Financial planners help you remain disciplined about your financial strategies. It definitely helps to have someone riding you to keep you on track.
What is the most important question to ask a financial advisor and why?
“Are you a fiduciary?” It means the planner has pledged to act in a client’s best interests at all times. Investment professionals who aren’t fiduciaries are often held to a lesser standard, the so called sustainability standard.
How can you assess your advisor?
Use your internal radar system, which is your brain and heart. Be sure what they are telling you makes sense and that you feel comfortable with the person and the advice you’re getting.
How can an advisor use a holistic approach to your finances?
By incorporating everything from investments, objectives, risks, insurance, taxes, estate planning, retirement, asset protection, trusts and wills.
How important are credentials?
Although they are important, focus on your advisor, not their credentials. It’s not what their title is, it’s what they do that will make you successful in retirement. A potential client should ask a lot of questions in order to feel confident in their financial future.
What should they look for in response?
The advisor should be asking a lot of questions in return. They should be interested in you, your situation and helping you.
Here is a good checklist of habits of a good advisor
- Acts as a fiduciary at all times, whether by law or by principle.
- Charges a standard fee for services rendered.
- Fully discloses, in writing, his experience, conflicts of interest, and compensation up-front
- Considers the big picture of your financial situation before advising on products or recommending specific actions.
- Is experienced.
- Follows a process for discerning your needs and offering recommendations.
- Has a clean regulatory record or a plausible explanation for prior citations.
- Is a member of a leading professional organization.
- Embraces continuing education and attends conferences.
The point of this discussion is to make sure that you are an active participant in selecting your financial advisor. You should interview them and they should also be asking a lot of questions about you and your goals in return. After all, how can someone help you if they don’t ask a lot of questions?
But it does go deeper than just that. You want your financial advisor to find out what areas of opportunities exist for you and what risks you are subjecting yourself too unnecessarily.
You want you financial advisor to see if you are paying too much in fees and if you have tax smart investment strategies. So call a financial advisor and ask them the important questions and make sure that they are asking the right questions in return.