What should I ask my financial planner?

Question

I have a meeting w/ my financial planner on Tuesday.
I am 23, will finish University this time next year, and have 80,000 of savings to invest. What QUESTIONS should I ask him? Which stocks/investments are best to discuss?

I have considered investing in:
-Canadian banks
-Stocks (various)
-Real estate (duplexe)
-Franchises (Subway)
-My own design/communications company (OMNIVISIONDESIGN.com)

Any ideas/suggestions?

Answer 1

You are 23 and have 80,000 in savings? And you need a financial planner? Judging by these numbers, you are doing very well without one.

But let's get back to the problem.

You need to let your planner do the talking. One thing that would be helpful to clarify is how long you have been dealing with this planner. Is he/she responsible for your current financial condition? If so he's doing a bang up job.

Ask him about the methods of tax sheltering your assets and income. See what his response is to that. One really good method is the use of index funds. Another is rental properties. I myself am a passive investor so I prefer methods that do not require any work on my part other than my brain. So I am a advocate of index funds. But for someone who is less passive, rentral properties are a gold mine. Indeed ask about investments in stocks. But it helps if you know ahead of time what you are looking for as an answer. With 80k, you do not really have sufficient funds, in my opinion, to go in many different directions at once. You will need to decide with your planner which direction you wish to pursue. A franchise for example will require every bit of the 80k, and perhaps more besides as will rental properties.

Answer 2

Well, I'll be on the same boat in 1 and a half years time... And I'm planning to go for the real estate...

It's and investment and a security. I wouldn't consider the last option. You should get a few years worth of experience first before fully focusing on your own company. You'll need the experience and the connections. The same goes for a franchise really.

I really wouldn't advice stocks either. Although the bank option seems pretty good too.

As for questions, I honestly don't know. I've never had a financial planner before since my older brother help me sort my finance out when I'm in a knot... But I'm guessing, it'll be a good start to ask advice from your parents/relatives or maybe someone you know who've been through the same thing recently. Good luck.

Answer 3

Financial planners fall into one of three categories, fee-only, commission only, or fee and commission. My guess is the "free" services you won are the services of a planner that makes all or most of his income from commissions. By offering to answer all of your questions for free for the next six months, he/she is hoping to uncover opportunities to place investments or insurance products for you, thus earning a commission from the financial institution involved. This is not necessarily bad for you. If you can trust in the planner's ability and honesty and can determine that he will put your best interests over a commission for a commission's sake, you can have a mutually beneficial relationship that will help you protect yourself and your family and plan for your future. Questions to ask: How do you get paid? Who is your broker/dealer and how do you determine what financial products to use?(Some B/D's apply pressure to their representatives to sell proprietary products over others. You want to avoid this.) How long have you been providing financial advice? Do you have clients that would be willing to talk to me about your services? If not, why? If the planner gets nervous or evasive about answering these questions, don't bother asking any more questions. A trusting relationship with a worthy financial planner is an incredibly valuable relationship. If this planner doesn't work out, keep looking.

Answer 4

1. Ask the planner about his qualifications and experience. If the planner is in the U.S., find out if he is a "registered investment adviser"--if so, he'd have a "fiduciary" duty to keep your best interests in mind. If he isn't a registered investment adviser, his legal responsibilities to you may be less.

2. Ask how he makes money--from commissions he earns by selling you stuff or from fees you pay him, or both? If he earns commissions, watch out. He may want to sell you something that isn't necessarily good for you simply because he'll make money from it. If the planner is charging you fees, will he charge a one-time consultation fee or annual fees?

3. Make sure the planner understands what you want--how much risk you're willing to take, how long your investment time frame is (is some money for a house downpayment and other money for retirement decades from now?), and how much liquidity from your investments you need to have.

See the webpage below for more info.

Answer 5

One of the simplest things that can help you and your planner is determining what your risk tolerance is. I work as a planner and it is a frustrating appointment when someone comes in and wants to make 12% a year but doesn't want to lose any principle. Most good financial planners will have a series of questions to ask that will help define where you stand as far as risk tolerance is concerned.

All of the ideas you have are good ideas, but for the right person.

Some questions to ask him:

"What is the simplest way to determine my tolerance to risk? Can you help with that?"
"What fees do you charge for your services?"
"What do you know about stocks, real estate, franchises, etc?"

Any good financial planner will actually be asking you alot of questions so I wouldn't be too concerned with asking him a ton. Just make sure you're not being 'sold' as alot of financial planners (especially independant brokers) will take you to the cleaners as far as fee's, commissions, etc.

If you need any other answers please ask!

Answer 6

You need to know and understand the realistic expectations for each type of investment and each asset class, for both short term and long term. You also need to understand the probable and possible "chaotic events" that occur within the long term. You should know what the long term average rate of return is and what the distribution of events is around the long term average.. in other words, what are the risks.. what are the uncertainties.. etc.

In addition, you need to communicate the financial and nonfinancial constraints of the fund for the short, medium and long term... for example, how much short run volatility can the fund sustain in the search for higher long term rates of return.. only you can bring such information to the discussions in which investment policy can be resolved.

And.. don't forget to commit your decisions to a written statement.

Answer 7

If you plan to use a financial planner, the most important thing to find out is how he/she makes his/her money.

A financial planner who relies on commissions from products he sells cannot give you unbiased advice.

You should not have to pay more than 2% of your assets for his help, including fees for purchasing stocks, bonds, funds, etc.

Good luck.

Answer 8

Ask for three references, preferably of people somewhat similar to you in terms of money they have to invest, who have been seeing this person for awhile. Ask if s/he makes money on commission or is a flat-fee/hourly fee person (the latter is better, then they don't make money off what they sell you and therefore don't have a stake in what they offer).