12 Questions to Ask a Financial Planner

By Andrew J. Christopher on February 5, 2021

By now, you probably know why financial planning is important, but you should also understand the importance of proactively communicating with your financial planner. Finding the right questions to ask a financial planner ensures you make the most of your time together. Use this list both when evaluating a new financial planner and when attending a regular financial check-in. Doing so will help you build a stronger relationship with your planner as they help you navigate the different stages of life.

Once you have determined that you need a financial planner, the next step will be determining how to find the right professional(s) to best serve your needs best. For example, if you are looking for overall wealth management services that include financial planning, you may want to look for a firm that takes a team approach.

Questions to Ask Your Financial Planner

Here are 12 great questions to ask a financial planner, starting with your first introductory meeting and moving onto in-depth questions about your own specific personal finance strategy. Keep in mind that many of the answers that apply to your particular situation won’t be known until after the plan is complete. Nevertheless, it’s important to understand the mindset and approach your planning team will take.

What credentials do you have as a financial professional?

Professionals in the financial services industry may have a range of credentials, but they’re not all the same. You want to make sure your planner or advisor is a CERTIFIED FINANCIAL PLANNERTM (CFP®) professional. Individuals with this designation have gone through a rigorous, multi-year process and evaluation to equip the professional with the knowledge and skills necessary to provide valuable advice.

How are you compensated?

Financial planners may charge for their services in a variety of different ways. At Dowling & Yahnke Wealth Advisor, we don’t typically charge extra for financial planning services. Our financial planning service is typically included in our overall fee-only investment management, which starts at 0.85% for the first $2 million of assets. As your assets grow beyond $2 million, your blended percentage fee will go down. This should be one of the first questions you ask to ensure you understand the cost of the services you’ll receive.

What is your investment philosophy?

If you are looking to work with a team that prepares financial plans and manages your investments, you will want to know how your advisor and planner will invest your portfolio. At D&Y, we believe in minimizing costs, efficient markets, and global diversification alongside an asset allocation that’s tailored to your unique financial situation. Your wealth management team should also be able to articulate how and when they will rebalance your portfolio.

What is the appropriate level of risk that I should take with my portfolio?

Finding the balance between risk and return (i.e., the allocation to stocks and bonds in a portfolio) is one of the most important jobs of a financial planner and wealth management team. The answer to this question is unique to each investor’s situation. Ultimately, taking risk in a portfolio is a balance between capital preservation (keeping what you’ve saved) and growth (ensuring your portfolio will last you many years into retirement).

How much do I need to save or set aside to maintain my standard of living?

In the years before you enter retirement, it’s important to discuss what you want your life to look like in the future. Based upon your desired standard of living, your financial planning team can complete an analysis to figure out how much you should be saving now to reach that goal. They’ll account for best-case and worst-case scenarios, as well as inflation.

How much can I spend?

The answer will depend on many factors, including your current portfolio value, your ability to save, and desired asset allocation. Additionally, your planning team will also consider other sources of expected income (like Social Security and pensions) to give you a realistic picture of an appropriate spending level in retirement.

What is the most tax efficient way to withdraw funds from my account?

Every type of account comes with its own tax implications. Whenever you need to make a withdrawal, either before or during retirement, your planner should be able to review your account types and help you choose the most tax efficient options.

What types of tax planning strategies do you use?

Tax management is one of the many benefits of financial planning and crafting the best strategy can be complex. When it comes to savings, your financial planner or advisor should review the availability of tax-advantaged accounts to make sure you’re taking full advantage of these opportunities. You should also ask if they implement tax loss harvesting (to minimize and defer your capital gains) and asset location strategies when managing your portfolio.

Will a Roth conversion save me money?

Roth IRAs come with a number of benefits, including tax-free investment growth and withdrawals. If you’re interested in converting an existing traditional IRA into a Roth IRA, talk to your planner about how this would work and whether the long-term financial gains would offset the tax costs. Your planner can also advise you on strategies to increase your Roth IRA/401(k) savings.

How much should I give to charity every year?

