It’s been said that health has more of an impact on our happiness than anything else. Some say financial contentment follows close behind, which makes the beginning of the year a perfect time to look at how we can improve our financial well-being.
With so many changes in the financial markets, it’s a good time to evaluate your investments. As you speak to advisors, the following questions can be asked to make sure you’re headed in the right direction for the future.
Are you a fiduciary?
A fiduciary is a person who has to place the client’s interest ahead of their own. Fiduciaries must also disclose their fees, how they’re compensated and any other conflicts or potential conflicts of interest that might influence an individual’s decision to use their services.
Can your advisor work for you as a fiduciary?
How do you charge for your services, and how much?
Is there an initial fee, do they charge a percentage for assets under management or do they make money from selling you a certain product? In other words, do they have an incentive to sell products to you?
Is the fee or commission charged upfront? Do they have relationships with certain companies and money managers? Do they focus on proprietary investments or are they able to consider the entire universe of available options when constructing your portfolio?
What licenses, credentials or other certifications do you have?
How long has your advisor been in the business? Is he or she committed to continuing education? Does your advisor have a graduate degree or professional designation? Tax laws and the financial markets are always changing, so be sure your advisor is on the forefront of these changes and able to make you aware of how they can impact you.
Also, can he or she offer you investments, financial planning and estate planning expertise? Can your advisor help you with your entire financial picture, not just on selling you an investment?
What services does your firm provide?
Do you provide investment advice only or is more comprehensive planning available? Will you help me with non-investment related assets like a family business or real estate? Can you advise me on contingency planning that takes care of my family should something happen to me? Do you have experience working with a special needs child? Can you tell me if the planning I’ve done today will ensure family harmony in the future?
What is your investment approach?
Does your advisor have a personal philosophy toward investing? Are they focused on the long-term or do they make a lot of tactical changes in the portfolio? Do they use low-cost funds or employ more expensive money managers? Can you expect a lot of volatility or a return consistent with your risk tolerance?
How much contact do you have with your clients?
How often can I expect to hear from you? Will we have regular meetings or can I expect to meet once a year? What issues do we plan to discuss in the next year? Will you help me communicate with other professional advisors, i.e., attorneys?
Will I be working only with you or with a team?
Since one person cannot be an expert in everything, some companies offer a team approach rather than relying on one individual for service. Would you benefit from working with a variety of experts? If you work with an individual, what happens to your life’s savings when that person gets sick or leaves his or her organization? Do you have a succession plan in place to plan for these potential scenarios?
What makes your client experience unique?
This question offers insight into whether their strengths are the ones you seek in an advisor. If they can’t answer this question quickly and succinctly, you may want to consider other options.