When clients come to financial planner Holly Hanson for help at Harmony Financial, she starts by getting them to prioritise.
Hanson says many people are fearful that they aren’t financially ready, or don’t know enough about money, to start building wealth with a financial planner — even though, she points out, “it has been proven time and again the earlier you start, the better your results.”
So she starts with prioritisation.
“Once they feel more confident in starting now, the best way to get them on track, and to keep them focused, is to prioritise their goals,” Hanson tells Business Insider.
“Part of this process is for them to decide (when it involves saving for a vacation versus buying a boat, for instance), but the part they need help with is in what order does each goal need to take place from a financially responsible standpoint.”
Then, they turn to eliminating any debt. “My advice always starts with paying off ‘bad debt’ first, from the highest interest rate to the lowest, while knocking out smaller credit cards first to keep them from getting overwhelmed,” Hanson explains.
“The next step is creating a sufficient account for ‘emergencies‘ — anywhere from three months to a year depending on the client’s work stability and risk tolerance. Once these two priorities are knocked out, then we have the discussion of goals and order them according to the client and the importance they place on each goal.”
Once that plan is in place, she says, the best thing a client can do is trust it.
“The smartest decisions I have seen a client make with their money is to trust in their plan. Out of all the scenarios I have been through with clients, this is the one that has created the best results for them financially as well as providing them peace of mind,” she says.
She recalls “hours and days” spent talking to clients and reassuring them of their long-term financial strategies during the market fluctuations that started in 2008, and reminding them that selling in such a down market would hurt their plan more than staying the course.
“It was trust that allowed them to stay in such an uncomfortable place and this trust is what they now look back on and are thankful for, in that they are still on course or have successfully achieved their financial goals,” she remembers.