, rather than costing them money.
Debt Reduction Unlocks Compound Interest Potential
1. I've helped many clients reduce their debt by half or more, which has freed up their monthly cash flow!
2a. With that freed up monthly cash flow, I help clients best utilize the Rule of 72 and compound interest while contractually guaranteeing them that they'll never lose money due to downturns in the stock markets.
2b. When many people were losing money in their 401(k)s this year, my clients were still making money with me!
Side Business Ownership Creates New Income Stream
My focus is on helping clients investigate business ownership. Therefore, the most significant single change I can make to their plan is to recommend an opportunity that aligns with their financial goals and professional capabilities.
Many of my clients are employed in good jobs and prefer to start a business "on the side" and manage it as semi-involved owners. This approach allows them to create a new income stream and build equity over time, similar to owning a home and selling it at a profit later on.
Recently, a couple about to become empty nesters invested in a pest control franchise. They planned to hire a general manager to get it cash-flowing and transition later.
As it turned out, one spouse decided to exit Corporate America early and run the business full-time while the other continued to generate a steady income. They are quite comfortable with their situation: ensuring a steady income while building up a future income source plus equity potential.
Diversify Investments for Stronger Retirement Fund
When working with clients on enhancing their financial strategies, even a small adjustment can lead to significant benefits. For example, I had a client who was primarily investing in low-yield bonds, which was safe but not particularly fruitful in terms of growth. By shifting a portion of their portfolio to include dividend-paying stocks and a small percentage into high-growth mutual funds, we managed not only to increase their potential for higher returns but also improved the diversification of their investments. This change meant they could look forward to a more robust retirement fund while still maintaining a comfortable level of risk.
Another impactful strategy has been to adjust the timing and amounts of contributions to retirement accounts based on the client's lifecycle and career progression. Often, clients set up these contributions early in their careers and neglect to adjust them as their salary grows or as they near retirement. For one young professional, by gradually increasing their monthly contributions in line with salary increments, we could significantly enhance the projected value of their retirement savings, ensuring an easier and more secure transition into retirement. Remember, even incremental changes in your financial planning can lead to a substantial difference down the line, helping secure your financial future in ways you might not anticipate.
