Personal Finance

Financial Advisor Series – Part 3 – The 5 Questions To Ask

Top 5 Questions to Ask a Financial Advisor

As the third part of the Financial Advisor series, I will be specifically addressing the top 5 questions you should be asking a Financial Advisor before you hire them. Check out Part 1 – Do I Need a Financial Advisor? And Part 2 – What Should I Look For in a Financial Advisor?

What I Realized After Years of Prospective Client Meetings

Over the past 12+ years of working with hundreds of clients, I learned very quickly about the incredible value that Financial Advisors can provide to individuals and families.

But what I realized in the majority of those first prospective meetings was that many individuals just weren’t sure of the role a Financial Advisor plays. And because of that, had no clue what to ask.

Prospective clients would come in a little overwhelmed or even nervous at times. Overwhelmed by the simple fact that we were talking about their money and overwhelmed by the idea of someone else managing it and what that would look like.

But time and time again, through our conversations, explanations and dialogue, the wall started to break down and there was peace, comfort and understanding of the financial advisor / client relationship that lied ahead.

They felt at ease about moving forward when we were able to clearly and reasonably explain the details behind the following 5 questions.

The Top 5 Questions To Ask Before Hiring A Financial Advisor?

1. What will the experience be like if I hire you and/or your team?

Get a full understanding of the team of people you will be working with. Who are you to contact with questions and concerns and what is the individuals/teams experience to be able to provide you with said services.

I would also want to know how often you should expect to hear from your advisor and how often will you be meeting together to get a review of your investments and financial goals.

You want to know who you’re working with and what to expect in terms of communication going forward if you were to hire them.

2. What are the full service offerings that you provide?

What services can you expect to receive going forward. Right now you may only need an advisor for investment management but it will be helpful to understand the depth of services they provide, if any, and how that may be beneficial for you going forward. A few examples would be; Cash flow planning, Wealth Transfer Planning, Gifting Strategies or Charitable Planning.

Do they have access to and relationships with other great resources like CPAs, Lenders, Attorneys to help you as time goes on and as your needs change.

Get an understanding of their day to day and how you will ultimately benefit by working with them today and in the future.

3. How are you compensated? And based on my asset size, what is the fee I will be charged?

Get an understanding of how the advisor is getting paid from the assets under management (AUM) and how you will be charged. Typically, you will be charged a percentage of your assets and the fee will be withdrawn from the account on a monthly basis. This lends itself to the most mutually beneficial dynamic.

I am more weary of a commission based fee structure and advisors pushing products like insurance, annuities, etc.

You want to leave the meeting understanding how much you will be charged and having an idea of what other charges, if any, to expect in the future.

4. How will I be invested and who will be managing these decisions going forward?

I do not expect any individual to walk away from a meeting with a financial advisor and have the ability to recite every single detail of the proposed investment allocation.

But what I do want you to walk away with is an understanding of the following:

  • Is it liquid? Do you have access to the investments or is there any type of lock up period.
  • How the advisor will make changes to the portfolio going forward. Will they need to contact you every time or will they be making changes as they see fit based on the long term strategy?
  • How they make investment decisions. I want you to feel comfortable with how they talk about the stock market, the world, investing and how they choose their investments.


5. What are the safeguards in place for my assets?

I would want an understanding of the virtual security that the firm offers. Where will your assets be held and how are they protected and kept safe.

I would also want to know how your information will be delivered securely to you if statements or personal information needs to be shared via email. Or perhaps there is a secure portal.

You want to make sure your personal information and asset security is a priority.


Financial Advisors Are Not Needed For Every Individual or Family, BUT…

The good financial advisors are invaluable resources to manage all the aspects of your financial life and are well worth every penny. But it’s important that YOU feel good about your decision about who you hire.

Getting an understanding of each of these questions should help you navigate this journey in finding the right Financial Advisor for you.

Resources:

Financial Advisor Series – Part 1 – Do I Need A Financial Advisor?

Financial Advisor Series – Part 2 – What Sfinancialhould I Look For in a Financial Advisor?

Follow @finpoweredfemale for more personal finance, tax, investing and business ownership tips on building wealth with confidence!

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