Whether you’re already working with a financial advisor or thinking about reaching out to one, it’s good to go into your next meeting prepared. We’ve gathered five standard questions to help you get the most out of your relationship with an advisor and ensure you’re aligned in your visions for the future.
Question #1: Am I on Track to Reach My Goals?
One of our client’s biggest questions is, “Am I on track to reach my goals?”
While taking a “set it and forget it” approach to managing your wealth may be tempting, it’s better to think of your financial plan as a dynamic and ever-evolving journey. Checking the “map,” so to speak, every so often can help confirm if you’re staying on the right track to achieve your goals — or need to reroute.
This is especially true when outside forces like market volatility, high inflation, or regulatory changes have the potential to impact your goals. When something like this occurs, your financial advisor can work with you to determine if you need to make changes (like increasing your contributions) or if you’re better off riding out the short-term downswings.
Aside from these outside forces, natural changes are also occurring throughout your life. Even something as simple as near your retirement “finish line” is cause for checking in on your goals. For example, plan on retiring within the next few years. You and your advisor may need to transition most of your portfolio to lower-risk investments.
Question #2: What Is My Financial Plan Missing?
Sometimes you just don’t know what you don’t know — and the only way to find out is by asking your advisor.
Here are a few common examples of things that could be added to your financial plan.
The cost of college is rising, with an annual growth rate of 7.1% per year. While it’ll depend on the location and status of the university, a year of tuition at a private four-year college can average $37,641 — or $150,564 for four years, assuming the tuition stays the same the whole time.1
Parents (or grandparents) who want to help contribute to their child’s future education costs can often underestimate the money they’ll need to keep their child debt-free. Even if your child (or grandchild) is still in diapers, it might be time to consider a 529 plan or other education-based savings vehicle.
We encourage our clients always to appreciate the power of a solid emergency fund. As a general rule of thumb, it’s recommended that people have an emergency fund that could last them up to six months’ worth of expenses. Depending on your salary, that can be a substantial amount of savings.
Yet, for many, emergency funds tend to fall on the back burner or are skipped over altogether. But an emergency fund is essential to your financial plan because it serves as a safety net. Without one, you may be forced to dip into your retirement savings early, sell off a life insurance policy, pull from your brokerage account, or disrupt your financial life in another way. Any of these options can have long-term impacts on your savings goals.
If you have debts (mortgage, credit card, personal loan, etc.), have you made it a priority to pay them off before you retire? People often don’t consider this, yet it can make a massive difference in their spending plan in retirement.
Along the same vein, you should discuss ways to avoid accruing more debt in retirement with your advisor.
Question #3: How Does My Tax Strategy Align With My Financial Plan?
A financial plan is only as good as its ability to account for your potential tax obligations. Your financial life and tax planning go hand-in-hand because taxes can diminish your savings or investments when unaccounted for.
If you’re a high-earner, tax planning is critical to ask your advisor, as you may not be eligible for certain deductions or credits. Your financial advisor and your CPA should be able to work together closely to develop a year-long tax strategy. They can help you identify appropriate above-the-line or below-the-line deductions, charitable giving strategies, tax loss harvesting opportunities, tax-efficient investments, and more.
Ultimately, your financial advisor should be able to help you proactively focus on minimizing your tax footprint and help make sure your money works in a meaningful way to help you reach your goals.
If year-round tax planning isn’t something you’ve thought much about before, don’t worry! It’s never too late to start incorporating a tax-focused strategy into your financial life.
Question #4: What Are You and Your Team Doing to Develop Your Skills as an Advisor Further?
The Partners in Financial Planning team has over 100 years of combined financial experience and knowledge. But the great thing is, we’re always excited to learn more.
Our advisors are proud National Association of Personal Financial Advisors (NAPFA), which means we annually attest our commitment to our clients by affirming the NAPFA Fiduciary Oath. In terms of ongoing education, we are required by NAPFA to complete 60 continuing education (CE) hours every two years. This CE policy is critical to NAPFA’s commitment to maintaining the highest competency standards in the financial services industry.
Question #5: What Other Non-Financial Goals Do I Want to Achieve?
You and your financial advisor have a special relationship that is rare to find between a professional and a client. Your advisor understands your financial goals and aspirations. But have you talked to them about things you want to achieve that may be something other than finance-related?
Maybe you’ve always thought about furthering your education but thought you’d never be able to afford another degree. Or you’d love to move to another state or travel abroad for a few months. While you may not think these are relevant to your financial plan, talking about these non-financial goals allows your advisor to help you achieve them!
Our clients are so much more than numbers on a page. We take the time necessary to learn about their hopes, dreams, and what matters most. We develop long-lasting relationships that can often span decades and move from one generation to the next.
If you’d like to learn more about working with our team, please schedule some time to talk. We’d be happy to review your current plan and build a strategy for achieving your long-term goals.
Sources:1Average Cost of College & Tuition
Partners in Financial Planning provides tax-focused, comprehensive, fee-only financial planning and investment management services. With locations in Salem, Virginia and Charleston, South Carolina, our team is well-equipped to serve clients both locally and nationally with over 100 years of combined experience and knowledge in financial services.
To learn more, visit https://partnersinfinancialplanning.com