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How to Prepare Before You Meet With An Advisor

In financial planning, forgetting or neglecting that one key item could significantly affect your projected financial results. You don't want to leave any data behind. Getting the pertinent financial documents in order isn't something the average person does on a regular basis, so it may be hard to know what to bring to the table.

Why It's Important

Numerous government and independent studies indicate that most people are not prepared for the simplest of financial emergencies or for retirement. You don't need to end up on the bad end of these statistics. You can seek out professional advice at a reasonable cost. Preparing for that first meeting with a financial planner can be overwhelming. Here are five things you can do to prepare. (For more, see: How to Select a Financial Advisor.)

Gather Appropriate Financial Documents

It's nice to know ahead of time what documents to bring to the table. The financial documents required may vary based on how extensive your financial planning will be, but a robust checklist will help you understand ahead of time what is required. You may question why some documents are required. For example, employer benefit documents are generally necessary. Why? Because your employer may be offering benefits that should be optimized and included in your financial plan. Detailed insurance declaration statements are necessary to determine if you are adequately covered. 

Establish Monthly Cash Flow

This may seem unimportant to many people and even some financial planners, but understanding what is coming in each month will help identify any problem areas that may affect your cash flow and credit report. It is also important from an investing standpoint because positive cash flow can be directed into investment accounts that are geared to meeting your medium and long-term goals. With the time/value of money working in your favor, even an extra $100 per month toward your investment plan can be a big difference maker over the long term.

Create a Personalized Financial Dashboard

Once you have all your financial numbers determined, it is very convenient to have them entered into a financial planning software "financial dashboard" so that your accounts get updated regularly. The general functionality of such a financial dashboard includes:

  • Managing your monthly cash flow.
  • Seeing your checking and savings account balances.
  • Checking on your overall debt level.
  • Viewing your investment account balances.

Not all financial planners provide the functionality of such a software tool, but it is definitely nice to have as a client so you can check your overall financial wellbeing on a regular basis from the comfort of your own home. It also serves as a discussion point for your quarterly or yearly review with your financial planner. (For more, see: How to Find a Financial Advisor/Planner.)

Determine Risk Tolerance

Your personalized risk tolerance profile is important to determine so that your financial planner can design an investment portfolio with an appropriate allocation of assets. If you are married, each spouse needs to fill out a risk tolerance questionnaire. Additionally, your planner will ask you questions about your risk tolerance to augment your written submission. This is a tricky area because most humans are more optimistic when the economy (and your portfolio) are doing well and not as optimistic when things are going bad. You and your planner will have a lot of discussion in this area as it pertains to designing a personalized asset mix for you.

Establish Goals

In your first meeting with a financial planner, it is very likely you will be asked about short and long-term goals. In other words, where do you want to end up? If you are married, please discuss with your spouse and have some ideas you can discuss with your financial planner.

The First Meeting

Now that you have completed all or most of the above, you are probably a lot more familiar with your current financial situation than you were before. You are ready for that first appointment with your financial planner. He or she will have had an opportunity to review the benefit and insurance documents, the financial data and the questionnaires in advance to make for a very productive first meeting.

At this meeting, your planner will see that you have been diligent in preparing for financial planning and can focus on your overall goals, objectives, and lifestyle that you would like to achieve. Then he or she will be able to give you the cost of developing your broad-based financial plan. Alternatively, depending on your timeframe and ability to pay for such service, your planner may recommend a stepped approach, tackling just one piece of the financial plan at a time. Whichever approach you decide to take, a broad-based plan approach or piecemeal, you are well on your way to reaching that financial destination. (For related reading see: Do You Need a Financial Advisor?)