By Eric Reed
For financial advisors, the new year is a great time to take stock and reset.
The investment year is over. The tax harvest has entered. Contribution limits have been reset. And many customers will require a new approach.
So what are the possibilities in the coming year? What were some of the mistakes from the past? How can you improve in 2023?
SmartAsset spoke with Kristen Anderson, CEO and founder of freelance financial service Catch, and financial planner Treyton DeVore, founder of AllStreet Wealth and Creatorbread, for their thoughts.
Here are four New Year’s resolutions advisors should make in 2023.
If you’re looking to grow your financial advisory business, check out SmartAsset’s SmartAdvisor platform.
Run Your Business First, the new year is a good time to improve the way your business operates, says DeVore.
In particular, look into automating as many routine tasks as possible. This is especially important for financial professionals given how many advisors work for themselves or in a small business.
“Being independent is hard because you have to manage your own personal and business finances, which can be very overwhelming.” says DeVore. “When you’re a sole trader, time is your most valuable asset, so you need to reduce the time spent on repetitive 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 for office processes, marketing, email, website management and other administrative tasks. Financial professionals who work for themselves tend to spend much of their time devoted 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 customers, so you can spend your time on the work that matters.
Upgrade Your Existing Tools On a related note, the new year is a time to upgrade the tools you already use.
“In my experience, it’s really about understanding what your needs are and then finding the right tools and services to support you.” says DeVore.
This is no small thing.
Like many professionals, financial advisors and investors tend to pay less attention to their business tools over time. As long as the emails are coming in, they don’t really think about the inbox software they’re using. As long as the documents are submitted, they don’t really think about their record keeping process. And, ironically, as long as the bills are being paid, they rarely think about their financial management software.
This can be a mistake because there is a world of difference between them “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 customers.
Building Independent Client Services For financial professionals, it is important to tailor solutions and advice based on individual client needs. This is especially important when it comes to freelancers, says Anderson.
“Solopreneurs, freelancers and contractors make up a large and growing portion of the market.” says Anderson. “And they look for solutions that solve their unique challenges. Without an employer handling tax and retirement for them, there’s an added responsibility on advisers to make sure clients are getting things right.”
Whether they’re 1099 freelancers or small business owners, freelancers need their basket of financial services. They do not have employers making automatic tax or pension withholding on their behalf. They have a point or two of very low individual retirement account (IRA) and self-employment tax contribution limits. They need to manage quarterly taxes, outgoing business payments and smart investments, and that’s just the beginning.
There are more freelancers than ever before, and this population is growing. For 2023, it pays to build services and tools to meet their needs.
Stay on top of tax changes, especially for health insurance compared to previous years; in 2023, the tax code hasn’t changed 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, be sure to follow changes in health insurance premiums and credits.
“There are some new, important changes to know when it comes to buying your health insurance,” Anderson says, reminding financial advisers that the Inflation Reduction Act authorized billions of dollars in health insurance tax credits. “Estimating your income accurately is the most important part of getting these loans and can result in big savings.”
These are details that are easy to miss amid a volatile market, rising interest rates and questions about inflation. Don’t. For many customers, expenses like health insurance premiums have a huge impact on their budgets. Be 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 grow your service and business in the coming year.
If you’re looking to grow your financial advisory business, check out SmartAsset’s SmartAdvisor platform. We match certified financial advisors with the right clients across the US tax changes for 2023. Experts weigh in on the top 2023 tax changes advisors need to know.
