How Advisors Can Help Clients Avoid Financial Regrets

Regrets are a part of life and anyone that says they don’t have at least one regret is probably fibbing. With the benefit of hindsight, any regret is preventable, including those of the financial variety.

If there is a silver lining regarding financial regrets, it’s that these issues can be fixed and they highlight the need for more ordinary investors to connect with advisors. Not surprisingly, the current environment is accentuating clients’ financial regrets. Two years of inflation and rising interest rates will do that.

As advisors, financial regrets can pop up at any stage of life and these issues don’t discriminate on the basis of age, race or other demographic factors. Baby boomer and Gen X clients may be apt to be dismayed that they didn’t save more for retirement sooner while younger clients, including millennials and Gen Z, may be dismayed about consumer and student loan debt.

Point is, debt and financial regrets are areas where advisors can add significant value for clients. Here are some points of emphasis when it comes to easing clients’ burden of regret.

Debt, Savings Matter

A recent survey by Bankrate.com confirms that various forms of debt and savings (or lack thereof) are among the leading causes of financial regret.

“Around three in four (74 percent) U.S. adults have a financial regret, according to a new Bankrate survey. Most commonly, Americans regret not saving for retirement early enough (21 percent), taking on too much credit card debt (15 percent) or not saving enough for emergency expenses (14 percent),” according to the research firm.

While debt and lack of savings are among the leading sources of financial regret, advisors working with clients on these issues may want to emphasize savings, at least in early conversations.

“Despite rising debt levels and higher interest rates, regrets over lack of savings continue to outpace regrets related to debt, with more Americans saying their top financial regret was either not saving for retirement early enough, not saving enough for emergencies or not saving enough for a child’s education than those regretting taking on too much credit card debt, student loan debt or buying more house than they can afford,” notes Bankrate Chief Financial Analyst Greg McBride.

Data confirm the validity of savings-over-debt approach when it comes to quelling financial regret. The BankRate survey notes that 21% of those polled wish they had been more diligent in saving for retire while 15% are dismayed about their levels of credit card debt.

Quash Regret, Improve Wellness

Advisors know that financial stresses lead to an increase in overall stress for clients. Regrets only worsen that scenario and it can manifest in a variety of negative forms, including taking a toll on personal relationships and mental and physical well-being.

The time for advisors to act on these fronts is now because the Bankrate survey indicates 48% of those polled are more stressed today about their biggest financial regret than they were a year ago. Notably, that pain is acute across younger generations.

“Younger Americans are more stressed year-over-year as a result of financial regret. 60% of Gen Zers and 57% of millennials with financial regret say their resulting stress has increased since June 2022 — 45% of Gen Xers and 38% of baby boomers say the same,” concludes Bankrate.

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