Five questions a good financial planner should ask you

discovery meeting, Looking for a financial planner, Questions

Five questions a good financial planner should ask you

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5 minute read

Finding a financial planner can be very difficult, and finding your ideal one can be nigh on impossible. There are thousands to choose from. You may have a few meetings with different firms and then give up. This is what new clients tell us at Capital, and it comes up with such frequency that we decided to write this blog about it.

One of the tests of a good financial planner is the questions they ask you. If the questions are mainly about how much savings, pensions and investments you have, it’s time to finish your coffee and leave.

Why powerful questions can lead to powerful outcomes.

Let’s begin with terminology, because the terms and titles are quite important. What you should look for is a Chartered Financial Planner, working in a chartered firm. A financial adviser, financial consultant, investment consultant or wealth manager may all be able to give you advice.

What you need to decide is whether you simply want one-off product advice (should I buy an ISA or top up my pension?) or you need professional help to gain financial independence to meet your life goals.

Your financial planner needs to really get to know you; otherwise, any planning will be flawed. The key is gaining a full understanding of your life, goals, hopes and dreams (and the odd fear or two). Then you need to share your financial information: assets, liabilities, income and expenditure.

Understanding your experiences affects your relationship with money. Throughout your life you will have accumulated many experiences, and each one will have an emotional meaning attached. These drive your future behaviour.

Imagine that you are recommended to invest all your life savings accumulated over the last 20 years. The money will be invested in the global markets by your financial adviser. Your first reaction may be fear, and this fear leads to indecision. Nothing happens.

Why do you feel scared by this suggestion? Perhaps because you have attached meaning to investing such as ‘my uncle lost everything when he invested’ or ‘money stuff is really complicated; I’ll never understand it’.

Sometimes you may feel out of control, but regaining control relies upon slowing down your thoughts and paying attention to the meaning you have attached to certain historic views.

Financial planners are looking to positively enhance your actions or behaviour when it comes to money. How can they do that if they can’t get to grips with your money-based thoughts and emotions?

Many of these financial feelings are deeply buried. Many people never want them to see the light of day, for fear of embarrassment or of being judged. These are the very reasons that a seasoned Chartered Financial Planner will ask you significant questions.

1. What was money like when you were growing up?

This reveals a lot about your story as well as your family relationships and other important role models who have influenced you.

Whether you like it or not, your childhood will have shaped your thoughts, fears and relationship with money, either by sticking with them or rebelling against them. You may have heard a few of these conversations when you were growing up:

“Save for a rainy day; things may not turn out well.”

“We don’t talk about money in this house.”

“Rich people stepped on someone to get where they are.”

“Money comes; money goes.”

People who lived through the hardships of the Second World War and rationing understandably find they still watch every penny in later life, even when they have far more money than they need. Alternatively, if someone grew up getting everything they wanted, this can lead to unrealistic expectations of the lifestyle they can afford as an adult - a champagne lifestyle on a beer budget.

A good financial planner will want to know the internal dialogues going on in the head of the client they are partnering with.

2. When you think about money, what feelings come to mind?

The most valuable commodity that financial planners offer is total peace of mind. The best way to deliver this is to understand what keeps someone awake at night. Those 3 a.m. moments thinking, “Am I spending too much? Am I saving too little? What if I run out of money? What if my investment values crash? What if my children fritter it all away after I’m gone?”

Once your planner identifies these thoughts, they can begin to see whether any dread is substantiated or there is a need to challenge the memories, thoughts and emotions. This level of change is not a one-off event – it is an ongoing commitment, by you and your chosen planner.

3. What have been your best and worst financial moves?

It is important to build up a picture of previous experiences when it comes to investing money. At one end of the spectrum there are individuals who have only ever held cash in a bank. At the other end of the spectrum, there are impulsive risk-takers who have repeatedly invested all they have in various ventures, with equal chances of going bankrupt or becoming a multimillionaire overnight.

Most people lie between these two extremes but bring with them a tapestry of good, bad or indifferent financial motives. These experiences form an important part of the stories we tell ourselves about money and how we feel about it.

Experience shows that, for most people, the pain of a bad financial decision comes immediately to mind, even if the event was years ago - total recall tinged with a bitter taste. Trying to find an example of a good decision is much more difficult (the family home is a topical favourite).

4. What would you do differently if you had more money? 

Understanding this means that your financial planner can agree what you are working towards: your goals and aspirations. But it’s not as simple as that. What if you already have more than enough money to do everything you could dream of?

The answers can be varied and fascinating:

“Take more holidays to interesting places.”

“Buy my dream seafront property.”

“I’d be more selective in the work I do.”

“Buy a Ferrari 488 Spider.”

“I’d help students who can’t afford to go to university.”

“I’d help the local homeless enough that their basic needs would be fulfilled.”

The list is endless and as unique as anyone. The twist is that a good financial planner may be able to prove that you already have enough money, and more. Your future aspirations could start tomorrow. What’s stopping you?

5. What dreams do you have that you fear you won’t achieve?  

These are things that give you a rush of adrenaline when you think about them, from either fear or excitement. Fear is a reminder that you need a financial plan before taking a giant leap of faith, but if you want to be truly happy you will need to make the leap.

This involves giving yourself permission to follow your dream, whilst also having a voice of reason to keep you from doing anything irresponsible. A common response is ‘time’. If only you had more time, you could do this or that. This is often an excuse or a form of a security blanket. It feels safe to want something without the effort of getting it.

With the right focus and the right support, almost anything is possible if you want it enough. Your financial planner could be the catalyst for change.

Next steps

The next time you meet your financial planner, why not decide to really open up about your life? Share it in a trusted and confidential environment. You never know what great outcomes may result.

If you are still searching for the perfect adviser to help you with your financial concerns, keep this list and see if anyone asks questions like this (they don’t have to be identical). Click here for our blog on the key questions you should ask a financial adviser.

At Capital, we believe in the power of dreams.

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