| Whether you’re saving for retirement, considering major purchases, planning your estate, or just want a second set of eyes on your investments, hiring a financial advisor who you feel best suits your needs could be key.
A 2022 Northwestern Mutual study found that 62% of U.S. adults admit their financial planning needs improvement. However, only 35% of Americans work with a financial advisor.¹
The value of working with a financial advisor varies by person. While advisors are legally prohibited from promising returns, research suggests that people who work with a financial advisor feel more at ease about their finances and could potentially end up with about 15% more money to spend in retirement.²
Whatever your reasons for seeking financial advice, it’s important to have a list of questions planned to ensure you’re hiring a financial advisor who can help you plan to reach your goals.
5 Questions to Ask When Choosing a Financial Advisor
1. Are You a Fiduciary?
Fiduciaries are financial advisors with a legal obligation to prioritize your interests as they manage your assets or money.
Unlike a broker who may push you into insurance policies or investments to rack up fees and commissions, fiduciaries are bound to recommend options that benefit you, the customer. While conflicts of interest can still exist, any potential conflicts of interest must be disclosed.
SmartAsset’s free tool will only match you with vetted fiduciary advisors.
2. How Much Experience Do You Have?
In addition to asking about their professional certification, it can also be a good idea to ask a prospective financial advisor about their overall experience.
Generally, the more experience they have the better, especially if your financial situation is complicated. You should consider asking about their education, previous employers and track record of success.
You might also want to consider performing a background check to find out whether they’ve ever been convicted of a crime or been involved in a criminal investigation by a regulatory or trade group.
Don’t be afraid to ask for references from current or previous clients, and be wary of a financial advisor who seems reluctant to provide this information.
3. What Type of Services Do You Offer?
Some financial advisors offer a range of services, while others specialize in niche aspects of financial management.
For example, some advisors may only handle investments, while others take a more comprehensive approach, including retirement, estate planning and tax planning, along with other services. Ideally, you should look for an advisor whose range of services most closely fit your current and future needs.
It’s also helpful to ask whether they specialize in a specific type of client. Some financial advisors may cater to retirees while others may prefer to work with families or divorcees. Some advisors cater to high-net-worth clients.
Choosing an advisor who works exclusively with clients whose situations are similar to yours means they could be better equipped to offer the type of guidance and advice you may be seeking.
4. What’s Your Fee Structure?
Before you sign on the dotted line, you need to know how much your prospective financial planner will charge for their services.
Depending on the type of professional you’re working with, they may receive a flat or hourly fee, be paid on commissions, or a combination of both. Fee-based advisers, for example, charge an up-front fee, but may also get a commission for selling financial products.
Fee-only advisors make money from the fees they charge their clients. Some fee-only advisors charge a flat rate while others charge by the hour. Advisors who cater to high-net-worth clients may calculate their fees based on a percentage of the assets under management.
5. What’s Your Investment Approach?
You should also consider asking prospective advisors about their investing approach.
If you’re not comfortable taking on a lot of risk, you could consider a financial advisor who advocates a more conservative strategy. Knowing whether or not their investment style matches your personal investing philosophy beforehand could potentially save you complications in the long run.
How to Find a Vetted Fiduciary Financial Advisor
This is the biggest hurdle for many. With thousands of daily Google searches for “Fiduciary financial advisors near me,” “best fiduciary financial advisor,” and “financial investment advisors near me,” the hunt for a vetted fiduciary advisor can feel like a wild goose chase.
But it doesn’t have to be. And thankfully, it really isn’t.
Our free matching quiz links Americans with up to three fiduciary financial advisors who serve their area so they can evaluate and choose the one who fits their needs.
Advisors are rigorously vetted through our proprietary due diligence process and legally committed to acting in your best interest. It’s never too late to work towards the path of financial freedom.
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