When searching for a reliable, effective, and trustworthy financial advisor, it is important to establish a baseline level of confidence. To gain that confidence, there are several questions you can ask a potential advisor. Today, we will run down some common questions to ask your financial advisor when first meeting them to establish a baseline level of confidence and hopefully foster a strong and beneficial working relationship.

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Are They a Fiduciary, and What Are Their Credentials?

These tend to be the first questions most people ask, and for good reason. Fiduciaries generally have an obligation to care for their client’s best interest, even over their own interests. An advisor that is not a fiduciary does not have such an obligation.

Additionally, most people want to know their advisor’s specific credentials. For instance, a financial advisor may be a licensed certified financial planner (CFP), a certified public accountant (CPA), a Chartered Financial Consultant (ChFC), or something else. The credentials an advisor has may be useful for clients to understand how suitable their services are for the clients’ needs.

What Services Do They Offer, and What Experience Do They Have?

Not at all financial advisors offer the same menu of services, depending on their credentials and background. Therefore, even a perfectly competent and effective advisor may be unsuitable for certain clients if their area of expertise is unrelated to the issues affecting those clients. There are a variety of specializations for financial advisors, and many clients shop around to find the right fit for their specific financial concerns.

As with the services offered, clients generally look to understand their advisor’s level of experience with specific fields. Again, having a highly experienced advisor may not end up being as useful if the client’s issues are unrelated to the advisor’s main area of experience. For instance, a client seeking to navigate issues surrounding charitable giving may not be best served by an advisor who tends to specialize in general financial planning and investment management.

What Does Their Fee Structure Look Like?

Another point on which people seek clarity is how the advisor gets paid. For example, an advisor may earn a flat or fixed fee, may be paid hourly, could receive commissions, or receive fees from assets under management, to name a few. While these are all valid ways of structuring payments for their services, some payment schemes may be better for certain clients than others. Those seeking discrete financial advice regarding a specific situation, like wanting to create a retirement plan, may find that a flat fee is more suitable than an hourly fee, which may work better for individuals seeking financial advice at regular intervals over time.

Some advisors may receive commissions from recommending certain products to their clients, while a common fee many advisors make money from is the AUM, or assets under management fee. Generally, advisors make money from assets under management through a percentage of their client’s managed investments.

What is Their General Investment Philosophy?

For most people, knowing what an advisor’s investment philosophy is will help them understand and become more comfortable working with that advisor. Generally, if clients are looking for advice regarding investments, a typically large part of any financial planning strategy, it is beneficial to know what the advisor’s investment philosophy is at least in broad strokes.

For instance, an advisor may focus on reducing taxes and maintaining healthy diversification while mostly dealing with index funds. Other advisors might be more proactive and focus on trading individual stocks or alternative investment strategies. Most clients want to be informed about not only what investment services their advisor offers but also that advisor’s viewpoint on how to effectively invest.

How Do They Keep Their Clients Money, and How Can it Be Viewed?

This is a question that may end up being overlooked, but many clients like to know how their money is handled by their advisor, particularly with respect to whether the advisor makes use of a third-party custodian. A major third-party custodian is typically a financial institution like a brokerage that holds clients’ investments so that the advisor does not hold the investments themself, and the custodian allows the clients to view their accounts without using the advisory as an intermediary.

Choose The Templeton Group

If you’re hoping to work toward financial independence, financial planning is critical. The experienced financial planners at The Templeton Group can help you to build a strategy to work toward your goals. To learn more about our services and how we may be able to help you, request a free initial consultation with us today.

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