Questions to Ask a Financial Advisor

Research shows that only one in four Americans have a written financial plan. However, the findings also revealed that those who do, demonstrate active wealth-building behavior. 

The message here is clear. Financial Planning can be instrumental in helping build and protect wealth.

While DIY financial planning is better than nothing, to maximize your portfolio's potential, you may want to seek out the services of a financial advisor. 

However, to accomplish your financial goals, you also need to pick the right financial advisor. One that's qualified, experienced, has your interests at heart.

To find one of these, there are some important questions to ask a financial advisor that you want to know about. Depending on what answers a potential advisor gives to these questions, you'll be able to get an idea of whether or not they are a good fit. 

Ready to get savvy on what to ask a financial advisor before hiring them? Read on. 

What Is Your Fee Structure?

When choosing a financial advisor, one of the first things you'll want to get clear on is their fee structure.

Hourly rates for financial advisors can vary widely and differ depending on their level of expertise.

Take note that in this area, cheaper is not always better.

To give you a ballpark idea of the hourly rates for a financial advisor, they can be anywhere between $150-$400 per hour.

Besides hourly rates, a financial advisor might also charge a flat-rate fee.  They may also be dually-registered as a broker/dealer and offer commission based products.

Depending on the service provided, these fees might be inclusive in investment and financial planning packages. If, so be sure to ask for a fee breakdown so that you can get an idea of precisely what you are paying for.

What Will My Total Fees Be?

Another of the fee-related questions to ask a financial advisor is what their total fees will be. This is because the fees you pay have a direct impact on your net gains.

If an advisor also can act as a broker-dealer and charges commissions, they may not be able to give you an exact estimate. Any percentage-based fees can vary in its yearly totals.

However, a financial advisor should be able to give you a good idea of how much you will pay in fees per year.

Are You a Financial Advisor?

Before you choose a financial professional, you should also ask them whether or not they act as a fiduciary.

Broker dealers, insurance salespersons, or any other financial company representatives are required to recommend investment products that are suitable and appropriate and that are in their clients best interests at the time of the recommendation. However, financial advisors are held to a higher level of accountability. They are required to put their client's interests first at all times.

Fee-only financial advisors are also prohibited from charging commissions.  

If you are a reasonably savvy investor with a detailed understanding of what you wish to invest in—you might not need a financial advisor. For instance, if you only want your financial professional to handle transactions or to facilitate something like custom insurance coverage, you can choose one who does not act as a fiduciary.

On the other hand, if you require more in-depth guidance, you will want to engage a financial advisor who acts as a fiduciary. A financial advisor will also be more appropriate if you wish to grant them greater control over your portfolio.

What Type of Financial Planning Are You Experienced In?

When making a list of what to ask a financial advisor, this is a critical question. Investment and money management are broad fields with a lot of sub-categories. 

You want to make sure the financial advisor you choose has experience in meeting needs that are similar to yours. For example, devising an investment strategy tailored for retirement is very different than one designed for someone just entering the workforce. 

Some firms, such as ours, offer packages that cater specifically to each stage of life and set of needs. This is ideal for long term growth as your portfolio can be seamlessly adjusted over time to suit your requirements. 

What Tax Planning Strategies Would You Advise?

Growth and investment profits inevitably trigger some form of tax liability. However, there are ways you may be able to mitigate your tax burden. 

Through savvy tax planning, you can take advantage of things like tax deferment and the offsetting of capital gains. 

This is providing, however, that your financial advisor is focused on these things. To ensure that the advisor you choose is thinking about your taxes, ask them directly what tax planning strategies they might recommend for you. 

This will give you an idea of how well versed they are in this area and whether it is a priority for them. 

How Often Will We Communicate?

Before you choose a financial advisor, it's good to get clear on what communication frequency you're looking at. You will also want to ask what form the communications will take. 

Can you expect phone calls from your advisor? Or will they send you quarterly updates on your portfolio via email? If there are questions you want to ask, what is the best channel to use?

Asking these types of questions ensures that you and your advisor know exactly what expectations are in place from the get-go. 

Now You Know What Questions to Ask a Financial Advisor

Choosing a financial advisor can be tricky. There are literally thousands out there.

However, now that you know what questions to ask a financial advisor, you're one step closer to finding the ideal investment advisor for your needs.

Want to take another step closer to this goal? If so, take a look at our personal financial planning services. We specialize in providing plans that are tailored to specific needs and times of life. We know that a one-size-fits-all solution is not going to get you to where you want to be. That's why our advisors put your needs first every step of the way.

Have any questions? Good! Contact us, We are an award-winning financial office  and we will be happy to assist you with any queries.

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