6 trends in financial advice for 2022 | Financial advisers

Investors and financial advisers are not entering 2022 in the same space they started in 2021.

They are rethinking many aspects of financial planning, such as what retirement will actually look like and whether it is worth the wait. They are also worried about inflation, volatility and taxes, all of which will shape the financial advisory landscape through 2022.

The coronavirus pandemic, now entering its third year, has brought many of these questions and concerns to the forefront of the minds of advisors and clients.

For advisors considering where next year will take them, here are the top financial advice trends for 2022:

  • Rethinking retirement.
  • “List of living buckets.”
  • Preparation for inflation.
  • Less hold, more momentum.
  • Advanced tax planning.
  • Hybrid client communications.

Rethinking retirement

Customer experiences during the coronavirus pandemic were much like a retired test drive, wrote Joe Coughlin, director of AgeLab at the Massachusetts Institute of Technology, in a recent white paper. “According to Dr. Coughlin, because the pandemic meant we spent so much time at home, it made us re-evaluate things like where we live, how we work, who we spend time with, how we get around, what what we do for fun and how we leverage technology, “says Ryan Sullivan, Managing Director of Applied Knowledge at Hartford Funds. As a result, many Americans now have a much better idea of ​​what life could be like at home. retirement.

“Financial professionals can help clients discover the lessons they learned during the pandemic and apply those learnings to their financial planning and retirement goals,” said Sullivan. He suggests asking customers questions such as these about their pandemic experiences:

  • How did they feel about where they lived?
  • If they were working remotely, what was that experience like?
  • Who would they have liked to spend more – or less – time with?
  • Did they keep busy or get bored quickly?
  • Did they feel like traveling or were they just staying at home?
  • How much did they spend during the lockdown? Was it more or less than expected?
  • How did they maintain their physical and mental health?

“It takes sensitivity, but helping clients or prospects to consider these issues can make them aware of what they really want in retirement – maybe something different than previously thought,” he said. Sullivan said. “And once they can imagine it, they can plan it.”

“List of living buckets”

The idea behind “life on a bucket list” is simple: retirement planning should be about enjoying the trip rather than just focusing on the destination.

It’s a topic Brad Levin, Managing Director and Senior Wealth Advisor at The Colony Group, discussed with his clients. It is also the one he sees “becoming a major trend among the community of financial advisers in 2022”.

Levin has seen a change in outlook for customers over the past two years, helped in part by the pandemic. “After almost two years of limited travel capacity, many people are looking to travel more, not only in retirement, but also much more in the near future,” he said. “Some clients also express a desire to retire earlier, while others wish to maximize their enjoyment of life before reaching retirement.”

That doesn’t mean clients and advisors can stop planning for the future – advisers should still help clients plan for retirement that could last over 30 years. But you can also help clients make plans to fund rewarding life experiences along their retirement journey.

“Showing clients what it will take to achieve those goals can lead to increased financial confidence and help them feel they can give themselves permission to profit from today while planning prudently for tomorrow,” said Wine.

Prepare for inflation

Inflation will remain a major concern in 2022, says Brian Stivers, investment advisor and founder of Stivers Financial Services. As such, “investors and advisers will be looking to reallocate funds to investments that have the potential to do well in times of inflation,” he said. “Historically, these have been sectors such as energy, utilities, consumer staples, health care, banking and other inflation-friendly sectors.”

Investors with a lower tolerance for risk may seek safety not only because of inflation, but also because of COVID-19 and the midterm elections. Many advisers, low-risk investors, or people with limited experience may prefer to wait for this period of inflation and see how the midterm elections can impact the market, Stivers says. This can trigger a larger move towards US Treasuries, short-term fixed rate instruments, and even money markets and bank accounts.

“A long-time client of mine often says, in times of economic uncertainty, that ‘Zero is his hero’,” says Stivers, which means his client is more concerned with avoiding loss than seeking the. gain. He adds: “2022 could be one of those years when many investors and advisers decide ‘zero is their hero’.”

Less support, more momentum

The buy and hold strategy has been the most popular investment technique in recent decades, but Stivers believes recent market turmoil could change that in 2022. “The volatility of 2018 in the market is likely to change. increase the popularity of momentum and trend strategies throughout 2022, ”he said.

The idea behind market dynamics and market trending strategies is that investors can use economic and market data to determine whether the future trend is a good or a bad time to be in the market, Stivers says. You can also use data to determine where the momentum is in sectors of the market at any given time.

“Therefore, it makes sense to reallocate stocks when the trend, and momentum, moves higher and reallocate to a defensive position, like bonds or cash, when momentum, or trend information , are declining, “he said. This, he predicts, is more of how investors and advisers will think about investing in 2022.

Advanced tax planning

But there is a countdown to these exclusions and exemptions: “Under current law, this higher exemption from inheritance and gift tax will end on December 31, 2025, with the amount of the exemption falling. at the previous exemption amount – should be between $ 6 and $ 7. millions per person – unless laws are changed before then, ”says Marla Petti, Chartered Accountant, Certified Financial Planner and Senior Wealth Management Advisor at MAI Capital Management. That makes 2022 a great time to take advantage of the increased exemption, which can be used for the life of a client, she says.

“We use a variety of giving strategies which may include the use of irrevocable trusts, including grantor-kept annuity trusts, spousal life access trusts, intentionally defective trusts, or irrevocable life insurance trusts. “, she says.

Hybrid customer communication models

The pandemic has forced many advisers to adopt a virtual meeting style with clients, but advisers may not want to give up the practice too quickly. “As things continue to normalize in 2022, finance professionals should consider permanently implementing a hybrid model that combines in-person interactions with clients with ongoing virtual engagement,” Sullivan said.

He highlights the many benefits of providing continuous online interactions, such as allowing advisors and clients to use their time more efficiently and to “see” each other more frequently. Virtual meetings also make it easier for advisors to engage with others in their client’s networks, such as family, friends or other professionals, he says.

“The degree to which each client prefers virtual meetings over face-to-face meetings will be different, including the fact that some may prefer no virtual interaction,” he says. “However, offering an option online can set a financial professional apart and could be a big differentiator for busy and tech-savvy prospects.”

For a hybrid communication model to be effective, he says, financial advisors will need to devote the same amount of thought and effort to refining virtual meeting experiences as they do with in-person meetings. “Lighting, background, eye contact, body language and tone of voice are just as important online as they are in person, if not more,” he says.

He adds a caveat: don’t book your back-to-back virtual meetings. “It can be a bit disorienting to constantly look at a webcam and talk on a computer screen,” he says. “Give yourself – and in your eyes – an occasional break. “


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