It was another new client meeting for me. He was anxious as he had been a DIY investor for a bit and that hadn’t worked out. He had also had a few advisers (I think they were actually brokers or insurance salespeople as he did not get advice from them). He was trying one more time with me, so the pressure was on for both of us. “Thank you for meeting with me, let’s get straight into it. Where should I be investing my money now? Shares aren’t looking good and the currency is all over the place?” Are there any new and exciting products or funds that investors should consider?To me that was the equivalent of a nervous teenager approaching his crush like “Hi I’m John, am I the kind of guy you would like to marry?” I was so thrown by the start of the conversation that it got me thinking about the initial financial planning consultation from the perspective of a client.I find that there is eagerness on the part of clients and prospective clients to learn more about investments, how markets work, and the differences between various investment products? However, I often find the timing and relevance of the questioning to be misplaced. It is not unusual for someone to ask in the first meeting with me “should I invest in shares, unit trusts, or ETFs?” In that first meeting they need to be asking questions of me as an investment or financial adviser, what experience do I have in managing client money? What qualifications do I have? What is my track record? What does my client profile look like? Do I have the required license to offer the service they need? How do I charge for my services? What is my investment philosophy? How do I build portfolios for clients? Am I a Certified Financial Planner®? What should people prioritise when it comes to financial planning?The difference between investment products and asset classes, etc. should be a question asked of the adviser they eventually do appoint. The problem with asking the wrong questions upfront is that the person could be so impressed with the way the adviser answers them that they decide to do business with him. They then miss that he /she is not suitably qualified, experienced, licensed, or capable. By asking the wrong question the investor has inadvertently opened the door for the broker to do a sales pitch on them.It is understandable that investors may be uncertain about the type of questions that they need to ask. Financial services can be intimidating for the layperson, who often has no idea where to start looking for assistance, or what it is that they need in the first place. The industry has also not covered itself in glory, leaving many a well-intentioned retiree facing a bleak retirement because of the expensive cost structure of the RA they took out 30 years ago. Things have improved in the past decade, but there is still a lot of work to be done to improve matters.How to ask better questions when it comes to investing and financial services?A starting point for investors is to realise that the power dynamics are in their favour. The financial services sector is here to serve the client. When people understand that they hold the power in the relationship they have with financial service and product providers, they will enter into conversations with a very different mind-set, and the line of questioning should improve. When I as a client say to myself ‘what is it that I need as an investor?”, then developing the appropriate line of questioning becomes a lot easier.Typically the conversation one would have with themselves would go as follows: I have money to invest, can I do this myself? If no, do I need advice? What should I look for in an adviser? Once I have appointed an adviser, what do I want to achieve? By when? How much am I prepared to pay for this? And so forth. It is important to understand that this is an iterative process. Investors should be prepared to interrogate the answers that they get.A good approach is to start off with broad, open ended questions that get the adviser talking. From there the investor can move to more specific questions. It is important that the investor control that initial meeting. A product salesperson is likely to feel very uncomfortable by all the questioning, so the investor should look out for signs of discomfort. That is the reason the salesperson will likely open the meeting with a question like “How can I help you?” or “what is it that you are looking for?” – that way they can bypass the due diligence process and move swiftly to the point where they can start a well-rehearsed sales pitch.Asking the right questions is important in nearly all aspects of life, particularly in areas where getting it wrong can have serious consequences. Part of the preparation process should be formulating the questions that one will need to ask. To fully understand the importance of asking the right questions consider the following: “If I had an hour to solve a problem and my life depended on it, I would use the first 55 minutes determining the proper questions to ask” Albert Einstein. Your life may not depend on investing in the right product, but the quality of your life may very well do so, so ask away!

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