It might come as a surprise, but your financial professional—whether they're a banker, planner or advisor—wants to know more about you than how much money you can invest. They can best help you achieve your goals when they know more about your job, your family and your passions.
When your financial professional begins advising you on investment strategies, insurance needs, tax considerations, and estate and retirement plans, the first step they take isn't running through the numbers. It's asking questions that'll give them a clearer picture of your financial goals and life circ*mstances—and this involves having upfront conversations about areas of your life you might find personal. But certain topics may not come up in conversation naturally, according to Nate Harris and Doug Semple, Wealth Planning Strategists at First Citizens.
Here are a few topics you should be telling your financial advisor if you haven't already.
Say more, risk less
Your planner will likely ask you about topics like your family and your health, which you may find sensitive in some cases. It's important to remember that they're not prying, and that asking these types of questions isn't easy for them either. While these questions may seem personal, from a planner's point of view they're standard—and important. This is because the more information planners have about the things that could impact your finances, the better they can do their job of assessing your financial risk exposure and building the best plan possible.
This doesn't mean you shouldn't or won't experience initial discomfort when personal questions come your way, but it does mean you'll need to be honest.
"A big part of planning falls on the client for communication," Harris says. "All we can do is ask the questions."
Don't hold back on critical topics
In a recent eMoney Advisor survey of 2,500 clients, about 30% of those who've worked with a financial advisor said they withheld information on their personal spending habits—particularly those surrounding family, health, career and passions. While these discussions may be difficult, failing to be open can lead to holes in your plan, which can severely affect your ability to reach your goals.
Knowing some of the subjects you should be addressing might not entirely alleviate your anxiety when discussing them, but it'll keep you from being emotionally blindsided—and the earlier in your relationship you can have an open discussion with your planner about sensitive subjects like the ones below, the better off you'll be.
Your family
Discussing family honestly and openly with your financial planner is essential to keeping you on track toward achieving your goals. Across every income bracket, almost nothing plays as big of a role in assessing financial risk exposure as an open appraisal of the makeup, interpersonal relationships and health of your family.
"I've seen it throughout my career," Harris says. "Not considering family structure and dynamics can make or break a plan."
Here are a few family-related topics to discuss with your advisor.
- Do you have children from multiple relationships? What do these relationships look like now, and what do you expect them to look like in the future?
- Do you have any children or family members with physical or mental health challenges? For example, a family member may need ongoing support for a substance use disorder or some other diagnosis. There may be a cost of care involved, or you may need to explore different ways to transfer wealth.
- Do you have any estranged siblings?
- Is your marital status changing, or do you expect it to?
Unfortunately, family issues can be a difficult topic for many people to discuss, particularly if relationships are strained. And many clients don't think to bring up the rockier aspects of their families' lives, even if they're asked.
"When the subject of family comes up, most people are on autopilot," Semple says.
Your health
The current state of your health is also key to structuring your plan. Equally important is a knowledge of what could affect your health in the future—namely from hereditary issues like diabetes, cancer, stroke or autoimmune conditions. This applies not only to you but also to your spouse, children and parents.
"With people living longer, it's much more likely that someone in your family is going to have a long-term-care event," Harris says. "That's one of the biggest risks to your overall financial well-being. Not being prepared for something like Alzheimer's or dementia care with a parent or grandparent can completely decimate a portfolio. An honest conversation about what a long-term-care event would look like might be scary, but that's how we get to the subject of solutions like long-term care insurance."
Here are a few health-related topics to discuss with your advisor.
- Do you have a family history of any chronic illnesses?
- Are your parents still alive, and how is their health? Will you need to care for your parents at some point?
- How do you plan to pay for healthcare in the future?
- Who will take care of you if you need assistance as you age?
- What are your preferences around long-term care if you end up needing it? Would you rather stay in your home or move to a community or group care setting?
Your career
When it comes to your career and financial conversations, the question of what you do for a living will likely to come up every time you sit down to talk about your plan—and for good reason. Whether you're moving up through the ranks at your organization, considering switching professions or picking up a side hustle, the twists and turns of your career have a direct bearing on how your plan is built and reshaped over time.
Keeping planners informed on the status of what's likely to be your primary cash flow doesn't solely help them adjust your plan to align with shifting family budgeting, tax and estate planning needs. As more people supplement their income through part-time contract work or become employed as full-time independent contractors in the gig economy, regular updates on career status are a critical part of the information needed to protect clients from increasingly common liability issues.
"If you're out doing contract work and there's an accident or someone sues you, it's important to have personal assets separate from business assets," Harris says. "Setting up a business entity structure like a single-member LLC for independent contractors gives you liability and asset protection. Should someone sue, they won't be able to go after your home, your car or your personal assets.”
Here are a few career-related topics to discuss with your advisor.
- Are you happy in your current career?
- How do you feel about the chances of a raise or advancement?
- What would you do if your job went away?
- Do you plan to be your own boss or split from your current company to form your own?
- Is your employer changing anything about your benefits?
Your passions
No matter how rational we are, our passions and beliefs factor into our financial decisions in one way or another. By laying out what motivates you not only financially but also personally, planners can devise an investment strategy that strikes a balance between personal passion and financial protection.
"Overemphasizing the positive and negative based on beliefs and social trends is common," Semple says. "When volatility is going upward, people lean into their passions and have a high risk tolerance. But when this volatility heads in the other direction, the situation reverses and their plan can be heavily impacted."
Preventing these negative impacts hinges on voicing your passions. For example, if you want to devote a part of your portfolio to socially responsible investing, tell your planner but also make clear how and why something like this matters to you. Communicating that you're investing more for societal than financial returns lets them adjust your plan in a way that respects your passion while protecting the rest of your finances.
Here are a few passion-related topics to discuss with your advisor.
- What motivates you? Is it money, success—or something else?
- What causes do you and your family support?
- What do you do outside of work, and why does it matter to you?
- What are you hearing from friends or family about money or investing that you think is interesting?
The truth of the financial matter
Talking about personal issues can often be uncomfortable, but it's a key element to forming a strong relationship with your financial professional so they can more effectively help you pursue your goals. The sooner you can give detailed answers to questions about family, health and career, the sooner and better your planner can calibrate risk exposure and build a plan that secures your finances.
It's natural if you're hesitant to talk to your planner about these issues, but remember that it’s a big part of their job. When it comes to getting personal, they have a lot of experience. And their job is to help, not to judge.
"We're not therapists," Semple says. "We're approaching what we do from a standpoint of how certain aspects of your life could impact your finances. That said, sometimes the conversations that help us understand that come close to therapy. We're ready for that, though."
Use our handy checklist
Ready to get started? Before your next meeting with a financial planner, use this checklist so you know which topics to cover.
