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Questions to Ask Your Financial Advisor Before Getting Started

When you hire a financial advisor, you are entering a long-term relationship with a person who will know almost everything about your financial life. It is nearly impossible to know who to trust with your money especially when some financial advisors are only looking to line their pockets rather than offer the best investment advice. Hence the importance to carefully vet potential candidates. To protect yourself and your money, here are some essential questions to ask your financial advisor before making your next move.

What is Your Investment Approach and Philosophy?

There is not one accepted approach or philosophy when it comes to investment. Different professionals follow different approaches and philosophies. Ask the financial advisor to describe their approach and philosophy in simple terms that you can easily understand. An investment philosophy can be described as a set of guiding principles underlying the process of choosing an investment in a given situation. While they might not disclose their personal information, they might be willing to share the strategies they use to succeed, and they might use the same approach for your portfolio.

At Rand Financial Planning, our philosophy is that financial planning is a life-long process, not a single event. The process of financial planning is much more comprehensive and integrative than simply managing investments. The earlier the process is started the more easily you may achieve your goals and dreams. 

Are You Fiduciary?

Their answer to this question helps you know whether the potential financial advisor has your best interest at heart or not. A fiduciary financial advisor places the interest of their client before theirs. If they are fiduciary, they freely disclose their fees and how they are compensated. They also disclose potential conflicts of interest that might influence a client’s decision to use their services. A non-fiduciary financial advisor, on the other hand, might receive a commission for selling an investment that is not in your best interest and they will not disclose it to you. If they do not give a straight yes or no answer to this question, take it as a sign something is not right.

What Services Do You Offer?

Every person has different needs, what might work for another person might not work for you. The answer to this question will help you make sure that the advisor aligns with your needs. Some financial advisors are just investment advisors, and they will only offer you advice on your investments. Therefore, they would not be the right fit for you if you are looking for comprehensive financial planning around tax planning, insurance, retirement and estate planning. Go with a professional who offers services that suit your unique needs.

At Rand Financial Planning, we offer life-integrated financial planning that is customized to your personal situation. We provide this service in 3 ways:

  1. Comprehensive Plan: RFP's Comprehensive involves an ongoing relationship that takes advantage of the full range of our services. Our clients can meet or speak to us as often as is necessary to help you make important decisions and accomplish your financial goals.
  2. Investment Retainer: A series of three meetings of 90 minutes each. This service focuses on your investment portfolio, which investments to keep, which ones to sell and how to manage your portfolio on an ongoing basis.
  3. Financial Fitness Review: The Financial Fitness Review involves 8-10 hours of our time for research and analysis.  We answer your top three financial questions and have one two-hour meeting to discuss.  It is the best introduction to Rand Financial Planning.  

Learn more about our fee-only financial planning services

How Much Do You Charge for Your Services?

It is important to know your costs upfront because it can greatly influence your decision. Some financial advisors get paid a commission for selling a product, others get paid a fee while others charge a percentage of the assets under management. The answer to this question not only helps you know how much the service will cost you, but it will also help you determine if they have a hidden incentive to sell you a product. Most people prefer an advisor receiving a fee rather than a commission because they are likely to act in the client’s best interest rather than a salesperson.

At Rand Financial Planning, we believe in a fee-only model. This means we take our responsibility to act in our clients' best interest very seriously. We never accept any fees or compensation based on product sales and provide more comprehensive advice. Our website is up-front about our fees as well and we are committed to providing value that exceeds our fee.  

How Do You Measure Success?

A financial advisor should be in a position to measure their success based on how the plan is progressing compared to goals that their clients set up. They should share how your portfolio is performing against a benchmark that depends on the client's risk tolerance and their timeline. If the performance of your portfolio is slightly off track, they should be willing to work with you to come up with a strategy that will get it back on track.

By hiring a financial advisor, you are entrusting them with your money and the future represented by that money. Asking the above questions at the beginning of your relationship will help you decide if the potential advisor is one you want to work with.

At Rand Financial Planning, we believe that your goals and values are the foundation on which your personal financial plan is built. Everything else is coordinated so you can achieve your goals while remaining true to your values. Success to us is helping as many people as we possibly can navigate life with solid guidance and a freedom from financial worry. If we are successful at making life less hard for you we see that as a success.

Contact us today to schedule your no-cost, no-obligation initial consultation.

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

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