I’m a Financial Advisor: Here Are the Most Common Banking Mistakes I See Among Clients
Written by
Laura Bogart
Edited by
Kristen Mae
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Financial advisors have seen it all. From people who are burdened by six figures of credit card debt to millionaires, their clients span a range of backgrounds, income, stages in life, and relationships to money. That’s what makes their jobs equal parts challenging and rewarding.
However, as financial advisors gain experience, they come to observe a few general patterns in their clients’ banking and how they manage their finances. And in those patterns, there are some common mistakes. Fortunately, almost every mistake provides an opportunity for people to learn more and do better — if they know where to start.
GOBankingRates connected with a few financial advisors to learn more about the common money mistakes they’ve seen and to share their advice for avoiding them.
Taking a One-Size-Fits-All Approach to Retirement
As the Founder and CEO of 11 Financial, Taylor Kovar has helped a lot of business owners achieve their financial goals over the years. However, he’s also seen that many of his clients, particularly business owners, are reluctant to retire completely, even as they reach the age where a lot of people are ready to sail off into the sunset professionally.
Though society often portrays retirement as carefree, there are also many individuals who want to stay involved in the businesses they’ve built, even part-time. Those people sometimes don’t realize they can factor continued income from their businesses into their retirement budgets. Worse, they may avoid budgeting for retirement altogether because they think it would mean giving up their passions. And if they choose to stay working, even at reduced hours, failing to account for taxes can become a costly mistake.
“It’s important to remind clients that retirement doesn’t have to look like the traditional model,” said Kovar. “They can create their own version that allows them to continue doing what they love, just at a different pace.”
Leaving Money in a Traditional Savings Account
For Andrea Woroch, a nationally recognized consumer finance and budgeting expert, one of the biggest, most frustrating errors people make is leaving money on the table by keeping it in a traditional savings account. Instead, she recommends people move their savings to a high-yield online savings account that pays higher interest — essentially allowing your money to make money for you. Best of all, you don’t have to do anything other than make the initial transfer.
“For example, Bread Savings offers a competitive 4.4% annual percentage yield,* and interest is compounded daily and deposited into your account each month,” she said. “Comparatively, the average APY from traditional banks is 0.42% — a high difference in how much you earn.”
Using the Wrong Kind of Rewards Card
Did you know that the average credit card user misses out on $1,000 worth of cash back every year? If you didn’t, Woroch wants you to know. She cited data from Gigapoints, showing that people can miss out on that whopping sum because they’re using the wrong type of rewards card based on where they spend the most money each month.
She advises reviewing your current credit statements to see where you’re spending the most and then finding a card that offers the best cash back for those purchases.
“Most people would do well with a flat-rate cash back card like the Bread Cashback American Express credit card, which offers an unlimited 2% back on every purchase, and there’s no spending cap on how much you can earn. This includes monthly bills,” she said. “Use that cash to pay off your purchases.”
Neglecting To Optimize Your Accounts
Some people assume that if they don’t see anything overtly wrong with the accounts, it’s perfectly fine to keep things as they are. But this mindset can lead to missed opportunities to build wealth.
According to Derek R. DiManno, CFP, CLU, CLTC, founder of Flagship Asset Services, one of the most common and preventable errors people make with their banking is failing to diversify the products they use. He specifically points to people who keep too much money in low-interest checking or savings accounts, since excess cash in these accounts doesn’t grow or keep pace with inflation. Instead, people should look into high-yield checking and savings accounts, CDs, or investment accounts.
Oh, and while you’re setting up those new accounts, be sure to get in the habit of monitoring your bank activity regularly. DiManno warned that another mistake he often observes is neglecting account activity, which can result in overdraft fees, fraudulent charges, or unused — and costly — subscriptions going unnoticed.
It’s true that everyone makes mistakes, but you don’t have to keep making them, especially when it comes to your finances.
*Information is accurate as of January 23, 2025, and is subject to change.
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