When searching for a financial planner, you are essentially interviewing candidates for the role you’re looking to fill. Prior to an interview, you have to decide what is important to you and what questions to ask to make sure the financial planner you pick is the right one for you. After all, your financial planner is working with one of the most important and personal areas of your life - your financial well-being. Continue reading to learn the top three questions you should ask a financial planner before hiring them.
1. Are you a fiduciary?
A fiduciary is a person who manages property or money on behalf of another person and is required by law to manage a person’s assets for their best interest and benefit before their own. Fiduciaries are also not allowed to earn any commission on investment products they recommend to their clients to prevent the prioritization of their own self-interest.
In addition to asking the advisor if they are a fiduciary, you should consider having an oath signed. A fee-only planner should have no problem signing it while a fee-based or commission-based advisor won’t be allowed to sign it. This is a great way to hold a financial planner accountable and honest.
Another way to check if an advisor is a fiduciary is through their certifications. There are several certifications and designations that can qualify an advisor as a true fiduciary. A few examples are Certified Plan Fiduciary Advisor (CPFA) and Accredited Investment Fiduciary (AIF). You can ask your advisors for proof of these certifications to ensure they are truly a fiduciary.
2. Are you qualified?
When it comes to having trust in someone with your finances, you want to make sure they are qualified, knowledgeable, and experienced. If you are looking for a financial planner, you should be on the lookout for different licenses and qualifications. Just because a person says they are a financial planner or advisor, does not mean they are certified or qualified.
There are several types of licenses and designations that a financial advisor can have, such as a Certified Financial Planner (CFP), Financial Services Specialist (FSS), Chartered Financial Advisors (CFA), or Life Underwriter Training Council Fellow (LUTCF).
The combination of education, training, and experience that a certification requires allows you to build trust in a financial planner’s skills and ability to properly manage your finances.
3. How do you get paid?
All financial planners have to make money somehow, but different financial planners charge for their services differently. A few options are fee-only, fee-based which is a combination of commissions and fees, and commission-based.
If a financial planner says they receive money from commission on the products they sell to their clients, that is a clear sign they are not a fiduciary. All fiduciary advisors are fee-only. A non-fiduciary financial planner may recommend products that are not the best option for their clients since they have the self-interest of gaining commission on the sale.
You should also ask for their fee structure to get a more in-depth explanation of how the advisor will be compensated for their services.
It can be difficult finding a financial planner that makes you feel comfortable and confident that your finances are in good hands. FP Wealth Management prides itself on always having our client's best interests at the forefront of our minds. Contact me today to learn more about how we can help you with your financial planning. Email me at jason@fp-wealth.com or call me at 402-454-7204 to schedule your consultation.
Sources:
https://money.usnews.com/financial-advisors/articles/questions-to-ask-financial-advisors
https://www.nerdwallet.com/article/investing/10-questions-ask-financial-advisor