Whether you’re looking for a financial advisor for the first time, or it’s time to change financial professionals, finding the right fit for your family can feel overwhelming. A quick internet search will reveal hundreds of financial advisors in your city alone, and thousands more online. And if many of these advisors seem to offer the same services, choosing between firms can become more of a guessing game than a strategic decision.
Before you settle for the first financial advisor in your search results, vet your potential partner with the five questions we’ve listed below.
Finding an advisor who shares your investment philosophy, respects your financial goals, and can help you build a plan you’re confident in will take some research, but armed with these questions, you can choose a financial pro who’s the perfect fit for your family.
Wondering what to ask a financial advisor? Try these 5 questions:
What are your qualifications and certifications?
You may be surprised to learn that not all financial advisors and financial planners have official credentials. Depending on your state’s rules, a variety of financial professionals may be allowed to sell financial planning services, and even wear the title of “financial advisor,” without necessarily having the education and training necessary to offer these advanced services.
When you’re vetting potential financial planning partners, we recommend looking for a professional with the official CERTIFIED FINANCIAL PLANNER (CFP®) credential. This designation proves that your financial advisor has completed the rigorous study and testing requirements needed to provide clients with accurate and personalized financial advice.
What financial planning, investment, and advising services do you offer?
The next question to ask a financial advisor before you establish a partnership is what services you can expect when you work together. One of the biggest differences you’ll find among financial advisors and planning firms is the services that are included under their flat-fee or hourly fee structure—and which cost extra.
For example, one financial advisor may offer general guidance on your investment portfolio, tax bill, and overall financial health, in addition to helping build your long-term financial plan. But another advisor’s approach to financial planning may include these foundational services, plus ongoing investment performance monitoring, retirement planning, legacy and estate planning, charitable contribution optimization, and debt management strategies.
Curious what’s included in our wealth advising services? See the difference.
What’s your investment philosophy?
At first glance, this investment strategy question may not be an obvious one. But if your beliefs, values, and risk tolerance aren’t aligned with how your financial advisor approaches money, they may not be the best source for investing advice, tax advice, and support in making financial decisions.
To make sure you and your potential financial advisor are on the same page when it comes to your investing philosophy, consider asking:
- What’s your investment style?
- Do you prioritize investing in the stock market, mutual funds, or a mix of both?
- Do you use robo advisors, or manage portfolios yourself?
If your investment management goals are in alignment, they may very well be the right advisor for you. But if they pressure you to over-leverage your investments or take on more risk than you’re ready for, keep looking.
How are you compensated, and are you a fiduciary financial advisor?
Financial advisors can operate on a fixed-fee or fee-only basis, charge an hourly rate, or earn a commission based on the sale of financial products. The fee structure your potential financial advisor uses can have a significant impact on your all-in costs—and overall ROI.
Many high-net-worth individuals prefer financial advisors that use the annual fee model, based on a percentage of your total assets under management. By earning a small percentage of your total portfolio value every year, fee-only advisors have a vested interest in driving positive investment returns. Plus, the assets under management fee model can prove more cost-effective than paying hourly fees for financial planning and investment management, especially if your situation is complex.
How the financial advisor earns their income also tells you something about their fiduciary duty. A fiduciary financial advisor is required to operate with your best interests in mind. By taking the fiduciary oath, they’re committed to only offering you the investment options, recommendations, and financial products that they truly believe will benefit you—not what will make them the most money.
How will we communicate?
One of the last financial advisor questions worth asking before you choose is about communication expectations and frequency.
Holistic and responsive financial planning requires more than a one-time meeting and occasional check-ins. To create a personalized plan that maximizes your savings, optimizes your taxes, and makes the most of every investment opportunity, you need a financial advisor who’s willing to proactively monitor your financial circumstances—adjusting as the market shifts.
If your financial advisor only checks in once a year, they may be missing key details about your financial life. Changes like buying a home, saving for college, having a baby, or getting a new job have a significant impact on your personal finance situation, and are worth addressing proactively, not reactively.
Consider asking your potential financial advisor:
- How many clients do you manage, and how much time are you able to provide each client?
- What’s your average response time when I have questions?
- Will you reach out when I hit my investment benchmarks or need to consider a strategy shift?
In the financial services industry, finding a responsive, proactive, and dedicated financial advisor can be easier said than done. But with a bit of research, and a willingness to ask the tough questions, you can find an advisor who prioritizes your best interests and maximizes your biggest opportunities.
Looking for a financial advisor that checks every box? Start with Cook Wealth
Our joint team of tax and wealth advisors support high-net-worth individuals with tax-smart, risk-aware, and values-aligned strategies that help you plan for the future and enjoy life now. We go beyond basic financial planning services, offering holistic strategies that grow with your family, from our initial meeting, to every quarterly catch-up that follows.
If you’re looking for an advisor that knows your name and your story, and puts your family’s best interests first, reach out to our team and learn what’s possible.