3 important things to consider when planning for a client’s long-term financial goals

Here are three considerations that you can focus on when speaking to clients on retirement and long-term financial goal planning.

By: Samuel Lee

Sometimes, we often get caught up in the present and do not set aside time for the future. As a result, some clients may neglect planning their long-term financial goals.

With the biggest long-term financial goal for most people being their retirement fund, it is important for them to start planning early to avoid the pain of regret in their later years. Based on a survey conducted in 2021 by Manulife on Singaporeans’ retirement saving priorities and attitudes, 72% of retired respondents regret not saving for retirement sooner and almost half of them wish they have invested in a retirement plan.

“If we look at the last two years of the COVID pandemic, it went by so fast and the reality is, time passes very quickly and our long-term goals will be nearer than we ever thought. If we truly plan our future right, we not only have a peace of mind now but also during our retirement years. Let the young you ink your financial future today than live with regret at 60,” said Kalyanam Venkatesh, BA, CFP, a 28-year MDRT member from Singapore.

Here are three important points to consider when helping your clients plan for long-term financial goals

Covering their short- to medium-term financial goals

Before looking at your clients’ long-term financial goals, it is very important to ensure that they are not leaving their shorter-term financial goals unattended, as they are usually goals that you should address before proceeding to long-term financial goals. Shorter-term financial goals could be things like:

  • Building emergency funds
  • Settling loans and credit card debts
  • Down payment for house or car
  • Travel
  • Insurance
  • Cost of wedding
  • Cost of having children

After addressing these, your client would have a better idea of the amount of money required to fulfill their short- to medium-term goals. They would then be in a better position to estimate the amount of time and money needed for them to achieve their long-term financial goals.

Estimating your retirement needs

When the topic of long-term financial goals arises, retirement would be the first on most people’s lists. Retirement is when one permanently leaves the workforce behind, equating to them drawing their last salary. Everyone is different and no two lifestyles are the same. Therefore, estimating how much a client requires for retirement is important, to ensure financial security upon entering this new stage in life. Additionally, one of the things that scare people more than death itself is running out of funds before their time is up. Hence, it is crucial to plan adequately for the future.

Some factors to note while considering retirement needs would be:

  • Life expectancy – what is the average life expectancy in your market? For example, based on a report from the Singapore Department of Statistics in 2020, Singapore residents’ life expectancy is approximately 83.9 years, an increase from 81.7 years in 2010.
  • Living expense – estimate your client’s living expenses during this period and make provision for an increase in healthcare cost.
  • Lifestyle – for those who have provision plans to undertake new hobbies and challenges
  • Inflation – have you accounted for this? As a dollar today maybe worth significantly less in 20 years.

Other long-term goals

While retirement is considered the biggest long-term goal, there are other long-term financial goals that many would consider. For example:

  • Paying off home loans – homes are costly and it is important to plan when the house or flat would be fully paid for with consideration of earnings and forecasting.
  • Saving for a child’s university education – clients who are parents would like to be able to fully provide and ensure that their child gets the best education. However higher education does not come cheap, so it is always good to ensure that forward planning has been done.
  • Starting a business – most businesses require capital to start, planning cost and cash flow are also important so that clients will be able to identify the amount to aside to ensure that their business runs smoothly.
  • Legacy planning – giving their children a boost to ensure that they are provided for when they are no longer around.

Setting these goals will help guide and structure your clients’ decision-making process, especially when it comes to budgeting, investing and saving for their long-term financial goals. These three considerations will allow your clients to have a piece of mind when the future arrives.

As Gregory Fok, a 16-year MDRT member from Singapore, shares, “Our value to our clients is not based on the highest returns, or the lowest cost. But it is to give them a reason to live a fulfilling and meaningful life, dream a life they never dreamed before, allow them to have peace of mind and be able to sleep well at night.”