Tranel Talks Column

Financial Planning: Questions For Your Fee-Only Financial Advisor

Whether you are an experienced executive or just starting out in your career, managing your money responsibly will usually involve contacting a financial consultant. You will be working with either brokers and commission-based agents or with a fee-only financial advisor. While a fee-only financial advisor does not receive any compensation for their professional services, brokers and commission-based agents will. Whoever you work with, it’s important to know what questions to ask. The following topics are some of the things you need to address so your financial planner can make things happen for you.

Be Organized

In order to attain the best benefits from your time with your financial advisor, it is essential that you are organized. Be sure you have copies of your paperwork and documents to leave with your financial planner. Your past income tax returns will need to be reviewed. Also, provide statements of your IRA, 401K or other investment accounts.

Budget Realistically

Sit down with your financial advisor and make a realistic monthly budget. This is a must; it’s the only way you will be able to save effectively. Save receipts of everything for an entire month and add all of them into the budget. Under the “miscellaneous” category, allow yourself a realistic cushion — do not minimize your expenses. This will only be a detriment to you in the long-term.

Family Support Allocation

All matters of family financial support should be discussed with your fee-only financial advisor. Specifically, talk about family support in terms of the exact financial responsibility you will be bearing. This includes educational and college expenses, child support, medical expenses, daycare costs and more.

Establish An Emergency Fund

This topic deserves its own individual category because it is of the utmost importance. An emergency fund should be established, where you set aside a determined amount of money per week. If you’re not sure how much to set aside, about 10% to 15% of your gross pay is a good starting point.

Plan For Future Goals

Go over your Social Security statement with your financial planner. It should be reviewed carefully. Since only 40% of your income is replaced with Social Security, your budget must include any supplemental policies that need to be purchased. Your plans for retirement living should be reviewed. This discussion will have to review the numbers and see if your retirement plans are ultimately realistic in terms of your actual financial status.

Estate Planning

All life insurance should be discussed and reviewed. Policies vary dramatically and sometimes premiums are not as effective as they first appear. Another matter you will need to handle with your advisor will be medical directives for you and any loved ones you wish to include as well. You and your advisor should also discuss your financial particulars for when you make a will. This is particularly important for any investments that you have that you may want to leave to an heir. And when your will is nearly completed, you may want to have your financial advisor review it before it is finalized.

When establishing a relationship with a financial planning service, make sure to remember that there is a difference between a broker or commissioned-based agent and a fee-only financial advisor. Each type of professional is responsible for providing their clients with the best financial planning services possible. That being said, it’s important to remember that financial consultants are human. Try to establish a solid, open relationship that allows you to examine all your options honestly with your wealth management advisor.