If you decide to work with a financial advisor, it’s important you find someone who understands your goals and has the credentials and experience to support you in your financial journey. Here are some of the most important questions to ask when you’re interviewing potential advisors:
Are You a Fiduciary?
Unfortunately, not all advisors are held to the same standard. A fiduciary has a legal obligation to hold your interests ahead of their own. Most brokerage firms are only held to a suitability standard, which means if the recommendation of a product or investment is suitable for someone, then it’s suitable for everyone.
Everyone’s situation is very different, so it’s important to get advice that is customized for you.
What are Your Qualifications?
The term “financial advisor” could mean many things to many different people. It could be the insurance agent who sold you a life insurance policy, or the banker who might live down the street from you.
That’s why I think it’s so important to ask, “What are your qualifications?” and “What kind of background do you have?”
A Certified Financial Planner® has to go through at least three years of comprehensive planning work, they have to pass certain courses and they have to take a comprehensive exam. Plus, they have to commit to upkeep of at least 30 credit hours every two years to make sure they’re staying on top of things.
I also think it’s important to know what kind of experience an advisor has. Just because they’ve been in the industry for 35 years does not automatically mean they will be the right fit for you. If you’re looking for someone who is doing comprehensive planning, how many years of comprehensive planning have they done?
How are you Compensated?
This might sound like a taboo topic, but realistically, when you pay for something, you want to know what exactly what you’re paying for. Why not know how much you’re paying for the advice that you’re getting?
Fee-only advisors are only compensated by their clients. There is no third party involved, so there are no commissions and no sales aspect to it. The client is paying the advisor for the advice that they receive.
I believe that is the only way to know if someone is truly objective. That way, there’s no gray area when it comes to compensation.
Do you need help preparing for retirement? Contact me today to set up a meeting to talk about your goals. You can also download my free ebook for physicians for tips and information about getting your finances on track.