Updated: Nov 18
A client’s initial experience in working with us is very important. It sets the stage for what the client should expect in the future. One way to enhance the initial experience is to ask the right questions to identify planning opportunities.
In this checklist, we focus on important questions to ask to identify possible planning opportunities for a new client. Some examples include the following:
Future (or recent) life events
Family structure and impact of previous marriages
Saving or distribution strategies
Cash levels that exceed FDIC limits
Debt to income ratios for future lending purposes
Future inheritances or expenses related to caring for a loved one
Hi, Todd Pouliot, Gateway Financial. Feel free to visit us at mygatewaymoney.com.
Again, subscribe, and hit that thumbs-up button. We appreciate you guys out there doing that for us. And, today's checklist is actually brought to us from some communication we got via email, through our website. And, the question was basically like, “I've never worked with a financial planner, what in the heck is going on, how does this process work, what do I do, and what are the issues you need to cover?” And, it was such a great conversation to have with somebody that we decided to have this checklist and share it with you. So, you know, our client's initial experience in working with us is very important. It sets the stage for expectations of the future. And, one way to enhance that experience is to ask the right questions and define those planning opportunities. So, we're going to cover six main areas today to help you understand what an initial meeting would be like with us in those initial questions that we ask. And, those six areas are future or recent life events, family structure and impact of previous marriages, saving or distribution strategies, cash levels that exceed the FDIC limits, debt-to-income ratios for your future lending purposes, and future inheritance and expense related to a loved one. So, we're going to share our screen as we always do, and hopefully, you’ll follow along with us here. And, here we are, first and foremost, financial planning comes from a place of love. And, there's something that you love or somebody that you love that you’d like to take care of. So, are there any life events that you could expect to occur for yourself or your immediate family member? Marriage, higher education, career change, move, retirement? These are big things and I think there are some people that say there are about 22 different life experiences that happen but are there any things that you expect to occur for yourself? Now, one would hope that you expect someday to retire. I hate the word retirement, I like to use financial freedom as a better word, but some people have children and they're concerned about higher education costs or some people don't like their job and, boy, “I’d like to consider a career change, how do I financially plan for a career change?” Have any life events recently occurred, of those things we talked about, or anything else? Do you have or expect to soon have children or grandchildren? What are those planning and opportunities that you have, such as weddings, special needs, advance planning, whatever? So, those are things that we need to consider as far as financial plans. Were you previously married? Understand that that is a big part of financial planning. And, do you need to look at those estate planning documents? Boy, we have videos on that for you. Beneficiary designations. Have you removed your prior spouse for certain reasons? Have you included children from a prior marriage in your beneficiary designations? So, also, update your insurance needs. Those are very important planning issues that we talk about at our meetings. If you’re divorced, are there any issues that should be considered? Alimony, child care costs? Also, when was your divorce? Remember we have had many changes in the tax law. Understand those tax law changes. That's why we work with a very good CPA, to deal with those issues. Are you or your spouse partner incurring significant medical expenses or are you disabled? Maybe you've had a prior medical expense or medical issue and you're concerned about life longevity, so, these are some of the things. So, we do have other things like, the “What Issues Should I Consider When Reviewing My Health and Life Insurance Policies?” checklist. That is a wonderful checklist. We don't sell health and life insurance policies, but we want to make sure that they're part of the plan, so we have to understand what those policies mean, how they work, and how the life insurance policies best fit your needs. A lot of times, a low-cost term life insurance policy is more than adequate, but if you have large sums of money possibly a second-to-die policy for estate taxes could be part of that plan. So, make sure you understand how those fit in. Are you a veteran? Consider benefits that would be available and helpful to those that had served our country. Are you caring for your parents? This is becoming more and more common. We also have another reference for you. “What Issues Should I Consider For My Aging Parents?” checklist. We’ll pull that out in a meeting so we can go through that. Also, we have a video on that for you. Do you have any residency or citizenship concerns? Now, those are just the family issues before we talk about money. Yes, they all include money, but understanding, and knowing what's going on in each individual family can lead us down much better paths than not knowing what's going on, and just creating an automated robotic plan that everybody should follow. Each person is different. Cash flow. Do you need to review your