How To Hire YOUR Trusted Financial Planner and What Questions To Ask
- Mr. Organic
- Jun 22, 2019
- 4 min read
Updated: Nov 24, 2019
Hiring The Right Guy (or Gal)
First of all, congratulations on taking this step! Now lets get you to the professional best suited for you! It is important to find someone who you can trust, and here you will find a list of questions to ask that will affirm (or not) your trust in the person in front of you. For this article, the words adviser and planner are used interchangeably with no reference to a different meaning.
If you're not sure if you are ready for a financial planner, see my article: How to Manage Your Money Like The Wealthy for Individuals and Households | Millionaire Mindset, specifically steps 1-3.
Once you are ready to hire an adviser you should have goals set before the meeting. See my article on goal setting: The Millennial's Issue With Financial Planning and How To Overcome It
Choosing your financial adviser is no small task. This is basically an interview process. Ideally the relationship you choose to engage in when picking your financial planner will be a life-long one.
We already have enough issues with divorce in this country, and in most cases we try to avoid the scenario! The same goes when picking your adviser.
What is A Financial Planner?
First, it is important to understand what a financial planner is and how they help you. A financial planner is a qualified professional that is there for the long term.
Think of them as your primary physician, but for your money (or like a CFO for your household). In that case they may refer to other professionals that have a stronger knowledge base in a certain areas of expertise. For example, a good team of financial professionals will consist of a financial planner, estate planner, attorney, tax accountant, and other professionals deepening on the situation at hand.
Ask About Personal: Who Your Adviser Is And Why Do They Do This Job?
This may sound a little vague at first, but it is the most important. When you meet with an adviser they will spend the majority of the time letting you speak about your needs (or atleast they should be...).
Make sure to take time during the appointment to understand who the adviser is as a person. It is important to understand what experiences the adviser has had, and if they are really there to help YOU move forward.
Here are some example questions to understand who your adviser is personally:
A good leading question may be, "Why did you choose this career?"
"Are you married? Do You Have Any Kids?" This will help to determine how much time they can personally give, but also provide insight into whether or not they have made a lot of personal financial decisions with their own money or not.
"What are your goals?" This is a question you too will be asked by the adviser, and as I said above, have them ready!
Ask About Professional: What Can They Do And How Well?
Once you feel comfortable with the person you are sitting in front of, be sure to ask them about there professional career. If you never feel comfortable with the person behind the adviser, obviously, it is not a good fit for you, and you should keep interviewing.
Here are some questions to understand who your adviser is professionally:
"What Licenses Do You Hold?" This basically means what services can you provide. Some representatives can only sell life insurance and annuities, while others have access to every and any product you may need. It is imperative you understand if your adviser is limited in the scope of their product base. FINRA has several exams that qualify advisers for the sale of certain products. For example, a Series 6 licence only rep can sell only mutual funds, variable annuity and life insurance (if they are life insurance licensed), municipal securities and Unit Investment Trusts. S6 only reps cannot use money managers or buy individual stocks.
"How Will You Invest My Money?" This questions is to understand their investment philosophy. Some advisers shoot for the stars, while others have a more steady consistent flow. It is important to understand and be comfortable with your advisers investment philosophy.
"How Do You Measure Performance?" It is good to understand what the adviser is using to compare his returns too. This is often known as a benchmark.
"How Are You Compensated?" There are several types of compensation structures to be aware of. These include: commission only, percentage of AUM (1.0% of your assets), hourly rate, flat fee, quarterly/annual retainer, or a combination.
"How Do You Communicate and When?" Understanding how to best communicate with your planner is key. Also know when and why they may be giving you a call. It could be a call for an opportunity you don't want to miss!
What To Bring To The Meeting
In order to be most efficient and move forward once you have chose to hire your adviser of choice, you'll want to have some things available.
Goals
Pay Stubs
Recent Tax Return
Budget - For more information on budgeting mindset see: How The Wealthy Budget and Why You Should Too | The Millionaire Mindset
Mortgage Statement
Other Debt Statements
Employee Benefits
Retirement and Other Investment Accounts
What's Next?
After your first meeting you should feel comfortable with your financial planner. They will make you aware of the next steps in the planning process. Mainly this will include an in depth review of your goals and current situation to find out where you will be if you change nothing.
Once the current track is understood, implementations will be recommend to re-direct your track to align efficiently with your stated goals. From there adjustments will communicated and made as needed as long as the relationship exists.
Congratulations on choosing to take the step of hiring a financial planner! I look forward to your future success!
Thank you for your time,
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