Questions to ask your financial advisor


October 6 was World Financial Planning Day, the perfect reminder to meet with your financial advisor and review your financial situation. To help you prepare, here are some questions to ask:

Am I sufficiently covered?

Just like insuring your car against loss or damage, you also need to insure your life and your ability to generate income. Your financial planner can help you set up a personal insurance policy to protect you against loss of income or loss of life. You can use the proceeds of the policy to replace your income or take care of loved ones when you are no longer there to support them. A good financial advisor will also warn you if you are overinsured, as this leads to unnecessary premiums that could be better used elsewhere.

Am I invested according to my risk profile and my objectives?

Knowing your risk profile will help you determine your risk appetite to meet your investment goals. You might like the safety and security of money market funds, but saving for retirement using money market funds means your money won’t grow fast enough. You trade the risk that your money will fluctuate with the market, with the risk that you may not be able to retire due to insufficient savings. Your financial advisor can help you strike a balance between your comfort level and your investment goals to ensure you get a good night’s sleep while being able to retire one day.

Are my investment goals on track?

Your returns on investment must be secondary to your goals. Ask your financial advisor to give you a projection of future cash flows for your goal to see if you’re on the right track. While the projection is only a guess, it will give you a target to aim for. Plus, if you need to make any adjustments, your financial advisor can help you find a cost-effective, tax-efficient solution to meet your investment goals.

What fees do I have to pay?

Some investors believe that they pay no fees or that there is no cost associated with their investments. However, reinvesting dividends, issuing statements, and buying and selling stocks all come at a cost. Ask your financial advisor what your effective annual cost (ACE) is. This will show you the total cost of managing your investment. If you’re paying above the industry average, ask your financial advisor to help you explore alternatives. With investments, you get what you pay for. So don’t always look for the cheapest option – look for the option where you think you can get the best bang for your buck.

How is my financial advisor?

Since you will be sharing personal information about your finances, it is important to establish a relationship of trust with your financial advisor. To ensure you receive up-to-date, up-to-date advice, stay abreast of industry changes and don’t be afraid to ask your financial advisor about these developments and the potential impact on yourself. An informed decision will give you the confidence to act on the advice provided by your financial advisor because you know it’s best for you.

Our emotions and feelings are often our worst enemy when it comes to personal finance. Your financial advisor can’t pick the next hot stock or make your debt go away. But they can keep you from making emotional decisions and provide you with the support you need to achieve your goals. Schedule this meeting with your financial advisor – and if you don’t already have one, now is the time.

Jaco Prinsloo is a Certified Financial Planner at Alexander Forbes.


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