Before you decide on a financial advisor, check to make sure you’ll be getting the services and the advice you are going to need. The absolute best way to do that is to start by asking the right questions. Here are 10 questions you should ask your potential financial advisor.
Without a doubt, how to pick a financial advisor shouldn’t be too complex. But you’ll want clear trajectories. Firstly, no matter what type of professional you’re looking for, it helps to find someone who likes their job—and who isn’t just punching a clock.
Without a doubt, your financial advisor should offer services that will help you solve the problems you may face in retirement. That includes helping you:
Importantly, you’re looking for someone with advanced financial and retirement-planning education. Designations to consider include Certified Financial Planner (CFP®), Chartered Financial Consultant (ChFC®), and Chartered Life Underwriter (CLU®). Another credential high on the list is Retirement Income Certified Professional (RICP®), which involves retirement-specific planning training and education.
“Fiduciary duty” is a legal term that means that one party has the obligation to act in the best interests of the other party. You want your advisor to point you toward investments that are in your best interest—not theirs. It’s great if the two coincide, but yours should come first.
It’s important to know upfront how you’ll compensate a potential retirement advisor. You should ask whether you’ll pay hourly, per transaction, or annually, based on the value of your assets. Other advisors may be compensated through commissions on the products they provide.
Your financial advisors shouldn’t come into contact with your assets (except for the fees you pay for their services). Instead, the advisor should contract with a reputable custodian, which could be a third party or owned by their firm.
Well-known third-part custodians include Charles Schwab, Fidelity Institutional, Pershing/BNY Mellon, TD Ameritrade, and LPL Financial.
This is the most basic of questions and one any retirement advisor should be able to answer without hesitation. You should hear about the discipline behind investment strategies and how those strategies will help you achieve an annual return designed to reach your investment goals. This should all be provided in simple terms you can understand.
You should expect contact on a quarterly basis at a minimum. Monthly is even better. Your advisor should explain every buy or sell transaction, and they should provide periodic reviews of the status of your portfolio, including educational resources if appropriate (or if you ask for them).
Your advisor should be able to answer this question in enough detail that you’re confident there’s an exit plan if they retire, leaves the firm for another job, or is otherwise unable to continue serving you. You should know how your financial affairs will be handled and who would handle them.
Finally, ending an interview with this question can be very revealing. Even if you think the answer is no, it can demonstrate a level of engagement with a potential financial advisor. Still, there’s a chance you missed something during your conversation, and this is a good time for the advisor to bring up anything important.
Asking the right questions and listening carefully to the answers you receive can especially help you decide if there’s a good match. If you’re part of a couple, both partners should feel comfortable with the financial advisor. Philosophy, fees, qualifications, and more all come into play.
Remember, choosing a retirement advisor is not an easy task. You may have to interview several candidates before you find the right one.
Working with qualified advisors like the advisors at Teton Wealth Group can really help you get to where you want to be in your retirement.
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