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7 Questions People Forget to Ask Their Financial Advisors

SmartAsset - copyright 2018

Matt Wiley | MAR 4, 2019

Whether you already have a financial advisor or are considering your options, it’s important to do your due diligence. 

Here are seven valuable questions to ask:

1. Are you a fiduciary? 

This means that the advisor is legally bound to act in your best interests. While registered investment advisors (“RIAs”) adhere to this standard, others such as stockbrokers have lower accountability thresholds. 

2. What fees will I be paying? 

It can be difficult to assess all the fees involved in certain investments. Different investments have different types of fees, and in cases such as annuities, for example, they can be substantial. 

3. How will you be compensated? 

Many financial advisors charge a percentage of assets under management or a fixed fee. However, some receive commissions on the sale of certain investments, which creates a conflict of interest.

4. Do you have any disclosures? 

Disclosures can refer to any past regulatory, criminal or disciplinary actions on an advisor’s record. These can be big red flags when deciding who to work with. You can search for these on the SEC website.

5. What certifications do you have? 

Certifications can be a good indicator of an advisor’s level of expertise. Two of the most notable designations are the certified financial planner (CFP) and chartered financial consultant (ChFC). Both require an advisor to have a certain level of experience, complete coursework, submit to a background check and abide by a set of ethical standards.

6. What’s your investment philosophy? 

Advisors have a range of investing strategies available to them, and some may be more aligned with your risk preferences. If your primary goal is preservation of wealth, for example, that may require a different approach than pursuing aggressive growth. 

7. What types of clients do you specialize in? 

Some financial advisors work exclusively with wealthy individuals and their families. Others may work specifically with business owners or people in a certain professional fields, such as doctors or university employees. Choosing an advisor who works with clients whose situations are similar to yours means he or she will be better equipped to offer the type of guidance and advice you need.

The Best Way to Find the Right Financial Advisor for You

Chances are, there are several highly qualified financial advisors in your town. However, it can be daunting to choose one. 

This new tool makes it easy to find the right financial advisor for you. Now you can get matched with up to three local fiduciary advisors that have passed a rigorous screening process.

1. Simply enter your ZIP code below.

2. After you enter your ZIP code and answer a few questions about your financial goals, you can compare up to three top advisors local to you and decide who to work with.

3. Enjoy a better financial future!

Find Your Advisor

SmartAsset - copyright 2018

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