Working with a financial professional for the first time, for some, can create a little bit of anxiety. You’re essentially inviting a stranger to look at and give advice based on your financial situation – something a lot of people consider to be deeply personal. There are many pros to working with a financial advisor, of course: These professionals can save you time and money, as well as make sound financial investments in order for you to grow your wealth. However, just like choosing a doctor or lawyer, you should be aware of what to ask when meeting a financial advisor for the first time to decide if you’ve found a good fit. While there are many questions that relate to your specific situation, here are a few general questions to help get you started.
Are you a fiduciary?
As a reminder, an advisor who is a fiduciary has a duty to put their clients’ needs before their own, regardless of how they stand to profit from the advice they give, their firm’s interests, or the interests of others. By asking about someone’s fiduciary status, you’ll be able to find out whether they are likely to recommend advice based on your needs, and not the commissions they may receive.
How do you get paid?
While asking about fiduciary status can give you much-needed insight, it doesn’t hurt to ask directly how your financial advisor is paid. Financial advising is a job, after all, so financial planners have to make their money somehow. Asking this question allows you to see what sorts of fees you may be paying. Some advisors have a flat fee structure for certain services, while others may charge a fee on an overall percentage of your assets, or of the assets they manage for you.
What are your credentials?
Your advisor should have certificates (some firms only require their advisors to take a few courses). Three of the common types of professional designations are: Certified Financial Planner (CFP), Chartered Life Underwriter (CLU), and (for your taxes) a Certified Public Accountant (CPA). Each comes with its own education timeline, but it does show that the person who is taking care of your investments is willing to invest their time and knowledge to serve you better.
What services do you provide?
You may only need investment advice, or your needs may be more diverse. Someone who only deals with investments, for example, should not also be giving you insurance and estate planning advice. Furthermore, someone who does not review your tax return may not be able to provide real comprehensive financial planning services. It’s important to understand the scope of the relationship you are expecting if you were to hire said advisor.
What is your communication schedule & style?
Do you need an advisor who is readily available to you, or would you prefer to meet quarterly or once a year? Do you want a financial advisor who can fully explain their choices for your portfolio in layman’s terms? These are all things to consider.
Overall, working with a financial advisor should be a positive experience, and these five questions are simply a starting point. Don’t be afraid to ask questions and examine what it is you’re expecting in this relationship – this person should be working in your best interest. Chatterton & Associates advisors believe in giving proactive instead of reactive advice and will work hard to put your needs first. If you have any questions regarding how we work with clients, or if you need help with investments, retirement, taxes, estate or insurance planning, contact us today to see how we can assist you.