February 22, 2023

Worried about volatile markets? Here are 4 questions to ask your financial advisor

By Deanne Gage

Have you been worrying about the market dropping given the current state of the economy? And you’re not sure what to do? It may be a good time to connect with your advisor. Here are 4 important questions to ask.

Inflation, interest rate hikes, falling stock markets. It seems like everyone is talking about them. Veteran investors know that stock markets go up and stock markets go down. Are you worried about the economy? You’re not alone.

Not sure what to do next? See this as an opportunity to touch base with your Sun Life advisor.

Here are four worthy questions to ask.

  1. How is my money invested?
  2. How can I protect my portfolio?
  3. How well are my investments performing?
  4. Is there a better option?

1. How is my money invested?

Every investor has their own level of risk tolerance. Ask your advisor to see how much of your money is invested in:

  • Equities
  • Fixed income
  • Cash

“Did the investment plan that you set up with your advisor make sense one year ago? Then chances are, it makes sense today,” says Dan Richards, Globe and Mail contributor

Still, you’ll want to ensure that you aren’t putting too many eggs in one basket, says Alison Griffiths. She’s a retired financial columnist and author of a self-titled blog about money management. Sometimes 60% in equities has a way of becoming 65%, for instance. “As an investor, the best defence is to spread eggs out over a number of investment baskets,” she says.

Retirees and market volatility

Retirees need to ensure they have adequate cash holdings. They are, in many cases, living off their investments. “The rule of thumb is three years of liquid investments. That way, you don’t have to worry about liquidating things at the bottom of the market,” says Richards.

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2. How can I protect my portfolio?

Were you okay with mainly equities but now have a change of heart? It might be time to revisit your investment plan, Richards says. “There may be things that you thought you could live with before. It may no longer be the case now that you’ve experienced volatility.”

Alison finds that most people have too much invested in equities. “While fixed income and cash provide the lowest returns, they also provide the balance in your portfolio,” she says.

3. How well are my investments performing?

Griffiths suggests you inquire how your mutual fund is performing relative to its peers and a benchmark index. “If you see yours consistently at the bottom, you know you have a problem,” she says. “People really need to get this information. Why would you keep putting money into a bad investment?”

4. Is there a better option?

Have your advisor walk you through all the possibilities. Advisors licensed to sell securities and/or insurance can offer more product solutions beyond mutual funds

For example, low-cost exchange-traded funds and guaranteed minimum withdrawal benefit products.

Are you more concerned with protecting your principal? Ask your advisor about products like segregated funds and annuities.

Have a proactive discussion with your advisor about your investments. It could enhance your relationship. More importantly, it might also give you more peace of mind.

An advisor can help put together a solid plan that suits your goals.

This article is meant to only provide general information. Sun Life Assurance Company of Canada does not provide legal, accounting, taxation, or other professional advice. Please seek advice from a qualified professional, including a thorough examination of your specific legal, accounting and tax situation.

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