9 Questions Your Financial Planner Should Be Asking You

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If you have never worked with a Financial Planner before, the first meeting can sometimes feel a little daunting. In Britain discussing our finances is still often a taboo, so talking openly about your most personal and financial information with someone you’ve never met before can initially make you feel really vulnerable. 

It is good practice for the adviser to contact you with a list of information that would be useful to the discussion before the meeting, for example details of existing pensions and investments, financial products and personal details like National Insurance numbers.

This gives you the opportunity to prepare, and will help you get the best from your time with your planner.   

This article discusses some of the questions your planner should ask you to help you both get the most out of your time together.  

#1. What are your goals and objectives?

Your objectives, both personal and financial, should be central to the conversations you have with your planner, after all, these are the reasons that you chose to seek financial planning advice in the first place!

What you want to achieve is an incredibly personal thing and its vital that your planner knows what your needs are.

Establishing objectives and expectations early on has many benefits, the main one being that this will allow your adviser to build you a financial plan which truly reflects your dreams and aspirations for your life. Gaining thorough clarity on your goals is the very first step to supporting you in achieving the lifestyle you desire.

#2. What would you like your future to look like?

The most common question I get asked by clients when discussing their goals for the future is “what do other people say”. The short answer to this question is always this: No two clients say the same thing.

Retirement, for some, is their primary focus. The traditional concept of retirement includes working until a set age, then relying on pension income built up over their working life to financially support them through retirement.

Increasingly more and more people are deciding that having a set retirement date isn’t for them, with many choosing to work past their normal planned retirement age, sometimes on a part time basis or in a different sector all together. Reasons for this shift in social norm vary: some people enjoy the social aspect of working whilst others don’t feel financially able to retire based on their income expectations through retirement.

It would be a good use of time to consider what you would like your future to look like before meeting with your planner as this will allow your planner to provide you with the peace of mind  that your lifestyle is sustainable based on your current financial situation. If your desired lifestyle isn’t sustainable based on your current financial situation, your planner will be able to work with you to help you achieve your goals, or to manage your expectations.

#3. Your experience with money

Your past experience of dealing with money will help your planner establish the suitability of different plans and solutions for you. Experience is often a contributing factor in assessing understanding of different products that are available.

There are many products available in the market to support with a whole range of situations, however some of these options can be incredibly complex. With complexity, often comes a higher level of risk.  It would be hugely inappropriate for a planner to recommend a more sophisticated product to an inexperienced investor with limited understanding of the product and reasons for recommendation. 

It is also useful for your new planner to understand whether you have worked with financial professionals before. Each planner will have their own process, so understanding whether you have had experience with other professionals allows the adviser to manage your expectations more closely and bring clarity to any preconceived ideas about how you might expect your new planner to operate.   

#4. How you feel about investment risk

Investment risk can be broadly categorized into 3 main areas: Your capacity for loss, Investment timescales/ whether you are likely to need easy access to your investments in the event of an emergency, and your level of experience.

Experience has already been addressed, however capacity for loss and investment timescales are also important considerations which deserve a mention.

Capacity for loss is used to determine how much of an impact the loss of an investment would have on your quality of life and future plans. A person can usually tolerate a higher level of investment risk if the loss of the investment would have a low impact on their standard of living.

When considering an investment timescale, it is generally considered that an investment period of less than 5 years would mean that recommending an investment, other than cash based options, is unsuitable.

We have all seen the warnings about how stock markets can go up and down and that you can get back less than you put in. This risk is heightened in the early years of an investment, which is why equity or stocks and shares based investments should only be considered for the medium to long term (5 years +).

In addition, we all have differing opinions on risk. Some people are very risk adverse where as others are more comfortable with taking a higher level of risk with their money. It’s a very individual decision and understanding your views will allow your planner to recommend a suitable strategy for you and your needs. 

#5. Income sources

It is important for your planner to have a clear understanding of your income amounts and sources as these can affect the long term suitability of your financial plan.

Each income source is treated differently for tax purposes, and your planner will be able to identify which allowances you have available to you based on the different sources and amounts of income you have. From there, your planner will be able to put together a tax efficient strategy for you with a view to making you better off.

This is also a consideration when deciding who will own an asset. Ownership of an asset, for example a property, directly impacts who receives the income on it. If a couple own a rental property jointly 50/50, the income produced by the rental property would be split between them equally.

If one partner was a higher rate tax payer and the other a non-tax payer, half the income would be taxed at the higher rate and the other half not taxed. Restructuring the ownership of the property could be used as a strategy to pay less tax.  

#6. Expenditure

Expenditure is always an interesting conversation, and there can be huge benefits to reviewing your monthly expenditure on a regular basis. From forgotten direct debits to an out of control coffee shop habit, your bank statements are a good place to start to review your expenditure and to understand what you spend your money on.

Understanding your expenditure will allow your planner to recommend affordable solutions and establish a comfortable level of savings to you after all, theres no point in saving for tomorrow if you cant afford to live today!

Understanding expenditure can also be useful when planning for the future: if you have hobbies, enjoy holidays or eating out, for example, it helps to understand what you spend on these things currently to predict what your future expenses will be.

#7. Your balance sheet

Gathering a full and detailed picture of your financial situation is imperative to be able to build a plan that is tailored to your situation. A good place to start with this is to understand your assets and liabilities: what you own and what you owe.

Understanding what assets you own can allow your planner to advise on their tax implications and net worth. It also offers valuable insight into your financial perspective and what’s important to you.

Generally speaking, it is usually advisable to clear debts as the first stage of your financial plan, however a combination of low interest rates are different financial objectives may mean that saving may be a higher priority for you.

Understanding what you owe will allow your planner to support you with building a strategy to clear your debt in an efficient way, hopefully saving you some interest in the mean time.  

#8. Your family situation

Each individual has a different perspective on how their family fits into their financial plan, and its vital for your planner to understand what your thoughts are.

Between couples, it isn’t uncommon for one partner to have a substantially different attitude to their finances to their partner or spouse, and this can sometimes create issues in the financial planning process if the planner isn’t aware of this. For this reason, planners generally prefer to work with both partners in unison.

In situations where the family income comes predominantly from one partner, there can be serious financial implications in the event of that partners death or disablement that should be identified and addressed by the planner as part of the financial planning process.

It is also useful to understand the wider family situation: notably your children and parents as these can have a huge affect on both your actual financial position and your attitudes and feelings towards money. Will you need to support your parents, either financially or by providing care for them which may limit your earning potential? Do you plan to support children through university or have ongoing school fees to pay for? Do you plan to leave your house and possessions to your children on your death?

Whilst these can be emotive and difficult topics of discussion, they are integral for creating a solid financial plan for you and your family.    

#9. Basic health details

Depending on your objectives and need to visit a financial planner, it may not always be necessary to go into detail about your health, however for some situations health details are important in order to provide you with suitable recommendations and advice.

When considering personal insurance and life assurance, health details including pre existing medical conditions, smoking status, height and weight and lifestyle choices/ hobbies are important considerations as an underwriter would ask for this information to establish whether you would be offered cover, and to determine the premiums on any policy recommended.

For certain retirement products, long term care products and inheritance tax planning products, the suitability will also be dependent on the health of the life assured or owner of the policy.

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