Whether you’re new to the world of investing or have experience with the markets, if you are looking for a financial advisor, there are some important questions you should ask before making the commitment.
Ready to talk with a fee-only fiduciary financial advisor? Contact Financial Freedom to see how we can help.
There are many factors that can affect your decision, depending on your priorities and your investment style and philosophy. Perhaps you’re looking for someone who has many years of experience, or maybe you’d like someone with a fresh approach to investing. Maybe it’s the fee structure that matters the most to you.
It’s important to know what questions to ask before you start your search, so you can be confident you’re asking the questions that are important to you and will help you achieve your financial goals.
Here are 5 questions to ask:
#1 How Long Have You Been Practicing?
For some, this question is extremely important, but for others, it may not be a deal-breaker. Regardless of where you stand on this point, it’s important to gauge the experience level of any potential financial partner. Also, by asking how long they have been in business, you’ll likely get additional information as far as where they have worked in the past (if different from their current firm) and how many different firms they have worked for in total.
Depending on the answer to those questions, it may trigger red flags for you. If so, you can ask why they have held many different positions. The answer may surprise and/or reassure you, or it may have the opposite effect. Either way, you can get better insight when you get an answer directly from them, rather than reading a resume or work history on LinkedIn. Even if job experience isn’t your number one priority, asking this question can give you more information on any potential CERTIFIED FINANCIAL PLANNER™ professional (CFP®).
At Financial Freedom Fee-Only Wealth Management, we bring over 30 years of experience helping clients manage their wealth no matter where life takes them.
#2 Are You a Fiduciary?
By definition, a fiduciary has a legal and ethical responsibility to act in the best interest of their client. We’d all like to think that all financial advisors and CFP®s are acting in your best interest—and they likely are. But it can be a slippery slope when it comes to balancing their own interests with those of their clients.
Ideally, those interests would align, but in a situation where they have to make a choice, having a fiduciary means they are legally bound to act in your best interest and not in their own. For some investors, having a CFP® who is also a fiduciary gives them the needed peace of mind. If you’re switching advisors and have always worked with a financial advisor who was a fiduciary, you’ll likely be looking to partner with that same designation.
All of the advisors at Financial Freedom Fee-Only Wealth Management are CFP®’s and we act as fiduciaries to our clients 100% of the time.
#3 Do You Have a Typical or Ideal Client?
While you’re interviewing financial advisors, they are likely also interviewing you. Some advisors only choose to work with specific clients that meet their minimum investment requirements. While other CFP®s may only specialize in clients who work in specific industries or have a minimum number of years of investment experience.
Even if the Financial Advisor doesn’t have a specific clientele, learning about the types of clients they serve can be another way to get to know the way they interact with their clients and run their business. To take it a step further, you can ask if they have any long-term clients and which industries and/or asset levels they work in or belong to. Even if you don’t fit their exact criteria, that doesn’t mean you wouldn’t make a viable client, but it would give you a pretty good idea of if you would even like to entertain the idea of becoming one of their clients.
At Financial Freedom Fee-Only Wealth Management, we understand the importance of having a good fit when it comes to a mutually beneficial long term relationship. We strive for a ‘win-win’ relationship with all of our clients.
#4 What’s Your Fee Structure?
While asking someone how they get paid can be an uncomfortable topic, when it comes to working with a financial advisor, that’s an important question that shouldn’t be met with hesitation.
Any potential Financial Advisor or CFP® should be 100% transparent with their customers about how they make money. If they aren’t completely transparent or are uncomfortable or somewhat evasive about talking about fees, that should be an indication to cause pause.
#5 What’s Your Investment Philosophy?
This can mean different things to different people, but ultimately it would be ideal for your Financial Advisor to share your same investment philosophy principles. This can include how they feel about what to do when the markets fluctuate as well as their overall approach to managing their clients’ money. The bottom line is if you don’t feel like their philosophy lines up with your ideal CFP® relationship, you can move on.
At Financial Freedom Fee-Only Wealth Management, we understand what’s truly important to our clients and construct comprehensive wealth management plans that will help guide them toward financial security and independence. Contact us today for a complimentary consultation.