There are times in all our lives when we actively look for professional advice. Typically the search comes as we begin to make larger life decisions, like planning for our children’s education, purchasing our first home considering a career change, or preparing for retirement. All of those are financial decisions, but they also involve personal goals and our personal philosophies around money. What is your view of money? Are your finances there to help you live life to the fullest each day, or to build a charitable bequest, or support your children now and in the future? These are just examples of the philosophies around your money habits.
When looking for a financial advisor you need to ask yourself what services are most important to you and what type of advisor you need to meet your goals. Advisors come in many different forms, and their areas of expertise vary: investments, estate and tax planning, accounting, legal services, insurance, and others. Some advisors strictly manage your money. Some promise to help you with specific financial goals by offering products and services related to those goals.
It is important when looking for an advisor to consider both your personal goals and your financial picture. The best advisor will help you develop a plan in a way that clarifies the choices you need to make and shows how those choices will achieve the overall objective. Here are 10 questions to ask your financial advisor.
10 Questions To Ask Your Financial Advisor
1. What licenses, credentials, or other certifications do you have?
If you want comprehensive planning, look for a financial coach, Certified Financial Planner (CFP) or a Chartered Financial Consultant (ChFC). Those designations require testing and are good indicators of a professional who can provide broad-based planning services. If you have higher income or are a small-business owner, you probably want a Certified Public Accountant (CPA), who can offer you advanced tax planning. The Personal Financial Specialist (PSF) certification is another designation often obtained by CPAs who help clients with comprehensive financial planning. At Trust Point we offer a team approach for our clients, including a variety of services by staff with credentials including CFP®, CPA, CFA®, CTFA, and JD.
2. Are you a fiduciary?
A fiduciary is a person (or entity) legally obligated to place the client’s interest ahead of his or her own. Fiduciaries also must disclose their fees, how they’re compensated, and any other information related to potential conflicts of interest that might influence an individual’s decision to use their services. In contrast, non-fiduciary financial advisors might receive a sales commission for selling you a particular investment regardless of whether it is the best option for you. And, they won’t necessarily disclose the commissions they receive for serving interests other than yours. Trust Point is a fiduciary. We do not sell any products, and we do not participate in revenue-sharing agreements. The focus is strictly on finding the best solution for our clients.
3. How do you charge for your services, and how much do you charge?
If you don’t see this information on the planner’s web site, ask if there is an initial planning fee, if they charge a percentage for assets under management, and if they make money from selling you a specific product. This way you find out how much the service will cost you, and you also learn whether the advisor has an incentive to sell you particular types of products. At Trust Point, clients get a complete fee schedule, which is explained clearly at the beginning of the relationship, before the account is opened. We explain that we do not sell any products, do not participate in revenue sharing arrangements and do not receive commissions for the funds we offer and recommend to our clients. Our fees are primarily based on assets under management.
4. What services does your company provide?
Again, some firms provide only money-management services. Others offer comprehensive financial planning around retirement, insurance, estate planning, and tax planning. Choose an advisor whose services meet your personal goals and financial objectives. If you are looking for comprehensive services, make sure that the firm can offer everything you need and that, if necessary, it can work with outside attorneys, accountants, and brokers to ensure that your goals are achieved.
5. What types of clients do you specialize in?
Financial advisors tend to build their client base on customers much like themselves. They focus on a primary group, such as small-business owners, farmers, growing families, or people with specific financial needs, such as estate settlement or retirement planning. Make sure that the advisor’s focus meets your needs and that the expertise matches your personal goals. Trust Point’s financial professionals focus on clients looking for objective advice and good client service with a personal touch.
6. Will you give me a sample financial plan and account statement?
There is no single, set structure for financial advising or planning, which means there is wide variation in the industry. A sample plan and statement allow you to discuss the advisor’s approach, see the end product, and ask questions about the process. For instance, how are you going to receive information about what’s going on? This also gives you the opportunity to see how an advisor responds to client questions and interacts with you personally.
7. What is your investment approach?
This is an issue especially if you have a strong preference for a particular investment philosophy. For instance, if you prefer to use low-cost funds, you can ask whether the advisor plans to use actively managed funds or passive investments. You want an advisor who is listening to you and who seeks to understand your preferences and your risk tolerance. The best advisors also want to understand your personal goals before they try to help you shape investment objectives to meet those goals.
8. How much contact do you have with your clients?
Some advisors meet to establish the initial plan, then follow up annually. Others are looking for more input from the client as they develop your financial plan and might want to talk quarterly or monthly. The need for contact can vary depending on the goals you are pursuing. If you are selling a business or beginning to plan for retirement, you may have more frequent discussions as the date of those events approach. A recent J.D. Power & Associates survey found that investors contacted 12 or more times a year had the highest rates of satisfaction with their advisors.
9. Will I be working only with you or with a team?
This is another question where the “right” answer depends on your preference and what services you are looking for. Some companies have a team approach rather than an individual approach. Trust Point believes the best approach is what works best for the client. We provide a dedicated relationship manager who is supported by a larger team to service your account. As your financial picture develops and your personal goals are attained, we are equipped to be there to provide the additional financial service expertise you need.
10. Did they ask me questions and seem interested in me?
This last question actually is one you ask in your own mind after meeting with the candidate. Did the advisor talk most of the time or seek to learn more about you and your goals? It is important that the advisor ask questions and make an effort to get to know you. Good financial planning is about looking at clients’ individual circumstances, assessing their financial knowledge and risk tolerance, and helping them to develop a plan to achieve their personal goals. At Trust Point, we believe in spending the time to truly know our clients so that we can help them establish realistic plans to achieve their personal goals. Contact our team of professionals today if you’re seeking a financial professional to ease your financial planning and wealth management needs.
