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Questions for your advisor Part 2: Setting your financial goals

By AdvocateDaily.com Staff

In this final instalment of a two-part mini-series on working with financial advisors, CBIA/Lawyers Financial VP Dawn Marchand suggests questions to ask your advisor once you've chosen one.

After settling on an advisor they feel they can work with, it’s time for investors to get down to the business of setting financial goals, says Dawn Marchand, vice-president of marketing and direct distribution for CBIA/Lawyers Financial.

However, she tells AdvocateDaily.com that the task requires a whole new set of questions, which she shares below:

1. What is my current financial situation?

“The first step is to look at your current financial picture, which includes your assets, debts and savings, and your risk tolerance,” Marchand says. “Sometimes it can feel like a scary thing, but it’s not until you have all this information that you can start working to determine where the gaps and opportunities are.

“Having a solid picture of your net worth will help you make informed decisions today about future financial planning,” she adds.

2. What type of life insurance do I need?

There are two major types of life insurance, explains Marchand. First is term life insurance, which offers protection for a specified length of time.

“If you’re in your 30s with a couple of kids, you might want enough to cover their lifestyle and education should something happen in the next five or 10 years. It’s generally inexpensive, but will only protect you during that term,” she says.

Another form is whole life insurance, which remains in force for as long as the policyholder pays premiums.

“It tends to be more expensive,” Marchand says. “Based on your needs, an advisor can help determine which option offers the best value.”

3. How can I protect my income?

“People are more likely to consider insurance that kicks in on their death than for when they’re still alive,” says Marchand, who explains that more attention should be paid to the variety of products available to maintain income in the event an individual becomes disabled.

She says this type of insurance is particularly important for sole and small firm practitioners, since "their income is really the basis for their entire life,” Marchand says.

“Even lawyers in large firms, who enjoy benefit plans, should look at whether they need to top up disability coverage, depending on their earning potential because many plans will have a maximum level,” she adds.

4. When can I retire?

“It’s a very complex question, but the sooner you ask it, the sooner you’re able to develop a plan to get there,” Marchand says. “You need to think about the lifestyle you want to have and the types of activities you want to do during your retirement because if you’re happy to sit in the garden and read or paint, that will require a different level of income than someone who wants to golf every day and travel around the world.”

5. What are my top three financial priorities?

“A good advisor should be able to assess your lifestyle needs and future goals, and determine your top priorities," says Marchand. “It could be boosting your savings or paying down your mortgage, or it could be getting insurance in place while you’re healthy. If you’re in your 20s, developing a plan for retirement is not likely to be the top priority, but if you’re in your late 40s without a pension, then it’s a different story.”

For Part 1 of this mini-series, where Marchand explains the questions you need to ask in the search for a suitable financial advisor, click here.

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