When it comes to our money, how well our investments do is out of our control — as they say, past performance is not an indicator of future results. But, who we choose to manage our money is.
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.
2. 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.
3. 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,” says Bera. “Other people do comprehensive financial planning around retirement, insurance, estate planning and tax planning.” Go with someone whose offerings suit your needs.
3. Is your first meeting free?
Many financial advisers offer a free first meeting that gives potential clients an opportunity to meet the adviser face-to-face. The introductory meeting is a good time to ask questions about what to expect, how many meetings you’ll need to develop the financial plan, what information you will need, how they charge for their services as well as any specific concerns or interests you may have such as investing in shares, SMSF, retirement planning, insurance etc.
Some advisers will post or email a questionnaire prior to the first meeting so you can come prepared and you will recieve an Financial Services Guide (FSG) to take away. The FSG generally looks like a dry document however it outlines the adviser’s qualifications and the products and services they are authorised to provide advice on.
5. 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,” says Bera. “With a sample, you can say, ‘I really want that in-depth analysis,’ or ‘I don’t understand that.’”
6. 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. Wacks gives an example of the kinds of differences in investment philosophy that can arise: “I say to the client, ‘I’m not here to make you a lot of money. If you want someone to do that, and trade stocks back and forth, then I’m not the person. If you’re looking for someone who makes investments consistent with your risk tolerance and goals, then I can help you.’”
7. How much contact do you have with your clients?
“Some of 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. Are you a delegator? Or do you expect your advisor to explain things to you?” If you’re not sure of what you’ll be comfortable with, the J.D. Power & Associates survey found that investors contacted 12 or more times a year had the highest rates of satisfaction with their advisors.
8. 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 will say, ‘I’ll meet with you once a year, but Gina will reach out to you regularly and is my right hand person and does a lot of data gathering for me.’ Some companies have a team approach rather than an individual approach,” says Bera, adding that one isn’t better than the other. “It’s really whatever your preference is. But I wouldn’t want someone to get into a relationship and say, ‘I only see my advisor once a year, and I thought I’d be seeing him more often.’ Then others really like the team approach because they know if their planner is on vacation, they can still get an answer right away.”
9. What makes your client experience unique?
“Basically, ‘Why do I want to work with you?’” says Bera. “And people should be able to answer that.” This will also give you insight into whether their strengths are the ones you seek in a planner. For instance, she would tell clients, “I’m your financially savvy best friend,” and explain that her focus is on using their money to match their values. This pitch would appeal to some clients, but not ones who, for instance, are out to maximize returns in the market.
Finally, there’s one last question you want to ask of yourself after meeting with a potential adviser:
10. Did he or she ask me questions and seem to be interested in me?
“Do they talk 90% of the time?” , “If it’s more like 60/40 and he has asked you how they 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, etc.”
Author – Laura Shin
Article Source: FORBES