Charitable giving can help fulfill personal goals as well as help mitigate taxes. Ask your financial planner about how planned donations can fit into your overall strategy. Your planning team should be able to evaluate the pros and cons of Donor Advised Funds, Qualified Charitable Distributions, and selecting the appropriate assets to donate.

How should I prepare for long-term healthcare costs?

An often overlooked part of financial planning is preparing for future healthcare needs, both in the form of medical costs and the potential need for long-term care. Ask your planner the best way to prepare for these upcoming expenses and what kind of insurance products may offer you better financial protection.

Questions Your Financial Planner Should Ask You

Your financial planner will likely ask you a few questions to assess your financial situation, too. Here are some common examples so you can think about your answers in advance.

What are your short-term and long-term goals?

Be prepared to talk about what you want to achieve in the near term and further down the road. You may discuss college planning, expected retirement dates, upcoming real estate purchases, and more. Even if something is an idea rather than a concrete plan, such as buying a family beach house, your financial planner can help you figure out what it will take to achieve that goal.

What is your risk tolerance?

Everyone has a different mindset and personal comfort level when it comes to investment risk. Your financial planner or advisor will want to get a sense of your risk tolerance to help craft a portfolio that meets your specific needs. Your planner may ask you how you felt about your investments during a previous market downturn, such as the global financial crisis of 2008-2009.

What is your risk capacity?

In addition to risk tolerance, your financial planner or advisor will also talk to you about your risk capacity. This is the amount of risk that would be necessary to take in order to meet your financial goals. The answer will likely be determined during the financial planning process, but it will be helpful to consider before starting the plan. Even if you have a lower risk tolerance, you may need to consider a more aggressive strategy based on your retirement plan and time horizon.  Alternatively, individuals who are well situated in their retirement savings may be able to take less risk in their portfolio.

What do you spend your money on?

Budgeting is a big part of financial planning. Be prepared to talk about your ongoing expenses and debt. Your planner can help you figure out what to pay off first and how to potentially cut back spending to achieve those financial goals.

What are your biggest financial concerns?

Don’t be afraid to talk about your concerns with your financial planner or advisor. They will likely ask you the biggest things that keep you up at night, whether it’s how to pay for rising tuition costs, how a medical issue will impact your future, or how to save enough for retirement. By being honest about your concerns, you’ll put the financial planner or advisor in a better position to give you appropriate financial advice, as well as recommend actionable steps to address these issues.

What do you hope to achieve through financial planning?

This is an important question from your financial planner because it makes sure you’re both on the same page with expectations. Every client is different, and the financial planning process comes with a lot of customization. Be prepared to voice what you want to get out of financial planning — it sets both of you up for success.

How to Prepare for Your Meeting

In addition to thinking about the questions your financial professional may ask you, also gather the following information ahead of your meeting.

Accumulate all of your assets and liabilities.

Avoid ballparking at your financial planning meeting, especially if it’s your first one. Bring your most recent account statements, so you know the exact current state of your savings. Also, list out the values of personal property you own in full (such as real estate and vehicles) as well as outstanding debt you have, including mortgages, personal loans, student loans, and credit card balances.

Estimate your expectations of Social Security and pension.

Bring an idea of how much you expect to earn from Social Security and any pensions you may have access to because of your job.  The Social Security website is a great resource to find your most accurate projected benefit.

Define what success looks like.

Give your financial planner a clear picture of what a successful strategy looks like. Is it a certain portfolio balance? Is it peace of mind knowing that you’re financially prepared for the unexpected? This process will look different for everyone, as will the financial planning recommendations.

Know the questions you want to ask ahead of time.

Bring a list of questions you want to ask your planner every time you meet with them.

Bottom Line

Working with a financial planner is an important relationship. Take a few minutes before each meeting to prepare questions for your planner. Also, gather the thoughts and information your planner needs to create the best strategy for you to feel confident making big financial decisions.

Ready to schedule that first meeting with a San Diego financial planner? Contact Dowling & Yahnke Wealth Advisors to get started on planning your financial future.


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