Advisors must help clients deal with debt

By Stephanie Holmes-Winton | September 23, 2009 | Last updated on September 21, 2023
4 min read

I’ve made debt reduction strategy a very important part of my practice.

I’m often overheard at industry events rambling on about my clients and their debt loads, and some think I’m barking up the wrong tree.

If I had a dollar for every advisor who told me, “I work with high net worth clients. They don’t have debt issues, so I don’t visit that topic with them,” or “My clients are in good financial shape. I’m sure debt is not an issue for them, so we don’t need to go into it,” I’d be retiring soon.

But the term high net worth client seems fairly subjective. Is a 60-year-old with a $1 million account, which will provide nearly 100% of their retirement income high net worth? Is a 40-year-old with $3 million dollars of real estate assets high net worth if $1 million of that is mortgaged?

In reality, a lot of advisors have clients with high net assets or large accounts, but that doesn’t actually make them high net worth or financially independent. I don’t have a single client I would class as high net worth. They’re all works in progress; but many are headed toward my definition of high net worth.

I recently met some new clients — both husband and wife are physicians — who called because they’d heard through a friend that I would set them straight on family finances. The husband, Ted, said to me, “Now, you may not be used to dealing with high net worth clients such as ourselves, so please don’t go easy on us. Talk to us as you would to the rest of your clients.”

I assured him his net worth would not affect my comfort level and that I’d tell him the truth. After a good look at their information, I asked what led him to conclude he and his wife were high net worth. His answer was predictable, “Well, I’m a physician and so is my wife. We make lots of money, we have three beautiful properties and we’ve always been classed as high net worth by our advisors” (when I met the couple they had four advisors, none of whom knew about each other or had done a net worth statement or a financial plan).

Ted and his wife did make just over $1 million a year, not bad, great for Nova Scotia. And they did hold title on three beautiful properties, but they were all leveraged to the hilt. But, they had no short-term savings and only $345,000 in long-term investments. They planned to retire in 10 years, so it was time to give them the reality mirror. “Ted, I’ve got something to show you,” I said. “Now, don’t get upset, but you are not high net worth. I wouldn’t even say you are high net asset, really. You are very high income, but that only translates into high net worth when you routinely spend less than you make and put those funds toward debt reduction and wealth creation. You are currently doing neither.”

Since none of their advisors wrote up a plan, the couple had no idea the $345,000 would provide little more than $17,000 per year of income without the risk of running out. And none of their advisors told them how much damage not paying their real estate debt was doing to their non-existent retirement plan. In the course of our initial conversation, Ted said he’d called one of his four advisors to ask if he could help him figure out how well he was doing, and how he could tackle his debt and work with his cash flow. This is what he was told: “Ted, you’re a big boy. You make lots of money. You can’t possibly need that kind of advice. Besides, I don’t do that type of thing.”

That conversation left the impression the advisor didn’t care, wasn’t listening, and thought he was too good or perhaps too experienced to give such simple financial advice. Ted told me, “He was happy to deal with the sexy part of my finances, but when it came to guiding me past the mistakes I’m making with my cash flow, he wasn’t willing to roll up his sleeves.”

Fortunately, Ted isn’t the only client I’ve encountered where an advisor made him feel lowly for asking for help with cash flow or debt. Such inference by advisors is destructive, both to the working relationship and to the clients themselves. Some clients will be able to get past the insult and fix the situation anyway, but many will feel forced to protect their egos by pretending they do have their finances under control. And those with the larger salaries simply have a bigger shovel with which to dig their giant debt holes.

Advisors who aren’t asking clients about debt need to start, because it won’t matter how much you help them accumulate if they retire with $500,000 in debt. And, yes, that happens all the time.

Those who aren’t comfortable discussing debt, or don’t have a good personal track record, should find an expert to team up with. Debt is just as important as assets and must take the same priority in the financial plan.

And a written financial plan that includes actionable items on debt reduction empowers clients, keeps the plan top of mind by including day-to-day functions, and improves the client’s perceptions of the value an advisor provides.

Stephanie Holmes-Winton

Stephanie Holmes-Winton is a Halifax based financial services educator/speaker who helps advisors find the money to help their clients fund their financial plans. She is the author of Defusing The Debt Bomb & $pent. Stephanie is also the founder and board chair of the Certified Cash Flow Specialist™ designation program. You can reach Stephanie at or