Here is a selection of questions frequently covered during a client profiling interview. If you are still uncertain about what to expect, simply email us to learn more.
An investment strategy begins with identifying your goals and objectives. Goals come in many forms: to maintain your standard of living through retirement, fund your children’s post-secondary educations, or leave a legacy for the next generation. But they should be explicit and prioritized.
Good risk management requires that you guard against unsustainable risks that could change your life forever, like total disability or premature death. These “hidden needs” are first priority items that must be addressed with appropriate professionals.
Private clients need a full complement of account types to suit more complex planning: individual (registered and non-registered), corporate and trust. A segregated investment portfolio – one not mingled with other investors’ assets – provides the ability to control trading and costs.
You need a framework to evaluate your overall financial status. A simple personal statement of net worth will list current assets and liabilities. To be complete, it should also include implied assets, like the estimated value of your future pension benefits. Your ability to accept risk increases with your wealth level.
5. Ask about your employment status, income make-up and how stable your earnings are expected to be.
Situational factors, like the stability of earnings, are another ingredient of your risk profile: your ability to manage below-average outcomes.
Your willingness to take investment risk is closely tied to your tolerance for volatility or suffering of a loss. Risk profiling is an important step in tailoring a plan to match your individual risk requirement.
7. Describe the different types of investment risks that you should consider when making an investment decision.
The bad news is that there’s no such thing as a completely safe investment; only investments with different types of risk. The good news is that risks can be safely managed.
Your rate of return objective must be consistent with your risk tolerance. Your expected return should not require more risk than you can reasonably live with.
Your time frame determines whether to save (preserve your assets) or invest (attempt to grow them). Miscalculating your time frame can be costly if you must sell securities at prevailing market prices to meet short-range needs.
Being sensitive to the different tax treatments afforded investment income is one way to maximize after-tax returns.
11. Ask about your other professional financial advisers—accountants and lawyers—to ensure that your entire array of financial issues are dealt with.
Having your financial professionals interact ensures that strategies work in concert, not at cross purposes. This means that your desired and best outcomes are obtained.