Financial uncertainty and looming questions about big financial decisions can cause people an enormous amount of worry and countless hours of lost sleep. But it doesn’t have to be this way.
We help educate clients on financial uncertainties so that they can have peace of mind and sleep well at night is one of the most important things a financial advisor can do for a client.
A good financial planner can answer those questions that keep you up at night, and years in the business inevitably results in a familiarity with the most common causes for worry. This blog post is the first in a series about these questions and how advisors answer them, and we want to start with the four we hear most often:
Common Questions For A Financial Planner
1) Will I be able to retire the way I always envisioned? Are my assets sufficient to provide the same lifestyle I’ve become accustomed to throughout retirement? Am I going to outlive my money?
A financial advisor can answer this question by putting together a financial plan that includes all your retirement lifestyle goals and articulating whether or not the client has sufficient assets to achieve these goals. He or she can consider a number of options and create hypothetical plans to show you all the opportunities you have and roughly what you can expect from their retirement.
Not only that, they can change variables and “stress test” plans to address specific client concerns – for example running a few different plans to test the impact of longevity and whether or not this would cause them to deplete their assets.
2) Am I making the right decisions with my investments? Are they aligned with my wants and needs? Am I taking more risk than I need to achieve my lifestyle goals?
This can only be answered if you have established a plan that clearly states the goals you need to figure out how to fund. With a plan informing your investment decision making, it is just a matter of choosing the investment options that are the most appropriate to fund the plan.
A good advisor can take it a step further than that and show the impact of different investment and asset allocation options on your spending and other life goals. Maybe you currently have a 60% stock portfolio but could reasonably fund all their goals with a 40% stock portfolio. Or maybe by taking a little extra risk you can have a lifestyle that is well worth any extra risk they take.
This is not about making the “right” or “wrong” choice, but being aware of the opportunity set and choosing the option that suits you the best. It helps to have an advisor provide you with all your options so you can choose for yourself and know for a fact that your investments are aligned with what you want out of life.
3) How is a recent change in my life going to impact my current financial situation and how does it change what I can expect in the future? What are my options?
Financial planning is far from a set it and forget it process. Life shows up.
People’s situations change, whether it be family changes (divorce, death of a spouse or happier ones like a new child or marriage), occupation changes, or even one-time events that could throw a wrench in your current financial plan, it helps to have an advisor who knows your situation and is available to make changes to a plan to show you the impact of any changes in your life and what options you have to address them.
4) Will the events happening in the world today have an impact on my future? Will this most recent market decline cause me to run out of money? Should I do something?
Our knee jerk response to all of these is usually a firm “no” – but of course the more sophisticated answer requires consulting a financial plan to see if all client goals are still funded. If your account balance has dropped low enough to a level where you can no longer expect to fund your currently planned goals, the advisor can make you aware of any adjustments you may need to make to make the plan “fully funded” again.
In our experience, these changes can be small and are often temporary.
Many financial planning programs even have features that show how much a client’s account balance must decline before the plan would become “under-funded” and require adjustments.
If your account for temporary market declines in your planning process in a realistic fashion, it usually take a larger declines than most clients would imagine. Knowing this number in advance also prevents any surprise about the fact that changes need to be made if a temporary market decline gets bad enough to require them.
These are just four of the many financial questions that cause unnecessary worry and this blog is the first of a series will cover how financial advisors address these questions. If you have any questions keeping you up at night that you would like to see addressed in this blog, we’d love to hear them.
Schedule a consultation with one of our financial planners, or contact us today with your questions. We’d love to chat!
Read more about common financial planning questions in Part II »