Studies find that there are two factors that decide how people feel about their financial situation. One is how well their investments are performing and how much money they are making, and the other is how satisfied they are with their financial advisor.
Our investments performing well is completely out of our hands. It is our advisors job to make the right choices and ultimately make us money.
This is why choosing the right advisor is so critical. The best way to pick the right advisor is knowing what to ask when choosing a financial advisor. Here are some questions that would be in your best interest to find out the answers to before going any further.
How much will your services cost?
This seems like an obvious one, but you want to find out specifics. What other fees to they charge? How often are you charged? What sort of pay model do they follow? You want to find out what the initial fee is, if any, and what percentage they will continue to collect from you. You should also find out if they are given an incentives for selling certain products or services. This can help you weed out advisors who are just trying to sell you things for themselves and not for you.
What certifications do you have?
There are several types of certifications and licenses that financial advisors can have. Some are harder to achieve then others. For example, the Certified Financial Planner certification is harder to achieve, while the Chartered Financial Consultant is easier due to the specifications to achieve each. Those who have earned the CFP designation successfully completed a board exam, so might have more knowledge and expertise. Other financial advisors also include CPA, RIA, and PSF. You’ll want to choose one based on your objectives.
What services do you offer?
This will clue you in as to what they can’t help you with. Some firms might just focus on investment advice as opposed to complete financial planning. This can help you determine if they would be a right fit for you.
What kinds of clients have you assisted?
Some clients have specific interests, such as philanthropy, social responsibility, or they need help after a divorce or marriage. Some advisors focus on those who are in similar situations as them or around the same age so they can better serve them.
Do you have sample financial plans?
Financial plans aren’t one size fits all, but this can help give you a better idea of how they work and help you decide what exactly you’re looking for.
What is your investment strategy?
Find out how the advisor plans to invest your money, and ask questions about their plan. There are so many different approaches to investing and this can help you determine if the advisor has the same goals in mind as you do.
How much do you communicate with clients?
Some advisors have yearly check-ins, or phone calls. Some will more involved. Find out where they stand and what you think you need to be successful.