If you are reconsidering your current financial plans and have decided that trusting a professional is in your best interests, you may feel overwhelmed at the prospect of choosing the right financial advisor for you. How can you be confident that you will not be taken advantage of? After all, you are trusting a financial advisor with the outcome of your money. Before you commit to any single independent financial advisor, be sure to ask the right questions to vet their experience and skills.
Questions To Ask A Independent Financial Advisor
The following questions can give you a good and generalized head start when it comes to selecting the best financial advisor for you.
What Qualifications Do You Have?
One of the first questions that you should ask any financial advisor is what sorts of qualifications they are carrying. Many people can claim to be financial advisors with no more than a passing interest in investment and other money management skills. However, reputable financial advisors will pursue continuing education and other marks of their consistent development in the field. They may also be able to point to membership in organizations and other relevant groups that indicate a client-focused view of financial advising that may be a benefit to you.
Are You A Fiduciary?
One of the single most important questions to ask your financial advisor is whether or not they are a fiduciary. This label identifies a financial advisor as someone who has a duty to provide financial information that is in the best interest of their client. While non-fiduciary financial advisors are free to recommend products based upon whether they receive a commission or high fees on the account that can improve their own income, fiduciaries are bound to guide your portfolio in a manner that benefits you, not them. A fiduciary is looking out for your best interests.
How Will You Allocate My Assets?
A financial advisor is just that—an advisor. They are meant to collaborate with you to help you achieve your goals. It is important that they are willing to share how they intend to allocate your assets and that they do so in a manner that you agree with. Be sure that your advisor intends to diversify your portfolio (as long as this is what you intend) rather than placing your allocations into a few popular stocks. A robust portfolio will include some measure of stocks, bonds and other options to mitigate the unnecessary risk that may be present if you simply opt for a few high-profile stocks.
How Do You Receive Compensation?
How a financial advisor is paid will tell you a lot about how well they can manage your portfolio. If they receive a commission based upon whether you purchase a certain type of product, be wary that your advisor may recommend products that are merely “suitable” for you rather than ideal so that they can get some financial kickback. Advisors can choose to accept compensation in a variety of ways and fee structures; the term you are looking for is “fee-only” for your advisor. This means that they charge the same no matter which products you select and use, and they will never receive a commission based on the contents of your portfolio. This can protect you from being pushed towards products that are not the ideal match for your situation.
Fee-only advisors still work in a variety of ways, and none are inherently better or worse. Some may charge an hourly fee, while others have a set fee for each time that they meet with you or offer advice. One of the most common arrangements is for an advisor to charge a percentage of your portfolio’s value per year. In this case, anywhere from 1% to 2% is fairly standard and grants you access to the advisor as much as you need during the year.
Trust A Professional Independent Financial Advisor
Whether you are considering whether a financial advisor is right for you or you would like to secure an advisor to start managing your finances, be sure to trust the experts. The professional financial advisors at Inflection Advisors pride themselves on working with you to create a plan for your money that reflects your values, goals and risk tolerance to achieve the outcomes that you are looking for. Whether you are new to the idea of investing and budgeting or you need someone to take a second look at the plan that you have already chosen, entrust your financial wellness to the best. Reach out to learn more or to get started by asking any questions that you may have.
