Four questions to ask when choosing a financial advisor
While managing finances on your own may seem practical, it's often helpful to enlist a professional. A financial advisor can be an important ally as you strive to secure your own financial future.
Advisors are trained to guide clients on how to save, invest and grow their money to meet specific financial goals. When choosing an advisor, you’ll want to ask these questions to determine if he/she is the right person to help you.
Are you a fiduciary?
"Fiduciary" is not jargon. It is a legal term that refers to a trustee's liability and responsibility. An advisor who is a fiduciary is obligated to act in his or her client's best interest. Fiduciaries must also disclose how they are paid and any potential conflicts of interest.
How are you compensated?
Advisers are typically paid in one of three ways: fee-only, in which you, the client, pays fees with no commission; by commission, in which fees are paid based on products sold; and by salary, by which the advisory firm pays the advisor out of commissions and other revenue.
Will you be the only person working with me?
The advisor you initially meet with will not necessarily be your primary point of contact. Ask the question upfront so you know how often you can expect to meet with your advisor and what your communications will be like.
May I see a sample financial plan?
There is no set structure to a financial plan; different advisors will have different approaches. Ask for a sample so you learn your advisor's style, then you can ask for more or less detail according to what you are looking for.