What Your Planner Needs to Know

Whether you're meeting for a brief financial check-up or for long-term guidance, you must work closely with your planner for best results. You'll need to do a little homework prior to your first consultation. Follow these six steps:

1. Identify and prioritize your financial goals

Before your first meeting, jot down your goals and deadlines. For retirement, get specific about when you would like to stop working. For your children's education, outline how many years you have to save for each child, and whether you intend to fund only an undergraduate degree or more.

Be prepared to discuss each goal in detail. And don't leave any out, even if they are secondary. Worst case, you'll end up crossing a few off your list. But who knows? With a solid financial plan, you may be surprised at what you can achieve.

2. Write down questions and concerns

Keep a running list of any issues you wish to discuss with your planner, so you won't forget anything important in the meeting. Concerned about whether you're saving enough for retirement? Worried about having enough life insurance? Is the changing market leaving you uneasy about your investment portfolio? Don't hesitate to ask questions about any advice offered.

3. Don't hold anything back

Your planner will need details about your lifestyle, needs, dreams and fears to devise the best financial strategy for you. You'll ultimately be much happier with your financial plan if you open up. If you're anxious about running out of money during retirement, your planner may suggest you put some assets in a savings or investment plan (like an annuity) that will provide a guaranteed monthly income. If you've always wanted to retire early to open your own boat repair shop, your financial coach can analyze the feasibility of your dream.

4. Gather important financial documents

Supply your planner with tax returns for the past three years, savings and investment account records, insurance policy forms, your latest Social Security statements and any other pertinent records. Each document is a critical piece of your financial profile. Forgetting to show a record of $20,000 in a money market savings account could throw off your whole financial plan and send you both back to the drawing board.

5. Figure out what you're spending

Be willing to discuss your spending habits in detail, especially if you want to carve out more money to save. The best way to get a handle on how much you're spending is to keep a spending log for at least a month before visiting a financial planner. Don't shrug off small details. You may be surprised how much those daily coffees and lattes add up. When estimating your total annual expenses, don't forget to include occasional significant expenses such as family vacations or your child's summer camp.

6. Be prepared to discuss your risk tolerance

You may think you want an aggressive investment portfolio filled with growth stocks, but how would you feel if the value of your investments dropped 20%?

Your planner will want to get a sense of how much return you're willing to trade off to reduce risk. No matter what you choose, you're bound to weather some downswings in your portfolio's value during stock declines. But with the help of an experienced planner, you can craft a diverse portfolio to keep you on track toward your goals while letting you sleep at night. Test your risk tolerance.