Some clients and investors are better with it than others. Some are savers, some are spenders and others are the extreme of both. Here are five common money mistakes planners see from their clients and what they do to right them.
- CFOs only
- Splurging unexpected money
- Not rebalancing portfolios and reviewing beneficiaries
- Market anxiety
An estimated 88% of total U.S. public market assets are affiliated with a Principles for Responsible Investment (PRI) signatory, however only 4.5% of signatory assets are described in their official product documents (e.g., prospectuses) as taking ESG considerations into account to inform investment decisions, a Cerulli study found.
Managers are challenged by myriad factors around clarity and standards of terminology. They hesitate to document their commitment to responsible investing in prospectuses and other formal investment documents.
Key factors managers cite as major challenges to client receptivity: client unfamiliarity with ESG factors (26%), the perception that considering ESG issues has a negative impact on performance (25%), and difficulty defining the boundaries of ESG (25%).
Although many firms have adopted ESG principles, figuring out how to implement them continues to be a work in progress. Cerulli Director Michele Giuditta said “We are in the beginning stages of adoption, with many firms just starting to build their ESG integration processes.”
Netflix, $9 per month; Disney+, $7 – but what about for financial planning needs? Subscription models have made streaming more affordable than cable; it can do the same for financial planning.
For younger individuals and minorities, the barriers to entry can keep those who are most in need of financial planning out of their grasp – AUM minimums, income requirements – all prevent these groups from receiving financial planning.
Subscription-based planning is a way of lowering that barrier and giving individuals the financial planning they need without hurting a planning practice’s bottom line.
Many firms and planners have already adopted the subscription model, such as Luis Rosa of Build a Better Financial Future, a Nevada-based firm specializing in younger clients. XY Planning Network and Schwab have also adopted the subscription approach for the masses in addition to their other fee-only options.