It’s not easy finding a financial advisor.
After all, you have to trust this virtual stranger enough to reveal your financial situation – or hand your money over -- to him or her. But these steps can help you find the right fit.
1. Are you a fiduciary?
A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties.
Money managers, financial advisors, bankers, accountants, executors, board members, and corporate officers can all be considered fiduciaries. But, unfortunately, the financial industry doesn’t always follow the same standards when it comes to providing investment advice to clients.
Fiduciaries work in the best interest of the client. Nonfiduciaries need only to recommend products that are “suitable” — even if they’re not the lowest-cost or most ideal for you.
2. 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.
3. What are your credentials?
Tailoring your advisor's experience to your needs can save you time and money.
Whether they're certified financial planners, chartered financial consultants (CFA) or registered investment advisors will make a big difference to your final fee.
For deep investment analysis, CFAs are the best port of call. High-income earners and small business owners should consider a certified public account (CPA) for advance tax planning. Personal financial specialists (PSFs) are CPAs who also do comprehensive financial planning.
4. What services do you/does your firm provide?
Some people are just investment advisors and only provide you advice on your investments whereas others do comprehensive financial planning around retirement, insurance, estate planning and tax planning.
It may seem simple, but it's best to be aware and go with someone whose offerings suit your needs.
5. What types of clients do you specialise in?
Financial advisors often boast a niche, 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.
Most advisors tend to focus on people within 10 years of their age in order to understand the common financial worries such as housing, retirement or children.
6. Could I see a sample financial plan?
Financial plans vary wildly which mean that they could be difficult to understand for someone not well-versed in them.
With a sample, you can say, ‘I really want that in-depth analysis,’ or ‘I don’t understand that.’
8. How much contact do you have with your clients?
Some planners work on a yearly basis whereas others tend to meet more frequently. It all depends on the level of support you're looking for and the amount you're willing to pay.
If you’re not sure of what you’ll be comfortable with, a J.D. Power & Associates survey found that investors contacted 12 or more times a year had the highest rates of satisfaction with their advisors.
9. When should I start saving for retirement?
It’s important to know that the earlier you start saving for retirement, the less you’ll have to save in the future, so it’s important to start as soon as possible.
So, start with your first paycheck. What if I haven’t started saving? Start right now. It’s never too early and it’s never too late.
10. What makes your client experience unique?
Basically, ‘Why do I want to work with you?’
This will also give you insight into whether their strengths are the ones you seek in a planner. They should also be able to tell you whether they work in a group or solo – meaning you can suss out what meetings will be like going forward.
Main image by @lucywilliams02