The 10 Most Common Questions People Ask Their Financial Advisors

In this world of AI investing, robo-advising, Google, and ChatGPT, it feels like answers are at our fingertips. All you need to do is some research and press a button. In reality, navigating personal finances and ensuring you make decisions tailored to your financial future—without negative consequences—can often feel daunting.

Most people lead busy and complex lives and turn to experts for help in areas outside their expertise. That may be an accountant, doctor, lawyer, or contractor, and it makes sense to seek the expertise of a financial advisor to provide clarity in financial decisions. Whether you’re just beginning your financial journey or planning for retirement, understanding key financial concepts can make a significant difference in achieving your goals.

The challenge becomes finding the right advisor who can help you navigate financial planning with confidence. We’ve compiled ten of the most frequently asked questions posed to financial advisors, along with in-depth insights and straightforward answers.

1. How Can I Save More Money?

Building a solid savings strategy begins with developing a budget and pinpointing opportunities to reduce unnecessary spending. Setting clear financial goals, tracking your spending, and automating savings into investment accounts like TFSAs or RRSPs can help you commit to your savings goals. Small lifestyle changes, such as cutting back on dining out, finding energy-efficient ways to lower utility bills, and reassessing subscription services, can significantly boost your savings potential.

2. How Can I Effectively Grow My Investments?

Creating a successful investment plan requires assessing your financial objectives, comfort with risk, and contingencies for changing timelines. A well-diversified portfolio that includes a mix of asset classes can help mitigate risk while optimizing long-term returns. Diversification ensures your investments are not overly reliant on any single asset or sector, reducing exposure to market volatility. Understanding various investment options enables you to make well-informed choices.

3. How Can I Prepare for Market Downturns?

Market downturns are inevitable. Adults will navigate 60–70 years of economic and market fluctuations. Communicating your risk tolerance with your advisor will help them develop the best plan to mitigate the impact of market declines. A solid financial strategy and support from your advisor can help you navigate downturns successfully. Keeping a long-term perspective (10 to 20 years) and avoiding emotional investment decisions are crucial. Having a cash reserve or lower-risk assets in your portfolio can provide stability during volatile periods.

4. Should I Prioritize Paying Off Debt or Investing?

Deciding whether to prioritize debt repayment or investing depends on the nature of your debt and your overall cash flow. High-interest debt, such as credit cards, should typically be paid off first because interest rates can outweigh investment returns. Lower-interest debt, like student loans, lines of credit, or mortgages, may allow for a balance between paying down debt and investing for growth.

5. How Can I Ensure I Have Enough Savings for Retirement?

Estimating the savings required for a secure retirement involves assessing key factors, including your desired lifestyle, projected expenses, and available cash flow for investment. While a common rule of thumb suggests estimating your cost of living in retirement at 70–80% of your current income, this figure can fluctuate based on healthcare costs, travel plans, inflation, and long-term care needs. Various income sources, including pensions, government benefits, and investment returns, significantly influence your retirement strategy. A financial advisor can evaluate your financial landscape and create a tailored plan to help you retire with confidence and long-term security.

6. How Can I Make Sure I Don't Outlive My Money?

The risk of outliving your savings is a growing concern due to rising life expectancies, making it essential to have a well-structured financial plan in place. Planning for sustainable withdrawals, maintaining a diversified income stream, and considering annuities or other income-generating investments can help ensure financial security throughout retirement.

7. How Can I Reduce My Taxes?

Effective tax planning is a crucial part of strong financial management, helping you minimize tax liabilities while maximizing savings and investment opportunities. Utilizing tax-advantaged accounts like RRSPs and TFSAs, claiming eligible deductions and credits, and structuring investments efficiently can help reduce your tax burden. Strategic timing of withdrawals, choosing the right plans for withdrawals, charitable giving, and income splitting can also be beneficial.

8. How Do I Protect My Family Financially?

Protecting your family financially requires a multi-faceted approach, including life insurance, disability insurance, and maintaining a well-funded emergency savings account. Keeping your estate plan current—including a legally valid will and power of attorney—helps protect your loved ones' financial security and ensures your assets are distributed according to your wishes. Additionally, planning for education savings and setting up trusts can provide long-term security for your family.

9. What Is the Best Time to Begin Estate Planning?

The word “estate” in this context refers to all the money and property owned by a person at death. An estate plan ensures you have a structured strategy in place to protect your assets and ensure they are distributed to your loved ones according to your wishes.

The "right" time to begin estate planning is when you have assets, such as real estate or investments. It’s also important when you share ownership of assets, such as property or a business, or when you become a parent. If you are single or have no immediate family, it is especially important to appoint an advocate to ensure your assets are handled as you intend—this responsibility does not automatically fall to the most responsible family member.

An effective estate plan includes a will, power of attorney, and structured strategies for minimizing taxes while transferring wealth. Without proper planning, your assets could be allocated based on provincial laws, which may not reflect your true intentions and could result in probate costs. A well-structured estate plan ensures your wishes are honored while providing financial and legal protection for your loved ones.

10. Is Hiring a Financial Advisor Worth It?

While managing finances independently is an option, working with a financial advisor provides expert insights and tailored strategies that enhance your financial planning and decision-making. Financial advisors offer guidance in investment management, tax optimization, retirement planning, and estate planning, providing a personalized approach to achieving financial security and long-term stability. Partnering with a financial advisor can streamline your financial planning, alleviate stress, and help you avoid costly mistakes.

These are just a few of the most common questions financial advisors receive, but the best advice is always personalized. If you have concerns about your financial future, consulting with a professional can offer valuable insights and a clear path forward, giving you greater confidence in your decisions.

At Smith Rogers Financial, our expert financial advisors are here to answer any questions you may have and help you navigate investments, retirement, tax planning, and more. Let our experienced advisors help you build a secure and confident financial future tailored to your goals. Schedule a call with us today.