Questions for Interviewing Financial Advisors?
Am I Ready For This Interview or Is This Interview Ready For Me?
What terms do you need to understand when interviewing financial advisors?
What questions should you ask when interviewing financial advisors?
What are some tips for getting the most out of your appointment with your financial advisor?
Interviewing financial advisors allows you to find an advisor who best suits your financial needs. This process can help you evaluate the advisor’s qualifications and experience, and understand their approach, investment philosophy, risk tolerance, and overall approach to financial planning. You will be able to evaluate their communication skills to ensure they will fit your styloe, and you can review their fees and services to see if they will be of benefit to you.
Interviewing at least 3 advisors before making your decision can help you compare the fees and services offered by the different advisors.
Questions to Ask When Interviewing a Financial Advisor
1. Are you a fiduciary? – Another way to ask is, Who else stands to gain from the advice you give me?
Fiduciaries work in the best interest of the client. Remember, they must put your interest ahead of their own. If they are no fiduciaries, they are only required to make recommendations for products that are “suitable” – even if they’re not the lowest-cost or most ideal for you. Make sure they follow the fiduciary standard.
Advise Chaser: Be sure to do your research beforehand as some might answer yes to this question even though they do not follow fiduciary standards.
BrokerCheck.finra.org Is somewhere you could go to see if someone made a complaint about them.
Look for referrals
Other research (Do your homework)
2. How do you get paid or compensated? – This can be another way of asking if they are a fiduciary advisor because a fiduciary is synonymous with compensation. They create a plan for you for a fee.
They can get paid through fees, commissions, or a combination of both.
It’s important to know how your financial advisor is making money and how much your fees will be.
To make things simple and avoid conflicts of interest, focus on fee-based advisors. This means they do not get commissions for selling you products. Some of the different fee structures you might hear about are flat-fee, hourly fees, or they might charge a fee based on assets under management.
An advisor selling products is not necessarily bad, but you need to be careful they are not directing you in directions that might not be best for you at that time. Be sure to know if they are incentivized to sell products with a company they represent.
3. What qualifications and experiences do you have?
How long have they been in the industry, and what designations do they have? (Some designations to look for include CFP, CFA, CPA/PFS, CLU, ChFC)
Make sure to examine their Form ADV, especially Part 2 as this will give you more information about their record.
The ADV is a form used by investment advisers to register with the Securities and Exchange Commission (SEC) and the state securities authorities. It consists of three parts, and part 2 is where you will find a narrative in plain English about the adviser’s business practices, fees, conflicts of interest, and disciplinary information.
4. What services do you offer?
This will be determined by the expertise they have and any licenses or credentials they hold. Make sure the services they offer align with your needs and that they are not one-dimensional (i.e., only sell insurance products)
It’s important to consider whether you want investment management or if you want more of a comprehensive financial plan. Are you wanting a financial professional who can help with budgeting and getting out of debt or someone who can do estate planning? Make sure you find someone who can meet all your needs and can help you reach your different goals.
5. What are my overall or all-in costs?
Not only will you have to pay the advisor, but you will also have to pay other fees if you are wanting to invest. Make sure you are fully aware of all trading fees, as well as any fund fees that might take place. You can easily lose more of your investment than you might think solely due to account and trading fees.
6. Who will I be working with?
Depending on the firm, you may be working with only one advisor or a team of advisors. Ask who you will be in touch with on an ongoing basis if they work with other professionals such as insurance agents and attorneys.
7. How often will we meet?
Will you meet every six months or yearly? Regular communication with your financial advisor is important to ensure that your financial plan stays on track. Ask how often you will meet and how you will stay in touch between meetings.
8. How do you communicate with your clients?
It’s good to know how you will communicate and how much access you will have to your financial advisor. Do they offer in-person, phone, or online appointments? Will they be available for other forms of communication outside of appointments?
9. Who is your custodian?
In most cases, your financial advisor has hired an independent custodian, such as a brokerage, to hold your investments, rather than act as his or her own custodian. This gives you the ability to perform safety checks, which means you have another place to look for accurate and updated information about your assets.
10. What types of clients do you specialize in serving or typically work with? or Do you have experience working with clients in my situation?
Some financial advisors target a certain niche, like younger people or people close to retirement. They might also have certain net worth thresholds as some may only work with ultra-high net worth families or individuals. It’s important to find someone who has experience working with clients that have similar needs.
Working with advisors whose worked with clients with similar situations to yours can make them better equipped to offer the type of guidance and advice you need.
11. What tax consequences do I face if I invest with you?
Asking this question ensures that the advisor has your tax bill in mind when making financial decisions. This can help you find out, “What do you get to keep after all fees and taxes are paid?”
12. What is your investment philosophy and approach to planning?
Make sure their philosophy and approach are similar to your own, such as whether they are too cautious or too aggressive for your needs.
Sharing a similar investment philosophy with the advisor you’re hiring is important because you must believe in the decisions they are making. If you do not, then you will not stick with it.
13. Who else stands to gain from the advice you give me?
Ask your financial advisor about any potential conflicts of interest. Financial advisors that sell insurance policies, mutual funds, or similar products may have pre-existing relationships with the companies that provide these products.
14. Have you ever been professionally disciplined?
FINRA, CFP Board, and state securities and insurance agencies keep records on the disciplinary history of financial advisors. You can contact the organization the advisor is regulated by to see if they’ve ever been subject to any disciplinary action.
15. Can you provide references?
Talking to current or former clients of the advisor can give you a better sense of their experience working with the advisor. Ask for references and follow up with them.
These are just some suggestions for questions to ask during your interview process. Take some or all of these questions, or maybe these questions will help you think of others that will be more beneficial for your situation. By asking the right questions and taking the time to find the right advisor, you will be able to create a financial plan that works for you and helps you achieve your financial goals.
Disclaimer: I am only learning myself, so I cannot guarantee this information is completely accurate, but my hope is that it can give you a good starting point if you are interested in finding a financial advisor as well. Be sure to do your own research and let me know if you have any additional information or corrections to add to this information.
If you want to learn more, check out my Financial Professionals page for additional information.
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