The relationship between a financial advisor and their client is delicate. Dealing with a client’s financial future is a heavy responsibility for an advisor. How you approach the initial client contact and the questions you ask may mean the difference between a fruitful, long-term relationship and a lost client.

"The most critical questions financial advisors should be asking are to understand their client's financial situation and goals," said , founder of Wealth Choice in Coronado, Calif., a firm focused on executive and professional women. Grimes and other advisors we spoke to tend to ask open-ended questions to get their clients to open up more fully about their finances, goals, and values. That's important before getting to specific investments to have a better gauge of a client's 澳洲幸运5官方开奖结果体彩网:risk tolerance, needs, and objectives, Grimes said.

Nevertheless, you may find it helpful to get answers to more specific questions as you go forward. Below are five key questions to create a trusting 澳洲幸运5官方开奖结果体彩网:financial advisor–client relationship. These will show the client you want to understand them and help create a platform for a tran⛦sparent relationship. By starting out on the right foot, future disagreements can be minimized. These questions fall into three broad categories: relationship, risk, and wealth accumulation.

Relationship Questions

1. What are your biggest 🔥money worries, and what can we do about them together?

This may be among the most 🔜important questions to explore with a client. As an advisor, you are a problem solver, and you need to understand what is expected of you from the beginning. It’s also a g✤reat way to build rapport and show the client that you are on their side and want to improve their life.

Below, you can explore what financial skills diffe🍌rent age groups said they most wanted to learn when asked by Investopedia.

2. H🐟ow much 𒀰in losses would make you lose confidence in me?

This question has two purposes. First, it sets the stage for the investing reality that financial assets go up and down—no matter how talented ♒the advisor is. It also provides a starting point for educating the client about investing in the markets. Second, the response to this question can be filed away for the future so that if a client panics after a 5% market drop, you can revisit the reactions to this initial question while calming frazzled nerves.

Risk Questions

3. What percentage of losses in your portfolio wou🐓ld cause you to lose sleep at night?

Financial professionals generally measure risk in terms of volatility. Both investors ꧒and financial professionals need to understand how much risk an investor can stomach before they are tempted to do something unwise, such as selling at the bottom or dumping all their equities-based mutual funds.

4. Would you feel Worse if your mutual fund fell 10% and you didn’t selꦺl, or if you sold your fund shares and they went 🐠up 10% afterward?

澳洲幸运5官方开奖结果体彩网:Behavioral finance theory generally argues that investors feel the negativity of losses more acutely than the positivity of gains. Assessing how one feels about watching their investments fall in value or missing out on an opportunity to realize gains gives ins💖ight into an investor's risk tolerance. To get some re♛al-life data, you might want to follow up and ask if this happened before.

Understanding a client’s risk tolerance can also help the advisor and client determine the overall portfolio 澳洲幸运5官方开奖结果体彩网:asset allocation. More risk-averse investors tend to favor a greater allocation to bonds and fixed asset classes and a lower share in more volatile stocks and 澳洲幸运5官方开奖结果体彩网:equity funds.

Goals Questions

5. How do you measure the success of you𝓰r portfolio?

When investing, you'll have benchmarks for the returns on a client’s portfolio. For example, if the client has 60% stocks and 40% bonds, then the investment portfolio returns would likely be measured against the proportionate returns of the 澳洲幸运5官方开奖结果体彩网:S&P 500 and that of a 澳洲幸运5官方开奖结果体彩网:Bloomberg bond index.

Suppose the client responds by saying they expect 10% annual returns. In that case, the advis𝓀or must educate them about historical market returns to avoid problems down the line.

The Bottom Line

A long-term financial advisor-client relationship is built from the beginning. By asking the right questions, listening intently to the answers, and creating an atmosphere of trust, both parties are more likely to be satisfied. It's essential to make human connections with clients by communicating in a natural and authentic way. By asking specific questions about their experiences with money, their hopes for this relationship, and their overall financial goals, you can encourage clients to open up in ways that will be necessary throughout your work together.