Once you’ve gotten a list of potential advisors, take one more step before setting up appointments to meet: Find out whether each has ever been disciplined for any unlawful or unethical behavior.
When you have your initial interview, here are the questions you want to ask:
How do you charge for your services, and how much?
If you didn’t see this information on the planner’s web site, ask whether there’s an initial planning fee, whether they charge a percentage for assets under management, or whether they make money from selling you a specific product. Not only should you know how much the service will cost you, but it can help you determine whether they have an incentive to sell you things.
What licenses, credentials or other certifications do you have?
Of the four main types of financial advisors, the certified financial planner (CFP) designation is harder to achieve than Chartered Financial Consultant (ChFC), because the former requires a comprehensive board exam; the latter, however, uses the same core curriculum. If you want someone to manage your money, then look for a registered investment advisor (RIA). If you have a high income or a small business owner, you’ll probably want a certified public account (CPA), who can offer you advance tax planning. The personal financial specialist (PSF) certification is usually obtained by CPAs who want to demonstrate they can help clients with comprehensive financial planning.
What services do you/does your firm provide?
Implicit in this question is also what assistance the advisor will not give you. “Some people are just investment advisors and only provide you advice on your investments,” Other people do comprehensive financial planning around retirement, insurance, estate planning, and tax planning.” Go with someone whose offerings suit your needs.,
What types of clients do you specialize in?
Some financial advisors have a niche, says Bera, and if you have a specific interest, such as charitable giving or socially responsible investments or if you’re a newlywed or recently divorced — you’ll want to find one that concentrates in that area too.
Could I see a sample financial plan?
There is no one set structure for a financial plan, which means there is wide variation. “Some people might give you 50 pages of stuff you don’t understand like charts and graphs, and another planner might provide a five-page snapshot of your financial situation.
What is your investment approach?
If you have a strong preference for a particular philosophy, ask the advisor what his or hers is. For instance, if you prefer to use low-cost funds, you can ask whether they plan to used actively managed funds or passive investments.
How much contact do you have with your clients?
“Some planners hold an initial planning meeting and then you see them once a year, and that’s all you get,” says Bera. Others might have quarterly check-ins. “Some clients just want to go over everything once a year and then they’re good. Others are looking for more support, so it depends on the amount you want to pay, and how involved you want your planner to be.
Will I be working only with you or with a team?
This question will also help you see how often you’ll be in touch with your advisor. Some companies have a team approach rather than an individual approach.
What makes your client experience unique?
This will also give you insight into whether their strengths are the ones you seek in a planner. This pitch would appeal to some clients, but not ones who, for instance, are out to maximize returns in the market.
Did he or she ask me questions and seem to be interested in me?
“Does he or she talk 90% of the time? If it’s more like 60/40 and he has asked you how he or she can help you, that’s really important. Financial planning about looking at the person’s individual circumstance instead of punching in some numbers — it’s based on the client’s goals, financial background, what they believe about money, and so on.