Finding the Best: What to Ask a Financial Advisor Before Hiring

Finding the Best: What to Ask a Financial Advisor Before Hiring
30 Dec 2019

While 75% of Americans are handling their finances, 60% wouldn’t be able to cover a $1,000 emergency expense and 50% have less than $10,000 in savings

Does that sound like you?

If it does, it may be time to think about hiring a financial advisor. 

Financial advisors help with budgeting, retirement planning, investing and protecting your assets. They are invaluable but only if you hire someone who is a good fit.  

Here are some tips on what to ask a financial advisor before hiring.

What Type of Financial Advisor Are You?

There are many types of financial advisors, all using different terms and titles to describe what they do. 

It’s important to ask this question immediately because you want to hire someone who is experienced in the areas you need. 

The most common types of financial advisors are: 

  • Accountant: prepares and files your taxes.
  • Financial Planner: general management of your finances.
  • Investment Advisor: manages your investment portfolio and helps you choose investment opportunities.
  • Money Coach: general management of your finances, helps financial-related mindset, personal habits, and lifestyle changes. 

What Are Your Qualifications?

One of the most important questions to ask a financial advisor is about their education and experience.

You want to make sure you are hiring someone who will give you the best advice for your situation.

Look for the following when checking out qualifications: 

All of these credentials require passing examinations to demonstrate proficiency, meeting continuing education standards and follow certain ethics policies.  

The NAPFA also requires a fee to retain membership. 

Are You a Fiduciary?

The Fiduciary Standard is a requirement that states financial advisors have to place their client’s interests before their own. 

This standard is regulated by the SEC, Securities and Exchange Commission, and/or state regulators. 

This is important because it means fiduciaries are required to avoid conflicts of interest, be reasonable in their investments and give clients complete and correct information about their strategies. 

They also are paid by a fee, not commission, which is useful for reducing costly financial advisor fees

When hiring a financial advisor, make sure he or she is a fiduciary so you are protected by the Fiduciary Standard. 

You also want to make sure the potential financial advisor acts as a fiduciary 100% of the time. 

How Many Clients Do You Have?

You want to know how many clients your potential financial advisor has because it will tell you about the level of service you can expect to receive.

If your potential financial advisor has hundreds of clients, you can expect a lower level of service but if he or she has only a few clients, they might be new and inexperienced. 

The average financial advisor who works with a team should be able to effectively support about 100-125 clients while still being able to offer full support. 

Final Thoughts On What To Ask A Financial Advisor

These questions will help when you decide what to ask a financial advisor so you will have all the information you need to hire the best fit. 

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