Start by asking what’s most important… and then ask why wait?
by Michael YokenMr. Yoken is a Partner with Baystate Financial, Boaston. Connect with him by email: email@example.com. Visit www.baystatefinancial.com
When thinking about how to protect your livelihood or build the financial resources you will need to live life as desired, it often starts with clarifying what you want to achieve, what you value and how uncertainties can affect plans and aspirations.
To get your clients on the road to financial security, here are 10 questions they’ll want to ask first.
1. What is important to me?
Clarify what’s truly important to you – the people you care about, the aspirations you have, the things you want to protect, and the support you’d like to give to others. Whether you reflect on this question by yourself, with family members, or alongside a financial professional – answer this first, as it will create the framework around which your financial strategy can be built.
2. Who depends on me today and who might depend on me tomorrow?
This question should be at the core of your decision making process and should be answered well before you consider what you may need. Spouses, partners and children are often thought of as the most obvious dependents; however, there can be others – for example, parents, in-laws or siblings who, due to age, disability, or other circumstances, may be unable to care for themselves. Even individuals without a family have dependents – namely, themselves – since their well-being depends on their own ability to earn an income. With your list of current and potential dependents in hand, you will be better prepared to plot your course toward greater financial security.
3. Who is providing for my dependents now?
Does someone in your family provide valuable non-financial support to those you care about? Think of the stay-at-home parent – they may not support their family with earned income, but the support they do provide is just as valuable as any paycheck. If a stay-at-home parent were unable to provide that support, it would surely be expensive to replace. Account for all who provide essential financial or non-financial support to your dependents.
4. What risks have I overlooked or not fully considered?
People may concentrate on the risk of premature or accidental death and overlook other risks to their well-being and livelihood (for example, a breadwinner unable to work due to illness, an aging parent unable to care for themselves, a retiree dealing with rising healthcare costs, a business owner faced with a succession problem). As you work to construct your strategy, be sure to think broadly about the financial risks you face today, or may face in the future.
5. Are my plans flexible enough?
There are ways that financial product solutions can be structured to provide future flexibility and adjust with your evolving needs. When speaking with your financial professional, ask about flexible solutions that can be upgraded (or downsized) as events in your life unfold.
6. How do I pick the right financial professional?
When choosing a financial professional, work with someone who is not only competent, but also inspires your trust and confidence. The best financial professionals are good listeners who seek to fully understand your circumstances and financial objectives before proposing possible solutions. They should have access to product solutions from many fine companies, should clearly explain how they get paid for their services, and should provide references upon request. Make sure your financial professional has a solid support network behind them since those affiliated with a strong, reputable firm will likely have access to better resources to support your changing needs.
7. How do I pick the right financial services company?
Based on your specific needs, your financial professional should present product solutions from companies that they highly regard and with which they have had positive experience. Just as you will want to align yourself with a strong, reputable financial professional, you will want to do the same with regard to financial services companies. In many cases, products will be used to address financial needs and objectives that last for decades, if not a lifetime. To help ensure that your financial product providers will be there when you (or loved ones) need them, work with strong, stable companies that have received high marks from independent ratings agencies such as A.M. Best, Standard & Poor’s, Moody’s and Fitch.
8. What if I already have a plan?
Even the best financial strategies should be revisited and updated regularly, generally at least once a year. Common life events such as marriage, having children, changing jobs, or even moving, can affect your existing approach. So, too, can just having another birthday – particularly if it means you have reached a financial milestone, such as the year you can begin collecting Social Security, receiving Medicare benefits, or taking distributions from your retirement accounts. An experienced financial professional should regularly review your strategy with you, to help ensure that it remains aligned with your objectives and appropriate for your circumstances.
9. What is the downside of putting this off?
Developing a financial strategy is a critically important activity that should not be rushed; however, there is a fine line between not rushing the process and not focusing on it at all. By putting this off, we expose ourselves and our families to unnecessary risks and lost opportunities – be it by not safeguarding our lifestyle from unexpected events, by not insuring our livelihood and legacy while in a position of health and strength, or by not capitalizing on even one extra day to build and protect our retirement nest egg. By actively focusing on this process, you can help protect your interests and shape your future.
10. What am I waiting for?
You should now know what to consider as you develop your financial strategy and how to secure the best resources to turn that strategy into a reality. Perhaps most importantly, you should now understand how to avoid common pitfalls that lead some to take what may be the greatest risk of all – the risk of doing nothing. Take the next step by doing additional research on your own or seeking guidance from an experienced financial professional. ◊