As you get older, managing and getting your finances in order becomes a top priority. Navigating through your muddled finances can become stress-free and easy if you hire a the right advisor who not only provides you with clear, and unbiased advice regarding investments but also prepares you for your future. You may feel anxious or pressured before your first meeting with the financial advisor, but it is precisely the right time to do your due diligence, get fully prepared and ensure that the financial advisor you hire is worth it.
It doesn't matter if you are a beginner who is evaluating financial advisors for the first time or if you have been investing on your own in the past or if you are an expert trader who is re-evaluating professional advisors, make sure you ask the right questions to have a productive conversation when you meet the advisor.
The first meeting usually is a discovery or an assessment session where your advisor would want to learn about your existing investments, personal goals, and priorities to develop a realistic yet personalized plan, based on your situation. If you want to get the most from your meeting, then you must do some advance thinking and take a deeper look at your finances by asking yourself these questions:
Having clear answers to the questions above will allow you to define your financial goals, priorities and also set the right expectations for your financial advisor. This handy guide lists top 10 key questions you should ask your advisor on your first meeting to achieve your short and long-term financial goals.
You must get clarity towards whether your advisor is a fiduciary or a broker. Also, it is essential for you to comprehend the difference between the two. A registered investment advisor or "RIA" is held to a fiduciary standard, who puts the client's best interest ahead of their own. Fiduciaries adhere to the code of ethics and care and work under strictly defined standards. They are transparent and provide conspicuous facts with an objective to assist the client with their financial decisions without misleading them. Whereas, a broker or a suitability advisor recommends an investment that is appropriate as per the situation.
It is recommended to hire a fiduciary, who holds credible designations and memberships in financial associations, as their advice can positively impact finances.
The 2 Es - Education and Experience are essential indicators to consider when hiring a financial advisor. You must inquire if your advisor has the right credentials with an acceptable score along with a certain level of experience, which will help you gauge his/her competency level. Some of the renowned certifications are Certified Financial Planner (CFP), a Certified Public Accountant (CPA), Personal Financial Specialist (PFS), etc.
A professional financial advisor may offer more than one services. As a client, it is crucial for you to find out if your advisor has some specific specialization on a particular investment type or if your advisor is an expert in offering multiple services covering diverse investment portfolios such as retirement planning, mutual funds, tax planning, insurance, real-estate planning, etc.
Remember, there is always a higher chance for you to get the right recommendation if your advisor understands the whole spectrum of finance.
You may feel that this could be a too much of a direct question to ask at the first meeting, but you must be aware of the fees your financial advisor charges to manage your portfolio. Transparency is the key here. Some of the common ways an advisor gets paid are - a flat fee model, charging a specific percentage of the assets they manage or commission based. Also, get clarity on the combination fee structure, i.e., fixed plus and commission fee.
Ask your advisor in simple terms to describe his/her investment philosophy and approach. It will help you understand if your advisor has a long-term strategy for you. Make sure your financial advisor also recommends and builds a portfolio with diversified stocks or assets.
Communication is the key. Look out for a professional who proactively communicates either on phone or in-person, to keep you updated on your investments and performance. Make sure that your advisor holds review meetings and check-ins regularly as per your preference like monthly, quarterly or annually. Meeting your expert advisor at regular intervals can make you feel empowered, financially confident and uncover money management skills that could make a big difference.
A big reason to invest money is to achieve your financial goals; hence it is vital to assess and track your portfolio performance on a regular basis. Additionally, you can ask your advisor to help you with apps and websites to keep a check on your portfolio performance. However, make sure your advisor evaluates and informs the rate of return on your portfolio and also re-balance funds as an when required, according to your risk tolerance and long-term goals. Always keep your eyes open while investing and ensure that you invest in diverse portfolios.
Ask your advisor the kind of clients he/she deals with.Are they mainly high net worth individuals or corporates? This piece of information will help you analyse if your advisor is catering to clients who are in your financial strata and whether he will be able to provide you with specific recommendations, tailored to your needs. You can ask for a few client references whom you can talk to and understand if the advisor is the right one for you.
Your advisor should be actively involved in the strategic decisions of your account,hence you may want to check if he will directly be responsible or someone else from his team will be handling your portfolio. It will help you to build a relationship with your advisor and express your existing financial situation clearly to get accurate guidance.
Ask your advisor for a reference/sample financial plan that's based on your financial situation and lifestyle. You must go through the plan thoroughly and understand if all the financial aspects are covered and follow up with questions to get more clarity.
Finding a financial advisor is somewhat like finding a soulmate, difficult and tedious, but it will be rewarding at the end. From a practical standpoint, your financial advisor should be confident, approachable and friendly. He should be able to address all your financial concerns and help you create a strategy with an aim to meet your short-term and long-term financial goals.
Use your initial appointment time with a financial advisor as an opportunity to ask the right questions. This will help you choose the right advisor, who is transparent, trustworthy and reliable. Should you leave the meeting feeling uncomfortable and stressed, then it is better to walk away and talk to another financial advisor?
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