10 Questions to Ask When Finding a Financial Advisor

It’s never too early to find a financial advisor and take better control of your money. Far too many people put off financial planning, deciding to wait until they’re making more. This leads to saving less, spending more and being unprepared when emergencies strike. Working with a financial advisor you can trust will benefit you for the rest of your life. But how can you choose the right person? Here are 10 questions to ask when finding a financial advisor that will help you evaluate them.

1. What are your level of education and qualifications?

Before you even consider working with a financial advisor, you need to make sure that they are qualified to be giving you advice about your finances. Certifications for financial advisors include certified financial planner (CFP), chartered financial consultant (ChFC), registered investment advisor (RIA), certified public accountant (CPA) and personal financial specialist (PSF).

Most people will want to look for advisors with CFPs or ChFCs, as they provide all-around financial advice. RIAs typically focus on money management and choosing investments. CPAs focus on planning for taxes, and those CPAs who also offer financial advice typically have PSFs, as well.

2. Will you act in a fiduciary capacity?

Fiduciary is an important legal term, and when a financial advisor acts in a fiduciary capacity, it means that they commit to always acting in the best interest of those who they’re advising. Your financial advisor must then manage your money for your own benefit, not profits of their own. They couldn’t recommend or take any action that would result in them making money from how they used your assets.

Financial advisors who act in a fiduciary capacity have a higher set of standards to meet by law than non-fiduciary advisors. It’s a good idea to get it in writing that your financial advisor will be your fiduciary.

3. What is your specialty?

There is no jack of all trades financial advisor who is right for everyone. You’ll get the best results when you find one who understands where you’re at in life and can help you meet your goals.

Let’s say that you either own a business or are in the process of launching one. It’s a good idea to look for financial advisors who have been business owners themselves, otherwise they won’t have as much knowledge of managing finances for a business owner.

4. How much do you interact with your clients?

Every financial advisor is different in regards to how much they communicate with their clients. Some will be in touch every month, some quarterly and others just check in annually after that first planning meeting.

J.D. Power found that the most satisfied clients, on average, are those that talk to their financial advisors at least 12 times per year. When finding a financial advisor, it’s typically best to look for one that communicates often. However, you should also consider what level of communication you want, as some clients would rather only have the occasional check-in.

5. What is your client retention rate and average client relationship length?

This is one of the most important questions to ask when finding a financial advisor because it’s a concrete example of that advisor’s results. Just like in sports, investing and all kinds of other areas, the numbers don’t lie. A financial advisor who makes their clients happy will have a high client retention rate and long relationships with those clients.

What if the advisor doesn’t have this information? That’s a red flag, and you should consider other options.

6. What is your investment style?

Take a glimpse at all the websites and books made by financial experts and you’ll see that there are plenty of different approaches to investing. Some trade often, others prefer to hold investments for years or more. Some go for a higher risk approach, while others are very conservative.

Asking a financial advisor about how they invest can help you ensure that their approach lines up with your own. If you’re committed to one approach and an advisor is committed to another, there will be too much conflict between the two of you.

7. What do you charge?

There shouldn’t be any surprises regarding how much a financial advisor charges. You’ll want to know if the advisor charges a fee for initial planning, a percentage for what they manage, or fees for specific products and services.

Be wary of any financial advisors that charge you fees for their products and services. You don’t want an advisor who is motivated to sell you on anything, because this could create a conflict of interest.

8. What are the services you have available?

This is just as much about finding out if there are any services the advisor doesn’t offer that you’ll need. You may find that a financial advisor really focuses only on investing when you need help getting ready for taxes or planning your insurance. Consider your present and future needs to ensure that your advisor can help you with everything.

9. How will you keep my information safe?

Financial crimes have always been an issue, but the amount of information available online has made cybercrime particularly dangerous. If you’re going to have an advisor handling your sensitive financial information, it’s crucial that they’ve taken appropriate safeguards.

Your advisor or someone with their firm should be able to tell you what kind of technology they use to protect your privacy. Make sure that they use the latest technology available and that they keep it up to date.

10. What sets you apart from other financial advisors?

When you’re trying to find a financial advisor, there’s no shortage of options. This is an advisor’s opportunity to tell you what makes them different and where they excel.

You’ll find that every financial advisor has something they bring to the table that makes them unique. That could be an excellent track record of successful investments or managing money in a way that fits with their clients’ values. By determining what sets a financial advisor apart, you can figure out if they match what you’re looking for.

It takes time to find your financial advisor, and you should definitely meet with several of them during the process. Along the way, keep these 10 questions to ask a financial advisor in mind to ensure that you get the information you need.

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