Three Key Questions Every Financial Planner Should Be Asking


I’ve been working on a new question key for customer interviews.  In my work as a Financial Advisor I am committed to speaking to all my clients at least twice per year.  I call everyone on their birthday because, well, who doesn’t like to be remembered on their birthday?  But I also call everyone on their policy anniversary.

This anniversary call is the perfect opportunity to review the client’s needs and the structure of their relationship with me.  It’s also the time when I probe for a bit more information and look for additional opportunities for us to work together.

After we’ve gone through their account and verified that all the information we have is correct I will generally pause and then ask if I can ask them a few more questions.  There are three key questions that I will ask and depending on their answers it will direct me to certain products and service offerings that we can further explore.

1 – Do you have any outstanding debts or a mortgage?

If no, then I congratulate them on being in the minority.  The average Canadian is carrying $22,000 in personal debt, not including mortgages, and over 60% are set to entire retirement while still making long term debt payments.  After I’ve patted them on the back in this made and manner them feel good about themselves I move on to the next question.

If yes, I ask them if they like paying interest and if there was a way that I could help them pay less interest and be debt free years sooner would that worth a more detailed conversation.  I offer a unique approach to cashflow management which helps people identify areas of improvement and find extra money for debt repayment and savings.  Once I have them signed up for my Behavioral CashFlow Management program we can move on until then I stay on this point.  The fastest way to build wealth is to get control of your debts so until you get serious about your debts there isn’t much else I can do for you.

2 – Do you have a plan for building wealth?

If yes, then I congratulate them again on being proactive and taking steps toward financial freedom.  At this point I might ask them if they have a projected retirement date and if they know how much money they will be able to take out of their savings in retirement.  If not there is an opportunity to review their current plan through the Behavioral CashFlow Management program and help answer that question.  Often times through that process they discover they have less than they think and with a few minor adjustments they can end up with significantly more.

If no, then we talk about why not.  Usually the answer is that they don’t think they have any extra money to set aside right now so there’s no point.  This is the perfect opportunity to help people see the value of a Behavioural CashFlow Management plan.  A properly executed plan helps people see exactly how much money they have and where it’s going on a weekly basis.  With a few minor changes it’s shocking how much money we can find to help fund savings and other financial goals.

3 – Do you expect to die with money?

This is the silver bullet.  No matter what the answer is, there is a reason for us to continue talking.

If no, we go back to question two and fix the plan.  If yes, then I ask one last killer question; do you like paying tax?

There is no inheritance tax in Canada but all assets regardless of their type and source are subject to what the lawyers and accountants refer to as a deemed disposition upon death.  What that means is that all your assets are deemed to have been disposed of for cash one minute before you die.  The resulting income must then be declared on your final tax return for the year.  There are some exceptions, like your primary residence, but for the most part if you have $1 million in investments that cost you $200,000 to purchase back when you were working your estate must declare $800,000 in income for the year in which you die.  Depending on the province in which you live the potential income tax bill on your estate could exceed 55%.

With just a few tweaks while you are still living you can move assets into tax sheltered vehicles such as Cash Valued Life Insurance or Segregated Funds and significantly reduce the taxes payable on your final estate.  In fact, if you do it early enough and are in good health you may be able to reduce the effective income tax all the way to $0.00 and increase the value of your estate well beyond what it would be worth otherwise.

By asking those three key questions, along with a bit of clarification along the way, I can almost always find a reason to continue talking to a client.  Everyone wants to increase their wealth, and nobody likes paying interest or tax.  By answering these three questions we can almost always find a way to save significant money and increase your savings.

So, tell me – should we continue talking?  Reach out in the comments or directly via email on my contact page.

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