Simply “settling” for a financial advisor is never a good move. Knowing what questions to ask a financial advisor will save you time, effort, and money. To help you find the right advisor in 2022 here are the best questions to ask.
Planning your financial future can sometimes be overwhelming. While you may be good – or great – at financial management, you may be left wondering about details from paying off debt, investing in a Roth IRA and smart portfolio investments.
While not everyone needs a financial planner, they can help you get organized and formulate a plan for your money. But how do you know who to trust and whether they’ll be right for what you want to accomplish? When you work with an advisor you trust, you know that your needs always come first. In addition, you have confidence that they care about you, your financial goals, dreams, and aspirations.
Here’s 5 top questions to ask to make sure you’re not choosing the wrong advisor.
1. “Are you a Fiduciary?”
The biggest difference between Fiduciary vs. non-Fiduciary financial advisors is the standard they’re held to when advising clients. A Fiduciary is a person or legal entity, such as a financial firm, that has the power and responsibility of acting for another (usually called the beneficiary or principal) in situations requiring total trust, good faith and honesty.
There are a few ways to quickly tell a Fiduciary from a non-Fiduciary financial advisor. Financial advisors who are Fiduciaries will want to know your history, including your family, investment history, hopes and future dreams. A non-Fiduciary could be more concerned with what they can sell you—and probably less concerned with your particular situation or needs.
Some ways to distinguish a Fiduciary vs. non-Fiduciary financial advisor include if your financial advisor is registered with the SEC or state securities regulators, they are required to act as Fiduciaries in at least some situations. Fiduciaries also typically have long-standing relationships with several trusted and vetted industry partners such as estate planning attorneys and insurance brokers, who share their approach to acting in their clients’ best interests.
2. “Who do you specialize in working with and how many clients do you have?”
It’s important to ask a financial advisor what type of clients they specialize in working with. There’s no point in having an advisor that specializes in retirement planning in Wisconsin if you live in Iowa. There’s also not much use in an advisor that specializes in enterprise business corporation retirement plans when you need help with Estate Planning.
It’s critical your financial advisor has the right knowledge to help with your specific situation. It’s also comforting to know they’ve helped other clients with similar needs.
It’s worth asking the question of how many clients do they currently work with. In this instance, higher is not necessarily better as that could mean they have less time to spend with you giving personalized advice.
3. “How long have you worked as an advisor?”
Knowing the background of your chosen advisor is important. Did they decide for a career change last year and are experimenting in a new field? Or are they the wealth of knowledge you need in an individual handling your financial future?
Digging deeper into the background of your financial advisor will also help determine if they are a good personality match for you as you learn of their background and values.
4. What is your approach to financial planning?”
Ask the advisor if he or she will create a comprehensive financial plan for you. Also, ask if he or she will implement the plan and recommendations and/or work with other professionals to do so. In some instances, other professionals will implement the recommendations or you may want to implement them yourself.
You should ensure you have the same investment philosophy. When financial advisors really do their job is when the market is down and they can convince you to stick to the same page. It’s also important to make sure you and your advisor align on investment style. For example, if impact investing is important to you, you may want to ask whether or not your advisor will be able to help you create a portfolio that aligns with your values.
5. How will we work together?
In other words, how much of their time will you have? Will you have anyone else working alongside him/her? You want to know how often you’ll meet and whether they’re available for phone calls or emails outside of scheduled appointments.
This is a chance for you to learn more about their process, systems, communication style, and overall business operations. A few additional questions you can ask are:
What will be covered during our personal financial planning meetings? Will you help me with budgeting? With retirement planning? Tax planning? Estate planning?
How does the financial planning process work?
How often will you reach out to me?
These questions will help you understand how your financial advisor will work with you and if that system is good for you.
Are they able to meet virtually?
Are they flexible in terms of changing needs, goals, and priorities?
How do they set up your financial plan?
Is your plan comprehensive?
There are so many valuable insights you can glean by knowing the right questions to ask a financial advisor before making your choice.
Trust in Johnson Wealth and Income Management
Matthew P. Johnson is President and Owner of Johnson Wealth and Income Management, a third-generation company that has been serving clients for over 75 years. Matthew has been advising clients in the financial services industry since 1999. He strives to educate clients on how to invest for income, help to avoid loss by utilizing more conservative investment options, and is dedicated to helping them achieve a well-planned retirement.
Johnson Wealth and Income Management is committed to educating its clients and the community through workshops on topics related to more conservative investment alternatives. He resides in Hardy, IA with his wife, Sarah, and their four children, Naomi, Lydia, Jacob, and Solomon.
A note from Matthew:
When you have retirement in sight, sound decisions are vital in helping you pursue your goals and avoid costly mistakes that can affect your future.
As a financial professional, I am committed to helping people just like you create solutions for their retirement assets. Once I understand your risk tolerance, time horizon, and goals, I’ll work diligently to develop a program that carefully balances investment strategies with preserving principal. Today’s economic environment brings challenges, but along with challenges come opportunities and potential rewards. I work closely with my clients to evaluate those opportunities and get in position to reap those rewards. I enjoy helping people build a solid financial foundation for the future.
To learn more about Johnson Wealth and Income Management, contact us here today.
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