Interviewing a financial planner can be overwhelming and time consuming. It’s essential to find someone you can trust, who will take the time to understand your specific financial goals and provide sound advice tailored to your needs. Taking these steps will help you make an informed decision and build a successful partnership with your financial advisor.
- Are you a fiduciary?
An advisor who serves as a fiduciary accepts a responsibility to put their clients’ interests first. A fiduciary is legally required to avoid conflicts of interest and provide unbiased recommendations and advice. Registered Investment Advisor (RIAs) are legally bound to serve as fiduciaries. is bound by law to serve as a fiduciary. In contrast, non-fiduciaries, such as broker-dealers, are subject to the suitability standard, meaning their products must be appropriate for the client’s specific situation.
- How do you get paid?
Fee-only advisors typically charge a percentage of the assets they manage for you (1% is common), a flat fee for services, or an hourly fee. It’s important to understand your all-in costs for the services you are receiving. For example, does the advisor charge an initial financial plan fee upfront? What is their asset under management (AUM) fee schedule? Knowing these details helps you assess the total costs and ensure transparency in the advisor’s compensation structure.
- What are your qualifications?
There are hundreds of designations in the financial services field, and some are more relevant than others. The gold standard in financial planning is the CERTIFIED FINANCIAL PLANNER™ (CFP®) designation. One great tool to help you make informed choices about individuals and firms is BrokerCheck.
- What’s your investment philosophy?
It’s important that you and your advisor share similar investment principles. Does your advisor believe in a buy-and-hold strategy, or do they move to cash when the market appears unstable? What type of investments do they use – diversified, low-cost funds or individual stocks? Additionally, who do they use as a custodian for your accounts? Understanding their philosophy will help ensure your investment approach is aligned.
- What services do you provide?
Ask a financial advisor about the range of services they offer and if they provide comprehensive financial planning. Do they manage the portfolio themselves, or do they outsource the management to a third party? What areas of financial planning do they specialize in? This may include retirement, tax, education, insurance, or estate planning. Understanding their services and specializations ensures they can meet your specific financial needs.
- How do we work together?
When selecting an advisor, it’s important not to feel rushed into a decision. Consider how accessible the advisor will be. Will you have regularly scheduled appointments throughout the year? Are they available for phone calls and emails? Additionally, ensure the advisor you are interviewing will be your primary point of contact. Understanding these aspects will help you gauge the level of support and communication you can expect.