3 Ways to Steer Clients Through a Challenging Economy

What You Need to Know

Interest rates are up.
Paychecks purchasing power is down.
Clients need to know what to do now.

As we continue to operate in a challenging economy, it’s abundantly clear that your goals must align with the financial goals of your clients.

Seventy-seven percent of Americans feel anxious about their financial situation, and half of them feel that their finances control their lives and have difficulty controlling money-related worries, according to a recent Mind over Money survey from Capital One and the Decision Lab.

Vast numbers of Americans are worried about saving for retirement, rising living costs, and managing debt.

Double-digit price increases have raised American spending for food, energy, and transportation, with the costs of those goods up more than 7% in the past year.

Across the board, paychecks are not going as far as they did 12 months ago.

The federal funds rate went from less than 1% a year ago to nearly 4%, so the cost to finance practically anything, from cars to appliances, has increased.

Also, the average 30-year mortgage rate rose from 3.25% last year to about 6.75%.

That means that the monthly payment on a new $300,000 mortgage is $600 more per month than it was for the same loan that originated a year ago.

Despite this, opportunities exist for agents and advisors who can bring solutions to increasingly nervous clients.

While helping clients rearrange their finances may not be enough, agents can look at all their significant assets and see what other options are available to them.

Here are three options to consider:

1. Ask if it’s time to downsize.

Many boomers still live in big houses that have appreciated in value over time.

Is it time to recommend that they cash in on some of their real estate wealth and move that money into assets under management, an annuity, or some other vehicle that can help provide more money to live on? These options may need to be addressed.

2. Maybe a reverse mortgage?

This may be time to take a hard look at a reverse mortgage or similar option.

This may not be an area in which agents and advisors have deep experience, but it could be in your client’s best interest to look at ways to get some value out of their home while they continue to live in it.