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Questions To Ask When Hiring a Financial Planner

Tue Jun 8   sgreen   Uncategorized

It is of the utmost importance to do your due diligence prior to hiring a new financial planner or advisor. This is someone you trust to hold the future of your finances in their hands. Their job as qualified investment professionals is to help meet financial objectives. With that said, finding a good financial planner can help determine if your future goals will be achieved or result in total failure. To avoid the latter from happening, take a closer look at what a financial planner’s job entails to know what to expect and whatnot. 

The Role of a Financial Planner

Many people get confused about the role of financial planners and financial advisors. Partly, that is because the term has been used generically to cover many professions that deal with finances in various ways. Often, we think of financial planners as stockbrokers or accountants, or even insurance agents. 

In the most basic sense, the primary role of financial planners is to identify the best solution within a financial field that will bring the desired financial goals within a set timeframe. In addition, a financial planner works closely with their clients to analyze their goals and risk tolerance to help create and implement a financial plan.

There are several factors that determine the results of a financial plan and the individual or the company you are hiring is one of them. To avoid conflicts of interest or being a victim of a scam, make sure to ask questions when hiring a new financial planner. Here are some of the questions we suggest you ask:

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How Much Experience Do You Have?

Years of experience, place(s) of work, and frequency of changing brokers or jobs will help you get a better picture of the advisor you are interviewing. You generally want someone with at least 4 years of experience in the financial planning industry. Additional experience in other financial roles can be a plus, however, they’re not necessarily required for the role of a financial planner. 

What Are Your Qualifications? 

As mentioned above, look for financial planners with at least 4 years of experience. In the financial world, continued education is very important. Look for a planner or advisor with advanced education. Education and designations such as a Certified Financial Planner ™ (CFP®) designation can indicate an increased level of knowledge and understanding beyond . To obtain these advanced certifications and designations, the advisor must complete a full course of study and pass an exam.

Other Qualifications You May Want To Look Out For:

  • Chartered Financial Analyst (CFA)
  • Retirement Income Certified Professional (RICP)
  • Certified Investment Management Analyst (CIMA)
  • Retirement Management Analyst (FMA)
  • Certified Retirement Counselor (CRC)
  • Personal Financial Specialist (PFS)

Will You Work In a Fiduciary Capacity? 

An advisor working in a fiduciary capacity can be a sole advisor or even the entire financial firm that takes action on behalf of you by putting your interests ahead of their own. It requires being bound both: ethically and legally for your financial planner to act in your best interest. 

A fiduciary should only recommend the best possible solutions that will have the highest ROI (Return of Investment) at the lowest cost. On the other hand, non-fiduciaries need only suggest or present you with a suitable product or investment, even if they are not the best for your situation. 

Why Did Your Last Client Leave?

While this might feel straightforward or even inappropriate, it is a question you should be asking prior to hiring a new financial planner. Similar to employers asking their potential employees prior to hiring them, you should take advantage of this question. There can be a simple explanation, or, the answer can raise some red flags. 

What is Your Area of Expertise?

There are several specialized services a financial planner can offer. Judging by your current situation and your future goals, you may want to work with an advisor who is experienced with situations similar to yours. For example, if you need help with budgeting and cash flow, a financial planner specialized in asset management may be what you need. 

Similarly, you don’t need a retirement distribution planner if you are young and starting a family. Prior to hiring a new financial planner, ask them how they typically work to determine if their expertise matches with your goals and current situation. 

Can You Provide References?

Considering that you are putting your hard-earned money in the hands of an unknown person, this can be a very apt question. Asking for references is essential towards establishing trust and building a long-term relationship that can be beneficial for both parties. 

An ideal financial planner would already be prepared with references and accomplishments to help you make a decision. You can also check their background by yourself on Finra’s BrokerCheck. It can help you learn more about the employment history and licensing information of your new financial planner.

Are You Working On Your Own Or With a Team?

A financial planner can be a sole individual, a small agency, or a well-organized financial planning company. Either way, their purpose is the same… to achieve the desired financial goals based on a relevant and careful strategy. It is your right to ask about the progress and counsel with your financial advisor when you need to. Therefore, knowing who will be consistently handling your account is important. You should also expect to have periodic meetings and reviews to make sure you are on track to meet your goals.  

What Are My Costs?

A financial planner can offer additional services, expertise, and experience for a cost. Make sure not to pass this question as you want to know what cost do his/her services have. There are a variety of fee structures and to keep it simple, a fee-only payment can be the best solution for you. A fee-only planner may charge an hourly fee, a flat fee for services, or they may even charge a percentage of the assets they manage for you. 

How Will I Benefit From Your Services?

When interviewing your new financial planner, share your situation with him and ask for a brief proposal that can benefit you. While it takes time and research to develop a good investment plan, it will help you better understand the advisor and how they work. Depending on the answer, that individual may or may not become your new financial planner. Either way, that interview session can give you new ideas to implement in your financial growth strategy.

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One Question To Ask Yourself: What Is Important To Me?

Take a moment to think about what truly matters to you. If it is your time and energy, a good financial planner can take care of your time-consuming tasks while you focus on what really matters to you. An even better financial planner will work with you more closely and that will eventually affect some of your choices and personal decisions. 

This is why it is important throughout this stage to continually focus on your goals. You are in need of a financial planner that will help you establish a reliable and stable future. Anything less than that is not worth it. 

In Conclusion

Financial planners are there to help us and our families to take advantage of our resources and properly utilize them to ensure a stable future. They should be industry experts that have been in the field for a while and understand the market better than we do. However, as there are good financial planners, there also are not-so-good financial planners. Using the above questions will help you spot the difference and make the right choice.


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