10 Questions to Ask Your Financial Advisor at Los Angeles
If you could throw the right set of questions at your financial advisor, your task of choosing the best financial advisor would become a lot easier! A clear set of answers from your planner should not only help you plan wisely but also have a better understanding of the market trends in financial planning.
What if the market declines? How should I prepare for such an unforeseen mishap?
Your certified financial planner could table an apt solution to this. The most common of averting risks is portfolio diversification. Even if you choose to go for cash or cash equivalents, a small part of your portfolio needs to be kept in guaranteed investments.
How to plan for periods of inflation? How big a threat is it?
The impact of inflation should be considered as early as making investments, or perhaps, even before that (when you start earning and spending by yourself). Educate yourself on what assets perform well during inflation. Hard assets, that is real estate, perform well during periods of inflation.
I've heard investments bear some amount of risk. How much risk am I taking?
All investments do incur some amount of risk. As the market is volatile, so are your bonds, shares, mutual funds, ETFs, etc. If you prefer to go for the insured investments, let me tell you that those traditional and conservative ones bear an inflation risk as well.
Can investments have a safety net? What is the case with my investment?
A safety net in your investments primarily comprises an emergency fund. At any given time, one should have an emergency fund at his or her disposition. We are not talking about a single account or any insurance here. A safety net is an entire portfolio that’s best built with the help of a professional.
The “rainy day” fund can save you in the face of emergencies like – the death of a loved one, job loss, loss of a primary financial source, sudden medical expenses, and so on.
Should I be saving more for my retirement years?
There is indeed no stipulated formula for calculating and/or determining your retirement savings. Your financial advisor would do the job for you, keeping in mind the following parameters…
An average life expectancy (based on the status of your health and all your medical reports to date)
Your lifestyle (reflected in your spending and saving habits)
Plans and liabilities to cater to in the future
Is there any golden rule to follow while planning my retirement fund?
Not really. As we’ve already mentioned above – there’s no working formula for this estimation. But there’s an interesting thumb rule that you might follow. Suppose you are saving 20% of your income today. It means you are capable of living on 80% of your income in retirement, keeping all other expenses constant. This rule helps in estimating your spending patterns and/or financial needs of your retirement years!
You ought to ask this to your planner: are you a fiduciary?
Fiduciary financial planners are “legally” bound to keep your interests at the foremost. In other words, they cannot sell any financial product to you in exchange for a commission. The only source of income of a fiduciary financial planner should come from you, that is, the client.
Unless your planner’s a fiduciary, he/she could have hidden commissions from the insurance plan or any other product that they’re selling!
Talk about client base – how many clients is he/she working with currently?
Financial advisors have specializations too. Just like you wouldn’t prefer walking up to an insurance claim attorney if you’re fighting a divorce suit, you wouldn’t just go for any planner out there in the town!
Knowing your financial advisor’s client base helps you in more than one thing like how customized their services could be.
Where do you keep my money?
The place where your planner keeps your money needs to be safe and high-yielding as well. Third-party custodians that are well known, are one of the best places to keep your money. Third-party custodians give limited access to anybody (say, your finance manager) and would hardly allow them to play by their own rules.
Go deep down. Try and grasp the investment philosophy of your best financial planner in Los Angeles. It will help you make the correct choices. Get a thorough picture of the number of financial positions offered in each portfolio. Both the number and their quality could make a big difference in all the financial steps that you undertake.