5 Crucial Questions to Ask Your Financial Advisor

5 Crucial Questions to Ask Your Financial Advisor
02 Apr 2020

Financial advisors can help you make the most of your money, so you can have the retirement you dream about. However, not all financial advisors are the same. And their differences could be reflected in your bottom line.

All good financial advisors offer a free consultation that allows you to get to know them and tell them about your goals.

Are you on the hunt for financial guidance? Here are the most important questions to ask your financial advisor.

1. What’s Your Fee Structure?

Asking how they get paid is one of the most important questions to ask your financial advisor. Because you’re saving and investing for the long-term, even a fraction of a percentage point can make a huge difference.

Be sure to ask whether they are a fee-only advisor or if they get commissions from selling products. And ask what those fees are and how they can affect your balances.

2. Are You a Fiduciary or Nonfiduciary?

Although financial advisors may occupy one or more of multiple specialties, there are largely only two primary types of advisors: fiduciary and non-fiduciary.

Fiduciaries are independent and offer you a range of products that are best suited to your needs, even if they won’t make much money. Nonfiduciaries recommend the products that suit you from a range, but they won’t necessarily be the best products for you or have the lowest costs.

You can read more about what it means to be a fiduciary here.

3. Do You Have Clients in My Current Situation?

When seeking your first advisor, you want someone who understands not only what your goals are but what your current financial situation is. Ideally, they’ll have clients who are in similar spaces and therefore have experience in making your goals a reality.

For example, if you’re just starting out on the path to saving for retirement, you should look for an advisor who has experience with new savers and investors.

4. What Credentials Do You Have?

You should stick to advisors who have at least one formal credential. Credentials usually require both a certification exam and a work experience requirement. As a result, you can rest assured that you’re not their first or only client.

Remember that credentials and educational backgrounds aren’t the same. You can become a Certified Financial Planner (CFP) without a bachelor’s degree. It’s often helpful to seek out an advisor who has a background in finance or economics.

5. Does Your Company Sell Its Own Products?

Some larger firms may sell their own funds, and while there is nothing wrong with this, it’s important not to invest in a fund that suits your financial needs.

Get to terms with the kinds of products and instruments your financial advisor offers before you sign on, and compare the offerings between advisors to help you make a decision.

More Questions to Ask Your Financial Advisor

Finding the right financial advisor is the key to protecting your retirement income. To do so, you need to know the right questions to ask your financial advisor.

The list above is just a starting point. You should have more questions based on your income, your current savings, your retirement plans, and any big changes coming up in your life (having kids, going back to school, etc.).

Are you ready to start working toward your retirement goals? Schedule an appointment with one of our financial advisors to get started.


Daryl Seaton