Retirement

6 Questions to Ask a Financial Advisor

Future Capital
September 20, 2021

As your financial situation gets more complicated over time and your wealth grows, you may want to consider hiring a financial advisor. There are many different types of financial advisors, and they can help you with everything from retirement planning to estate planning and money management. Keep in mind that depending on the type of advisor you are looking for and how much money you have, the fees can range from a few basis points to more than one percent of your assets. Most financial advisors usually require a minimum number of assets to work with you, but that amount varies per firm and advisor. If you’re considering working with a financial advisor, here are six questions to ask before you hand over your money.  

  1. Are you a fiduciary? Perhaps the most important question on the list, a fiduciary manages their client’s money and has a legal obligation to do what is in their best interest. It’s critical that anyone managing your money is a fiduciary, as they are held to the highest standards, and they have a duty to put your needs above their own.  
  1. How do you get paid, and what are your fees? Fiduciaries do not earn commission or trading fees, but instead is paid a percentage of the assets they manage for you. This means there are no conflicts of interest, and their only job is to manage your money and never sell you products.  
  1. Can I speak with any of your current clients? As with any big commitment, you want to make sure you’re going in with eyes wide open. When speaking with references, you can ask them the tough questions like what they like and dislike about working with the advisor. You should also try to understand how long they’ve been a client and what level of service they receive from the advisor.  
  1. How do you measure success? This is more of a thought-provoking question to understand how the advisor works. While there’s not one right answer, the advisor’s goals should absolutely be centered around yours.  
  1. How often will we be speaking? The answer to this question helps you understand what to expect from a service perspective from your client. Will you have regular quarterly or annual check-ins to review the status of your accounts and discuss goals?  
  1. How will we communicate? This one is important for a few different reasons. First and foremost, you’ll want an advisor who is technologically savvy and can communicate with you in the way you prefer. For example, some advisory firms have tools that enable compliant texting with clients and others will conduct check-in meetings via video. It’s also important to understand if you get access to a client portal or mobile app and what that looks like.  

Along with answers to the above questions, it’s important that you also like the advisor. Do you enjoy speaking with them and do you feel heard when you talk to them? Those things are the intangibles that make or break an advisor/client relationship. Either way, working with a financial advisor is a big step in your life, so congratulations!

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