Preparing for the Unexpected: Disability
A wealth builder’s ability to earn income is typically their most valuable asset. Losing an income could very well total a loss of millions of dollars over a client’s lifetime. For example, assuming a 2.5% annual increase in income, a 43-year-old earning $150,000/year and planning to work until age 65 would lose $4,329,424 in lifetime income if they became permanently disabled today.1 This would likely be devastating to their short- and long- term financial stability, as even a substantial emergency fund and/or investment portfolio can be depleted quickly, and at the jeopardization of other goals.
Transtheoretical Model of Behavior Change
As we all know, most people are naturally resistant to change. You can gain insight on potential reasons why clients may be resistant to suggestions, advice, or tasks you ask them to complete by understanding The Transtheoretical Model of Behavior Change (TTM), developed by researchers James Prochaska and Carlo DiClemente in 1983. This model can apply to both prospecting – and motivating clients to follow your advice.
Goal Setting – A Win-Win for Advisors and Clients
According to Savology, people actively working toward clear goals are 10 times more likely to succeed. Your discovery meetings and review meetings can be a great time to talk with clients (both existing and prospective) about their financial goals, both for the current year and beyond. Any new goals can be added to the client’s financial plan, and existing goals can be reviewed and updated. Below are broad examples of some short-, medium- and long-term goals.
Life Cycle Financial Planning
Life cycle financial planning refers to the process of identifying and managing the financial needs and challenges that arise at different stages of life. As clients go through the various stages and life changes, their responsibilities, needs, and financial capabilities are likely to shift, so it is important to understand the needs of each phase to best serve clients. Below is a list of the 5 stages of the financial planning lifecycle, with examples of key financial planning needs at each stage.
Understanding Marketplace Health Insurance
How can clients obtain health insurance if they plan to retire prior to the Medicare eligible age of 65 or lack job-based coverage? The federal Health Insurance Marketplace (www.healthcare.gov), also called the “Exchange,” is the website where individuals can browse, compare, and purchase health care plans available under the Affordable Care Act. Many states, including Pennsylvania, Maryland, New Jersey, and New York, have their own marketplace website.
The Seven MAGI Calculations
Modified Adjusted Gross Income (MAGI) is a key calculation used by tax professionals and government agencies to determine an individual’s eligibility for various tax credits, deductions, and other considerations. It is based on an individual’s Adjusted Gross Income (AGI) with addbacks specified in the Internal Revenue Code. The concept of MAGI may seem straightforward; however, did you know that the IRS has seven separate definitions?
Education Planning Realities
According to CollegeBoard, the current cost of college compared to that of 30 years ago, after adjusting for inflation, is now 2.02x as high for in-state, public four-year institutions and 1.75x as high for private nonprofit four-year institutions.
Health Savings Account (HSA) Facts
Unlike Flexible Spending Accounts (FSAs), Health Savings Accounts (HSAs) do not need to be emptied each year and can serve as a long-term investment vehicle. In fact, HSAs offer a very attractive ‘triple’ set of potential tax benefits: 1) federal tax-deductible and FICA-free contributions, 2) tax-free growth, 3) tax-free withdrawals for qualified medical expenses. Below are details on these tax benefits.
One Big Beautiful Bill Act (OBBBA)
The lead up to and eventual passing of the One Big Beautiful Bill Act (OBBBA) has garnered significant attention in the industry. Now that the dust has begun to settle, many advisors are eager to understand the impact this will have on their clients. Below, we outline the high-level details of six key provisions of particular relevance to advisors and their clients. As with any new legislation, it is possible that some of the finer details may be further clarified over time.
Student Loans and Planning Considerations
There are many nuances to student loans that are important to understand, whether a client or child of a client is coming to you with existing loans, or contemplating taking out new loans for further education. Decisions surrounding student loans can impact other areas of a client’s financial plan, such as their progress toward other goals, life insurance coverage needed, and even tax filing status. Here, we delve into characteristics of different types of loans, and some planning considerations.
