There is plenty of financial advice for people with extra money to spend, but what guidance does an adviser offer clients who might be struggling to make ends meet?

In the office of Renaissance Wealth Advisors, Director Hau Nguyen and his colleagues employ a number of strategies to grow the wealth of their lower-income clients. 

“In terms of the percentage increase in wealth, it is easier to improve the wealth of somebody with less money,” says Nguyen. “If you can change their habits and change the way that person thinks about money, then you can help to improve their cash flow and savings. In doing so, you might be able to improve a person’s wealth by 50 to 100 per cent.

“While it is vital to go through the same statement of advice process we’d go through with every client, financial advice for lower-income clients focuses at first on looking at ways to manage spending patterns and to cut costs. It is about how much is coming in and what is being spent. The aim is to create great habits first, rather than going straight to investment advice.”

Small changes, big results

Nguyen believes that starting small can be surprisingly impactful. For example, Nguyen points to a recent office-wide saving drive during which he and his team agreed to give up one cup of barista-made coffee every day, and set that money aside. The company then undertook a financial forecast to calculate how much wealth could be accumulated if that money was put into superannuation every weekday during the 48 working weeks of each year, and taking into account the 15 per cent tax rate. The result was an additional lump sum of $60,000 to $75,000 after 20 years. It’s this type of insight, says Nguyen, that can benefit those who are having trouble making ends meet. In fact, he believes people with less wealth possibly have the most to gain from seeing a financial adviser.

We all share similar dreams

Nguyen believes a great adviser should always talk to their client about their aspirations - for themselves, their career and their lives.

“Whether they are a $10-million client or a $1,000 client, it is all about the same thing,” he says. “They all have dreams and objectives, and that always forms the basis of advice.”

Investment advice will be added into the mix after good savings habits have been established, or once the client has saved a lump sum, he says.

Everyone deserves financial security

One married couple - a client of Renaissance Wealth Advisors since retiring in May 2010 - had a total of just $145,718 to last the rest of their lives.

They could have put their money into a term deposit, says Nguyen, adding that many others in a similar situation choose this option. Instead, Nguyen and his team devised a comprehensive investment plan to suit the couple’s lifestyle and future needs.

As a result, the couple has withdrawn over $15,735 annually since 2010 – or more than $146,616 in total – and yet their lump sum balance is still $125,735, says Nguyen.

“If it was put into a term deposit it would have been gone long ago,” he says. “That is why they’re still clients of ours to this day. It proves the value of financial advice, no matter what your financial situation.”