Table of Contents
- 1. What’s Your Investment Philosophy?
- 2. How Do You Get Paid?
- 3. Are You a Fiduciary?
- 4. Do You Have a Minimum Financial Requirement?
- 5. Can You Assist with Tax Preparations?
- 6. Do You Have Any Conflicts of Interest?
- 7. How Often Will We Communicate?
- 8. What Are Your Credentials?
- 9. What Do Other Clients Like About Working with You?
- Find the Best Financial Advisor for Your Needs
You’re ready to take your financial management to the next level and hire a financial advisor. However, the prospect of trusting your money to someone you don’t know can be daunting.
Investing always has some risk attached, so how can you find someone who will help your wealth grow over time, with low risk? If you’re thinking about hiring a financial advisor, the process can be intimidating and you may not know how to start.
When you’re thinking about what questions to ask a financial advisor, keep reading to find nine of the best.
1. What’s Your Investment Philosophy?
One of the first questions for financial advisors is in regards to their investment philosophy. Not all investors work in the same way, so you want to be sure to find someone who will invest your money in a way that you agree with.
Some investors may believe in high risk, high reward, others may focus on diversification, and others may go for growth over a long period of time. Don’t be afraid to ask their strategies and make sure they align with your own.
2. How Do You Get Paid?
When it comes to money, the best financial advisors will always be upfront about their fees and how they get paid.
You may prefer to work with fee-only fiduciary investment advisors, while others may be fine to work with someone who operates based on commission.
It’s important to know from the beginning as to what fees, if any, you’ll need to pay. Make sure you understand the pricing model and be sure it’s one you’re comfortable with using.
3. Are You a Fiduciary?
You’ll want to ask your potential financial advisor if they’re a fiduciary. A fiduciary is someone who is registered and licensed, often with the SEC, and is legally required to act with unbiased and objective financial advice.
A fiduciary is someone who works to higher standards and is who you want to invest with. Someone who is not a fiduciary may receive commissions or kickbacks on the products they sell, meaning the financial advice you’re getting may be based on their desire to turn a profit, and not what’s best for you.
4. Do You Have a Minimum Financial Requirement?
Do you know how much you want to invest? Some financial advisors have minimum requirements when it comes to investing.
If you’re looking to make a smaller investment, you’ll need to find an advisor who works with clients who match your budget. Should you not meet the advisor’s requirements, they should be able to refer you to someone else who can.
5. Can You Assist with Tax Preparations?
When it comes to paying tax on capital gains and profitable investments, this may change how much tax you owe. However, tax on investments can be complex, so always ask your financial advisor if they will be able to help.
A good financial advisor should understand tax law extremely well and should be able to provide you with all the documentation needed to file your taxes.
6. Do You Have Any Conflicts of Interest?
Does your financial advisor have any biases or conflicts of interest? You need to know this, as they may otherwise try to direct your money into a place that benefits themselves more than you.
Ideally, your advisor should have zero conflicts of interest and should be honest with you about this from day one.
7. How Often Will We Communicate?
It can be useful to ask your advisor how often you’ll meet in person or communicate over phone or email. Depending on your needs, this may be quarterly or annually.
You want someone who will communicate with you as needed, but also you don’t want constant phone calls or emails. You should be able to work out a schedule that both parties are happy with.
8. What Are Your Credentials?
You’ll need to ask your potential advisor about their credentials, experience, and qualifications. Did they go to university? Which professional bodies are they a member of?
Experience is also a key factor, as an established financial advisory firm with years of experience is probably going to do the best at maximizing your return, based on what they’ve done for similar clients.
9. What Do Other Clients Like About Working with You?
You may want to ask your advisor what other clients like about working with them. It’s an interesting way to find out what their strengths may be and to work out whether or not they would be a good match for your needs.
You can also gain this information by reading online reviews. If you can find unbiased reviews online, either on their social media pages or on a review site, you can gain more insight into what the advisor is like to work with and whether previous clients would recommend the advisor to others.
Find the Best Financial Advisor for Your Needs
Selecting the best financial advisor for your needs is actually its own investment, so it’s not something you want to rush into.
Take your time to do your research, read through the website of potential options, then arrange a phone call or meeting to discuss in further detail. Use the questions above to ensure you get all the information you need before making a decision.
Remember, if an advisor doesn’t feel right for your needs, it’s ok to walk away. It’s your money, so you want to make sure you put it in the right hands.
Get started today and you’re sure to find the perfect financial advisor who can help you grow your wealth.
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