Get life and funeral cover today

basketBuy online

Why helping clients budget is your new secret weapon

5 October 2023
4 minute read
people discussing

When a client’s budget fails, so does their financial resolve and commitment to financial plans.  Helping your clients with their budgets may not be top of mind when you are onboarding and conducting annual reviews, but it makes sense for them and your business.

Wondering if it is worth your time? These 4 reasons show why you and your clients benefit when you work with them on their budgets.

1. Clients want help with their budgets

According to the Human8 What matters, 2023 trends report, consumers are looking for pragmatic solutions to their problems. There is no more pragmatic solution to financial problems than a budget.

When it comes to their finances, clients are looking for advice on how to manage their day-to-day money matters better. The starting point to help them with this is their budget. Many clients know the basics of budgeting, but struggle to draw up realistic budgets that are easy to follow.

Clients also, per numerous studies including the Morningstar Value of Advice study, want advisers to help them achieve their financial goals. If a financial goal such as investing R2 000 a month for retirement or paying a R750 a month insurance premium, is not built into the budget, it is going to be much harder to achieve.

Help your clients with their budgets and you are meeting their expectations and fulfilling a basic financial need.

2. Clients need help with their budgets

Even high-income earners are finding 2023 tough on the bank balance. Rising interest rates, a high cost of living and an ever-increasing petrol price are taking up more disposable income, and sometimes adding to debts.

The 2023 Debt Busters Money-Stress Tracker found that 50% of the 35 000 respondents are running out of money before month end, across all income groups. To cope, they are cutting expenses, looking for higher paying work and making a strict budget. Consumers are not just cutting expenses by cutting out the nice-to-haves such as entertainment. Local online research company TrendER/InfoQuest found that in May 2023 over 40% of consumers had cut down on groceries, and the Deloitte Frugal Food Index reported that 46% of South Africans surveyed had engaged in frugal behaviours, including buying essentials only.

Advisers can offer an independent, objective view of a budget that can identify where to cut expenses as well as income earning opportunities. Help your clients with their budgets in these challenging times and you reduce their money stress, which is good for them and for your relationship.

3. Budgets give you insights into your clients’ finances

Many clients find it difficult to talk honestly and openly about money, making it more challenging to give appropriate advice. Work with your clients on their budgets and you get to see firsthand what they earn, how and when they spend and what items in the budget really matter to them. This gives advisers good insight into their client’s needs, which leads to better advice that will help your clients achieve their financial goals.

Help your client set a budget and you can better identify their financial goals and build them into your clients’ budgets.

4. Advisers can recommend affordable products that are aligned to the needs of the client

Affordability is a key consideration when making product recommendations. Ignore the budget in the advice process and recommendations can be, or become, unaffordable. The result is a poor outcome for client and adviser. The client has unmet goals and an unsustainable financial plan, along with a bad advice experience. Advisers run into persistency and retention problems, as well as possible reputation damage.

When you have worked with your client on their budget you know exactly how much they have to spend on insurance and wealth products, and can be sure that recommendations can be followed in the long term without running into affordability issues.

Tech gives you the time to work with clients on their budgets

A budget is in theory a simple, quick and easy financial document to complete. In practice, financial advisers can find it a time-consuming activity.  Identifying income and expenses, and opportunities to increase and/or decrease budget items can take hours. As a business owner, you need to make sure you are productive and profitable, which means either charging for this service or making sure it can be done in the time allocated to your client.

Charging can be done on an hourly basis, such as Rxx per hour, or on a service basis, such as Rxx for a budget.

Alternatively, you can spend the time you save using tech and digital tools to help your clients with their budgets. For example, using a digital solution such as 1Life Vantage allows you to complete transactions, such as a financial needs analysis and product application, quickly, often in a matter of minutes rather than hours. 1Life Vantage models affordability on top of life stage planning.  Information is stored for future use which saves more time on reviews and updates. This time saved can be used to help your clients with their most pressing financial matters, including day to day, monthly and annual budgets.

Make budgets part of onboarding and client reviews

Cover the budget with your new clients and in annual reviews and you help clients meet day to day and future financial needs. There is no better way to demonstrate your care for your clients, and your expertise and value as a professional financial adviser.

Enter your name and contact number and one of our consultants will call you back:

Please type in your name
Please type in a valid SA number
Please select what your query relates to
Call me back