For financial advisors, the new year is a great time to take stock and reset.
The investment year is over. The tax harvest is in. Contribution limits have reset. And plenty of clients will be looking for a new approach.
So what opportunities are there in the coming year? What were some of the mistakes from the past one? How can you improve in 2023?
SmartAsset talked to Kristen Anderson, CEO and founder of the financial service for independent workers Catch, and financial planner Treyton DeVore, founder of AllStreet Wealth and Creatorbread, for their thoughts.
Here are four New Year’s resolutions for advisors to make in 2023.
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Streamline Your Business
First, the new year is a good time to improve how your business works, DeVore says.
In particular, look at automating as many routine tasks as possible. This is particularly important for financial professionals given how many advisors work for themselves or in a small business.
“Being independent is tough because you have to manage your personal and business finances on your own, which can be very overwhelming,” DeVore says. “When you’re a business of one, time is your most valuable asset, so you need to reduce time spent on repeatable tasks.”
It may seem like a contradiction in terms, but the more time you spend managing your own money, the less time you spend managing your clients’ funds. The same is true of office processes, marketing, email, website management and other administrative tasks. Financial professionals working for themselves tend to spend a lot of their time dedicated to routine business processes.
In the new year, find ways to offload that work as much as possible. Find services that can help you manage the parts of your business that aren’t serving your clients, so you can spend your time on the work that matters.
Improve Your Existing Tools
Relatedly, the new year is a time to improve the tools you already use.
“In my experience, it really comes down to figuring out what your needs are and then finding the right tools and services to support you,” DeVore says.
That’s no small thing.
Like many professionals, financial advisors and investors tend to pay less attention to their business tools as time goes on. As long as the emails arrive, they don’t really think about the inbox software they’re using. As long as the paperwork gets filed, they don’t really think about their recordkeeping process. And, ironically, as long as the bills get paid, they rarely think about their financial management software.
That can be a mistake because there’s a world of difference between “working well” and “not broken.” In 2023, look at the tools and services you rely on every day in your business. Are you using the right ones or just the same ones? It’s an important question that can make a world of difference to you and your clients.
Build Out Services for Independent Clients
For financial professionals, it’s important to tailor solutions and advice based on the individual client’s needs. That’s particularly important when it comes to independent workers, Anderson says.
“Solopreneurs, freelancers and contractors make up a large and growing part of the market,” Anderson says. “And they require solutions that solve their unique challenges. Without an employer handling taxes and retirement for them, there is an additional responsibility for advisors to make sure clients are doing things right.”
Whether they’re 1099 freelancers or small-business owners, independent workers need their own basket of financial services. They don’t have employers to make automatic tax or retirement withholdings on their behalf. They have the one-two punch of very low individual retirement account (IRA) contribution limits and self-employment tax. They need to manage quarterly taxes, outgoing business payments and wise investments, and that’s just the beginning.
There are more independent workers than ever before and that population is only getting bigger. For 2023, it’s worth building services and tools to meet their needs.
Stay on Top of Tax Changes, Especially for Health Insurance
Compared with past years, in 2023, the tax code hasn’t changed all that much. That’s why it would be easy for financial professionals to miss the fact that it has still changed, and in some very important ways.
In particular, make sure to follow changes to health insurance premiums and credits.
“There are some new, important changes to know about when it comes to purchasing your own health insurance,” Anderson says, reminding financial advisors that the Inflation Reduction Act authorized billions of dollars in health insurance tax credits. “Accurately estimating your income is the most important part of getting these credits and can result in huge savings.”
These are the details that are easy to miss in the middle of a volatile market, surging interest rates and questions around inflation. Don’t. For many clients, expenses like health insurance premiums have an incredible impact on their budgets. Make sure to keep them protected.
Bottom Line
It’s a new year and a new chance for financial professionals to keep improving. Try these four resolutions to boost your service and business in the coming year.
Tips for Growing Your Financial Advisory Business
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- Tax changes for 2023. Experts weigh in on the top 2023 tax changes advisors should know.
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