8 questions to ask your financial advisor

8 Questions to Ask a Financial Advisor

Using a financial advisor to help manage your wealth is a great decision. However, not all financial advisors are created equal. Before you entrust your wealth to a professional, you need to make sure they have your best interests at heart and are transparent about their methods and motives.

After all, you’ve worked hard to achieve financial success. Now, you need a trusted resource to manage and grow it while minimizing risk. 

With that in mind, here are eight questions you must ask a financial advisor before working with them.

1. Are your recommendations really in my best interest?

The term you want to use when asking this question is fiduciary. A fiduciary is a financial professional required to act in their client’s best interest, not their own. What does that mean?

Well, imagine you wanted to ensure your heart was healthy and you went to a doctor. Then, before checking you out or diagnosing anything, he recommends you buy a pacemaker and that you need to do it fast before the price goes up. Then, you later learn that the doctor was incentivized to sell the pacemaker. 

While that sounds a bit absurd, it’s exactly what happens in the financial management world. 

Make sure that the financial advisor you go with wants what’s truly best for you, not just to sell you a financial product. Ask them what they use in their own personal accounts and with their family members. A great financial advisor will always act in your best interest ahead of their own.

2. Will you offer comprehensive recommendations, or do I need another advisor for advice in other areas?

Some financial advisors specialize in only one area of financial management. While there is nothing wrong with that, it may serve you better to use an advisor who can be a single point of contact for all your financial needs. Work with an advisor who can give you a comprehensive plan needed to achieve your financial goals. It also helps if they can coordinate with other important people like your accountant and attorney.

3. Can you successfully navigate the complicated financial planning and tax world to achieve my financial goals? 

The financial planning world is ever-evolving. Each year, there are innovative wealth management strategies to learn, new investment opportunities to find, and complex tax planning to navigate. A financial planner should be at the forefront of best practices and strategies for every financial plan. 

Building wealth and reaching your financial goals takes patience, competence, and sound wisdom each step of the way. Ask your financial advisor what specific certifications and accreditations they have.

4. Do you have success helping others in a similar situation as mine?

Just like certain financial advisors only cater to specific investments or strategies, many of them also serve very specific niches in the market. When prospecting a financial advisor, ask them who their primary client base consists of. Are they people in the same stage of life as you? Is their financial situation, including goals, similar to yours? Are they federal employees with respective benefits? Are they self-employed?

Also, there can be a big difference between managing wealth for a young investor versus helping someone navigate retirement. Make sure your financial advisor knows how to help you achieve your specific goals.

5. How often will I hear from you?

Client education should be a priority no matter which financial advisor you choose to work with, and regular communication is vital to staying on top of the ever-changing financial landscape. Some advisors simply manage your wealth without much communication and meet with you once a year or so to go over everything. However, for many, that type of hands-off approach feels risky and impersonal

You’ve worked hard to achieve success and you may feel more comfortable with a more intentional approach to managing your financial wealth. A good financial advisor should meet with you at least twice a year, with quarterly reports that include changes and recommendations related to the current financial outlook. In addition, there must always be an open line of communication, such as email, through which your advisor can be accessible for advice, questions, and concerns along the way. 

6. What is my total investment expense and how much will you be compensated?

Financial advisors get paid in several different ways. Some are paid via client fees, such as hourly, annual, or based on a percentage of the client’s assets under management. Others get paid via commissions on financial transactions. This could include selling financial products like insurance policies, or through the buying and selling of securities. Finally, there are some advisors who are paid a salary from the investment firm with which they are employed.

It is common for financial advisors to get paid via a combination of these methods. Ask an advisor how they will make money from managing your wealth. Remember, working with a fiduciary may be the route as they are required to put your interests ahead of their own in every decision. 

7. Will you help me solve any possible financial problem I may encounter?

As mentioned above, traversing the wealth management landscape can be tricky. Not only are there a plethora of investment opportunities to choose from, there are also unexpected twists and turns that constantly loom ahead. For instance, a financial advisor should be able to help you navigate family deaths, disability, tax issues, real estate, debt, student loans, Social Security, health, college, and so much more. 

While it’s almost impossible for one financial advisor to have the answer to every question, they should be resourceful enough to help you find it and make the best decision every time.

8. Where do you keep my money and how can I see it? 

It sounds painfully simple, but you need to know where your money is kept and how and where it’s being used. A good financial advisor will disclose to you all of your financial accounts and investment holdings, and give you access at any given time. 

Do you know where your money is? Can you view it whenever you want? It’s important to ask even the most seemingly obvious questions when choosing a financial advisor.

The surprising value of trust.

When it comes to managing your money and building wealth, it’s impossible to put a price on trust. Worry, fear, uncertainty – they are all too common in the financial world. You need a financial advisor that understands you and your goals and puts your interests first, always. 

If you want to see the true value of trust in your financial planning, talk to us today. Schedule a call now and start on the path to building wealth for you and your family.