Your Next Steps
Given today's market volatility, one of the most important things you can do as an investor is to ensure that your investment plan is current. Your plan should examine where you are now and where you need to go to realize your financial goals, and should also identify the gaps you need to overcome.
It's important to recognize that it's very difficult to be good at all things. Because most of us are not wired, from an emotional standpoint, to effectively develop and maintain our investment plan, you may want to consider working with a qualified financial advisor. One major survey of affluent investors found that 90.2 percent of them want to work with financial advisors. The key is to find an advisor who will implement the five key concepts we've discussed here.
If you do choose to work with a financial advisor to update and implement your investment plan, you should be aware that not all advisors will approach your investments in the same way. There are two types of advisors: those who are transactional and those who are consultative.
The difference? Transactional advisors are primarily focused on recommending a variety of investment products to their clients. Consultative advisors, on the other hand, are primarily concerned with offering their clients a consultative approach that will help them meet their clients' investment needs.
Because consultative advisors are committed to uncovering your true financial needs and goals, and crafting a long-range investment plan that will meet those needs and goals over time, we recommend that you choose the consultative approach.
And what should you expect from a consultative advisor? The most successful consultative advisors use a systematic process, usually spread over a series of meetings, to design an investment plan that maximizes the probability of achieving your financial goals. These meetings typically involve the following:
- A discovery meeting. The advisor will determine your current financial situation, where you want to go and the obstacles you face in achieving what is important to you.
- An investment plan meeting. The advisor, using the information he or she gathered at your first meeting, will present to you a complete diagnostic of where you are now and specific recommendations for how you can bridge the identified gaps in order to achieve your goals.
- A mutual commitment meeting. At this meeting, assuming that the advisor can truly add value, both you and the advisor will decide to work together. You will now officially become a client.
- Follow-up meetings. These meetings are typically held quarterly (but can be more or less often, depending on your specific needs) and are when the advisor reports to you the progress you're making towards achieving your goals.
You should always expect outstanding service from any financial advisor you choose. Your phone calls should be returned on the same day, you should receive quick and complete responses to all your questions, you should be able to meet with your advisor as often as you wish, and your advisor should always take your unique needs and preferences into account. In short, you should expect to be treated like what you are—a very important client.
If you are currently working with a financial advisor and are unsure if he or she is using a consultative approach or the proven methodologies we've discussed here, you should have another advisor complete a diagnostic of your situation so that you can have a second opinion.
This is an exciting and challenging time to be an investor. There are many things going on around the world that will make the next few years extremely rewarding—if you design your investment plan to be successful.
You owe it to your family and yourself to make sure that your investment plan is designed to not only deal with the changes you've experienced during the last few years of market volatility, but more importantly, to also take advantage of the opportunities to maximize the probability that you will achieve all your financial goals. We wish you nothing but success in achieving all that's important to you.