Your financial advisor is an essential player on your wealth management team. A competent, trustworthy financial advisor can help you manage your money better, invest in high-yield instruments and boost your net worth. To reap these benefits, you need to ensure you’re working with the right financial advisor. Make the most of your visit with a financial advisor by asking these five questions.
1. What is your fiduciary status?
Your relationship with your financial advisor may or may not have fiduciary status. Fiduciary financial advisors are required by law to put their clients’ financial interests ahead of their own. This means they must disclose their relationship with any company they encourage you to invest in, as well as disclose all fees up front. Non-fiduciary advisors aren’t necessarily bad for you, but you should be aware of what you’re getting into before establishing a relationship with any financial advisor.
2. What are your credentials?
Don’t assume that fancy letters after your financial advisor’s name mean that he or she is qualified. If you don’t understand the significance of the advisor’s degree, ask for an explanation. Also ask for specifics about the type of credentials the advisor has and information about the board that licensed him or her. Obtaining this information will help you ensure that you’re getting the best possible advice.
3. Do you provide a variety of services?
Some financial advisors are investment-only advisors, while others provide wealth management, retirement planning and other financial services. Similarly, some financial advisors specialize in certain services. If you have special interests, make sure that your advisor will be able to help you with them. Ask what services the advisor provides and consider whether those services meet your needs prior to signing up.
4. What does a sample plan look like?
Ask any prospective financial advisor for a sample financial plan. By looking at samples, you can get an idea of the kind of work the advisor does, his or her planning style and whether your interests mesh with the way the advisor works. Looking at sample plans allows you to gauge the depth of the plans the advisor prepares. You may want less (or more!) detail than he or she usually gives.
5. How approachable are you?
Some advisors are more hands-off than others. They meet with clients once a year unless the client specifically requests other meetings. Other advisors take more of an active role, checking in quarterly and inviting clients to contact them with questions. Once you know what approach your advisor takes, you can decide if it works well for you and your needs.
Choosing a financial advisor is a big decision. The right advisor can help you double or triple your net worth and may be able to assist with financial planning and investments. If you ask the questions we’ve talked about, you can decide if a particular financial advisor is right for you.