There are many kinds of financial advisors, but not all will be right for you. The key to finding your financial advisor is to look for someone that matches your needs and specific financial situation. Do you need help with a budget? Do you want help investing? Would you like to create a retirement plan? Are you looking to get your estate plan in order or create a trust? While these are all things a financial advisor can help with, not all advisors specialize in these areas.
With those goals in mind, you will interview potential financial advisors. Yes, interview! An advisor is working for you, and you want to be sure they are the right fit for the job. There are questions you should ask in each interview you go into about things like services available, fee structures, and certifications.
1. Are you a fiduciary?
This is the first question you’ll want to ask and perhaps the most important. A fiduciary is obligated to put their client’s best interest before their own which tends to make them more trustworthy. For example, an insurance advisor that is not bound by fiduciary duty may recommend a product that is suitable for you, but it might cost you a bit more because they receive a higher commission or other forms of payment for selling it to you. Working with a fiduciary is the difference between being suitable and best for you.
2. How do you make money?
Every financial advisor has their own fee structure. To help keep your financial planning simple, you might try to find a fee-only financial advisor who charges a flat rate no matter what. Other advisors may charge a percentage of your assets under management or upfront fees as well as a commission for selling additional products. This often leads to purchasing products you don’t really need.
3. What services do you provide?
Financial advisors often specialize in specific areas within the financial industry. If you scheduled the interview with your needs in mind, then you want to know that the advisor is accomplished in those areas.
4. Do you require a minimum investment?
If you are looking for a financial advisor to manage your investment portfolio, you will want to ask if they require a minimum investment to open and maintain your account. That figure is a good indicator of the types of clients that an advisor typically works with and whether that fits within your budget.
5. How will we communicate about my investments?
Communication is always important, but most especially when it comes to your money! You will want to work with a financial advisor who openly communicates and does so through your preferred communication methods. You want to know how accessible they are and how often you can expect them to be contacting you.
6. What are your certifications or qualifications?
Certifications can be a good gauge of an advisor’s level of expertise, but you want to be sure that your advisor can explain what their certifications mean and what it took to get them. Some certifications are easier to earn than others, so be sure your advisor demonstrates a level of advanced training, product knowledge, and overall competency regardless of the number of certifications that come after their name.
7. What is your investment philosophy?
A great financial advisor will understand your situation, ask questions, and learn about your goals before they begin to make recommendations. Not every financial advisor will approach investments in the same way, and you’ll want to choose one that aligns with your comfort level when it comes to risk. Some advisors will offer a range of risk levels and ways to allocate assets within your portfolio. If you aren’t comfortable with a lot of risk, you’ll want to choose someone who uses a more conservative investment strategy.
Finding the Right Financial Advisor
Finding the right financial advisor to meet your needs can be difficult. There are many things you should take into consideration. If you are in the process of trying to find a new financial advisor but aren’t sure where to begin consider joining Planning Made Simple. Not only will you further your financial education, but you will have access to a community of investors just like you who can help answer your questions or provide advice. You’ll also be paired with a Planning Made Simple coach. Our coaches are some of the top financial professionals in the industry and are available to answer your questions and help guide you along your investment journey. Experience the support of the Planning Made Simple community before your find your new financial advisor.