4 Questions Your Prospects Want You to Ask

Last year, my wife and I moved to a new financial advisor for several reasons.

The last company I worked for had gone through an initial public offering, and I had received shares as part of my compensation. Plus, I was at a career crossroads and hadn’t done any meaningful planning in a while. I was looking for someone to be a thought partner and to create a holistic family wealth strategy.

The prospective advisor — let’s call her Ana — didn’t position herself as superior to other advisors or a better investor. She didn’t suggest that she had unique access to certain investments.

What she promised to do — and has since delivered on — is to help my wife and I think about our complete situation. Ultimately, the reason we picked Ana is because she asked the best questions.

Here are the four questions she asked us that tipped the scales:

1. How do you each define the term ‘wealthy’?

Our first assignment was to write down our answers, silently and separately. And then we shared them with each other, and Ana, in a live session.

The good news is that my wife and I share a similar definition of what “wealthy” means. It’s not about vacation homes (cheaper to rent), club memberships, or fancy cars. For us, it was about taking great vacations with our families where we wanted to go, when we wanted to go. The conversation that followed gave Ana some raw perspective into our value systems.

Why is this question powerful?

Asking this question does two things. It first and foremost ensures the couple is on the same page. Second, it opens the door to the ambitions on HOW a client wants to live their lives. Not how much money they need. If done correctly, this question sets the table for all the planning conversations to follow.

2. If you’re wildly financially successful, how much do you want to give to or leave to your kids?

This question is an important one following the wealth definition question. It helped us calibrate a few key decisions all parents must wrestle with. Do we pay for our kids’ college ahead of funding our retirement? Do we help them buy a home one day? Do we want to save all the way until the end of our lives or die with just a few pennies in the bank?

When Ana asked us this, we started by reflecting on what our parents had done for us and our familial obligation to do the same for our kids. It also opened a window for Ana to ask about our children. Their interests. Our hopes and dreams for them. And ultimately what we felt we owed them versus what we owed ourselves or our community.

Why is this question powerful?

It’s a table-stakes question for relationship expansion. Without understanding a parent’s goals for supporting their kids, it’s hard to really ever have a shot at building both a great financial plan and estate plan.

For clients with school-aged children, asking the question is straightforward because it always starts with a discussion on tuition. For clients with grown children, it can be equally powerful. This question tees up concepts like annual gifting and generation-skipping trusts. It also starts a healthy conversation about how much of your client’s wealth stays in the family or passes to charity.

3. What does ‘being charitable’ means to you?

When a company goes public, most employees are hit with a sizable income tax bill. We were looking at options to reduce our tax liability while supporting the causes we already supported on an annual basis. One tax professional and a separate advisor was pitching a charitable remainder trust (or CRT) to us. Ana simply asked what being charitable means to us.

Why is this question powerful?

There are many ways to be charitable. Lots of small gifts here and there. In addition to helping causes we care about, gifts that are meant to offset taxes. Annual giving to your alma mater. Tithing. Bequests at the end of your life.

But there are also methods, such as a CRT, to give big, meaningful gifts while you are still alive and return financial dividends for a specified period back to you. The open-ended nature of the question gives clients a way to step back from specific strategies and talk at a deeper level about how many organizations they want to support and in what ways.

4. If you could choose between simplicity and maximum tax efficiency, where on that continuum do you put yourselves?

I don’t like to pay a penny more in taxes than I have to. But I also hate doing paperwork and personal administration. The thought of being locked into a lifetime of filing trust returns was enough to sway us away from a CRT and to just do a one-time outright gift. We got a smaller deduction, but it took a tenth of the time.

Why is this question powerful?

There are a lot of estate planning tactics out there to help clients. Some of them come with setting up new entities that will require additional tax preparation and administration.

When you understand where your client is on the spectrum between simplicity and efficiency, it will help you guide them toward what’s best for them. The other genius of this question is that if they want it both ways, it opens the door to provide more management services to handle the annual paperwork associated with these estate planning administrations.

Putting It All Together

I’m about eight months into working with Ana and her team. I couldn’t be happier with her partnership. The conversations that came from these four questions have given us a framework for navigating some recent investment allocation decisions.

When I think about working with her versus the other advisors we interviewed, it’s clear why she stood out: She asked the questions that mattered.

Jim Sinai is the chief marketing officer of Vanilla. Vanilla enables wealth advisors to offer estate planning advisory software to their clients.