For new financial planning clients, coming to an initial consultation can be an anxiety-inducing experience for lots of people. There are lots of reasons that make it difficult. “It’s hard for me to ask for help.” or “I don’t want to ask a silly question” are phrases and thoughts that are very common. For clients of a current practice, it can sometimes be just as difficult to know what to ask to make sure your advisor is giving you the value and wisdom you are compensating them for! It can be challenging at times even for existing clients to ask questions to get great value out of their financial planner. So, what ARE good financial questions that you should be asking? How should I prepare for a financial advising appointment? How often should I be meeting with my advisor?
For individuals taking the crucial first step in selecting a financial advisor (and even for those of you that already have a financial advisor you work with), the answers to these questions often set the groundwork for the entire relationship. The best advisory relationships in any profession are built on trust, and for the first meetings, the conversation and questions should be focused around fact-finding for both the new client and the financial professional. As a new client, here are a few great questions that will give insight into how the advisor helps people.
Are you a fiduciary? I feel this is the most important question that should be asked of any financial professional. In short, acting as a fiduciary for a client means you are duty-bound to put the needs of that client over ANY other potential conflict of interest. An advisor acting as a fiduciary will make investment decisions based on what is in your interest. You can feel confident that an investment that is being suggested isn’t a sales ploy to make the advisor more money, it is because the advisor has done their homework and feels that the investment is in your best interest as a client.
How do you make money? Another very important question that advisors will sometimes try to gloss over. A financial advisor can make money in a variety of ways with a variety of options, including:
- Selling comprehensive financial plans for clients
- Providing brokerage services for clients and suggesting securities to buy and sell for commission
- Providing ongoing investment management for a fee
- Selling services as a financial coach (often on a subscription basis)
Be sure to ask your financial advisor in detail how they charge you for the value they provide and services offered. If the answers seem vague or they try to switch topic quickly, this should be a big red flag!
How will our relationship work? This is another great question! This can be different for everyone. Some clients want lots of contact, quarterly meetings, and phone and email contact to keep them up to date. Others are content with a yearly update. Knowing where you fall into this spectrum and whether your advisor can accommodate can make a huge difference in value! It can be very frustrating to expect your advisor to be in regular contact and them not meet that expectation. So don’t be afraid to establish it up front with them!
There are so many more questions to ask, but these are what I feel are the most critical to establish with a financial professional both at the start of the advising relationship as well as throughout. At Resolute Wealth Management, our process starts with making sure that from the first meeting, these questions are clearly answered for our clients. We act as fiduciaries for our clients, putting their needs first with every investment decision made. We use a fee-based model for our advising clients, disclosing our fee structure, what services we provide, and what levels of service can be expected. Lastly, we clearly define our relationship according to the client’s needs and involve our clients in that discussion. If you have any questions or feedback, want to reach out to discuss other questions, or want to be included on our email list for future blog posts, please reach out to me directly at firstname.lastname@example.org or send me a note at the bottom of our website.