In order to build someone a comprehensive investment plan, a financial advisor has to understand some of the intricacies of that person’s financial life, risk tolerance and goals. If a financial advisor focuses on the investments without understanding a client’s full picture, it could result in a subpar investment plan.
Here are seven questions your financial advisor should have already asked you:
1) How is Your and Your Spouses Health?
This question sets the stage for the length of time that a retirement plan might need to provide for you and your spouse, and it also will spur a discussion about potential medical expenses that might need to be factored into the investment plan.
2) What Outstanding Debts and Liabilities Do You Have?
And also, is there a plan in place already to pay them off? A financial advisor should also ask what, if any, interest rate you’re paying on that debt, and if you expect to acquire more debt sometime in the future. Debt payments impact income needs in retirement, so this is crucial.
3) What Types of Insurance Coverage Do You Have?
This should include a discussion on healthcare coverage, life insurance, long-term care insurance, and other applicable insurance. Having insurance means having additional asset protection, and can help address some “worst case scenario” aspects of a financial plan, like premature death or a need for daily medical care.
4) What Are Your Retirement Income Sources and Needs?
A financial advisor should discuss what a client’s current income needs are, and how they expect those income needs to change over time. It’s a good idea to also include what income sources are currently available, such as social security, rental income, or a pension. This will help your advisor figure out what income needs should be addressed, and how.
5) Do You Have Any Planned Expenses Beyond Retirement Income?
You may have a goal of purchasing a new car, or paying for your grandchild’s college education. These “above and beyond” outlays should be factored into the investment plan because they can impact growth of your investments.
6) Do You Have a Will or any Trust Accounts?
This should drive a conversation about your estate plan, and how you want to leave assets to heirs.
7) What Are Your Long-Term Goals
This is a time for a financial advisor to listen and take notes. Your long-term goals are the reason you worked all your life to reach retirement, so your investment plan should focus on helping you reach them all.
Next, Discuss Investment Accounts and Portfolio Strategy
You may have noticed we did not mention investment accounts or retirement assets yet. That’s because without a broader discussion about your financial situation and goals, a financial advisor wouldn’t be equipped to give educated advice on how to structure a portfolio and what to invest in. If a financial advisor wants to talk only about investments without asking the above questions, then you might not be getting the full value of an investment plan.
If you have any questions of your own or want to speak with one of our Wealth Managers about your retirement plan and goals, please do not hesitate to give us a call at 1-800-541-7774. We’re happy to help.
