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The Top Five Questions to Ask Your Westchester Financial Advisor about Retirement

by Andrew Fox, CFP | Mar 9, 2018

Seeking a Westchester financial advisor to help you make the smartest investment choices is not a task that should be taken lightly. 

You know this - as you’ve done your financial advisor research! You may have even googled the best questions to ask a financial planner. And ultimately, you made your choice. But now what?

Send these five questions to your advisor ahead of time and you will leave with what really matters: satisfaction with your progress or an action plan to make changes.

1)If you are smart enough and work hard enough can you deliver returns that will consistently beat the market?

No. Financial markets don’t work that way. I know it sounds almost un-American but the only way to consistently outperform financial markets—based on skill (not luck)—is to be constantly BETTER than the best and brightest in the world and I would humbly suggest this is a very tall order. Ken French, a finance professor at Dartmouth College, and leading thinker at Dimensional Fund Advisors, puts it this way:

“The market is smarter than we are and no matter how smart we get, the market will always be smarter than we are.”

This is a profound thought wise investors will do well to remember.

2) How should I go about figuring out how much of my nest egg I can spend each year in retirement?

Over three decades ago, during the first few minutes of my first Economics class at Colgate University, my professor said something like this that I will always remember: “The study of Economics is actually quite easy because the answer to every question is the same, ‘It depends.’” How right he was! Guess what the answer to this question is?

There are a lot of variables at play here, such as:

  • How long do you plan on living?
  • What will inflation be like over these decades?
  • Likewise, what returns will financial markets deliver over these years?
  • Can you handle volatility in your portfolio or do you prefer to never see your statement balances go down?

I prefer to use a methodology that analyzes what has happened in the past and bases future projections on close to “worst-case” scenarios.

This is not reflecting any pessimism on my part but rather acknowledging that the future will always be uncertain. I would rather have this uncertainty manifest itself in too much money “problems” for a client rather than too little. Put another way, if you’re 90 years old, fit as a fiddle, but dead broke because you outlived your nest egg, is this a blessing or a curse? I would prefer to avoid this scenario entirely through realistic and cautious planning.

3) In what ways do you add value to my retirement planning?

The short answer is two ways and in order of priority:

People Management:

Screen Shot 2018-03-02 at 1.27.28 PM.png

Statistically speaking, we are our worst enemy. Whoever is looking back at you in the mirror may be well-intentioned but he may be dangerous! Proper behavior vis-à-vis our own investments falls into the category of easy to understand but hard to execute. Even if it’s only a handful of times over the course of many years, good Westchester financial advisors can be worth their fees many times over by ensuring rational behavior when the market—and the media—seem to have run off the rails on a 
Crazy Train (Thanks Ozzy!) 


Money management

There is a right way and a wrong way to construct and maintain investment portfolios. I don’t believe investment advisors add any value whatsoever in terms of having superior prescience but I do believe great value can be added without having a crystal ball clearer than anyone else’s. 

The longer answer has to do with creating an understanding within clients of why their portfolios are constructed and maintained in the fashion they are. It also has to do with helping clients deeply internalize the idea that investing in stocks the right way can only be considered “gambling” to the extent that we are betting on the long-term future of global capitalism and should that fail, God help us all! This is an enormously important concept because the average investor may impulsively react to a certain isolated market event that will completely derail his plans for a financially secure retirement while global equity markets don’t even skip a beat. Many amateur investors fail to realize that the markets will not systematically reward them—via higher expected returns—for taking on risk that is easily diversified away. Should a football team expect to score more points if its players choose not to wear helmets?

4) If I spend more in management fees, shouldn’t I expect higher returns?

It is reasonable in many industries to expect quality to increase with cost—think Yugo vs. Mercedes—but in the arena of investing it is pretty close to the exact opposite. Jack Bogle, the revered founder of the Vanguard Group puts it this way when it comes to expenses:

"The grim irony of investing is that we investors as a group not only don't get what we pay for, we get precisely what we don't pay for."

This is similar to the answer for question #1 in that you might think the higher price you pay, the better “quality” advice, hence the higher the return, but close to the opposite is true much more often. There aren’t many guarantees in investing but one is that every dollar you pay in expenses is a dollar off of that return.

5) What’s the most challenging part of your job?

The challenging part is also the most rewarding. Just a few days ago the Dow Jones Industrial Average dropped over 1,000 points in a very short period of time. My phone was totally quiet! Crickets!! Whether a client has been with me for 20 days or 20 years, I constantly stress and reinforce the idea that stock markets will always be unpredictable and sometimes wildly volatile. Given the investment management style I deploy, human behavior ultimately is far more the determinant of long-term success than seemingly random whimsical market movements. Instilling confidence in people to ignore the mass media’s disingenuous attempts to “sensationalize” largely normal market swings, and focus on what is truly important to their financial well-being is the most challenging but far and away the most rewarding part of my job.   


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