What are your charges and how do you calculate them? This information may be on the potential planner’s website, but be clear if he/she charges an initial fee, whether charges are based on assets under management and if he/she stands to benefit from any products they may want to sell you. That would create incentive for the advisor to sell your particular products.
What licenses, credentials or other certifications do you have? There are four main types of financial advisors: certified financial planner designation is harder to achieve than chartered financial consultant. The former requires a comprehensive board exam. The latter does not demand the test, but uses the same curriculum. If you need someone just to manage money, you might opt for a registered investment advisor. If you have high income or own a small business, a certified public accountant may be your choice. A CPA may also qualify as a personal financial specialist through additional training.
What services does your firm provide? This question may screen out services you may NOT expect to receive from a particular provider. Some financial planners focus on retirement, insurance, estate planning or tax planning. Be specific and go with the advisor who will meet your particular needs.
What types of clients do you specialize in? Some financial planners have a niche, serving clients with particular interests such as charitable giving or socially responsible investments or the problems related to marriage or divorce. As a professional factor, most financial advisors tend to relate best to people within 10 years of their own age. Those who are closer to retirement, for instance, can relate to clients facing the same challenges.
May I see a sample financial plan? There is a lot of variation among plans. If you are provided a complex stack of pages complete with graphs and charts regarding things you don’t understand, likely you wouldn’t relate to your own plan any more easily. A sample might guide you in choosing an advisor whose approach meets your specific needs.
What is your investment approach? If you already have a firm preference about how to invest, you need to know if the advisor you are contemplating is on the same track. If you prefer low-cost funds, ask if the advisor would use actively managed funds or passive investments. If you are willing to be risky in hopes of a large return, say so. Discuss risk tolerance and goals.
How many times will you expect to meet? After an initial planning meeting, some advisors do not see the client again for a year. Some clients need more support than that. How much control are you willing to cede to your money manager? Some surveys suggest that more frequent meetings result in the most satisfaction for the majority of clients.
Will I work directly with you or with team members? Often, you will meet annually with the advisor you select, with additional contacts during the year with a team member. Companies differ on this issue. One approach is not better than the other if the bottom line is to serve your needs. But the more you know before you make a commitment, the more satisfactory the relationship is likely to be.
Why should I choose you to handle my financial affairs? If the answer comes close to “I’m your savvy best friend, financially,” you are on the right track.
After a conversation with a potential advisor, ask the next questions of yourself: Did he or she talk most of the time? Does he or she appear genuinely interested in my circumstances and not just the numbers? Am I sure he or she will act based on my goals, financial background and philosophies about money? Based on these answers, make your choice.