"I ended up having substantial student loans. And it was something that I struggled with for several years, both from a cash-flow standpoint and also from an emotional standpoint," N'Jie-Konte said on Wednesday, in a webinar for clients and members of the public on understanding how to strategically repay student loans.
Anna N'Jie-Konte, the president and director of financial planning at Re-Envision Wealth.
By providing thoughtful and timely services to help next-generation clients (or their older family members who may be helping to pay their loans) navigate the confusion around all these changes, rules and programs, financial advisors can rapidly grow their business. That's because offering education planning services is the number-one strategy to increase organic growth for firms across the industry, according to a recent report by Dimensional Fund Advisors.
N'Jie-Konte knows the value of financial planning focused on student loan repayment, because she had to learn it on her own. She grew up in an immigrant household with "very humble financial means" and did not know how to invest or handle debt. So when she graduated from college into the Great Recession, facing her student loans came as a shock, she said in the webinar.
"I really have a soft spot for this issue and recognize how much stress it does add to so many people's lives," N'Jie-Konte said.
Today, N'Jie-Konte is the president and director of financial planning at Re-Envision Wealth, a New York-based registered investment advisor that is one of the few Black-owned RIAs in the country. The firm, which reported around $64 million of assets under management, specializes in working with clients of color and aims to help close the racial wealth gap for Black and Latino households, according to its website. The student loan question is especially salient to those populations, she said, because Black and Hispanic American families are more likely than White Americans to have student loan debt.
Cindy Mota, the associate financial planner at Re-Envision Wealth.
Abdullah Konte
"The struggle with the student loans was real," Cindy Mota, an advisor who described herself as from a "humble" family originally from the Dominican Republic, said in the event of her own past experience. Mota, the associate financial planner at Re-Envision, co-ran the event with N'Jie-Konte; together in the webinar they reviewed the latest repayment options and answered audience questions.
Financial Planning spoke with N'Jie-Konte following her event to hear tips on how financial advisors can connect with next-generation clients or multigenerational families whose younger members may have student loans. Below are three takeaway tips.
Avoid shaming clients
"I'm acutely aware that most financial advisors do not have lived experiences that most of America has, if I'm going to be frank with you," N'Jie-Konte said, laughing.
She added that many advisors in the industry came from upper-middle class or wealthy backgrounds and "never had to deal with student loans or even if they did, their parents paid for it," which can make it hard to relate to younger clients who are rising in wealth but from families with less wealth, and experiencing an early setback because of heavy student loan debt.
"[Be] extremely mindful of that, especially because younger generations are more apt to call that out and expect more. … Otherwise, I think they risk alienating the next generation."
By listening with empathy, avoiding "anything related to shame" and sharing one's own experience of paying off debt (if relevant), the advisor has the opportunity to connect in a more authentic way with their client — or with the client's child who is a student loan borrower.
Stay on top of new developments
It can be hard as advisors to keep up with all the areas in one's profession that are changing, from regulations to retirement rules to estate planning and tax — but staying up-to-date on the fast-changing student loans situation can help an advisor differentiate, N'Jie-Konte said.
"Going off of the trite assumptions that we have had for many years around debt or even student loans, is not going to work," she said. Strategies that made sense to help borrowers a few years ago, in a lower interest-rate environment, might be ineffective today.
Knowing the individual borrower's situation is also key to suggesting the right moves amid these changes. For example, N'Jie-Konte said in the webinar, some might want to file taxes as married filing jointly, while others, if one partner is expecting a big income boost, might want to do married filing separately to shield the lower-earning spouse from a tax hike.
Add value with personalized, creative solutions
"My consistent callout to the industry is to be more creative and innovative in terms of the types of advice that folks are provided," N'Jie-Konte said.
In the case of student loan repayments, it's important to look holistically at all the financial and life goals that a client has and consider how they can balance paying down student loans optimally with remaining on track for important milestones like saving for retirement.
"A lot of them are deciding, 'Okay, do I still want to use some of the cash reserves that we've built up to pay that off? Do I want to liquidate some investments, whether that be employer compensation or just general taxable portfolios to pay this off?' Or, 'How am I going to fit this into my overall budget going forward?' I think there's a ton of budget pressure for younger folks right now, because interest rates are higher."
"I can't even tell you how many people I have as clients who have six-figure student loan debt, but they're making $700,000, $500,000, $1 million a year," she said. "It won't take much concerted effort to get them to be extremely wealthy."
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