12 QUESTIONS TO ASK YOUR FINANCIAL ADVISOR
Perhaps you’ve always been a “do-it-yourselfer” or you’ve worked with a handful of advisors over the years. Whatever your situation, more and more retirees are interested to see what an advisor who specializes in retirement planning has to offer. But finding the right fit can be tough. Armed with the following 12 questions, you will be well on your way to retirement prosperity, rather than just survival! Don’t miss out on #12, as the simple reflection from this question may be even more helpful than the rest!
Are you a fiduciary? We’ve stressed the importance of working with a fiduciary in the past, but to recap, this means that an advisor is not only ethically and morally obligated to act in your best interest, but legally required to as well.
Learn more here: FIDUCIARY.
Do you ALWAYS act as a fiduciary? It seems silly we have to ask this follow up question, but unfortunately, receiving honest and objective advice is not as easy as it should be! Advisors may not know how to answer this question, so you could rephrase it by asking, “Are you dual-licensed (as an advisor AND a broker)?” Dually licensed advisors can wear two hats- one as a fiduciary and one as a salesperson. You may not be sure which you are receiving advice from!
*the CERTIFIED FINANCIAL PLANNER™ shall always act as a fiduciary
Who is your typical client? It is important to know who your advisor works best with- young couples? Retirees? Teachers or farmers? You may not find an advisor who specializes in your exact situation, but it is important to know they have experience working with others similar to you.
To see who we work best with, check out WHO WE SERVE.
Do you have an investment philosophy? The obvious follow-up question: what is it? While investment strategies will vary to each individual’s needs, an advisor’s investment philosophy is the bedrock for what they believe. This should be where they plant their flag, stand on their soapbox, and speak with passion! If you don’t connect with your advisor’s investment philosophy, it will likely cause many problems down the road.
To review ours, check out OUR PHILOSOPHY.
How are you compensated? There are a variety of ways an advisor may be compensated. Some include- sales loads directly from the funds they recommend, hourly or flat fees, asset fees based on the size of your accounts, commissions, and/or transaction fees when buying and selling investment positions. A good follow-up question is to ask if there are any additional fees that do not go to the advisor. It is important to understand your all-in costs and the value you receive in return. Any unnecessary expense, however small, can have a big impact when compounded over the course of retirement!
To learn more, read THE PROBLEM.
What are your credentials? The tiny letters on an advisor’s business card may seem inconsequential and even challenging to understand, but they show a dedication to mastering one’s profession. However, not all credentials are created equal. Ideally, an advisor is either a CFA® (Chartered Financial Analyst), CFP® (CERTIFIED FINANCIAL PLANNER™), or PFS™ (Personal Financial Specialist). They may also hold designations specific to your situation, such as RICP® (Retirement Income Certified Professional) for the retiree developing an income plan, or CDFA® (Certified Divorce Financial Analyst) for someone going through a divorce. What you want to avoid are generic answers such as, “I specialize working with retirees, divorcees, etc.” without the credentials to support this claim.
To learn more about my own credentials and what I’m excited to tackle next, view LOREN’S DESIGNATIONS.
Do you have a minimum investment requirement? Often advisors require you to invest a minimum amount of money to make the relationship viable. If you are below the minimum, it may be worthwhile to discuss if there are exceptions- for example, if you have a plan to invest more over time or if the advisor offers alternative pricing models. It is important to talk through expectations up front so everyone is on the same page and you can make the most of your relationship.
While Integrity Wealth Management does not have a minimum requirement, our investment management services make sense for retirees with $300k and up.
Learn more here: FEE STRUCTURE.
How often can we expect to meet or communicate? It is important the advisor can lay out what an ongoing relationship will look like. Do you meet monthly, quarterly, or annually? Perhaps meeting frequency is flexible or strategic in nature. How you meet is also important- some advisors offer in-person visits, virtual meetings, or a combination of both.
What services do you provide clients? Some advisors offer products for sale and that is the end of the relationship. Others manage assets throughout retirement, while comprehensive advisors take services a step further with a financial plan, tax coordination, social security strategies, insurance coverage and much more. Understanding what you need and managing expectations upfront will help you determine if a relationship is a good fit. It will also help you decide if you need to hire multiple professionals for each service you request.
Check out OUR SERVICES.
How will you safeguard my assets (where do you custody)? If an advisor ever asks you to write them a check directly, run the other way! They should always safeguard your assets by working with a respected custodian (or insurance company for insurance products). Common custodians include: TD Ameritrade, Charles Schwab, Fidelity, Altruist, and so on.
What can I expect if I meet with you? These 12 questions can often be asked over the phone or before meeting with an advisor, but what happens if you want to move forward? Advisors should be able to clearly lay out their process with complete transparency, so you always know what is coming next. A well-prepared advisor may also share a list of helpful items to bring to your meeting or even give pre-meeting “homework” to complete. Knowing what to expect can reduce uncertainty and anxiety, making it more likely you will start working toward your goals!
You can see how we lay out our meetings here: OUR PROCESS.
The last in this list questions are for yourself instead of your advisor, but they could be the most important! Do you like the advisor? Do you trust them? Do you see yourself working with them for many years? Do they listen or are they just giving you a well-rehearsed pitch? Would you feel confident leaving your kids or grandkids’ finances with them should anything happen to you?
An advisor could check all the boxes, but if you cannot confidently answer “YES” to these last questions, the relationship has little chance of flourishing!
Feel free to print these questions to help find the right advisor for you! We will chat more in two weeks. Until then, don’t hesitate to ask us any of the above questions or any add a few of your own- we’re happy to share more!
Disclaimer: None of the information provided herein is intended as investment, tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement, of any company, security, fund, or other securities or non-securities offering. Your use of the information is at your sole discretion. The content is provided ‘as is’ and without warranties, either expressed or implied. Integrity Wealth Management LLC does not promise or guarantee any income or particular result from your use of the information contained herein. Under no circumstances will Integrity Wealth Management LLC be liable for any loss or damage caused by your reliance on the information contained herein. It is your responsibility to evaluate any information, opinion, or other content contained.
CFP® RICP® AIF® CRC® CKA® WMCP®