8 Important Questions to Ask Your Financial Advisor Before Hiring
Hiring a financial advisor is not as easy as some might think because you are hiring someone who will help you make some of your life’s biggest financial decisions. Your financial advisor helps you decide what type of house or car you can afford or if you are saving enough money for your children’s education.
You will also seek their advice on how to build long-term wealth and save for your retirement. Therefore, you have to be vigilant while choosing your financial advisor.
Here we have a list of the 8 important questions that you need to ask your financial advisor before hiring them.
What License Do You Carry?
Almost all financial advisors carry so many different licenses to prove that they are allowed to give you financial advice. However, what you are looking for is an insurance license.
If your adviser has one of those, they are not fee-only and are going to make a commission off of selling your insurance. So, you need to ask your financial advisor what license they have before hiring them.
How Do You Get Paid?
This is one of the most important questions that you could ever ask a financial advisor. This is because there is a big difference between fee-only and fee-based financial advisors.
Fee-only advisors are better because they do not sell financial products like insurance and earn a commission. Fee-based financial advisors sell products and charge commissions. They prefer their interests instead of their client’s best interests.
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Do You Inform Your Clients Before Making Changes in Their Portfolio?
This is also an important question to ask, mainly because of people’s preferences. Some people want their advisors to manage all of their finances for them like balancing their portfolios and purchasing the funds on their client’s behalf.
Other people like to be informed before their advisors make any changes. So, ask your advisor how they handle portfolio changes and make sure it is in line with what you prefer in an advisor\client relationship.
What Happens to Your Clients If Something Happens to You?
This is a question that not many people want to ask their financial advisor because it is not the most pleasant topic to discuss but, it is important.
What if your financial advisor dies unexpectedly? What will happen to your money and will you have access to your accounts? Make sure your advisor has a plan to manage your finances if something unexpected happens.
Who Are Your Typical Clients?
Many financial advisors work with clients who have specific needs. If you have specific investment needs, it is a good idea to hire an advisor who is used to dealing with such things.
For instance, an advisor who works with small business owners will know how to handle business tax deductions, create a health plan, etc. Similarly, an advisor who works with millennials is likely to know all about refinancing, student loans, etc. So, look for an advisor who understands your specific needs.
Can I See a Sample Financial Plan?
Asking to see a sample financial plan at the interview gives you an idea of what to expect in your dealings with your advisor because some people want to know everything about their finances so the more details their advisor can provide, the better.
Whereas, some people find too much information overwhelming and want their advisor to boil it down to its essentials. So, always ask your advisor for a sample plan.
What Services Do You Provide?
Before hiring a financial advisor, you need to know what services come with the fees you pay and what cost extra money. For example, if you hire a CFP to set up a financial plan for you, that plan might include setting up a trust. This service is not included in your base fee so you will pay extra money.
If you want to avoid such confusion, then always ask prospective advisors about your “all-in-costs” for their services.
What is Your Investment Philosophy?
You are better off with a financial advisor whose investment policy matches your own. If you make simple investments, you will not be happy with an advisor who moves money around in complicated ways to maximize your return.
One simple to get a sense of an advisor’s investment policy is to ask them how they invest their money. If they invest in the same way as you, then you will have no problem taking their advice. You can visit Web Access for more financial advice.
You might feel uncomfortable asking these questions while hiring a financial advisor but it’s fine because a good financial advisor realizes the importance of a good relationship between the advisor and the client.
Here we have talked about everything you need to know before hiring your financial advisor. We hope this list of questions will help you find the best financial advisor for you.