Top 6 Questions to Ask a Financial Advisor
There are over 24,000 financial planners and 100,000 financial advisors in Canada and approximately 285,000[1] financial advisors in the United States.
With tax season right around the corner, I was thinking what are the questions that we should be asking financial planners at different stages of life; ie: when you are starting to first invest and what to ask if your are a seasoned investor.
This is a good way to understand the Firm and the Planner or Advisor (to learn more about the differences click here). Think about it, when you go out with a guy/gal on a first date or start a new relationship, you ask many questions, right? There is no difference here, you are looking to embark on a journey with a person who is handling your hard earned money.
So I reached out to Dany Guillemette, Financial Advisor from PEAK Investment Services Inc. to discuss what are the best questions that people need to ask them. Here is what I found out:
What are your credentials?
You need to find out who this person you are entrusting your hard earned money with, so ask the financial advisor :
What is your background and experience?
What are you credentials/designations?,
What associations are you a member of?
What Services do you provide?
What services do you provide and where can you best advise me?
Are you an independent Advisor?
This is a very important question to ask your Financial Advisor, since some financial institutions, are tied to in-house products so they are either encouraged to showcase them or only the financial products that they offer.
What type of services can you provide to me?
Ask your advisor if he/she will be able to provide others services than managing your savings, such as insurance need analysis, Retirement projections, Net Worth Analysis, estate planning and/or tax planning.
Do you offer services beyond the creation of a financial plan?
How do you develop the plan and manage it moving forward?
What is your fee structure?
Knowing this is key as you need to know how the financial planner gets paid. Find out if they are fee based or paid on a commission.
Fee based means that they are paid on the total investment that they are managing for you. This fee is typically a percentage between 1% and 2.00%.
How do you get paid?
Do you receive commission from the financial vehicle companies?
What are you fees? What do these fees include?
What is the typical plan that you provide to your customers?
This is also very important, this is where the advisor/planner will work with you to build out a personalized short, medium and long term financial plan.
I like to see things in advance, so be sure to ask for what you would like to see. If you like a lot of info, complete with charts and predictions, be sure to ask for an in-depth report. If you are more of a bullet point person, ask for an easy to read plan that outlines where you are today and the plan to get to where you want to be.
How much contact do you have with you clients?
This is a great question for you to ask, as it relates to how you like to work with a planner/advisor. If you like to have multiple touch points, ask if he/she is open to a quarterly meeting/ check-on. If you like to have an annual review to see how the investment plan is moving along, be sure to come with your questions and comments.
A recent J.D. Power review revealed that consumers were most happy with their advisor if they have monthly touch points. Be sure to speak with your Financial Advisor to figure out what works best for you.
Let me know what questions your asked your new financial planner/advisor.