I thought this entry would be interesting for both financial advisors and for people who work with them. Having a truly productive relationship with your financial advisor means trusting them and giving them the needed information to figure out how to really help you. Much of that information doesn’t come out through back and forth discussion and needs to be extracted through specific questions and elaborate answers. Below are 8 of the questions which I ask my clients that I think really help to gain a more complete understanding of their financial profile:
Who and what are you financially responsible for?
Many people are relied upon for financial support. In life (in most cases) we are financially supported by someone until we can take care of ourselves. We then often have kids and take care of them and sometimes need to care for our aging parents as well. Beyond caring for individuals, some people who have built wealth have deep relationships with charities and organizations which they support as well. Speaking openly about these priorities will help answer a spectrum of related financial planning concerns.
What do you want your retirement to look like?
Some folks don’t even like discussing retirement as the concept itself is a bit outdated and makes people feel old. What we’re getting at here is having a person open up about how they would ideally spend their time at a point when they can no longer work, don’t want to work any further, or have the financial resources to support a lifestyle which doesn’t require work. A vision of one’s ideal future can help clear up issues related to planning for that future.
What are your health concerns?
Healthcare is expensive. Getting older is expensive. Discussing a client’s health issues with them will expose you to any potential issues which might jeopardize a financial plan. This question should lead to a discussion of disability and long-term care policies, life insurance, savings for future live-in homecare, Medicare coverage, etc.
How did you build your asset base? Through work, inheritance, some combination?
Attitudes and beliefs about money most often get transferred from parents during childhood. That, combined with how a person acquires their wealth. If your client is slowly spending down an inheritance, they might have very different priorities than a hard-working entrepreneur who rapidly creates wealth. This conversation should clarify issues related to risk tolerance, spending, etc.
Goals: Short-term (0-3 Years) Mid-term (3-10 Years) Long-Term (10+ Years)
Quantifying goals is very important. Many people come to financial advisors because they don’t know how to quantify goals or perhaps because they want someone to tell them what their goals should be! I like to map out short, medium, and long-term goals and then back into them financially. I find this process can take something overwhelming, like buying a 1M house, and breaks it down into what you can do tomorrow to continue stashing money away towards the down payment.
What keeps you up at night?
This is a pretty basic one, right? It’s very important to understand one’s concerns. Some of those concerns might be irrational from the standpoint of the financial advisor but that doesn’t matter – you must help clients make financial decisions which they are comfortable with, even if they are a bit different than what you might do yourself or recommend to others.
A financial advisor should ask a client “what are your expectations of me?”
All people are different. And most people have somewhat different expectations about what their ideal relationship with their advisor will be. Ask — it can only help. Do they want weekly phone calls? Perhaps an ongoing e-mail relationship? Understanding what a person is looking for will help the client be happier and help the advisor to have a longer-term relationship with them.
How do you feel about taxes?
OK, the answer to this should be obvious, right? Everyone hates taxes? Not true – paying taxes is patriotic and some people like to do it. Understanding one’s attitudes about taxes can help figure out if tax-deferral products are a priority, or perhaps a person doesn’t mind taking short-term gains from a portfolio. In fact, looking at one’s tax returns can be an interesting part of that conversation. It answers a lot of questions and helps to illustrate a person’s full financial picture.
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Using this list should help you improve communication with your financial advisor. Assuming you have a trusting relationship, providing your advisor with good information should make the planning process easier for both of you.
As always, feel free to contact me with any questions or concerns.
Russell Bailyn
Wealth Manager
Premier Wealth Advisors, LLC
14 E 60th Street, #402
New York, NY 10022
P: 212-752-4343 *231
F: 212-752-7673
rbailyn@pfawealth.com
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For general informational purposes only. This information is not intended to be a substitute for specific professional or financial advice. Please note that individual situations can vary.