emergency fund to see if it's adequate? Do you need help developing a spending plan? Boy, that budget sounds really good right now, doesn't it? Do you need to review if you are saving in the right places? I'm going to stop here and read this. Contribute to your employer's retirement plan, take advantage of the employer match, and max out HSA contributions if you're participating. When you work with us you get that tax preparation document and also a tax planning document to talk about, “Am I doing the right things with the HSA, and did I contribute enough by the way I need to add to make my catch-up contribution from last year because I didn't get my paperwork right at the HR department to fill up my HSA contributions.” Max out employer retirement and IRA contributions if applicable. If you can contribute to an IRA and then save in taxable accounts. So, understanding the strategy of how to save. Also, I did not mention it here but look at Roth options because that is part of the tax planning that we want to do. Are you taking any distributions from your retirement accounts? Again, this would be somebody later in life that would visit us. Consider the rate of withdrawal and the tax efficiency of your distribution strategy. Ensure that any RMDs are satisfied. Ensure that those required minimum distributions are satisfied. It's the largest penalty in the tax code at 50% if they are not. Do you expect your cash flow will change in the future? Again, a lot of this is a family issue. But, do you expect your income to increase? Consider making those Roth contributions during lower tax bracket years and harvesting capital gains. And, if you expect it to decrease in the future, consider making traditional IRA and 401K contributions and utilizing tax losses during higher tax bracket years. Boy, we've been talking a lot this year regarding tax gains and tax losses and how we're harvesting those because they can have a major impact on your tax plan at the end of the year. If income will vary, and I am seeing this more and more and more in our financial plans people that have side hustles or their job may be commission-based or whatever – their deferred compensation or bonuses, consider aligning your high tax years with higher tax deductions such as charitable gifts and medical expenses and taking advantage of any tax losses. I cannot tell you the horror stories I have seen over the years. I will not speak about anybody individually, but boy, we really want to make sure we align that plan that tax plan and properly get through those years for deferred compensation or bonuses. Do you expect to receive Social Security in the future? Another great conversation. Somebody who's age 55 or older, we do not have this conversation but some of the younger people that we deal with, they want to know or maybe make a plan without Social Security involved. Reviewing your social security statements, and if you will receive a pension from the state or federal government, the government pension offset, the GPO. Determine if you'll be subject to windfall elimination provisions, the WEP. So, we need to make sure we know and understand how those things work together, especially if you're married. Consider your spouse's social security benefits and review strategies to maximize those. Just taking social security as soon as you can may not be the best plan. Also, look at how long you're going to live. I’ve done a great video on Social Security. Asset and debt issues that we talk about at our first meetings. Do you need to review your objective and risk tolerance for each investment account? Make sure your money has a purpose. Assign that purpose to a goal. Understanding investments you currently own. A lot of people don't understand what they have. Are there any high levels of cash? Consider the following regarding high levels of cash. Number one, interest rates on the cash may be higher elsewhere. Why do I say that before I said the other one? We are in an inflationary environment and very low-interest rates are being earned. You are losing money every day in a savings account possibly. Be careful, don't hide. FDIC Insurance limit is 250,000 per ownership category per insured bank. Understand those things. Again, cash may not be the best place right now, especially if you have a long time horizon. Do you have any debts with high-interest rates? I love helping people get out of debt. I love that feeling of being debt-free, it's such a relief. Do you have debts or will your total monthly debt payment equal 36 percent or more of your gross monthly income? Some lenders may not be willing to lend you money. I would love to see that number at zero. Yes, there are some good debts to have. A 30-year mortgage at 3% might not sound like a bad idea right now. And, in fact, it might not have sounded like a bad idea when I got my first loan on my first mortgage which was at 8.33%. Do you have any annuities? Again, this is one of those things that people don't understand in their Investments. Review your riders, your death benefits, and surrender charges. They are extremely difficult and confusing investment products and they do that on purpose to make them confusing for you. I cannot tell you the number of people I've met that have never read the contract on their annuities and don't understand how they work. Does your employer offer equity compensation? Boy, when you check yes on this, I love having a great dialogue with you. If so, review your rights on any vesting schedules and the tax consequences of purchasing and or selling shares. This is not a five-minute phone call conversation, this is an in-depth conversation on those stock options. Restricted stock or RSUs, employee