Asking the right questions can make all the difference in your financial future. Working with a financial advisor can be an incredibly beneficial experience, especially when it comes to managing and investing your money responsibly. A financial advisor can help you make sound decisions and avoid costly mistakes, but for that to happen, you need to maintain an open dialogue about the important factors affecting your finances throughout your life. Additionally, a financial advisor can see things about your financial situation that you may not recognize. Here are five key questions you should be answering with the help of your financial advisor to get the most out of your relationship.

1. What steps can I take to effectively manage my debt and reduce my financial burden?

One of the key things a financial planner can do is help you manage your debt responsibly. If you’re relationship has just started, make sure to explain in detail everything you’ve been doing to keep your finances in order as well as any challenges you’ve faced. Ask them what strategies they recommend, such as consolidating debt or making extra payments on certain accounts, and what steps you should take to ensure that all your debts are taken care of in a timely manner. Additionally, inquire about any potential risks associated with certain methods of debt management or repayment plans. A good financial advisor is well versed in various debt management strategies.

This is especially important when it comes to long-term accounts and goals. With so much going on in life, and without the proper knowledge and direction, it can be easy to miss out on opportunities to improve your financial health. It’s even easier to forget to check in on your long-term financial commitments such as mortgages. According to the latest Quarterly Report on Household Debt and Credit, the total household debt went up by $351 billion, reaching $16.51 trillion in the third quarter of 2022. Also in the third quarter 2022, mortgage balances alone climbed by $282 billion. If you’re looking for ways to manage your debt and reducing your monthly loan repayments and allowing for more cashflow is one of your goals, for example, your financial advisor can give you the insight into whether better mortgage rates are available at any point during your relationship.

2. How can I effectively balance risk and return with my investments and still achieve my financial targets?

Most investors don’t realize or understand how investment risk impacts financial outcomes. Investing is an important part of managing finances responsibly and reaching long-term goals, so risk management is crucial. Diversifying your portfolio with an appropriate mix of investments could potentially help you maximize returns over time. However, it needs to be done correctly, as investing is all about balancing risk and reward. In general, people know that bonds tend to be less risky than stocks, but what they lack is how to apply that to their own situation. Discuss with your financial advisor how different types of investments, such as stocks, bonds, mutual funds, commodities, and currencies may affect the amount and nature of the risk you face and how that fits into your overall wealth management strategy.

Also evaluate how you might incorporate non-traditional investments to offset a different cycle in the market. All of this will help you understand how the different types of investments work together and to decide on how much risk you’re comfortable with, allowing you to create a sound investment portfolio that meets your unique needs.

3. Am I taking the necessary steps to achieve my financial goals?

It’s easy to set intentions and goals for your future, but it takes strategic planning and dedicated implementation to bring them to fruition. It’s important to establish realistic short-term and long-term financial goals so that you can stay on track towards achieving them without becoming unmotivated or overstretched. I always like to build in some “easy” wins early on when I work with a client. This might be increasing their monthly retirement plan contributions by 1 or 2 percent or paying off a small balance credit card. Here are other examples:

Short-term goalsLong-term goals
Saving enough money for an upcoming vacation.Planning for retirement.
Increasing savings.Paying off a debt.
Building an emergency fund.Buying a new home.

Now, regardless of the type of goal you’re looking to achieve and how simple it may sound, the journey toward reaching each milestone starts with creating and following an effective plan that puts you in control of your financial destiny. Your plan has to work for you, so be open with your financial professional if you feel the plan doesn’t fit you. As my wife and I like to say, “you gotta like your own deal.” Nothing will kill a financial plan faster than a misalignment of values.

Talk to your financial advisor about where you are currently financially, what steps need to be taken for you to reach those goals within a reasonable timeframe, and if there are any adjustments that need to be made for those goals to become more achievable.

Questions to Ask Your Financial Advisor

4. How would the worst-case scenario affect my financial goals? Can I stress test my financial situation?

It’s also important for investors understand what could happen if things don’t go as planned or something unexpected occurs that affects their finances negatively. For example, what would the impact of a recession and sustained market downturn have on short term returns and how does that impact long-term goals? Sudden and unexpected events such as losing your job or getting sick, natural disasters or an unpredictable change in the markets when trading can also take a significant toll on investments. At Four Points Wealth we believe in leveraging technology to show our clients what a financial shock (be it personal or systemic) would have on their financial picture by modelling different scenarios.

Ask your financial advisor how those scenarios could potentially affect both short-term and long-term objectives, what steps should be taken in order mitigate any potential damage caused by them occurring, and how considering investing strategies that focus on diversification and hedging can increase your chances of achieving your goals while simultaneously reducing the risk of loss in case something unplanned happens.

5. What is my relationship with money and how has that impacted my financial situation?

This is a tricky and rather personal one. Have you ever stopped to think about how your behavior and habits may impact your financial outcomes? Money is ultimately just a tool used for reaching our various life goals—it shouldn’t define who we are as people or cause us undue stress or worry over time. However, for many people that’s exactly what money does. For example, those raised in households where money was scarce may struggle to take risks with their finances or over-react to sudden changes in their financial situations, afraid of winding up back in poverty and not able to meet needs. On the other hand, those brought up around lavish and abundant spending – where people buy whatever they want unchecked – may also struggle as adults with financially responsible habits.

Both scenarios can lead to issues later: either over-saving or over-spending on unnecessary items.
It’s important for us all to remember our upbringing and how that shapes our own relationship with money today. By becoming aware of the triggers that lead us into poor financial decisions, we can work to ensure greater financial stability as adults. Then, we can take a hard look at how we approach money and make responsible decisions and create meaningful shifts in how much money we have at the end of each month. Talk with your financial advisor about how being mindful about spending habits can alleviate stress related to money management over time and ask about other tips that could help you maintain a healthy relationship with money throughout life.

From creating a realistic budget to finding ways to reduce spending, pay off existing balances, and maintaining a healthy relationship with money, a financial advisor can help identify which areas of your finances are most important and help guide you towards a brighter, more secure future. Having regular conversations on all these topics discussed above is key for understanding where you stands financially today, setting realistic short and long-term goals, mitigating potential risks associated with investments, finding the best debt management strategies, gaining insight into useful budgeting practices and much more. And with all the pieces in place you will be able to make sound decisions throughout your financial journey so you can start living the life you’ve always dreamed of.


Advisory services are offered through CS Planning, Corp., an SEC registered investment adviser
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