Money is a necessary part of life, and it’s never too early to start learning about it. In today’s world, you have to have a certain degree of financial literacy because staying ignorant could put you at risk of losing substantial funds, making poor investment decisions, and getting left out in the cold when there’s a market crash.
Thus, never shy away from seeking help for financial planning and ways to maximise profit from your hard-earned money. It’s imperative, however, that you provide the right input to get the right output. You should have a list of questions you need to ask your financial advisor.
Who is a financial advisor?
A financial advisor is an expert who evaluates your financial situation and goals and devises strategies for you to achieve them. More specifically, financial advisors help clients manage their money, diversify their assets and teach them ways in which their money can generate wealth for them.
Why do I need a financial advisor?
Financial advisors educate and advise clients about investments, savings, insurance plans, mortgages, retirement plans, and other products for financial stability. A good financial advisor can help you achieve your goals and make smart money decisions.
Five questions to ask a Financial Advisor:
Asking the right questions will help you gain insight into the process of turning your money goals into a reality. So we have curated a list of the top 5 questions you must ask your financial advisor to get a holistic view of your financial health.
1. Am I on track with my investment strategy?
If investments are a big part of your retirement plan, you will require regular market updates and insights on the latest trends. If you are unclear about your investment strategy or have difficulty understanding whether your strategy is working, i.e., generating long-term profit for you, seek clarification from your advisor.
The investment market always fluctuates; therefore, you will want to ensure that the strategy you crafted ten years ago is still viable. If not, ask your financial advisor about more options and ways to shift your strategy for benefits.
2. What can I do to prepare for financial emergencies?
Financial calamities are unforeseen and can cause great distress if not prepared for. One such recent example is the Covid-19 pandemic, in which every 4 in 10 persons was not financially equipped for the financial emergency.
While you cannot foresee calamity, being prepared and well-equipped with finances all the time should be a priority. Having an emergency plan for your finances will keep you at mental peace and provide for you in any unexpected circumstances.
Ask your financial advisor for the best backup strategies and take regular input on improving your financial plan.
3. How can I make my financial plan more effective?
You must present a holistic picture of your financial health and status to your advisor and let them know your priorities, goals, and investment plans. Discuss with your advisor where you see yourself financially in the next five years and plan accordingly.
If you are closer to retirement, getting married, or expecting a baby, seek guidance on how to financially prepare yourself for these events. Your advisor can help you restrategize your plan and give you tips on what to prioritise and how to save more.
4. How do I create a realistic budget that meets my goals?
Budgeting is the most important factor in financial planning. Seek help from your advisor while establishing a monthly budget to help you reach your financial goals. Your advisor can help you sustain your finances and explain how to best spend, save and invest your money to accomplish your financial goals.
5. What additional actions can I take to safeguard and maximise my money?
A good catch-all question to cover for your blindspots. However, you must be open to your advisor’s suggestions here, even if they don’t align with what you thought was best. Discuss with your advisor ways to save more, earn larger investment returns, or ways to protect your hard-earned money against financial crisis and fraud.
You may find room for self-improvement by identifying areas of error together. Seek guidance on these areas and ask your advisor to suggest ways of improvement.
If something is hard-earned, you should make the maximum effort to gain the required information about its value. Setting short and long-term financial goals is important and crafting strategies with the help of an expert to achieve them is even more important. Understandably, financial discussions can be overwhelming and may make you feel vulnerable; however, the more you ask, the more clarity you gain. So do not hesitate on the chance to gain financial literacy no matter what stage of life you are at. It will not only help you build more assets and invest wisely but bring about a great deal of mental peace.