7 Questions to Ask Your Financial Planner (And Why They’re important)

By August 15, 2018 Blog No Comments

Finding the right financial planner isn’t easy. As a member of the tech industry, you’re likely experiencing a few things right now in your financial life: you have a high salary, you have unusual (but fantastic!) benefits and potential stock options, and you may feel a little bit unsure about how to best balance your money with your life goals.

You know you need some help with your finances, but it’s hard to hand over your money to someone else. With conflicting financial advice everywhere, how are you know which financial planner is right for you?

Ask your financial advisor these questions to see if their practice will be a good fit for your financial planning needs:

  1.  Are You A Fiduciary?

A fiduciary is someone who places their client’s interest ahead of his or her own interests. A fiduciary must also disclose how he or she is compensated.

Compare this to financial professionals who sell products. They’re often held to the less stringent suitability standard. This means the advisor can recommend a product that isn’t the absolute best for you, and they don’t have to tell you how they’ll get paid.

Financial advisors that act as a fiduciary are held to a higher standard. You want to work with someone who has your best interests at heart!

  1. How Are You Paid?

Financial advisors can be paid in many ways, including commissions, client fees, or a mix of both. But all good financial advisors will tell you exactly how they will be paid for their work, and they’ll be transparent about their fee structure.

Many experts recommend seeking out fee-only advisors who are compensated solely by their clients. Since they receive no additional kick-backs from selling financial products, it reduces the potential conflicts of interest between the client and the financial advisor.

  1. What Are Your Credentials?

There are many titles and designations in the financial advising industry. Admittedly, credentials aren’t always a sole indicator of whether or not an advisor is worth their salt, but you want to work with someone who knows what they’re doing and has been trained. As a consumer, it can be incredibly confusing to figure out exactly how educated and experienced a financial advisor is.

One well-respected designation is the Certified Financial Planner (CFP) designation. Those that carry the CFP designation have taken financial planning classes, passed a comprehensive test, and worked in financial planning for at least two years. If your advisor doesn’t use the designation, ask why. They may have a good reason, but it’s worth a conversation.

Whatever designations your potential financial advisor holds, you’ll want to do your due diligence on their education and experience.

  1. What’s Your Financial Planning and Investment Philosophy?

Every financial advisor has their own way of approaching financial planning and investments. Some financial advisors concentrate only on investments. Others are comprehensive planners that manage the entire planning process. Some advisors cater to DIY clients who prefer to implement advice on their own.

Make sure you understand your potential advisor’s financial planning approach so you can choose the one that is the right fit for you.

It’s important to ask your financial planner a follow-up question to this one: does the advisor have any restrictions on what products and services they can offer? You don’t want an advisor who is only qualified to sell insurance products to be giving you investment advice.

  1. Will I Be Working With You or a Team?

Some financial advisors work directly with clients. Others have a team of people in house that work with them to take care of clients — some financial planners work closely with estate lawyers and accountants to implement a financial plan. It’s important to know the team you will be interacting with on a regular basis.

In addition, it’s good to make sure that you are on the same page with your financial advisor about the frequency and method of contact. Some financial advisors check in once a year, while others may have more regular phone or face-to-face check-ins. Make sure that your advisor matches the level of support you want.

  1. Have You Helped People Like Me?  

Many advisors specialize in a specific client group. For example, the majority of my clients are tech professionals or locals in Redding, California, with larger-than-life goals and who are enjoying their west coast lifestyle. You’ll want to make sure that your financial planner regularly serves someone like you, and understands your unique goals and needs.

  1. What Makes Your Client Experience Unique?

In other words, “Why should I choose you?”

This gives your advisor the chance to give you a summary of the best that he or she has to offer. It will also help you determine what your advisor is good at, and whether or not that matches with what you are looking for in a planner.

Ask Your Financial Planner the Right Questions to Find A Fit

Having a dedicated financial advisor can help you reach your money goals. Use these questions to make sure you are choosing the right financial advisor for you.

About Woven Capital

Aaron Hatch is a Certified Financial Planner and co-founder of Woven Capital, a fee-only financial planning and investment management firm that specializes in helping people balance life, work, and community. Aaron has been quoted in various publications, including The Chicago Tribune, US News and World Report, and the Huffington Post among others. Aaron can be reached at aaron@wovencapital.net