Great Questions To Ask When Interviewing A Financial Advisor

You’ve decided it’s time to think about hiring a financial advisor. What do you ask to make sure they’re the right fit? Interviewing a financial advisor can be a tough endeavor. When you hire a financial advisor, you are entering into 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 advisor’s are only looking to line their pockets rather than work in their clients best interest. Hence the importance to carefully vet potential candidates. Thankfully, there are only a few key questions that can really help determine if your financial advisor is the right fit for you. To protect yourself and your money, here are some essential questions to ask before making your next move.

Are you a FEE-ONLY investment advisor? Investment advisors are regulated under the Investment Advisors Act of 1940 and are ALWAYS fiduciaries. A fiduciary (such as Branson Financial Planning and its employees) places the interest of their client before their own. If they are a fiduciary, they freely disclose their fees, how they are compensated, and any potential conflicts of interest that might influence a client’s decision to use their services.

Why the emphasis on ‘FEE-ONLY”? Not all investment advisors are purely fee-only. It’s incredibly common in our industry to operate as an investment advisor AND as a registered representative. Registered representatives (also called brokers) sell commission-based products that need to be merely ‘suitable’ for their clients, a much less stringent standard of care. As a registered representative / broker, they do NOT have to act as fiduciaries. These financial advisors are considered ‘dually registered’ because they’re both investment advisor AND registered representative.

Why is this important? Well, how do you know when your financial advisor is operating as an investment advisor (fiduciary operating in your best interest as all times, only compensated by client fees, doesn’t receive kick backs or commissions from third parties) vs. when the financial advisor is operating as a registered representative (receives commissions, is NOT a fiduciary, only needs to sell products that are suitable). The answer to this question is important because it can be incredibly difficult to know.

Are you a registered representative (also called a broker) operating under a broker/dealer? See the answer to the question above as to why this is important to ask. Pure advice in the comprehensive financial planning world should be as conflict free as possible and always in a fiduciary fashion. Operating as a broker doesn’t fit that definition.

How Do You Charge for Your Services? It is important to know your costs because it can greatly influence your decision. Some financial advisors get paid a commission for selling a product (brokers), others get paid a retainer 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. Branson Financial Planning strongly encourages folks to seek out a fee-only financial advisor because they are likely to always act in the client’s best interest rather than a salesperson trying to make a quick commission.

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 financial advisor aligns with your needs. Do you need specific help around tax planning or cash flow? If the financial advisor you are interviewing is investment heavy in their service model, it might make sense to look elsewhere.  Overall, go with a professional who offers services that suit your unique needs.

What are your Credentials? According to the CFP® board, 90% of consumers see an advisors certification as important. And I would agree. The financial advice world is littered with a myriad of certifications and their accompanying acronyms. It’s important to know your financial advisors education beyond just the legal minimum required. Branson Financial Planning considers the CFP® Certification to be the gold standard of excellence for financial planners and advisors. CFP® professionals have met extensive training and experience requirements and commit to CFP Board’s ethical standards that require them to put their clients’ interests first. That’s why partnering with a CFP® professional gives consumers confidence today and a more secure tomorrow.

How often will I meet with you? No answer is right for this question. A financial advisor engaging in an ongoing relationship should absolutely communicate to the client how often they plan meet. Communication has been cited numerous times in the past as the number one reason a client will decide to leave their financial advisor. Branson Financial Planning considers communication to be the most important indicator of success between an advisor and client.

What is Your Investment Approach and Philosophy? There is no one accepted approach or philosophy when it comes to investments. 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. 

Do you have a niche or specialty? This is an important question, but certainly not a deal breaker by any means if you and your advisor don’t align perfectly. Advisor focuses range from physicians, to equity compensation, to pre-retirees. It’s important to get a sense of your advisors experience in providing solutions and advice to your specific details. 

Branson Financial Planning understands that by hiring us as your financial advisor, you are entrusting us with your money and the future represented by that money. Ask us or any other potential financial advisor you are interviewing the above questions at the beginning of your relationship to help you decide who you want to work with.

As always, remember to consult with your tax, legal, and investment professionals.

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Jeff Branson, MBA, CFP® – Jeff is the founder of Branson Financial Planning. He spends his time acting as a personal CFO to households across the United States. He believes that financial advice should be clear, objective, and delivered in a fiduciary manner. When he’s not working, Jeff spends his time exploring beautiful Maine with his girlfriend Bianca and his golden retriever Mavrick.