If there’s ever a time to get
down-right personal, it’s when we discuss our investments with our advisor.
Seriously!
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!
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