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Important questions to ask your financial advisor

Retirement planning can be confusing at the best of times, but when finances are thrown in, it can make the whole process feel incredibly daunting.

Key points:

  • There is no one-size-fit-all financial advice, it depends on your financial situation and personal goals

  • Choose an advisor with expertise in the area you require assistance with

  • Make sure you walk away from your first meeting aware of what steps you need to take next

Older couple sitting with their financial advisor
​There are a number of questions you should ask a financial planner before engaging their services. [Source: iStock]

Instead of guessing how you should develop your retirement plan, engaging a financial planner or consultant can better assist you in organising your goals and objectives before you retire.

You may be looking forward to a relaxing retirement where you spend time with the grandkids and volunteer in your local community, or doing the exact opposite and travelling around the globe. 

A financial advisor can provide you with direction on how you can meet your goals and objectives in the most efficient and fiscally safe way possible. 

Personalised advice

When you first sit down with a financial advisor, they will try to ascertain your goals for retirement and provide advice that best fits your personal circumstances. Your best interest and wishes should always be at the heart of the advice you receive.

Additionally, financial advisors are required to leave you in a better position financially than when you first started with them. This means you can be reassured that a financial advisor will be trying their best to assist you on your journey to retirement.

Principal Financial Planner and Aged Care Specialist at We Plan Financial in Victoria, Rosie Bouton, explains that depending on what financial assistance you require, a financial planner can assist you in planning for retirement in the short and long term.

She suggests being open and transparent with your advisor about your current financial situation and where you would like to be, so the advisor can best service your request and provide realistic advice.

"The best way into a financial relationship is to be open and honest and to make sure you are not withholding any information. The more information you can provide to your advisor, the better," says Ms Bouton.

"We can also weigh in on people's expectations, so if they want to live a comfortable lifestyle but they don't have the super there to do that, we are instrumental in shifting their expectations as well; bringing them more into line around what they can afford and what they can't."

Choosing an advisor

There are a number of questions you should ask a financial planner before engaging their services, this can help inform if they are the best fit for you and your financial needs:

  • Do they have credentials?

  • Are they registered as a financial advisor?

  • What are their qualifications and experience?

  • Do they have specific areas or products they advise on?

  • Does the advisor provider broader financial advice or is it only in aged care finance?

  • Is the service ongoing or is it a once-off advice?

  • How do they provide advice? Is it in writing, will there be multiple options to choose from, and will it be easy to understand?

Not only should you be asking questions of the financial advisor, but they should be asking questions to understand more about your financial situation and your personal goals as well. These could include:

  • If you have had a financial advisor before, was it a positive experience and what was it like?

  • What expectations do you have about their services?

  • To you, what does your retirement look like?

  • Do you have specific objectives for retirement?

  • How active do you intend to be during your retirement? Will there be a lot of overseas trips or will it be more low key?

  • Are you aiming for a comfortable or modest retirement lifestyle under the Association of Superannuation Funds of Australia (ASFA) financial retirement standards?

Ms Bouton suggests providing ideas around what your retirement will look like rather than focussing on numbers, as this can be more helpful to a financial advisor. Finding out how her clients picture their retirement is key to Ms Bouton's approach.

"Rather than keeping it to just figures, think about what they like to do in retirement, it brings it towards more fruitful discussion," she says.

"It can give me a bit more insight into what really makes them tick, how they might respond to your fluctuations or market volatility, and gives you a bit more idea about the person that they are. 

"Financial advice is more of a relationship you build with them rather than a static thing over figures."

Preparing for your first meeting

In your first meeting with your new financial advisor, you want to bring as much information and documents as possible so they can get the best understanding of your finances as possible.

What you provide will help them get an idea of what your financial situation looks like and ascertain whether you are on track to meet your retirement goals.

The important documents you bring should include your current finances and assets, like:

  • Statements of your financial accounts, including superannuation, current savings, and other bank accounts

  • Overview of your investments, such as stocks, bonds, or your housing portfolio

  • Your work salary, if you are still working, or pension statements

  • Fortnightly or monthly overview of your expenses, including food, accommodation, travel, and insurance

  • Outstanding debts, such as a mortgage, car repayments, health bills, and other loans

  • Tax statements from the last year or two

  • Other important information, for example, inheritance or trust, your current Will, or life insurance

It is likely that if you don't track your weekly or monthly spending currently, your financial advisor will ask you to do so, as it best explains how you spend your money.

Once your financial advisor has analysed your financial situation, here are some questions you should ask:

  • How does my financial situation look?

  • Am I on track to meeting my goal?

  • Should I consider changing my retirement age goal?

  • If I am not meeting my goal, what ways can I reduce my spend and boost my superannuation?

  • What changes in my personal life have impacted my financial outlook?

  • How are my investments looking? Should I be doing more or changing up my investment scope?

  • What is the next step from here?

In most cases, your first meeting with a financial advisor won't be your last. If you are already on the right track with your retirement planning, then you may not have to change anything. But most people will need to make changes to their investments, spending habits, or super contributions to get themselves on the right path to their goals.

When you leave the meeting, you should already have a good understanding of what you should be doing next and how you are currently tracking financially.

Depending on how you are feeling, you may want to see your financial advisor in another couple of months or give yourself a whole year to start implementing these new strategies.

Remember, you shouldn't be leaving your first meeting feeling like you are in over your head, but walk away with a clear plan to move forward. Your financial advisor should give you confidence and make you feel assured that you can either meet your goal or make changes to your lifestyle that will put you in a better financial position for your retirement.

What questions do you plan to ask your financial advisor? Tell us in the comments below.

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