The American Resort Development Association (ARDA) estimates that regardless of potential pitfalls, over nine million consumers invest in vacation timeshares each year.
Yet, buying vacation timeshares has become synonymous with bad financial investment in recent years. In fact, according to a consumer survey conducted by the AARP in 2013, timeshares topped the list of “10 Common Spending Regrets.” Survey respondents cited mounting maintenance fees and difficulties trading or selling their timeshare slots ended up costing them more than they were worth.
Despite this popular opinion, some clients are still interested in buying timeshares. So how can financial planners wisely advise clients about this delicate decision? Regardless of your personal experience with timeshares, it’s important to remember that people buy timeshares for different reasons and not all timeshare deals are the same.
To better navigate a timeshare discussion with clients, Financial Planning offered up the following tips in 2016:
- Encourage your clients to do their homework by searching out all available timeshares options rather than settling on an initial offer.
- Warn your clients that timeshare sellers often resort to high-pressure tactics and small incentives in order to seal the deal.
- Show your clients how timeshare costs could potentially affect their retirement spending plans.
- Attempt to dissolve any “vacation fantasy” illusions by putting pencil to paper and calculating the advantages of owning a timeshare versus taking traditional vacations.
- Inform your clients that buying timeshares on the secondary market could be more financially prudent than purchasing one directly from a promoter.
- Remind your clients that a timeshare’s value doesn’t necessarily appreciate over time.
- Suggest your clients look at timeshares as lifestyle purchase and not a financial investment.
So rather than advising against them, financial planners should gather as much information about a client’s plans for how they’ll likely use the timeshare, the details of their intended timeshare negotiation, and the possible long-term financial consequences therein.