How To Prepare For A Financial Appointment

22238373_sWhen we go to the doctor, we know we will hear the same basic questions every time, “How old are you?” “Do you drink?” “Do you smoke?” “How much exercise do you get a week?” “Are you experiencing any pain?” Those questions, although simple, are critical to doctors. They use our answers to decide how they will conduct the rest of the appointment and what advice and recommendations they will offer moving forward. An appointment with your financial advisor should work the same way. There are specific things about your life, your spending habits, and your future plans that are critical to the plan that your advisor will lay out for you.
An appointment with your financial advisor can be a lot more effective, and a lot more comfortable, if you know ahead of time what to expect. Be prepared to answer the following questions.
First, “What are your future goals?” No matter what stage of life you are in, you always have goals. It is impossible to create a successful plan of action for your future if it is not clear what you want that future to look like. Be prepared to give specifics of where you want to be, and what you would like to accomplish with your finances in the years ahead. And make sure you define your risk tolerance. Your ability, or inability, to tolerate risk is critical in defining future goals. If you are planning for retirement, what is your target date? What is your retirement accumulation plan? If you are in retirement, how long do you hope to preserve your capital? Be prepared to give a clear picture of what you hope the future holds.
Once your goals are laid out, it is critical to fully understand your current situation. Before an advisor can work out a plan moving forward, they need to know what you currently have to work with. Be prepared to give a realistic account of your total current assets. Be honest about your cash flow as well as how you expect that cash flow to change in future. If you know a raise is coming, or if you are at risk of possibly losing your job, these are things that your financial advisor needs to know. The appropriateness of any investment vehicle they suggest will likely be based on what you have now, and what you expect to need moving forward.
Once you have discussed your starting point and your ending point, you will need to understand your current journey. Your advisor should know if you have a formal budget. If the answer is no, creating one is probably the first step. Folks, no matter what stage of life you are in, a budget is a blueprint for financial success. If you do have one, it’s important that you lay out your budget for your advisor so they know what cash you have available to invest if you are in your accumulation years. If you are in your distribution or retirement years, your advisor needs to understand if there is an income shortfall each month. If so, then your advisor can develop a good investment distribution plan. You must be straightforward and honest with your advisor so that they can create a plan that is right for you.
Next, you need to tell your advisor how involved you want to be in the process. Most financial advisors send out a quarterly report for their clients, but if four updates a year aren’t enough, discuss this. If you are married, explain whether one or both of you want to be the contact person to receive updates on the progress and growth of the investments. Do you prefer to be contacted by e-mail or phone? What times of the day are you available to chat? Be clear about what level of involvement you want in the planning process and how you want that involvement to be carried out.
Lastly, be prepared to ask some questions yourself. This first meeting with your financial advisor should be a two-way street. Make sure that you have a list of questions or concerns you may have about your planning process and your financial future, and feel free to voice them in your appointment. The success of your relationship with your financial advisor is largely based on understanding, comfort and transparency. Make sure to ask him or her to explain anything that you do not understand. Any question that you do not ask during your meeting is a question you will be asking yourself later as you lie awake at night wishing you knew the answer.
Making an appointment with an advisor is a critical step in your financial planning process. By being prepared and knowing the questions you will need to answer, you can make the appointment go smoothly for both you and your advisor. An initial meeting with a financial advisor may seem now like a small step toward attaining your financial goals, but it could be a giant leap forward for your finances and your peace of mind in the future.
Folks, it is tricky out there. Make sure you are asking the right questions so you can make sound financial decisions.
Be vigilant and stay alert, because you deserve more.