Whether you’re just starting to save, planning for retirement, or looking to optimize your investments, a qualified advisor can provide valuable guidance to help you work toward your goals.
But first you need to determine their level of expertise and how well their services align with your objectives. Here are seven essential questions to ask during your initial meeting with them and what to look for in their responses.
What are your qualifications and credentials?
Start by inquiring about the advisor’s qualifications, such as their certifications and licensures. Look for recognized ones like Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), or Certified Public Accountant (CPA) since these designations often indicate a commitment to high ethical and professional standards. This will also give you a better idea of their specializations and areas of focus. In addition, ask if they’re a fiduciary, which is an advisor required by law to work with your interests in mind and only recommend investments that are the best fit for you.
What services do you offer?
Financial advisors provide a range of services, including retirement planning, investment management, tax planning, and estate planning. Discuss your expectations with your potential advisor, and confirm that what they have to offer aligns with your financial goals. If they don’t, you can then ask them to refer you to someone who better suits your needs.
How are you paid?
Every financial advisor may have a different compensation structure, so be sure to clarify how theirs works. They may be fee only, meaning they’ll charge a percentage of assets, a flat fee, or an hourly rate, or they could be commission based, receiving a commission from selling products like annuities, insurance policies, and mutual funds. This will allow you to evaluate any potential conflicts that could arise in the future.
What’s your investment philosophy?
Investments play a key role in your overall financial health and security, making it vital to check that the advisor’s investment philosophy and approach match your own. Verifying this up front will help ensure their strategy would work with your personal risk tolerance, goals, and timeline should you move forward with them.
How will we collaborate together?
When talking with the financial advisor, get information on their process for communicating with clients. Ask how often you’ll meet, how best to contact them, if you can ask them questions outside your scheduled meetings, and their typical response time. Also, find out what resources they will use, such as apps to view and monitor your portfolio, and how often they will check in on your finances.
What does your typical client look like?
It’s important to find out if the financial advisor generally works with clients like yourself. If their clientele is similar, it can give you peace of mind knowing they have experience with supporting situations and specific goals like yours.
Who is your custodian?
Every financial advisor has a custodian, which is an institution such as a bank or brokerage that securely holds and monitors their clients’ stocks, bonds, and other assets. A reputable custodian can add an extra layer of transparency to your financial transactions, ensuring that your money is in a safe place.
By asking these questions in your first meeting with a financial advisor, you can gain a better understanding of their qualifications, services, and overall approach, which can help you make a more informed decision about whether they are the right fit for your financial needs and goals.