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As a financial services firm, we receive a lot of questions from clients who may be unfamiliar with the financial world and curious to learn more about how developing a solid financial plan can be beneficial for their futures. Many of these questions present themselves whenever we take on a new client, so we have compiled those frequently asked questions here.
Our Frequently Asked Questions
How do I stay with my strategy when the market is going haywire? The most successful investors are pragmatic. They don’t focus on what they hope happens, but rather, they prepare for what likely will come next. Steeling one’s resolve in the face of turbulence is never easy, but being aware of risks ahead of time can help ease concerns. Regardless of risk tolerance, any new investor should expect to feel some discomfort – the financial planning process can feel intrusive and can stir up anxieties about money. This is why trust is such an integral part of the process. Add market risk to the mix, and the experience can be overwhelming. Risk management strategies can give some peace of mind during volatile periods and make it easier to stay the course. We spend time getting to know our clients and their inclinations, which include their risk tolerance. As an investor, you are always free to choose the risk level to which you can tolerate exposure, but always keep in mind that low risk means low reward.
Why should I pay for a financial plan? A plan sets a context. What makes up a “good investment” only makes sense in the context of what the end goal is. Too many people rely on following their friends, relatives, or coworkers’ lead in many of their most critical financial decisions. You must keep in mind that a financial plan is like a fingerprint: there are always similarities, but each is very unique. Financial plans serve as the blueprint for the overall goal, thereby setting the context for which investments make sense for what you’re trying to accomplish. Like anything, they’re subject to the GIGO principle: Garbage in, garbage out. The more detailed we can get, the better. This requires time and patience, especially since you don’t want a mere balance sheet and cash flow statement, nor just a fat financial plan the size of a dictionary, chock full of color graphs and tables. You want to be able to get a real sense of where you stand so that you can think more long-term about your goals.
How do I know a certain strategy is right for me? This is another reason why a financial plan is important – providing a context will determine what type of strategies make the most sense. Narrowing the immense universe of investments to the types that can most effectively help you towards your goal makes it easier to evaluate whether or not a given strategy makes sense.
How can I trust (or build a better relationship with) an advisor? Always be frank with your advisor. It’s human nature to get dodgy about personal financial details, and so many keep too much information to themselves. Not only is this counterproductive, but it also sets the wrong atmosphere and tone for what should be a long-term relationship. Building rapport with someone you work with is always helpful since people tend to become less defensive around those with whom they feel comfortable. Lastly, be as explicit as possible with your advisor as to what you expect in the relationship. We all have expectations in our working relationships and verbalizing them clarifies what’s important to you. Over time, an advisor who values your relationship will address these concerns and make efforts to meet them. This is the fairest method of evaluating your advisor since they can’t control markets, and it is the foundation of building trust
Am I accumulating sufficient capital to ensure my financial independence? Financial independence means something different for each of us since the level of income we’d require to be independent is going to be entirely dependent on expenditures. We all have different needs. A behind-the-envelope method would be to ask yourself, “How much passive income would I need on a monthly basis to walk away from my job?” Once you have a number in mind, it sets a starting point to answer whether you’re saving enough.
If you still have questions that were not addressed on this page, we would be happy to provide you with answers. Please contact us with any inquiries you may have about your financial picture, our process, or the services we provide – we’ll be in touch with you as soon as we can!