If you’ve never met a financial adviser before, it can be a little intimidating to think about what might happen. In this series, our financial adviser Jordan Vaka wants to unpack how he works, in the hopes that it helps you feel a bit more comfortable getting started.
Sometimes I think about how it must be for the people I meet to be sitting in a relatively anonymous office, while someone across the table asks them a bunch of questions about their money.
Because I know talking about money is uncomfortable for a lot of people. It’s a mix of things, I think – worries about past mistakes, judgement, embarrassment, seeming arrogant. A whole bunch of emotions.
But I’m a strong believer that it is the questions that an adviser asks that determines how good they are. Having ‘all’ the answers is the easy part – knowing which questions to ask, when to ask them, and how to go about it is way more difficult.
So I thought I’d use this post to talk, a little, about the questions I ask in our first meeting. What they are, why I ask them and what other people have made of them in the past.
My Five (Big) Questions
I try to strike a balance between running quite structured meetings, while not being too prescriptive about how the conversation travels. After all, it’s a meeting, not an interrogation!
And over the years, I’ve found that the key is to ask questions that encourage thoughtful discussion.
For instance, our first meeting is all about exploring five main areas:
1) What are your burning priorities that have to be addressed right away?
2) Where are you now?
3) Where do you want be in the future?
4) What are the complexities and roadblocks that could prevent you getting there?
5) What would getting to your ideal future mean to you?
Obviously, these are big questions. So while I use them as our conversations guideposts, it’s not unusual for our meetings to digress, drift and wander away from them.
They’re also questions that people aren’t asked in their day-to-day lives. These can be challenging questions that lead to difficult, yet enjoyable, discussions.
And as you can see, each of them builds on the ones that have gone before and helps us dig deeper. This helps us (sometimes slowly) uncover how we can best help.
Putting Out the Fire
Take our first ‘big’ question: what are your burning priorities that have to be addressed right away?
The most common answers are:
I need help with my divorce settlement.
I want to know what to do about my super.
My insurance is so expensive, is there something cheaper?
These questions are, often, all about the most immediate parts of their finances and nearly always relate to the financial products people hold. These are the obvious points, so I see them as the ‘obvious issues’.
After all, if everything’s on fire your main concern is putting it out – not what shoes you’re wearing.
Putting out the fire is easy – there’s normally a ‘right’ answer that we can help with right away. But this also means our impact is quite limited.
Extinguishing the fire is a great first step, but it probably won’t make you feel more secure in your financial future.
All we’ve really done is put the fire out.
Now that the fire is out, you can take lift your eyes, look up and start thinking about the future.
Our next questions – about where you are now and where you want to be in the future brings us a bit closer to the bigger parts of your finances.
For some people, acknowledging where they are now is uncomfortable.
It might mean accepting mistakes that have been made in the past, or how their finances have been eroded by somebody in their lives.
Or, it could be uncomfortable talking about the successes you’ve experienced, the life you’ve built for you and your family.
But this is the key part of our discussion. Knowing where you’re starting from, and the destination you want to work towards, is the first part of your financial plan.
People don’t always know the answers to these questions, so don’t feel bad if you don’t. It’s an advisers job to help you explore your thoughts on it, to get an idea of what your answers could be.
Now that we’re looking off into the distance, towards the future you want to build, we can also see the things that will slow you down, or confuse the path a little.
Maybe it’s not having a great history with money that’s making you reluctant to make decisions.
Perhaps it’s personal obligations that have a financial aspect.
Could be that you’re coming out of a divorce with a finite amount of money.
Or maybe you only have three years left before retirement and need to make some big decisions relatively quickly.
Clearing up these complexities – providing answers to the questions you haven’t asked yet – are where financial advisers really shine. This is where we really help.
What It All Means
Now, this is a tough question!
Why do I ask this one, knowing that it’s incredibly hard to answer and can really make people uncomfortable?
In the majority of cases, building your ideal financial life will require some form of sacrifice or trade-off.
Having a big super nest-egg will require spending less money today.
Retiring early means earning less over your lifetime.
Buying that house will mean carrying debt for longer.
And your answer to this question helps me gauge what kind of priority we should be assigning to each of your individual objectives. Does it mean enough to you to build your ideal life, to justify the sacrifices and commitments that are involved?
All of this is to say that there are reasons behind all of the questions that we ask. And that they’re important because they help us make sure we are helping you answer your own financial questions as well as possible.
You’ll also notice that this first meeting is, pretty much, just me asking you questions.
I don’t offer many answers in these meetings – and in my next post, I’ll explain why that is, why we have different types of ‘advice’ in Australia, and some of the ways the regulations have been designed to protect you.