Six Questions To Ask Your Financial Adviser

Being an independent, self-directed investor is a good thing. Even better? Getting regular advice from a trusted financial adviser. “Consulting a financial adviser is the prudent approach,” says Duma Mxenge, Head of Business and Market Development at Satrix. “It’s less about maximising your investment returns (although that is important), and more about having peace of mind that you're on track to meet your financial goals.”

Mxenge points to research that found 86% of advised clients reported greater peace of mind than those managing their own finances. “In moments of market uncertainty, self-directed investors tend to panic and disinvest; whereas having an adviser gives you an additional layer of friction that prevents you from making a poor decision.”

What advice should investors seek, and when they meet with their advisers, what questions should they ask? Mxenge has six suggestions.

1. “Does My Investment Strategy Align With My Financial Goals?”
   Your investment strategy should serve your goals, not the other way around. To prevent misalignment, each part of your portfolio should clearly support a specific goal. 
   
   “If your goal is to retire comfortably in 20 years, your strategy will look very different from someone who’s saving for a home in three years or funding a child’s education in 10 years,” says Mxenge. His suggestion? “Very simply, your short-term money should not be invested in volatile assets, and your money for long-term goals should not be invested too conservatively.”
    
2. “Is My Portfolio Well-Balanced?”
   In an investment context, “balance” does not mean “a bit of everything”. “Balance means appropriate diversification,” Mxenge explains. “It’s about having exposure to different asset classes (cash, bonds, equities, property), across regions and sectors.” 
   
   Balance is also about getting your risk tolerance right. A portfolio that’s too aggressive, for example, may give you sleepless nights during a market downturn. Speaking of which…
    
3. “What Could Go Wrong And How Should I Be Preparing For It?”
   A good adviser will consider your financial capacity for risk and your emotional comfort with risk. “And those levels will change as you get older or as your circumstances shift,” says Mxenge. “Your adviser will help you to identify your blind spots and flag your exposure to risks that you might not even be aware of.” 
   
   It’s important to treat your meetings with your adviser as financial “health checks”. “Just like you wouldn’t only see a doctor when something goes wrong, you shouldn’t only see your adviser when markets are turbulent,” says Mxenge. 
    
4. “What Milestones Are Coming Up?”
   Your adviser can only give good advice if they know and understand what’s changing in your life. “Marriage, divorce, birth or adoption of a child, career change, promotion, job loss, starting or selling a business, receiving an inheritance, health changes… 
   
   These life events can have a huge impact on your income and expenses, and they usually require adjustments to your investments, insurance, estate planning or tax strategy,” says Mxenge. “Keeping your adviser informed allows them to be proactive rather than reactive.”
    
5. “What Should I Do Differently In The Next 12 Months?”
   Again, questions like this shift the conversation from hindsight to foresight. “They also help clarify whether your adviser is thinking holistically about your financial life, or narrowly about products and performance,” says Mxenge. “A good adviser is a long-term partner, not just a product seller.”
    
6. “How Did My Portfolio Perform?”
   Performance matters. It’s why you’ve invested your money instead of stashing it in a sock under your mattress. But, as Mxenge concludes: “Performance is a vital part of the picture, but it’s not the whole picture. Investing should be less about trying to chase market performance, and more about staying aligned with your goals.”

Disclaimer

_{Satrix consists of the following authorised Financial Services Providers: Satrix Managers (RF) (Pty) Ltd and Satrix Investments (Pty) Ltd. The information does not constitute financial advice. While every effort has been made to ensure the reasonableness and accuracy of the information contained in this document (“the information”), the FSPs, their shareholders, subsidiaries, clients, agents, officers and employees do not make any representations or warranties regarding the accuracy or suitability of the information and shall not be held responsible and disclaim all liability for any loss, liability and damage whatsoever suffered as a result of or which may be attributable, directly or indirectly, to any use of or reliance upon the information.}