Hiring a financial advisor is an important and often rewarding decision. The ideal financial advisor for you can help create actionable financial goals, improve your investment portfolio, plan for retirement, relieve stress, and give you overall peace of mind.
Despite all the benefits, there’s still a lot of uncertainty when you’re looking for someone to hire. Specifically, what traits and qualities should you be looking for to find a great advisor? How can you avoid someone who isn’t a good fit, and find someone more in sync with what you’re envisioning?
To help, I’ve put together 7 questions you should ask your future financial advisor, along with my own commentary.
1. How Do You Get Paid?
Many people are afraid to ask this question—but they shouldn’t be! We all work to provide services to others, and it’s just the same with financial advisors. A great financial advisor is completely honest and transparent with the way they get paid, and should be able to easily answer this question without fidgeting and acting suspicious.
Consumer tip: If an advisor is willing to negotiate their fees with you, they should be considered a salesperson and it’s wise to continue your search for a true advisor. A great financial advisor knows the value they bring to their clients and isn’t willing to discount their services.
2. Can You Explain Complicated Financial Concepts in Plain English?
Whether it relates to your physician, your accountant, or your advisor, you need to trust the people you work with, and this includes having a basic understanding of the overall game plan of your situation. I am not saying that a client needs to understand every detail and nuance of the plan, but they should have an easy-to-understand handle on the plan. You want to know everything is going according to plan, but you don’t need all the intricacies.
For example, if I get a new phone and my emails aren’t coming in, I really don’t care about the specific details of solving this issue. I just want an expert to help me fix the problem and get me to my end goal: having an easy-to-use, functional phone.
3. Do You Make House Calls?
If the advisor’s answer is “yes,” you should be immediately concerned. Unless they are a close family friend, making house calls are the actions of a salesperson looking to make a sale, not a true financial professional.
Can you imagine a surgeon, CPA, or lawyer knocking on your door to perform their services? Of course not, and you should expect a professional financial advisor to do the same.
4. Does Your Office Return Calls and Emails Within 24 Hours of My Request?
The answer to this question should absolutely be a “yes.” Your financial advisor should have their firm properly staffed with caring team members who strive to give excellent and prompt service.
Consumer tip: If an office cannot respond to you promptly, it likely means they are not detailed, or not properly staffed (or both!). In either case, you are best to seek help elsewhere.
5. Are You a Fiduciary?
Your future advisor will answer with an emphatic “yes” to this question. A fiduciary is someone that by law must put the client’s best interests before their own. While you might think that all advisors inherently abide by this rule, unfortunately, that is not the case. You want to ensure that your advisor is always acting in your best interest, not their own. Also, a fiduciary advisor will be happy to put this in writing as well.
6. Will You Manage Just One or Two of My Accounts While I Leave Other Accounts With Another Investment Office?
This question will separate the best advisors in the industry from the average advisors. An average advisor will be willing to accept a partial role in managing a portion of your household portfolio because they’re happy to earn any kind of compensation. A great advisor will explain that it isn’t in the client’s best interest to have two advisors.
Working with one office exclusively will likely result in better long-term financial outcomes, as the advisor will be able to see all the pieces in the financial puzzle. In addition, having two advisors manage your investments leads to duplication of investments, not diversification. It also leads to potential issues with tax-planning strategies, as well as higher administrative costs.
Lastly, it might entice one advisor to take more risk in your account, hoping to outperform the other advisor’s accounts and prove their worth. That is not a recipe for investing success.
Consumer tip: Horse races are for entertainment purposes, not investment account comparisons.
7. Do You Have a Continuity Plan?
This is a great question that many consumers are afraid to ask or don’t fully consider. Quite simply, if you are working with a legitimate financial planner, they will have a plan in place in the event of their sudden death or disability. Great advisor offices work as a team so that serving clients is not limited to one person.
Just as you wouldn’t get on a plane with only one pilot, you shouldn’t work with a financial advisor if they are the only one to serve you. You should protect yourself and your family’s financial future by working with an advisor using a team-based approach.
Take the Next Step in Your Financial Life
If you are considering working with a financial advisor, we would love to chat with you. To schedule a no-obligation meeting, you can reach out to me at 712-472-3867 or email firstname.lastname@example.org. Also, be sure to check out my book, Stop Doing Dumb Things With Your Money, and tune in to my new Podcast, WIN—What’s Important Now.
Corey Heimensen is the owner and Accredited Investment Fiduciary® at Heimensen Wealth Advisors, a full-service financial planning and investment management firm serving pre-retirees, independent contractors, small business owners, and young families. With 30 years of experience, Corey believes that future success in life means that you have to conquer today, and he equips his clients to do just that through education, guidance, and customized strategies. Corey’s goal is to do his part to make his clients’ lives better, taking some of the financial burdens off their shoulders so they can focus on what matters most to them.
Corey is the author of Stop Doing Dumb Things With Your Money, and host of his new podcast, WIN—What’s Important Now, where he discusses planning strategies you can utilize now to help you build a financial path for tomorrow. Corey earned a degree in finance from Buena Vista University and resides in Rock Rapids, Iowa, with his wife and three children. When he’s not building his firm and working with clients, you can find Corey boating, reading, and attending sporting events. He loves anything related to basketball! To learn more about Corey, connect with him on LinkedIn and subscribe to his podcast.