Planning for retirement will require help from a professional. Knowing the right questions to ask a potential advisor can help ensure you get an advisor that best suits your individual needs. When you begin to interview a financial advisor, be sure to ask questions – lots of them!
Are you a fiduciary? This is important because a fiduciary must put your best interest first, meaning before their own. A fiduciary’s duties are both ethical and legal, and they must adhere to a strict code of ethics set forth by the Financial Industry Regulatory Authority (Finra), the Securities and Exchange Commission (SEC) and state and regulatory agencies.
What are your fees? Your advisor should be 100 percent transparent when explaining their fee structure. Many do not spell out in advance the additional fees each year for investments such as mutual funds. Look for a fee-only financial planner, they are registered investment advisors with fiduciary responsibility, and they may not accept fees or compensation based on product sales. Some Advisors do get paid commission on investments or other products they sell – this information needs to be explained clearly to you.
What services do you offer? Keep in mind that many advisors may offer fewer services and charge higher fees. Before you enter into an agreement, do your homework and get an idea of what other advisors in your area are offering for the same price. Look for an advisor that provides personalized service, a specifically designed holistic plan and one that is actively involved in helping you with all your financial decisions. This should include annual review meetings to ensure your financial plan is up to date.
What type of communication will I receive as your client? Your advisor should provide active and transparent communications to let you know they are actively monitoring your account. Monitoring things like trade notifications, weekly market commentary, investment outlooks, and various other educational resources that help educate you the client. They should also be available to answer your questions and proactively educate you with a thorough explanation of the strategies being used to manage your investments.
What professional experience and credentials do you hold? There are over a 100 different financial advisor certifications and designations. But there are a few that truly matter. A Certified Financial Planner (CFP), A Chartered Financial Analyst (CFA), and A Certified Divorce Financial Analyst (CDFA), should you be going through a divorce.
It is imperative that you do your homework before you hire an investment advisor. Selecting the right financial advisor is extremely important to your financial well-being. You want to hire someone you trust that will partner with you to plan, invest and manage life’s financial decisions with your best interest in mind.
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