When looking for a financial advisor for the first time or for a better fit, you may want to forego discussing the numbers on your account statements or your investment performance targets. It may be more productive to search for financial advisors who want first and foremost to get a better understanding of who you are and your motivations for seeking financial advice. Such professionals realize that only by understanding the “why” behind your quest for financial advice are they more equipped to recommend to you the appropriate “what.”
To get to why, seasoned advisors will ask questions (like those below) to get a deeper understanding of who you are. Rather than ferreting out facts and figures, such questions seek to gauge your psychology around life, work, goals, retirement, etc. Often, this Q&A is a good exercise not just for advisors, but also for prospective clients; it requires them to think more deeply and holistically about who they are and why they are looking for financial advice.
Financial Advisor’s Discovery Questions
- Tell me about your background: family, friends, place you grew up.
- Tell me about your dreams for your children.
- Do you have other family obligations?
- Tell me some key values your parents passed onto you.
- How does your family history and/or your personal traits impact your relationship with money?
- What does money mean to you?
- What concerns you most, at this moment?
- How would you like people to remember you?
Family / Lifestyle
- Who handles your finances?
- What is your current lifestyle? Will you be able to carry this in to retirement?
- Do you consider yourselves spenders or savers?
- How are you doing in terms of managing your income versus expense?
- How do you feel about budgets?
- Do you and your spouse have a philosophy for how much you save, spend, and give away to charity? Are you both on the same page?
- What attracted you to your current employer?
- How is your career path going?
- Are you passionate about your work? If not, what would you rather be doing?
- What motivates you to work?
- Where do you see yourself in 5 years, 10 years, 20 years?
- How is your work-life balance?
- Is there a savings amount you’re targeting? If so, how much? Why that number?
- What is your exit strategy?
- Paint me a picture of your ideal retirement.
- Let’s pretend you had no restrictions on your time, you can spend it doing whatever you want to do, tell me your perfect calendar.
- What is your greatest concern? Running out of money or running out of time?
- What level of income would you consider financial independence?
- Tell me about your key goals, which will take planning and money.
- Have you ever worked with anyone to determine how much it will take to retire?
- Tell me about the planning you have done to ensure you are able to reach your objectives.
- Tell me about both your positive and negative experiences with investing.
- How have you made investing decisions in the past? Were you happy with the process that you’d used?
- Do you like learning about investing? Or, would you rather delegate that responsibility to a trusted adviser?
While the questions are extensive and quite personal, in many respects, they are necessary and useful for advisors and clients. Only by understanding the clients and the why (or motivation) behind their quest for financial advice do advisors have the foundational information needed to recommend the appropriate what (or strategies, products, services). For example, knowing that a client has a high savings rate and low risk tolerance level, an advisor may recommend more conservative investments that address these tendencies. Meanwhile, the information from this Q&A could provide prospective clients greater insight and clarity for the reason behind their saving and investing. This could provide additional motivation for staying the course as it often takes years to earn, save and invest for major life goals: house, college, retirement.
A deeper understanding of who clients are and what they are trying to achieve helps create a trusted and effective advisory relationship. It’s often said that financial advising is a business built on trust. If an advisor doesn’t take the time to know who you are and why you are seeking advice, does it make sense to entrust the individual with your hard-earned money?
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