If there’s ever a time to get down-right personal, it’s when we discuss our investments with our advisor.
Whether we are a first time investor or a sophisticated one, the document, which is all-telling and all-knowing about us, is the Know-Your-Client (KYC) application form. Our personal status, investment knowledge, and objectives are revealed in black and white. We need to take notice. We need to care about the contents. We may think it’s acceptable to fudge some of the information. For example, let’s use our investment knowledge. Perhaps we like to brag this up from poor to fair. In all sincerity, being honest about every detail is critical to our investment success.
When we take investing seriously, we want to make wise decisions about where we invest our money. Matching the right investments to our purpose and time horizon is like finding the right partner through a dating service. If we desire a marriage made in heaven with suitable investments that align with our needs, then our financial advisor needs accurate information about us.
This is where it all begins… We have to know our purpose for investing, the length of time before we will require the money, and, of course, the level of risk we are willing to accept. Open discussions lead to suitable investment recommendations from our advisor. Even though we may begin our investment journey with a meager amount, the point is our baby steps eventually result in whopping savings when we persevere and remain disciplined.
Consequently, the puck doesn’t stop when our accounts are opened, investments are picked, and the automatic contributions are set-up. We must diligently review our investment decisions at least annually with our investment advisor. Life happens. Our personal and financial circumstances will change as time passes. Our original investment decisions may need to be tweaked with the changing circumstances.
Here’s the best part. Take advantage of these annual meetings. Our advisor is our accountability partner. We all could use a dose of motivation and confirmation that we are on the right track headed in the right direction. Who better than our advisor to give us a pat on the back and congratulate us for taking care of our financial future? Money matters and so do our dreams. With our advisor’s help, our investments make our dreams a reality. This reason alone ensures we should willingly commit to the annual appointments. Also, with our advisors’ help our investment knowledge will likely increase when we commit the time and energy to learn from our conversations. A favorite analogy is relating this experience to starting kindergarten. Remember what that experience was like. A little scary! A lot of unknowns! Eventually we maneuvered our way up to high school and some of us eventually moved on to post-secondary programs. Scaling the investment ladder can be seen as the equivalent. A little scary! A lot of unknowns, especially with the markets! Eventually we will achieve success with the right investment strategy.
There’s a second layer of confirmation. Security regulators carefully scrutinize recommendations made to investors. The primary reason for the KYC (Know Your Client) form is to ensure our hand-picked investments are in sync with our objectives. When we put our signature on the application form we confirm the information is accurate. We need to ensure we pay attention and do not dismiss significant details with a casual, “whatever”. These details are important to the outcome of our investments.
We should not dread the annual meeting with our investment advisor but rather approach these meetings with confidence and assurance. We are ultimately taking control of our dreams by taking care of our investments decisions.
Two resources to deepen our understanding are: the Mutual Fund Dealers Association of Canada’s fact sheet which outlines all of the information our advisor needs for opening our accounts and the Investor Centre’s explanation about the Know-Your-Client rule.
Have any concerns or opinions about taking care of your investment decisions? Leave me a comment below!