stock purchase plans, we need to understand what's going on. Employee benefits. Many many people miss maximizing their employee benefits. HSA accounts, as I've spoken about earlier, FSA accounts, and dependent care flexible spending accounts. Make sure you are using those properly. Somebody at your company should understand those benefits for you and how to take advantage of those benefits as best as they can. Do you own a primary residence? Review your insurance coverage, property taxes, and associated debt on how the home is titled. Home values over the last few years have skyrocketed. Property and casualty insurance has not kept up. Make sure you are reviewing those property and casualty policies that you have, and make sure that they are adequate policies and we do that for our new clients. Do you have a second property or rental? And, congratulations to you on that. If so, consider how the properties are titled, any potential liability, and the possible use of an LLC. Do you own a business? Consider retirement plan options, succession planning, and valuation. How about that? They have retirement plan options, SIMPLE, SEP, IRA, solo 401(k)s, regular traditional 401(k)s, and Roth options. There are a ton of options out there. And then, shortly I'll be making a video about those options. Are there any assets that you’ve forgotten about? That's why you want to have a financial plan that lists all your assets on a balance sheet so you can constantly review that balance sheet. Do you need to review your tax return? Boy, we have done these videos already, as someone who is working, and as a retiree, “What Issues Should I Consider When Reviewing My Tax Return?” Those are great checklists to review in those videos. Do you need help identifying tax planning opportunities? Well, if you're a client of ours, we've got a tax plan and we review it every year. Long-term planning issues. Are you considering any major expenses for the future such as a second home? Do you have an estate plan? If you're going to become a client of ours, you will end up with an estate plan. I tell you, that's one of the biggest things. Again, another checklist of all these things and all these questions lead to us doing workflows, flowcharts, and checklists, and we go through those to make sure that everything has a process behind it. “What Issues Should I Consider When Reviewing My Estate Planning Documents?” Boy, what a great thing to review, “I already have an estate plan, what should I review about that?” “I've been married, I've had kids, so you know, maybe my idea of my 5 wishes for life care – health care has changed.” Do you have a plan to fund long-term care expenses? Not a conversation we want to have, but a conversation we should have. Do you anticipate that you might receive an inheritance from a loved one? Again, I don't like adding these in because somebody can always remove you from their inheritance plan, but it's nice to know that it's there, and let's plan for that and how that may affect your overall financial plan. Some other issues that we may have, do you need to review your insurance coverage? Again, I spoke about it a little bit earlier with insurance, but let's look at that life insurance policy and make sure it's the right one for you, disability, and property casualty insurance. Again, here we are again going right back to those, “What Issues Should I Consider When Reviewing My Property And Casualty Insurance?” and my health and life insurance checklist. All these things lead us to more checklists so we can document that we've covered all the things for you. I love this, are you charitably inclined? My wife and I obviously do a lot of work for the Cystic Fibrosis Foundation and we want to know what your charitable wishes are. Are there any state-specific issues that we have to consider and any other personal concerns? Again, everybody is different, every plan is different and I know this is kind of a longer video to help us get a better view of what the first meeting is like. But, that first meeting is so important for us to say, “Alright, let's look at this checklist, let’s look at this workflow.” Let’s review the things that are personable to you and most importantly that last question. What made you come to see us? What is your purpose and what is your goal and what is your why? And, those are the things that people need to understand like behavioral finance is such an important part of financial planning and understanding your behaviors when you tell me why money is important to you, I may say, “Well you tell me why, but when we look at your actions, we see that you’re aligning your money somewhere else, so either your why is wrong, or your money alignment is wrong.”And, we need to kind of sit down and have an introspective look upon ourselves, and hopefully with your spouse or significant other, and say, “You know what, we're not aligning our actions with our goals, and why don't we move our actions more towards our goals?” Or you say to yourself, “Maybe our goals are wrong.” “Maybe we need to align them with our actions because this is what we are doing and maybe this is a conversation we should have.” Again, we're not a psychology department here, but we want to align goals and your actions together because financial planning is ultimately about each individual person and where they’d like to end up. So again, thank you so much. Thanks to the people that have asked us to do this video for you. Subscribers, we appreciate you being here. Make sure you smash that subscribe button and that like button. Ring that bell and we’ll notify you when those new videos come through. And, we appreciate you being here and have a great day.