If you’re looking to make an investment and hire a financial planner, there are a lot of articles on the internet that can help you find the right person for the job. If your research is good, you’ll end up hiring a financial advisor that understands you and your financial history and goals.
But what happens after that? What do you do once you’ve hired a financial advisor? How do you know how your portfolio is doing?
Fortunately for you, there is a system in place for investors to understand and keep a tab on what exactly is going on with their portfolio. It’s quite simple, just talk to your financial advisor and ask questions about everything you possibly can. Financial advisors who are confident and experienced will be more than happy to answer all your queries and help you understand exactly how your money is being put to work.
Here’s are 5 questions to ask your financial advisor about your portfolio today.
- Is my portfolio aligned with my goals?
Make sure your financial advisor clearly understands your long-term goals. Your vision for the future is what your portfolio should be based on. Whether it’s buying a new house, sending your children to a good university, or maybe even leaving behind some savings for your grandchildren.
It is imperative that your financial advisor aligns with your goals and ideals; after all, unless they are willing to walk beside you in your journey, they will most probably not understand your yardsticks for success.
- Should we make some changes? Why & why not
As life goes on, you will be faced with a number of situations at each stage of your life which could require you to rework your financial plan. This usually comes up as we grow older, have children, move ahead in our career, etc. The easiest way to look at this is to realize that your financial plan grows and evolves and changes as you move into a new stage of life.
Do you feel like your long-term goals are currently moving towards a different direction when compared to the time you made your plan? Sit down with your financial advisor and explain the new changes in your life and your goals and ask them how that affects your plan. Do they think that you should change the plan? Ask them why. Do they think that you don’t need to? Ask why again. Always be cognizant of the bigger picture and make sure you know exactly how your plan helps you achieve your new goals.
- What about portfolio succession planning?
Succession planning is an important step that many investors often skip. You may or may not work with the same financial advisor all your life. It’s not guaranteed that your current financial advisor works with you forever. And if you’ve hired a wealth management firm, there is a high probability that your portfolio may change hands in the near future.
Ask your financial advisor what happens to your portfolio should something prevent your advisor from working on it. Keep a contingency plan ready and ensure that adequate measures are taken by your financial advisor to keep your portfolio intact even in their absence.
- When will we re-balance my portfolio?
At any point in time, your portfolio should contain a good mix of –
- Income Funds – Stable and predictable
- Growth Funds – Stable but riskier than income funds
- Aggressive Funds – Rapid-value fluctuations and high risk
- International Funds – Investments in foreign markets or organizations outside your country of residence
Just like an automobile needs to be serviced regularly, your portfolio also needs to be rebalanced at regular intervals. This ensures that you always have the best investment mix that is in sync with your changing priorities and goals.
- Am I on track to hit my retirement goals?
Probably one of the most important aspects to consider when you hire a financial planner. While short-term gains are always welcome, it’s imperative that your financial advisor is aware of the end goal; retirement. Keep in mind that the earlier you start investing in your retirement, the better would be your returns in the long run.
This is primarily because you have more flexibility to tweak and make changes to your retirement plan during the initial stages of your financial planning journey.