We will discuss the questions to ask a financial advisor in an interview. In addition, we will talk about other considerations when choosing a financial advisor and what financial advisors do.
These are the questions to ask a financial advisor when determining who will manage your money. The questions that follow are not in any particular order. Asking these questions can help you determine if the financial advisor is a good fit for you. In addition, these questions to ask a financial advisor will be like a job interview for the advisor. In the end, the questions you ask will hopefully help you feel more confident in your choice of a financial advisor.
What kinds of clients do you specialize in?
This is one of the questions to ask a financial advisor that may seem trivial. However, the question can be a critical one in determining whether the financial advisor is right for you. For example, if you are a young person who is just starting out in your career and the advisor specializes in corporate pension funds for the elderly, then you may want to call another advisor.
Another example that is similar to this would be your doctor. If you have skin irritation that requires a doctor, who would you visit? Personally, I recommend seeing a dermatologist. Furthermore, a urologist or OBGYN probably won’t be able to help you. Use the same logic when picking the right financial advisor.
What are your qualifications and experience with investing? Do you have credentials?
True financial advisors are certified professionals who act as fiduciaries to clients, not salesmen
The term financial advisor is one of the broadest terms when describing professionals who give advice regarding money management. They are also sometimes called “investment advisors.” In many cases, the term “financial advisor” is a substitute term for “wealth advisor”, “wealth manager” and “financial planner.” However, there is a difference.
A financial advisor is considered a true professional in the financial industry. For example, they may be required to pass board exams and have a financial education. The accreditation may originate from an institution of higher learning or university degree. Finally, if the advisor works with the public at large, they are required to hold a Series 65 license.
The Series 65 license is administered by the Financial Industry Regulatory Authority (FINRA). In order to pass the Series 65 exam, you must gain expertise in topics such as state and federal securities laws and finance rules. In addition, financial advisors must learn about fiduciary obligations and ethical standards relating to clients.
Another license that some financial advisors acquire is Series 7 Certification. Candidates must past the Series 7 exam to qualify for the certification to work with clients in the financial industry.
Finally, one of the most common financial advisor certifications is a “Certified Financial Planner.” These professionals have higher standards. However, keep in mind that there is never a guarantee that a professional will help you earn money. There is always a level of risk in the financial industry for investors.
What are your fees and how do you get paid?
Beware of professionals who receive sales commissions
One of the ways in which these professional advisors differentiate themselves is how they receive compensation. Some professionals charge an hourly rate for their time or as a fee in the form of a percentage of the account size; whereas, others may receive payment through sales commissions or financial incentives.
Note that commissions or incentives may create conflict with what is in the best interest clients. For example, if your financial planner receives sales commissions on buying/selling stock in your account, he/she may be inclined to more frequently trade stocks in the account. As a result, frequent trading benefits the professional through sales commissions; however, you may be the loser in the end as portfolio performance takes a back seat to trading.
Are you a fiduciary?
When considering questions to ask a financial advisor, you should consider fiduciary responsibility. Financial advisors who are also fiduciaries are ethically and legally required to put the needs of their clients above their own personal needs. Fiduciary advisors are held to higher standards compared with other investors. In addition, it is in your best interest to choose an advisor who will help you, instead of taking your money.
What is your investment philosophy? How do you approach Investing?
When reviewing the questions to ask a financial advisor, you should be able to have a conversation with them about their investing philosophy and approach. The financial advisor should be able to easily explain to you in laymen’s terms how they invest money and why they use the style or approach that they do. If what they say doesn’t make sense or it feels like they are just giving you a sales pitch, then perhaps they are not a good match for your investments. Afterall, you will be handing over a lot of your hard-earned money to them. Moreover, it is important that you trust them and feel comfortable that they are intelligently working on your behalf.
Can you provide me a list of the services that your company provides?
Different financial advisors provide different services. Bigger firms offer more services; smaller boutique advisor firms provide more streamlined services. It will be up to you to decide whether the firm you are interviewing is right for your needs. For example, a financial advisor can provide general investment management, tax planning, corporate focus retirement plan management, life insurance plans and much more. Furthermore, it is important to understand that you must find the right match for your needs. If they cannot help you meet your investment needs, the next advisor probably can help you.
