Why Wealth Management is Important in 2017
Everyone looks for trends, for what's big, for what's at the forefront of conversation when the calendar turns the page to a new year. Doug Myers, Chicago Private Client Market Leader with Associated Bank, pinpoints wealth management as a top financial industry topic this year.
"I see financial planning as becoming the big trend, and that's something we're certainly working toward to enhance our financial planning offering and our platform," Myers said. "And I think people want in their relationship with their bank and financial advisor, I think they want advice, they want help, they're not sure how to navigate the murky waters ahead, especially with all the uncertainty coming up with our new president. I think that everybody's a little bit anxious about what's going to happen, and I think that they're looking for advice and they're willing to pay for good advice."
What exactly is wealth management?
"What we look at is goal-based financial planning," Myers said. "For example, you have a couple children and they're going to college in let's say 10 years, for example. Your goal is to have enough money to get them through college and to have enough money in the bank to pay for college. I think, you don't really care about if the market is up 5 percent, if you're getting 4.5 or 6 – your goal is to have enough money to pay for college, and that's what we refer to as goal-based financial planning. You have to have enough to retire, you might buy a vacation home, and those are your goals. And so, we're going to sit down with you and make sure that you're doing all the right things to meet your goal."
While there's no magic number for what age people start their financial planning, the general theory is the sooner the better.
"You look at all the baby boomers and we see a lot of people who aren't prepared, and they might be in their late 40s or early 50s or even late 50s and (they) haven't sat down and thought about this," Myers said.
"And with social security up in the air, and people wonder what's going to happen in 10 years to Social Security – I recently read where seven years is the drop-dead date for social security in terms of it not having enough money to be able to fund all the people in retirement. I think this is a real issue," Myers said. "And what we try to focus on is do the right things and start preparing for your goal of eventually retiring and having the monies you need ..."
Myers advises not counting on Social Security as a sole income source for retirement.
"Nobody knows, is the point," Myers said. "If you count on Social Security for your retirement, you might not live in the manner you're accustomed to right now."
"You have to prepare arly and when you're younger to start facing these issues and that's the whole concept of financial planning," Myers said. "And we council our clients that now is the time to start. If you're in your 30s that's great, if you're in your 50s, (that's a) little bit late, but let's start and have a goal and start working on that."
"When you look at someone who starts, let's say right out of college at 21, 25 versus when they start at 30 to 35, it's a world of difference in terms of the monies saved and the compounding effect of interest rates when you start early versus starting late."
It's easy to see, however, why people don't always start saving and planning when they're young.
"I think people in their 20s and certainly I can look back to myself – you're invincible. Fifty is a long way off. You don't really think about the adult things you need to think about. You're worried about the cars and the nice house and the clothes, and I think you get caught up in all the things you are looking to do when you're in your 20s. And it's hard to focus on the long-term future in that mindset I think"
Digital wealth management platforms aren't always better.
The financial technology – or FinTech – industry is one that is growing quickly, with an increasing number of companies offering an even greater number of online and mobile platforms.
"I think you cannot erase the human expertise and the contact in your financial roadmap, so to speak," Myers said. "There's a lot of programs on the market; I know some of the discount brokers are offering the automatic financial planning and the automatic investing. And I think that's fine for some people, but I think when there's turmoil in the markets, as there always is, you're going to need a person to sit down with you and readjust and maybe reevaluate the plan and change direction a little bit."
"You have to balance the customer service aspect with the security aspect," Myers said. "And once again, that's why we're spending a lot of money time and energy making sure that our client data is secure and allowing you to be able to do what you want to do on a mobile device. And, let's face it, that's the industry, that's where life is going, everybody wants to be able to tap into their personal life on their mobile phones and certainly we're working towards that."