This article is original content written by Manchester, CT Financial Advisor Thomas Scanlon, CFP®, CPA
You’ve decided you need a financial advisor. Or perhaps you have a financial advisor and you’ve decided you need a second opinion. Here are 6 Questions to ask your prospective Financial Advisor.
1) How Long Have You Been Practicing?
This is a simple softball question to get the conversation going. You want to know how many years of experience your advisor has. I really hate to generalize but longer is usually better. A more experienced Financial Advisor has lived through the good, bad and ugly markets. This experience should make them a better advisor.
2) Do You Have a Specialty?
Some financial advisors will specialize in a certain area. For example, some advisors will work primarily with retirees. These types of clients bring both their unique opportunities and challenges with them. Other advisors may specialize in serving doctors or perhaps high net-worth individuals. Not every Financial Advisor will have a specialty.
3) Do You Have Any Special Designations?
Many Financial Advisors will have some or several designations. One of the most common designation is a Certified Financial Planner® or CFP®. There are many other designations a Financial Advisor could have. A word of caution here however. There has been a tremendous growth in the world of designations. Some of these designations have dubious value at best. If your prospective Financial Advisor has designations ask him about them. Find out what was involved in getting the designation. What is involved in keeping the designation? How does this designation help him deliver the services to his clients?
4) How Do You Get Compensated?
Financial advisors can get compensated through commissions, fees or a combination of both. Neither form is ‘better’ than the other. Of these compensation arrangements, the fee based model would be the most objective.
As a prospective client to a financial advisor you just want to know how they get paid. It’s that transparency word we hear a lot about these days. As long as you know how you are compensating your Financial Advisor, you can decide if you want to work with them under their compensation arrangement.
5) Do You Have An Account Minimum?
Many advisors will have account minimums. For example, they won’t work with anyone that does not have at least $100,000 to invest. Many advisors will have significantly higher account minimums. The advisor here is really just making a business decision. They only want to work with someone that has a certain amount of investable assets.
6) What Should My Expectations Be?
This is where the rubber means the road. What should your expectations be when you hire a financial advisor? The answer is, “it depends.” Sorry, I wasn’t trying to be funny. It’s the truth. You will have certain expectations and the financial advisor will have a certain process as to how they deliver their services. If it’s a match, great. If not, well you’ll probably be moving on. It’s the advisors job to set your expectations at the beginning of the relationship.
The Other Side of Coin
Bring these 6 Questions to Ask Your Prospective Financial Advisor to your first meeting. Also be prepared also to be interviewed by the Financial Advisor. As you are trying to figure out if this advisor is someone you can work with, they are doing the exact same thing.
The information contained in this report does not purport to be a complete description of the securities, markets or developments referred to in this material. The information has been obtained
from sources considered to be reliable, but we do not guarantee that the forgoing material is accurate or complete. Any opinions are those of Thomas F. Scanlon, CPA, CFP and not those necessarily those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. Tax preparation and accounting services are provided by Borgida & Company, P.C., not as a service of Raymond James. You should discuss your tax or legal matters with the appropriate professional. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.
