by Sanjeev Kumar Gopalakrishnan, News That Matters

5 Important Rules While Interacting with Your Financial Advisor

Never Lie to Your Doctor, Lawyer ... or Financial Advisor

The age-old saying, “never lie to your doctor or lawyer,” has always been proven true by many real-life experiences over the years. But in today’s world of financial uncertainties, this adage must include another critical expert – your financial advisor. However, many of us really do not take financial planning and advisory services seriously until we’ve burnt our fingers with some careless investment decisions and unethical practices. So, let’s look at some critical rules to remember while interacting with financial advisors.  

5 critical pointers to remember while interacting with your financial advisor

All the facts about you

The most important rule while talking to your financial advisor is to disclose all the facts about you. While interacting with your financial advisor, you may get excited and share a “larger than real” image of yourself and your ambitions. However, ensure that you bring out only your true colours. To receive accurate financial advice, give only facts regarding your present job position, salary, your current savings, your critical life goals (e.g., build a home in India, retirement fund, emergency fund, parents health fund, etc.), and your financial weakness (e.g., tendency to spend on purchases, unclear about spend percentage, etc.). When you disclose such facts, your financial advisor will be in a position to guide you the right direction.  

Start with life goals

Always prevent the tendency to plan your goals based on the money you have. Your life goals must be the driving force that will help you plan your financial strategy. Be clear about what you want from your life and the future financial needs you need to be prepared for. These aims help you visualize where you wish to see yourself in next 30 years. You will then need to be clear about where you stand financially in the present so your financial advisor can then calculate the gap and help plan the financial strategy carefully.  Your goals can definitely change as you age, and so will specific parts of your strategy. Hence make sure that you review your performance and need for change regularly with your financial advisory services.

Be patient and be detailed

Financial planning is an exhaustingly detailed process.  It drills down every financial aspect of your life. It also reviews many critical aspects of your life. For financial advisors and registered investment advisers

to provide you with an accurate financial advice, they need to understand all the details about your current value, assets, and liabilities so they can connect this information with your life goals.  To arrive at an accurate conclusion, they will definitely question you closely, there will be detailed analyses, and the need for extensive documentation. You will have to answer many questions. Hence be patient and respond to the best of your ability.

Don’t be perturbed by the presented scenarios

Based upon your expected net worth and future income at retirement, the prepared financial plan will create simulations of potential best- and worst-case retirement scenarios, including the scary possibility of outliving your money, so steps can be taken to ensure that does not occur. It will look at reasonable withdrawal rates in retirement from your portfolio assets. Additionally, the plan will consider survivorship issues and financial scenarios for the surviving partner. Hence, never be concerned if any of the presented scenarios paint a bleak picture.

You are never too young or old to get started

Well, age is never a factor when it comes to getting started with financial planning. In fact, the earlier you start the better it is. The advantage of starting earlier is that you can reach your goals faster and can train yourself in building financial discipline earlier in life. Of course, it’s never too late either.  You can always use an opportunity to get your life on track.


Make your financial advisor your buddy

The more transparent and true information you share, the easier will be your entire planning process. Financial advisors are not magician, but with their experience and sharp expertise they can certainly guide and support you in planning your finance, organizing your investment plans, savings, expenditure, and all other aspects of money management. Be prepared to be open and make changes in your way of living based on your financial advisor guidance. Well, if you follow the above rules, you can be successful in extracting the best plan from your financial advisor. 

 About The Author

Sanjeev Kumar G, an IBS Chennai Alumni, is a Certified Financial Planner (CFP) from India, since 2005. He has 22 years of experience and is an expert in various personal finance areas like portfolio construction, investment research, life insurance and financial planning.


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