February 2017 Attract Gen XY clients using debt management Technology plays a bigger and bigger role for Gen XY consumers Many Gen XY consumers biggest immediate financial challenge is managing personal debt ID: 672226
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Slide1
Attract Gen X/Y clients using debt management
February 2017Slide2
Attract Gen X/Y clients using debt management
Technology plays a bigger and bigger role for Gen X/Y consumers
Many Gen X/Y consumers’ biggest immediate financial challenge is managing personal debt
Free, publicly available tools (e.g. mint.com, personalcapital.com) allow clients to manage some of their own financial information like balance sheet and budgeting
Debt management is an opportunity to provide differentiated advice for consumers along with those capabilities
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Agenda
Review key debt management strategies
How to use RightCapital tools to illustrate debt strategies
Using debt management + RightCapital Leads to bring in younger prospectsSlide4
Review of debt reduction strategies
Avalanche approach – pay down highest interest rates first
Pay the minimum each month to all debts except the one with the highest interest rate
Allocate remaining $$ to the debt with the highest rate
Mathematically, the quickest approach to getting debts fully paid off
May not factor in emotional impact of keeping multiple debts on clients’ balance sheet
Snowball approach – pay down smallest balances first
Pay the minimum each month to all debts except the one with the smallest balance
Allocate remaining $$ to the debt with the lowest balanceCreates psychological benefit of seeing reductions in the number of bills receivedNot the optimal approach mathematicallyAllocate additional money to paying down debtBalance between paying down debt and saving for retirement.Need to incorporate debt strategy into the holistic financial planning.
RightCapital allows you to illustrate all three optionsSlide5
How to use RightCapital tools to illustrate debt strategiesSlide6
Sample slides with clientsSlide7
Case Study - Meet the
Bradys
Mike and Amanda: Married
Current ages: 31/29
Current debts:
Car loan: $15,000 at 5%
Credit card: $15,500 at 11%
Credit card: $13,000 at 17%
Slide8
What are the Bradys
’ options?
Avalanche approach – pay down highest interest rates first
Pay the minimum each month to all debts except the one with the highest interest rate
Allocate remaining $$ to the debt with the highest rate
Mathematically, the quickest approach to getting debts fully paid off
May not factor in emotional impact of keeping multiple debts on clients’ balance sheet
Snowball approach – pay down smallest balances first
Pay the minimum each month to all debts except the one with the smallest balanceAllocate remaining $$ to the debt with the lowest balanceCreates psychological benefit of seeing reductions in the number of bills receivedNot the optimal approach mathematicallyAllocate additional money to paying down debtBalance between paying down debt and saving for retirement.
Need to incorporate debt strategy into the holistic financial planning.Slide9
Illustrating the value of the Avalanche approach
You can illustrate the total interest savings generated by the strategy as well as how much sooner the client will be debt freeSlide10
Lay out a clearly defined payment approach for clientsSlide11
Using debt management + RightCapital Leads to bring in younger prospectsSlide12
Bring in prospects through RightCapital Leads
Use digital marketing to promote your Leads portal – create your free financial planning account for freeSlide13
Create a connection using Debt Management
When a prospect creates their account through the Leads program, the balance sheet and budgeting tools are immediately available.
For Gen X/Y clients, you can immediately reach out to illustrate debt management options by enabling the debt management screen to demonstrate the value you can provide through advice and software
Continue to engage clients by turning on additional planning capabilities such as investment review, college planning, and retirement planning.