A financial adviser is someone that is sought to assist with investments, structuring annuities, and controlling spending to name a few job duties. These advisers offer specific services based upon their schooling and chosen area of expertise. It is important to ask questions and interview several potential advisers before signing any contracts.
These eight questions will help you decide which adviser is right for your situation.
1. What are your fees?
Every financial adviser charges fees. Some charge per hour and others charge a percentage of your assets. When a financial adviser is retained, the common fee percentage is 1-percent to 1.5-percent of your total asset value. It is important to follow-up with an additional question regarding combined flat and commission fees, as some financial advisers use a combination structure.
Do not take words to heart, though, always get your financial adviser's fee schedule in writing. It should be structured as a complex breakdown, leaving no fees unaccounted for.
2. What are your Best Personality Traits?
Knowing whether or not your financial adviser's personality is a good fit for you is ideal. This working relationship has to be give and take, both parties need to be able to read each other to make sound decisions and improve your financial portfolio. This is an important question to ask before hiring a financial adviser. You do not want to work with someone who does not possess the personality traits or qualities you seek as it could cause a major financial disaster.
3. Is Selling a Structured Settlement a Good Idea?
You can sell all or part of your structured settlement. This money can be used to make investments, large purchases, or take care of an emergency need. It is ideal to ask your financial adviser if selling your structured settlement for cash makes sense for your financial portfolio. The downside is a reduction in your structured settlement's value, which reduces the number of payments you will receive.
4. How do you invest your Own Money?
Knowing how your potential adviser handles his or her own money should give you an idea of their plan for you and your needs. If their investment style is not a method that you find attractive, it may not be a good fit. Consider working with a financial adviser that has investments in the industries you wish to invest in. Common ground helps build stronger relationships, stronger investments, and larger returns.
5. What Exact Services do you Offer?
Does your potential financial adviser offer more than one service? It is important to find out. Some specialize in only one type of finance, whether it is insurance or investments as examples, while others offer expanded services. Working with either a single-niche adviser or one with expanded services has benefits. If you are looking to have a diverse financial investment portfolio, someone offering multiple services would work best.
6. What are your Credentials?
Education and experience credentials are important bits of information to ask about when taking steps to hire a financial adviser. University level financial planning courses should be completed. Completion of the 10-hour exam should also be passed with an acceptable score. Inquire with the potential candidate about business references to interview previous clients or employers about their work ethic, success, and ability to perform job-related tasks.
7. Are you a Fiduciary?
Fiduciaries put a client's best interest ahead of their own. Full disclosure of compensation is also required of advisers working as fiduciaries. The Investment Advisers Act of 1940 requires advisers to provide services to clients under fiduciary standard guidelines. If your potential financial adviser is a fiduciary, ask what his or her intentions are for your specific scenario.
8. What is your Method for Reviewing Results?
Ask a potential financial adviser, before you hire one, about their results reports process. Your chosen adviser should provide results reports to you on a regular basis. The frequency of receiving these reports will be decided upon when you are discussing the terms of your agreement. A common time frame for results reports to be completed is quarterly. Exact breakdowns of profits, losses, and initial investments should be included.
Closing Thoughts
Asking questions and reviewing credentials are not enough to decide whether someone is your ideal financial adviser or not. Their body language, confidence in answering questions, and overall opinion or plan for your financial situation are also factors. You will know after meeting with several potential candidates who is the right fit for your individual financial needs.