What asset allocation will you use for my money?
One of the most common questions to ask a financial advisor is how the allocate a portfolio for their clients. Asset allocation is a critical part of using the investment expertise of a financial advisor. For example, a younger investor may want to have more risky investments that offer higher returns; however, an older investor might instead desire to have more secure investments in their portfolio. Be sure to select a financial advisor who will tailor a financial asset allocation plan to your needs.
Will we maintain an interactive relationship with frequent communication about the state of my money?
A good financial advisor will maintain frequent contact with you about your investment. Investors want to know that their money is important to their financial advisor. Moreover, a financial advisor should be contacting their client at least quarterly with updates on their investment. In addition, many clients can access an electronic interface, such as a website, to check on their investment portfolio daily. Obviously, it is not necessary to monitor your investments daily, but it is nice to have that option.
Is there a minimum requirement for investment?
Different investment firms will have different requirements regarding the amount of money that you are required to place into an account. As a result, this is definitely one of the questions to ask a financial advisor prior to investing. Many investors who are just starting out may only have a limited amount of money that they can invest. This is ok, and there are other brokerage firms that can help you with little money and low fees.
How do you measure success with clients?
When writing down your questions to ask a financial advisor, you should include inquiring about how they measure success. You probably have an idea about how you personally measure financial success. For example, perhaps you want to see your investment grow each quarter or each year. However, your investment advisor should also have expectations about how to measure success. Ask them specifically how they will measure success with your account. Beware of pie-in-the-sky answers or promises that sound too good to be true.
Is there a way I can monitor my money/investment account online each day?
One of the most commonly overlooked questions to ask a financial advisor is what third party custodian they use for clients. Financial advisors are required to use a third party custodial. Common custodians may include companies like TD Ameritrade, Fidelity or E-Trade. These accounts are where your investment or retirement accounts are held. Part of the reason third party accounts are important is because in the past, con-artists who swindled investors out of money failed to use trusted, third party custodians. Trustworthy third party custodians who work with financial advisors help keep your investments safe. In addition, the third party custodian provides FDIC and SIPC insurance for clients, which insures their investment.
Follow-up Questions for Yourself
After posing the questions to ask a financial advisor, there are some more personal questions that you can ask yourself. For example, did you feel comfortable speaking with the financial advisor? What was your overall impression of the financial advisor? Moreover, did you like or trust them? Finally, did they listen to you?
Implementing Financial Plans
Navigating the world of investment and finance grows more complicated and difficult each year. Learning how to manage taxes, create wealth, manage investments and estate planning can be a daunting task. It’s much simpler and easier to depend on the expertise of a wealth advisor to accomplish financial goals. Contacting a professional wealth advisor can simplify strategic wealth management for you.
However, first we should discuss investment basics. Moreover, it is important to understand the basic concepts of investing and the types of investments available. Here is some information you may want to know prior to meeting with an investment planning services professional.
There are a number of different types of investments that are available for investors to choose from. Moreover, technology of the 21st century has made it easier than ever to choose many different investment options. For example, strategic wealth management investments can include things like stocks, bonds and real estate. In addition, there are many new investment opportunities like cryptocurrency and micro investing.
A Good Financial Advisor Will Answer Your Questions
Hopefully we have helped you answer the questions to ask a financial advisor. Applying these questions while interviewing the potential financial advisor will help you determine if the advisor is the right fit for you. A good financial advisor will be intelligent, experienced and patient enough to explain things to you. In addition, you will build a trusting relationship that will hopefully last a lifetime.
Disclaimer: It is important to note that Piggy Bank Coins does not provide financial advice. We do not endorse or recommend any financial investments. Instead, we provide information for educational purposes to those seeking knowledge regarding personal finance. However, in the spirit of transparency, note that the author is an investor in cryptocurrencies, precious metals and some equities.
In addition, The Federal Trade Commission (FTC) requires that Piggy Bank Coins disclose to readers that we may receive commissions when you click our links and make purchases. However, this does not impact our reviews and comparisons. Moreover, we try our best to keep things fair and balanced, to help you make the best choice for you.