When you're planning to get guidance from a financial advisor, you want to make sure you're in good hands. Consider writing down targeted questions that will help you determine whether you should select a particular advisor to steer your portfolio. Here are several questions you could ask when choosing an advisor.
Read more: What is financial advising and why is it important?
Understanding qualifications and experience
Here are a few basic get-to-know-me questions for your advisor:
How long have you been a financial advisor?
Are you a fiduciary?
Being a fiduciary means that the advisor is required by law to work in your best interest. Non-fiduciary advisors aren’t bound by this requirement.
In addition, ask about your advisor’s credentials. The Financial Industry Regulatory Authority ( FINRA) lists professional designations on its website, which will enable you to identify the various letters and initials after a professional's name. Becoming a Certified Financial Planner (CFP) requires at least a bachelor's degree from an accredited university and college coursework from a program registered with the CFP Board. CFPs also need 6,000 hours of professional financial planning experience or 4,000 hours as an apprentice.
Assessing services and specialties
Here are a few questions to indicate the advisor’s areas of expertise:
What services do you offer?
How do you stay updated with the latest financial trends and regulations?
Most advisors should be able to talk through difficult financial-related questions about topics such as debt management or retirement planning, but if you’re looking for specific help (such as estate planning advice or tax planning), be sure to ask about the advisor’s credentials and expertise in the appropriate areas. You can also ask if they will connect and coordinate with other experts, should you later need any additional knowledge (such as from a tax professional or lawyer).
Evaluating approach and philosophy
Here are a few questions to understand the advisor’s values:
What is your investment philosophy?
How do you tailor your advice to individual clients?
How do you support clients through different life events?
Finding out your financial advisor’s philosophy is a good idea, so you understand how they’ll cultivate your portfolio. If the advisor’s investment philosophy is in balance with your values, they might be a good fit for you.
While a potential advisor can’t reveal the names of those whose money they manage, they may be able to tell you about their clientele's assets, occupations and other characteristics to determine whether or not they match your particular profile.
Fee structure
Here are a few questions to gauge cost:
How do you charge for your services?
Can you provide a detailed breakdown of your fees?
When you're asking, "What is your fee structure?" you're also asking, "How do you get paid?"
You want to check if you’re working with a fee-based provider who doesn't receive commissions for selling products or a commission-based provider who may steer you toward products based on their commission structure. Fee-only advisors, such as those with Ally Invest Personal Advice, typically charge a percentage on the assets you invest in, but you might also find some who charge a flat or hourly fee.
Communication and accessibility
Here are a few questions to understand how the advisor communicates:
How often will we meet to review my financial plan?
How do you prefer to communicate with clients (email, phone, in-person)?
How quickly do you typically respond to client inquiries?
Understanding your financial advisor’s process will help you have clear expectations about the relationship. You can find out how they assess your financial status and goals and what steps they will take to develop and implement financial planning recommendations.
Ask your potential advisor to walk you through how your meetings will look over the long term, so you understand how often and for how long you’ll meet, as well as what to expect at each meeting.
Evaluating success and performance
Here are a few questions to ask to gauge the advisor's success:
How do you measure success for your clients?
Can you provide examples of how you have helped clients achieve their financial goals?
What benchmarks do you use to evaluate investment performance?
Financial advisors may send statements about your investment account performance and even offer tools and outside sources that can help you learn more about investing, such as monthly newsletters, online resources and additional education.
Personal financial advice through Ally Invest
By establishing conversations and asking questions, you can find the right advisor for your goals and style.
With Ally Invest Personal Advice, you can expect exclusive tailored support from an experienced senior financial advisor who will handle all aspects of your financial planning, meticulously craft a personalized investment portfolio while providing guidance and continuous monitoring to help you with your financial needs.
If you’re ready for the next step, set up a consultation with an Ally Invest financial advisor to map out your financial goals and kickstart your journey today.
