Finding a financial advisor can be difficult, especially if you haven’t worked with one before and don’t know what to ask. Even if you already have an advisor, it’s always good to check in with them and make sure you understand what kind of service they’re providing.
When looking for a good advisor, it’s first important to make sure you know what you’re expectations are. Do you want someone to handle all of your investments, prepare your financial documents like wills, trusts, and even do your taxes, or do you just want someone to give you some advice and suggestions? Maybe your expectations are somewhere in between. Before you can hire the right person for your needs, you have to know what those needs are.
Now that you’ve done that, it’s time to start interviewing a few advisors and find someone who you feel that you can trust to handle your financial needs. Here are a few questions to ask potential advisors to make sure you’re getting the information you need.
What’s your background?
Look for a Certified Financial Planner (CFP), not brokers or insurance agents. You want to make sure the person you hire has the right qualifications to do the job.
How much experience do you have?
Are you looking for someone young who knows all the new information available and can handle your finances for years to come, or do you want someone older who has seen difficult economic situations and has the experience to navigate their way through them?
Do you accept fiduciary responsibility?
This may sound like a complicated legal term, but the bottom line is that it means they are making decisions based on what’s best for you not based on any bonuses or advantages they may receive. They should be willing to accept this responsibility through a written statement that they sign for you.
What services do you provide?
You’ll want to make sure you’re hiring someone who provides all the services you’re looking for. Do they offer retirement and estate planning? Insurance? Can they manage your investment accounts? Do they offer advice on planning that you can use to manage your own funds? Make sure you know what you’re hiring them to do.
How do you charge?
This is something you’ll definitely want to have a clear understanding of. Do they charge a fee for each individual service? Or do they charge a percentage of the funds they are investing? You may need to do some calculations on your own to determine which is better for you.
Do you offer different investments based on your clients risk factors?
You’ll need to have an understanding of your risk tolerance. For instance, if you’re young and won’t be retiring for more than 20 years, you may have a higher risk tolerance for your funds. If you’re older and close to retirement, you may not want to take as many risks with your finances. Different investments come with different risk tolerances so you’ll want to make sure you hire someone who can work with yours.
What kind of investments and planning do you recommend?
Different advisors will have different answers to this question. Make sure you work with someone whose answer matches your needs. Someone who recommends a variety is probably your best option. Look for things like real estate investments, bonds, index funds, and money markets. Someone who thinks about short-term investing as well as long-term investing is looking at the big picture of your financial future.
Lastly, get recommendations from friends and family of people they trust to work with and make sure whoever you hire is reviewing and evaluating your needs on a yearly basis as your financial situation will change over time.
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