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Top 10 Questions to Ask Your Financial Planner

#accounting professional#financial planning#investment tips

Written by prositesfinancialJun 4 • 4 minute read

choosing a financial planner

Once you’ve saved up a reasonable nest egg, it may be time to go looking for a dedicated financial advisor to help manage your portfolio. Finding someone to trust with such an important responsibility can be daunting. After all, this person or firm will be able to trade with your money and could make or break your ability to reach your financial goals. So where do you begin?

To narrow it down, begin by asking for referrals. Ask people who you already know and trust who they use or recommend for financial management needs. Be sure to ask people who are like you in terms of where they are in life with regard to financial goals and outlook. The idea here is to find a professional with a good track record of maintaining a healthy, trusting relationship with their client.

After you find a good referral, ask for their contact information, and schedule an interview meeting. Once that meeting arrives, here are some questions you can use:

1. How Do They Charge for Services?

It is possible this information may be on the firm’s website or in their brochure, but if not, ask them if they charge an initial planning or consultation fee. Then inquire about whether they charge a percentage of assets, or if they make a profit when they sell you specific investments. It is important to understand the incentives behind the firm’s decision-making process, not just the fees they charge. This can tell you a lot about the firm.

2. What Are Their Credentials?

There are four main types of financial advisors. The Chartered Financial Consultant or CFP, is more difficult to obtain than the Chartered Financial Consultant, or CFC. They both use the same core curriculum, but the former requires a comprehensive board exam white the latter does not.

If you are looking for someone to manage your money for you, look for the Registered Investment Advisor, or RIA, registration. If you have a very high income or own a small business, you might do well with a Certified Public Accountant, or CPA, who can provide tax planning services. Lastly, the Certified Financial Specialist, or CFS, certification is often earned by CPAs who want to show that they can provide comprehensive financial planning services for their clients in addition to tax services.

3. What Services Are Available?

It is important to not only understand what services the firm provides, but also what services they will not. Some professionals or firms only provide advice to clients as a service but don’t actually manage money or place trades. Others handle all your investments for you and serve as a full-service brokerage firm where your money is stored in an account that they actively trade. Still, others provide comprehensive financial services such as tax planning, retirement planning, and estate planning. They may also offer things like life insurance and annuities. The goal is to find a firm which can serve your needs as completely as possible.

4. Who Are Their Clients?

Some firms serve specific niches of clients better than others. They may have a specific target demographic that they prefer. Perhaps they have a specific age range they cater towards, or maybe they work mostly with business owners or nonprofits. It is good to find out how closely you match with the firm’s existing clients and with their expertise. For example, some firms cater to seniors who are within ten years of retirement. Others may even focus on seniors who have already retired. Another may focus on young entrepreneurs and business owners. The goal here is to make sure this firm has plenty of experience in the areas that are important to you.

5. Ask for Sample Plans

Each financial plan will be different, and it would be unreasonable to expect this sample to match exactly with your own needs. However, asking for an example will tell you a lot about how the firm works in practice. For example, is the sample plan easy to understand? How long or detailed is it? It might be just a few pages with some charts and graphs, or it might be a massive tome with tons of complicated financial jargon and overwhelming details. Would this sample plan be useful to you if you received it, or would it be too intimidating? Don’t be afraid to ask questions and share your response to the example.

6. What Investment Strategy Do They Use?

There are many different ways to approach investing. Some firms may choose to use a variety of mutual funds, while others may directly invest in highly targeted stocks and bonds. Some prefer targeting growth, while others may target value. Some have a very active management style, while others have a more passive approach. It is important to ensure your outlook and philosophical approach to investing are compatible and that you aren’t going to be pulling in opposite directions all the time. Are the firm’s investment selection and management values compatible with your own?

7. How Often Will They Meet with You?

The amount of client interaction that firms provide varies widely, with some firms contacting clients only once a year by phone, while others have a quarterly sit-down in-person meeting. Others provide monthly newsletters and reports, send you birthday cards and host holiday parties.

How much interaction do you want from your firm? Some people prefer a more hands-off approach, delegating to their firm and trusting them to handle things. Others prefer to be more involved with regular meetings and phone calls to check in and make sure they understand each decision. Is the firm compatible with your desired level of interaction?

8. Who Will You Be Working With?

It is important to understand how the firm handles client relationships. Can you count on seeing a familiar face each time you work with them, or will you be working with a large team? The answer to this question can tell you a lot about the relationship you can expect to have with the firm.

9. What Makes Them Stand Out?

What is the firm’s unique selling point? Why should you go with them over someone else? Is there anything unique or special they can provide that other firms cannot? You will likely be spending (and making) a lot of money with this firm, so it is imperative that you select one that stands out from the pack and provides something special.

10. How Do They Treat You?

This last question is more of a summary of the whole interview. Did this person or firm make you feel special and cared for, or did you feel like just another number on a spreadsheet? Did they seem genuinely interested in you and your needs, or were you just another appointment in their calendar? If you are going to trust them with your financial matters, they should be someone who actually cares about you and shows integrity.  

Do some research so you are prepared and equipped to find your next financial planner or advisor. Having a clear goal in mind will help you feel much more confident with your decision and help you avoid frustration down the road.

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