Colleen has already met with an advisor, but because she lacks knowledge in this area, she admits to feeling intimidated by finances and investments. “Honestly, I wouldn’t know where to start,” she says. However, Colleen knows she will get closer to her goals if she finds someone who understands the issues they need to discuss together. “Knowing what questions to ask is definitely helpful, especially for someone like me. I don’t know much about financial planning and investing, but I should. »
So what should you discuss? There are two categories of questions to ask your financial advisor: those to ask when choosing a new financial advisor and those to ask your financial advisor during your annual portfolio review. Let’s start by looking at what you should discuss when looking for a new advisor:
Key questions to ask when looking for a financial advisor
1. What are your qualifications for giving advice?
Whether you’re looking for a new financial advisor or already have one, Brent Allen recommends learning about his skills. Ask him about his qualifications and how he continues to train in this ever-changing field. Advisors often have several areas of expertise, such as investments, life insurance or estate planning. What most people need – especially if they have never been advised – is a certified financial planner. “It’s the benchmark,” confirms Brent Allen.
2. What is your approach and what services do you offer?
d also talk to your financial advisor about their investment management style. Does he select stocks and bonds himself or does he use professionally managed mutual funds? Do its practices align with how you want your money invested? Ask him if he offers other services. Today, many advisors prepare comprehensive estate plans or help entrepreneurs develop succession plans. Also ask him about his availability. “You don’t want a counselor like Colleen’s, but someone you can continue the conversation with after the initial meeting, either in person or via video,” says Brent Allen.
3. How much do your services cost?
Of all the questions to ask your financial advisor, this is often the most anticipated. We all know that advice isn’t free, but before agreeing to do business with an advisor, you need to have a frank discussion about the fees you will have to pay. “Do you have to write him a check at the end of each month or will a percentage be taken from your investments? asks Brent Allen. It’s important to understand what you’re paying for and whether you’re getting what you pay for. “If the cost is X and in return you get 3 times X – for example, financial planning, portfolio management and tax strategies – that’s good value for money,” he explains. he.
4. What goals should I set for myself and how can you help me achieve them?
According to Brent Allen, you must first define your objectives. He points out that the work of a financial advisor is not limited to putting money aside for retirement. With his client, the advisor can also plan the purchase of a cottage, the studies of a child, an annual trip and many other things. Your advisor should help you define your goals and make a plan to achieve them. But to achieve that, you have to talk about it. “It’s a team sport,” continues Brent Allen. Everyone must participate. »
5. How will we measure success?
Once the objectives have been defined, it is necessary to discuss what will constitute success. And success for you isn’t necessarily about owning a portfolio that has outperformed the benchmark. Maybe it’s taking a vacation, buying a cottage, or simply increasing your assets. According to Brent Allen, if you ask your advisor how they measure their own success, they might say it’s the number of clients who have achieved their goals. Ask your advisor for references to see if they’ve helped other clients succeed.
Questions to Ask Your Financial Advisor During Your Annual Portfolio Review
Once you’ve found your ideal financial advisor, you should meet with them at least once a year to review the past 12 months and look ahead to the next year. Here are some of the questions to ask your financial advisor to make sure you stay on track.
6. How has my portfolio performed and how has my net worth grown?
How you judge the performance of your investments will depend on the expectations you set with your financial advisor. If you’ve told him your risk tolerance is high and you want to maximize growth, your portfolio’s performance should reflect that. Your financial advisor should be able to explain not only the performance of your portfolio, but also the factors that may have influenced it.
Similarly, it is important that you know where your net worth is and how it has evolved over the past year. Again, your financial advisor should explain the reasons for any changes.
7. Am I on track to achieve all of my goals?
This is where you can test the value of the financial plan your advisor has developed for you. You should see steady progress in achieving all of your goals. If not, your advisor should be able to not only explain why, but also recommend a plan to rectify the situation.
What should I focus on in the coming year?
Your discussions surrounding your annual portfolio review should generate ideas and directions that may differ from those of the previous year. Your financial advisor can set you new goals for the year, as well as ways to achieve them and tax strategies that will help you along the way. At the end of your annual portfolio review, you should have a clear action plan for the next 12 months.