As a physician, is your wealth manager asking you the right questions to manage your investment portfolio?
In a previous post I discussed the most important step in getting your financial life in order—and that’s to determine exactly what your goals are. Everything you do falls into place and has a purpose based upon your financial goals.
Then, before actually building wealth you need to protect what you already have and proactively protect what you will have through appropriate asset protection and insurance planning.
Only after you’ve done that can you focus on building your wealth to achieve the goals you’ve set.
Wealth enhancement can be broken down into 2 areas: investment portfolio management and retirement planning.
One of the things that irks me about most financial advisors is that they dump their clients money into a mishmash of investments without any sense of purpose or figuring out how much risk you really need to take in order to achieve your goals. They also typically look at investments in isolation to the rest of the wealth enhancement process, and that’s a mistake.
So what are the questions you or your advisor need to answer before implementing a wealth building strategy?
Here’s a start:
- How much risk are you able to take in your investments?
- How much risk are you willing to take in your investments?
- How much risk do you NEED to take in your investments to achieve your retirement goals? (This is THE most important question)
- What is the proper mix of investments (asset allocation) that meets your ability, willingness, and need to take to risk?
- How will you change your asset allocation as your age and as your life circumstances change?
- How do you properly diversify an investment portfolio?
- What specific investment products do you need?
- What specific investment products should you avoid? (This is just as important as determining what you need)
- How do you minimize taxes in your portfolio?
- How much do you need to save to meet your financial goals in retirement?
- What are the chances that you will meet your retirement goals?
- What options do you have if you cannot meet your ideal retirement goals?
- How do minimize the chance of outliving your money? (This is THE ultimate goal of any financial plan)
- How does inflation impact my future spending and how does that effect my savings rate and asset allocation?
- How do I allocate investments across different accounts?
- What is the role of annuities, and do you need an annuity?
- Which type of retirement accounts are appropriate for me (IRA, SEP IRA, solo 401k, etc.)?
- Should I invest money in Roth accounts or traditional accounts?
- When should I take Social Security?
- Do I need long term care insurance and if so how much and what type?
As you can see your financial plan is not just about investments It’s about integrating your investments with the other critical parts of wealth enhancement and ultimately your comprehensive wealth management plan.