10 questions to ask a potential advisor (Financial Safari)
From pay structure to qualifications, every advisor is different. Make sure you are getting one who is transparent, certified, and versatile.
are you looking to meet with a financial planner? Are you looking for an investment advisor, A financial coach or maybe a broker? Whomever you end up meeting with asking the right questions up front can save you a world of headaches along the way and save you a lot of money. Here are 10 questions you need to ask when considering a financial advisor. One. How are they paid? Financial advisors are either going to be paid from fees or commissions. A fee is a flat rate that you pay upfront. It might be an hourly rate, a flat retainer fee or an asset under management fee and advisor. Getting paid through commissions gets paid in various forms. Some commissions are in what the financial industry calls loads. You can pay front end loads to get in or back in loads when you're trying to get out. Some commissions are even hidden in places you don't see. The best commission is one that comes out of the financial institutions pockets and doesn't affect your balance to what are your all in costs. In addition to paying an advisor, you might be facing other hidden fees as well. These financial termites might be eating up your account at a faster rate than you might realize. The impact of fees can be seen in this graph. In this scenario, we're starting with $200,000 in an account with 6% growth. The top line of this graph shows compounding interest with no annual fees. After 30 years, this account would grow to 1.15 million if you add just 1% in annual fees. After 30 years, you're down to about 860,000. If you add 2% in fees, you're down to about 650,000. Make sure you don't have any unnecessary fees in your portfolio. Three. Are they a fiduciary? It's a good idea to make sure your financial advisor is a fiduciary. A fiduciary financial advisor is registered and regulated by the Securities and Exchange Commission. They are required by law to always act in the best interests of their clients. Traditional brokers might claim they will, too, but this certification gives you an extra layer of trust for what are their qualifications? What certifications does your advisor hold? Are they accredited? Don't fall for the fancy marketing credentials. Some accredited designations are certified. Financial planner, retirement income certified professional, master registered financial consultant and chartered financial consultant. There are a lot of certifications out there for financial advisors. Make sure your advisor is qualified to support your unique situation. Five. Are they an independent advisor? An independent advisor means they aren't affiliated with a larger company or in partnership with specific companies like a brokerage firm or life insurance company. If they aren't independent, they might be restricted to only use the products and services available from the company they are affiliated with and could present a conflict of interest. An independent advisor will have access to more of the tools and services that may be the better option for you. Six. What is their investment philosophy? Make sure you and your advisor adhere to a similar investing strategy. Do you have a similar risk tolerance level or maybe socially responsible? Investing is important to you. Talk with your advisor about the values that are important to you. They may be able to help you create a portfolio that aligns with your values. Seven. How often should you meet? Are you going to meet once per year? twice per year. Are they available by phone or email for questions? Outside of those appointments, will you as an investor, want to be hands off or heavily involved? Make sure your relationship with your advisor works for you, and your communication is clear. You will not want to hesitate to reach out when you have questions. Hate. What is your tax strategy? The best financial planners coordinate with the CPA or another certified tax planner to make sure you're getting optimal tax advice each year. Remember to account for taxes when looking at your portfolio balance. Nine. Who is the custodian of your investments? A. Custodian is an institution that physically holds your assets for security. Ideally, your financial planner will hire an independent custodian, such as a brokerage, to hold your investments. This provides an important safety check, and you won't have to wait for your advisor to send your performance information. You can go online and check your accounts at any time. 10. Can I get a second opinion? No matter what you're looking to do with your money, always, always get a second opinion. If there are resistant to the idea, you might want to think twice about working with them When speaking with a retirement planner, Don't be afraid to ask questions. You've worked hard for your money, and your advisor should earn your trust. Asking the right questions could be the difference between a retirement dream and a retirement nightmare. At Capital Financial, we have a team of dedicated fiduciary financial advisors. Contact our office today for a no cost, no obligation consultation, and our team will be happy to answer all of your questions.