Both advisors and clients can benefit from discussing the financial ins and outs of education
Advisors are increasingly dependent on planning areas outside investment to demonstrate their value. They’re also looking for ways to engage with new generations of clients, as well as deepen relationships with the families they serve.
They may be able to address all those points by focusing on one major financial issue: student-loan debt.
“[W]ith many [firms] offering student loan payment incentives … advisors are paying attention to tools they can use to help their clients with the cost of college,” said a piece published by WealthManagement.com.
While parents may have a crack at talking to their children about how they should handle debt, teenagers may not feel comfortable having such conversations; advice that comes from firsthand experience acquired decades ago may also not be so applicable today. As third parties and experts in money matters, financial planners may be in a better position to talk with young people about educational expenses and debt.
Being a millennial advisor could provide an additional edge in terms of relatability. “As a millennial financial planner, it comes naturally to me to have those 'money chats' with fellow millennials and Gen Z-ers,” Kyle Goulard, founder of Goulard Financial, told WealthManagement.com. While parents are very capable of giving their sons and daughters advice, Goulard said third parties are sometimes necessary to conjure “aha” moments in relation to finance.
Read also: Financial advisors staying relevant with college and career counselling
Conversations around student debt aren’t necessarily as immediately lucrative as other areas like estate planning or tax strategy. But for many holistic practices, they represent part of a broader mission to help families. Planners can talk to parents about setting up college savings vehicles; with college freshmen-to-be, they can go discuss different career choices and how well potential salaries stack up against the future costs of student debt.
And by following a don’t-try-too-hard approach, advisors can open doors to children becoming future clients. As Sidney Divine, founder of Divine Wealth Strategies in Atlanta, described in her own experience, “It was less about converting and just letting [the children of my client] know I’m there for them as a result of their parents working with me.”
Another more important effect of advisors discussing student-loan debt with college aspirants is that it gives them an idea of what it should feel like to work with an advisor. “Today's teenagers will be setting a new standard for their future financial relationships,” Goulard said.
Cultivating financial literacy with children can also benefit parents. Not only does it make them more confident in the advisor they’re working with, but it also increases the chances that the children won’t grow up to be a financial burden in adulthood, which could weigh on older generations’ retirement plans.
