There will be a point in a client’s life when a transition occurs that can be a benefit or setback. For example, life transitions can include a job promotion, retirement, a job loss, marriage, divorce, or retirement. While these life events can be difficult or cause emotional distress, financial planners can assist clients in navigating these transitions when they occur.

A financial planner can help clients with the following life transitions:

• Career Changes: A client might receive a job promotion or change careers altogether. A financial planner can analyze their balance sheet and insurance coverage and ensure they contribute the maximum yearly contributions.

• Marriage/Divorce: Whether the client is getting married or going through a divorce, a financial planner can assist with budgeting, debt management, asset division, estate planning updates, and possible tax consequences involved in these unions or separations.

• Loss of a Loved One: During the loss of a loved one, a financial planner can help clients handle life insurance claims, estate administration, re-titling assets, and updating beneficiary designations. In addition, assist heirs with the transition of assets and create financial plans with the funds they will inherit.

• Retirement: Financial planners can help create income strategies, determine optimal Social Security claiming ages, manage retirement account withdrawals, and ensure long-term financial security.

 

One of the areas that many clients overlook is the unexpected life transition; even if the transition was expected, most clients are unsure how to proceed or what steps to take to reduce the amount of stress possible. Susan Bradley’s article, “Financial Triage,” introduces a process financial planners can use to help clients remain calm when stressed about money or a financial transition. The formula normalize + prioritize + organize = stabilize the method to obtain stability in their situation. The step is normalize, which encourages the client to share their fears and what keeps them up at night. For example, what could keep clients up at night could be debt or no longer being happy with their careers. While the client shares this information, the financial planner should be taking and listening attentively. Not only will the client appreciate that they are heard, but this will also give the planner their issues, which they can help the client prioritize. Once the client shares their issues, the financial planner can help them prioritize and sort their client’s fears to determine which ones need immediate attention and which ones can be controlled. For example, suppose the client has massive debt and needs to replace their air conditioning. In that case, the planner can help the client by setting a portion of their paycheck towards buying the new AC unit while using the remaining funds to stay current with their debts and use any excess funds to pay down the higher-interest debt. The final part of the equation is organized, in which the planner and the client will work together to create a plan to achieve their goals. The client can divide the goal into small and manageable steps to stay motivated throughout the process. According to Bradley, “the formula result will allow the clarity, balance, confidence, and a plan of action which will create stability” (Bradley, 2009, 22). Do clients have choices when deciding whether they have options to overcome their current transition or customize their plan?

A financial planner can offer expertise, guidance, and support through these life transitions. Their expertise can help clients stay motivated during these difficult life transitions and help clients move forward through various life transitions.

Reference

Bradley, Susan (2009). Financial Triage. Bank Investment Consultant. 17(2): 21-22.