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CAPITAL IDEAS: You don’t know what you don’t know—Get more from your financial advisor with 50+ questions asked by high earners

I’ve learned that if you have a question about something, you’re not the only one. But sometimes you don’t know how to articulate that question, or which question to start with. That was trig for me. For you, it might be investing and retirement planning.

I am humbled that some readers of Capital Ideas are financial advisors looking for investment advice to offer their clients. As some readers know, I am an owner of Berkshire Money Management. You may wonder why I’m giving away business secrets to my competitors. Well, other financial advisors are only “competition” in a friendly way. The Chiefs and the Eagles both played to win, but wanting to win is just part of the love of the game. And the game is making sure families don’t run out of money in retirement.

I want to help financial advisors help more clients by letting them in on a marketing secret: Snappy Kraken. Snappy Kraken is “an automated growth program that combines content, technology, and education to help financial advisors expand their market share while simultaneously delivering higher quality experiences for your existing clients.” And, no, this is not a paid endorsement.

Snappy Kraken recently conducted a survey of 800 American investors with income of $200,000 to $500,000 per year to learn more about their bear market and recession fears. The report is for my financial advisor colleagues. The investors’ replies (below; modified for clarity and format) are for readers with questions or concerns about their own investments.

Do you have questions about your financial health?

In high school, I thought I was smarter than I was. I got straight A’s, so I wasn’t academically challenged. But there’s a big difference between knowledge and wisdom. I thought I was smart enough to take trigonometry at the same time as algebra. I figured I’d just read ahead in my algebra book and get A’s in trig. Ugh. It was such a bad idea. I was lost. The teacher was excellent; it was all my fault. And when she asked, “Does anyone have any questions?” I kept my hand down. Not because I was embarrassed; I was so lost I didn’t even know what question to ask.

I’ve learned that if you have a question about something, you’re not the only one. But sometimes you don’t know how to articulate that question, or which question to start with. That was trig for me. For you, it might be investing and retirement planning. I suspect that some of the fears, thoughts, and considerations in the “raw data” are the same as yours.

I am presenting a sample of the respondents’ replies so you can recognize your specific questions and concerns. If you do see some, feel free to forward this column to your financial advisor. I’m willing to bet she’s already addressed them for many of her clients. You and your financial advisor can address the issues, improve your plan, and make you feel more comfortable about the possibility of a successful retirement.

Describe three thoughts you have when the news announces a recession is coming.

  • Is it overhyped?
  • Oh crap! What will happen to my investments?
  • Part of me is nervous, but the other part is good because prices need to come down. How do both affect us now and later in life?
  • Am I in a position to buy beaten-down stocks. Will the recession be short-lived?

In past recessions, what investment-specific strategies have you used?

  • Should we stay the course if my investment tank on paper?
  • Can I move from stocks and real estate into tax-free bonds?

What would you like to know about investment-specific strategies to help you during a recession?

  • What are those tax strategies?
  • Is there really anything I can do to preserve 401(k) investments?
  • Can I count on my advisor to protect me as much as possible?
  • Where do I even begin?
  • How to pay less taxes on my earnings?
  • Which are the best funds to move my money into?
  • What are other options to reduce my tax burden?
  • How to not lose money?
  • How can I shelter more money without being taxed on it, but yet generate income?
  • Should we invest more or less during recessions?
  • Which companies do well during a down economy?
  • What can I invest in to defer the taxes on any gains?
  • What reallocation of funds would be my best option to weather this recession?
  • How can I analyze a number of strategies to employ the ones that benefit me best?
  • Just how much should I keep liquid versus investing?
  • What else is there besides tax loss harvesting?

What’s your worst fear when a recession hits (related to your money and investments)?

  • How can I prevent losing college money in my 529 Plan and retirement money in my 401(k)?
  • Will I be able to retire early after saving for so long?
  • Will I lose everything we have saved and built up?
  • Will the market come back?
  • Will I lose more than I can afford to?
  • How long will it take to make back the money I lost?
  • Should I cash out now that I took a massive loss?
  • I have already given up some luxuries. Will I be able to afford my lifestyle?
  • Will I have to dig into the kids’ college funds?

If your retirement accounts dropped in the next six months, describe how your hobbies, lifestyle, and habits would change.

  • Stop spending. What else can we do?
  • Would I still be able to travel?
  • Should I downsize my home?
  • Will I have to continue to work for another 10 years?

What makes you hesitate to call a financial advisor to help you create a recession plan for your investments/IRA/401(k)?

  • Why don’t I feel comfortable talking about investments?
  • Can’t I make my own choices and save on any fees by doing this?
  • My husband feels like he knows enough about investing. How can I tell him that I don’t trust his lack of professional experience?

If you were given a free PDF guide to help you plan for a recession, what questions would you want it to answer?

  • How do I protect my money in a recession to ride it out?
  • How can I have my money invested without worrying about the stock market and my returns on my investments as well as protecting my overall account value?
  • Is there a role for options to mitigate the impact of a decline in the stock market?
  • How have my investments performed under a multitude of market conditions?
  • When should I rebalance my portfolio?
  • What is the e best plan of action for our income level and best ways to invest?
  • What will my savings look like in a worst-case scenario?
  • How do I project how much I need to maintain my lifestyle? What is the basic difference between stocks, bonds, and mutual funds?
  • Will I have enough money to make ends meet based on my age and the amount I will receive in about 15 months?
  • Should I pay my mortgage off when the opportunity presents itself?
  • How can investments be insured against recession?
  • What market sector bounces back the quickest after a large downturn in the market?
  • How to create income in a low-interest-rate environment?
  • How much Prozac to take to wait it out?

Your financial advisor should be trained to help you with most of these questions and feelings—except the one about Prozac. Consult your doctor about that one.

Allen Harris is the owner of Berkshire Money Management in Dalton, Mass., managing more than $700 million of investments. Unless specifically identified as original research or data gathering, some or all of the data cited is attributable to third-party sources. Unless stated otherwise, any mention of specific securities or investments is for illustrative purposes only. Advisor’s clients may or may not hold the securities discussed in their portfolios. Advisor makes no representations that any of the securities discussed have been or will be profitable. Full disclosures here. Direct inquiries to Allen at AHarris@BerkshireMM.com.

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