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8 Questions to Ask Your Financial Advisor

8 Questions to Ask Your Financial Advisor

| September 19, 2023

You and your finances have gotten to the point where they need more specialized attention. Maybe you’ve decided on a big goal that you need to save up for. Or you are planning to open or expand a business. Or you simply can’t decipher your balance sheet and need someone to look at and improve it.

A financial advisor can help you set your investments in order. However, even in emergency situations, it’s up to you to screen potential candidates as you would a lawyer or a realtor. If you’re a novice at this business, don’t fret. Here are a handful of the most important questions to ask your financial advisor.

What Services Do You Provide?

Finance professionals cover a broad range of services and areas of expertise. Personal financial advisors might offer consultation on retirement funds, portfolio management, taxes, estate planning, debt management, insurance, and much more. 

Those who specialize in business services might provide suggestions for managing cash flow, budgeting, coordinating taxes, financial reports, employee IRAs, regulatory compliance, and other duties.

It never hurts to get a full picture of the services your advisor may provide — even the ones you don’t need.

What Are Your Qualifications?

Depending on the location, some financial advisory businesses don’t require their employees to meet rigorous standards. Steer clear of these advisors. A truly qualified advisor will have certificates as a certified financial planner (CFP) or chartered financial analyst (CFA). 

Ask specifically about these kinds of certifications, including CPA. You should also ask about how long they’ve been in the business and their experience in the industry. An advisor who’s served clients for a long time may be more dependable.

Are You a Fiduciary?

A fiduciary is held to a different standard than other kinds of financial advisors. They are specifically required to focus on your interests and goals rather than their own. This requirement keeps them as honest as possible — they must declare if they may pose a conflict of interest and are subject to regulatory compliance. 

Ask your financial advisor if they have a fiduciary duty to you, and get their response in writing.

How Do You Earn Your Money?

Financial advisers have different mechanisms in place for generating income. Some charge commissions on financial transactions or asset-under-management fees. Others simply charge fees by the hour or per visit. 

Whatever their structure, it’s important for you to get clear on how they earn their keep. This will help you manage your payments to them and reduce the chance of unexpected or concealed costs.

What and How Will I Pay?

Corresponding to the last question, you’ll need to ask what out-of-pocket expenses you’ll pay. This point is where you’ll get dialed down on their fees and commission structure, if any. You can also ask where your money will go besides your advisor’s regular charges — say, business operations or technology needs.

What Types of Clients Do You Work With?

Like most professionals, financial advisors can be roughly broken down into personal and commercial categories. Some cater to clients in a certain financial predicament that needs attention. Others work with small businesses, and some work with large corporations. 

Short of asking for a complete profile, ask what kinds of people or clients they work the best with.

How Do You Approach Investing?

Your financial advisor’s philosophy on finance should match your investment goals and needs. 

Some are better at managing short-term investments in hopes of a higher and more frequent return. Others believe in a more long-term, patient approach to build secure and dependable portfolios. And many take elements of both strategies to create unique philosophies of their own. 

Have an open discussion about what approach your financial advisor takes to make sure it’s compatible with your goals.

How Do You Measure Success?

Every financial advisor is aware of the benchmarks and indexes that mark success in their field. Although most people have access to these standards, a financial advisor must be more deeply informed about the ones they use. 

Find out what benchmarks your advisor will use and how they will use the data to develop and maintain your personal finances. You might want to take a closer look at their benchmarks on your own, too.

Move Forward With Good Life

Good Life is committed to transparency and openness about what we do. We’re eager to use our tools and experience to improve your finances, whether it’s for you and your family or your business. If you're interested in finding out more, contact us to set up a risk-free consultation. We’ll answer any questions you have.