Financial Literacy

Client Education Helps Clients Go the Investment Distance

Sticking to a long-term investment strategy can help you work towards financial independence for your future. Often, though, the rollercoaster ride of economic market conditions can be emotionally challenging for investors.

landscape500x600It is one of the reasons that Louis J. Butera, CFP®, founder of Butera Wealth Management, LLC, based in Newtown Square, Pennsylvania, uses the “bucket strategy” to help diversify varying amounts of a client’s investment from excessive long-term risk while ensuring assets and cash are readily available.

“We use it to help smooth out the ride for clients,” Butera said. “We do that by segregating assets in different buckets based on an investment objective – conservative, moderate, aggressive, etc. We have three to five years of cash flow in a conservative bucket that provides income to the client. It gets spent down during bad times and replenished in good times. This helps clients stick to a long-term plan because they understand the purpose of each bucket.”

Butera believes the bucket approach helps clients to look further than just a few months ahead financially, because he is also educating them in related financial concepts.

“It’s a big deal,” he said referring to the role teaching plays in developing client relationships and their acceptance of the bucket strategy to diversify the risk tolerance of their assets.

Because client education is such an important part of the advisor-client relationship, Butera starts the process at the first meeting he has with a prospective client – and the client is under no obligation to sign on with the firm.

“I have developed a brief process that helps people determine how to select a financial advisor that’s right for them. Many people are intimidated when meeting advisors and it is difficult for them to develop enough trust in the advisor to make a decision from just one meeting. We take people through our process and it has proven to be a valuable exercise and time saver for them in the end,” he said.

Planning for the “what-ifs” of long-term health care is another area where Butera’s educational efforts serve to guide clients toward more prudent decisions.

The demands of health care in later life have long been identified by the AARP (American Association for Retired Persons) as the greatest threat to financing a retirement, yet far too many Americans fail to plan for it.

“The issue of how to handle long-term care is a great question with no easy answer,” Butera said. “Healthcare and long-term care are the big variable costs in retirement.”

While the industry has prepared a plethora of charts and reports addressing this threat, no guarantees can made regarding longevity and illness, so exact forecasting is difficult.

To be diligent, Butera provides clients with scenarios depicting current healthcare costs escalating by at least double the prevailing inflation rate.

“We compare that to their present retirement income plan and stress the outcome to see if they will have enough money,” he explained. In reality, long-term care insurance isn’t always an option for many clients. Thus, Butera knows a chat regarding its alternatives is in order. “We discuss living arrangements while clients are still healthy in retirement.”

As the son of a small business owner, the idea of working for yourself was the mindset with which Butera was raised. He started in the property casualty insurance industry, and later obtained his health and life insurance licenses.

“One day a client asked me if I could help him with setting up a retirement plan,” said Butera. “That is when the light went on for him. “I got hooked on all of the facets of asset allocation and financial planning.”

For more information regarding Butera Wealth Management, LLC, visit buterawm.com

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Private Advisor Group, a registered investment advisor. Private Advisor Group and Butera Wealth Management are separate entities from LPL Financial. No strategy including diversification assures success or protects against loss.

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