Wealth column: 5 questions to ask when interviewing a financial adviser
Meeting with a financial adviser, or a new financial adviser, is the first step in creating a relationship with the person you may choose to put your financial future in the hands of.
It's a huge responsibility that your future adviser should not take lightly, and neither should you.
In order to make sure you are working with a reputable, capable adviser, we recommend asking the following questions at your introductory meeting:
1. Are you independent?
This is an important one. Being independent means that the adviser doesn't earn commissions off of the products they recommend and aren't limited to the products their company offers. Having an adviser who is beholden to the products sold by their company means you aren't being exposed to all of your options, including the one that might work best for you.
2. Are you held to a fiduciary standard or a suitability standard?
If your adviser is a fiduciary they are legally obligated to look out for your best interests. If your adviser is not a fiduciary, they fall under the suitability standard. This means the adviser has to provide you with options that are suitable for your situation, which is a lower threshold than the best-interest standard. With the suitability standard you are left wondering, is this the best option for me? Perhaps this option earns your adviser a larger commission, is an easier transaction to close, or is not the lowest cost option. More and more advisers are becoming fiduciaries, but it's still an important question to ask.
3. Do you offer services along with investment management?
Many people who first see a financial adviser are looking for help with growing their retirement savings. However, as you get closer to retirement, you'll want to talk to your adviser about how they can help you with the next steps in helping you plan out your financial life. Having an adviser who can help you prepare a comprehensive financial plan means that they can help you your withdrawal strategy, plan for your children or grandchildren's education, assist with estate planning, consider your Social Security options and help you bring all of that together in one place.
4. Have you ever been reprimanded by a regulatory body?
This question may be one of the more uncomfortable to ask, but it's important to know if the adviser you're working with has ever been involved in any unsavory practices. If you are unsure about asking in person, the SEC has created an online database where you can look up any customer complaints called brokercheck.finra.org.
5. What will your services cost me?
This is another important question you'll want to get answers to before signing any paperwork. Your adviser may charge you by the hour, annual retainer, a percentage of invested assets or they may make commissions of the products they sell you. You should be comfortable with the amount you'll be paying and how your adviser is paid.
If you don't like the answers to any of these questions, we recommend getting a second opinion. After all, you've worked hard to build up your savings and should have confidence in your financial future and the people who are managing it.