3 Important Questions to Ask When Looking for a Financial Advisor

If you’re planning your investments, there is no dearth of financial instruments in the market today. However, with so many choices, it also becomes difficult to pick instruments that best align with your financial goals and provide you with both long-term and short-term gains. This is where a financial and investment advisor comes in handy.

The financial advisor can guide you with your investments and help you maximize returns by making money work for you. With their knowledge and experience, you can rest easy knowing that your finances are in the right hands. It’s essentially like having a pro in your corner.

But how to choose a financial advisor? And a good one at that. In this article, we’ll try to answer this by taking you through some important questions that you should be asking your financial advisor before hiring their services. But first, let’s take a look at what is it exactly a financial advisor does.

Who is a financial advisor?

A financial advisor is anyone who helps you manage your finances. Financial planners, financial consultants, and investment managers would all be considered financial advisors. These individuals provide a wide range of services, depending on their specific expertise, education, and training. Here’s a look at the different kinds of qualifications they might possess –

Chartered Financial Analyst: CFAs specialize in stock analysis for mutual funds, banks, and other major institutions. For an individual to become a CFA, they have to take three exams.
Certified Public Accountant: CPAs are financial advisors that can help you with consultant and accounting, taxes, and business services like mergers and acquisitions.
Certified Financial Planner: CFPs are experts in estate planning, taxes, retirement, and insurance planning.
Registered Investment Advisor: RIAs are financial advisors that specialize in the management of high-net-worth portfolios. They also lend their services to commercial banks, hedge funds, mutual funds, insurance companies, etc., to help them make more money.
Personal Finance Specialist (PFS): These are certified public accountants that can help individuals with broader financial planning and not just accounting.

Financial advisors can possess any one or many of the above-mentioned qualifications. But don’t get confused with these abbreviations. At the end of the day, you should look for a financial advisor who has sufficient knowledge and experience in your domain and is able to deliver on their promises.

If you’re looking for the best financial advisor consulting services in the United States, Julius Wealth Advisors is the answer for you. Jason Blumstein of Julius Wealth Advisors possesses years of experience in empowering people to reach their financial goals. Besides providing fiduciary advisory services, they offer long-term financial planning and behavioral coaching to their clients too.

With that, let’s take a look at some questions you should be asking before hiring a financial advisor for investing and managing your money.

Three most important questions to ask your financial advisor

What is the foundation of a strong financial practice? No, it’s not a tax plan. It’s something much, much simpler and basic – trust. Financial advisory works on the principle of trust. A trustworthy financial advisor service is one in which you know that all your financial goals, aspirations, and dreams are taken care of.

Now, how do you find such a financial advisor?

While some financial advisors are great salespeople, they lack the necessary skill set to help their clients through financial issues. On the other hand, there can be some financial advisors who are incredible individuals that can be trusted with all financial matters, no matter how tricky.

So, here are some questions you can ask financial advisors before hiring their services –

Question 1: Are you a fiduciary?

If you look at the profiles of some of the best financial advisors, you’ll find a mention of this keyword – ‘fiduciary.’ Fiduciary is basically a standard that was designed by the U.S. Securities and Exchange Commission (SEC) that rests on the foundation of loyalty, duty, and care. Financial advisors who uphold the fiduciary standard are those that always put the needs of their clients first. Fiduciary financial advisors are also required to state if they encounter any conflicts of interest in their job that hampers their ability to act in the best interest of the client.

Before hiring a financial advisor, ask them if they are fiduciary. Make sure you follow up with some important questions, “Do you uphold fiduciary standards in all aspects of your business?” and “Would you sign the fiduciary oath?”

Question 2: How will we be working together?

Before you make a decision about hiring a financial advisor, you need to know how you’ll be working together. It is important to inquire about their communication style and the systems and processes they have in place to provide you with the best services possible. Here are some related questions you can ask –

How would the process of financial planning work?
Will you help me with tax planning/budgeting/retirement planning? What are some things that’ll be covered in our personal financial planning meetings?
Can you provide your financial advisory services in writing?
How often would we communicate/meet?

With these questions, you’ll get a better idea about how your financial advisor works and whether their style of working aligns with yours.

Question 3: What is the fee structure?

You want your relationship with the financial advisor to be completely transparent, so it’s important to ask them to disclose their fee structure from the get-go. Different financial advisors have different ways they like to get paid. While some might charge an hourly fee, others could have a fixed fee structure. Let’s take a look at these different fee structures –

Fixed fee: In this, your financial advisor would charge a flat rate for a given service.
Hourly fee: This is a pretty straightforward method in which the financial advisor charges an hourly rate for the services they provide.
Commissions: Some financial advisors receive a commission on providing certain financial products, like mutual funds, annuities, insurance, and more. Make sure to ask if your financial advisor is taking commissions.
Assets under management: This is an annual fee that is levied on a percentage of your investments.

Conclusion

If you’ve never availed of the services of a financial advisor before, the process of hiring them can feel intimidating at first. But with these questions in mind, you can make the right decision when it comes to choosing your financial advisor. Besides these three important questions, you can also ask the following –