You may be shy about talking money, but you shouldn’t be with your financial advisor. It is your money and you need to know where it is going and how it’s being spent. If you are new to financial advising, use these questions to better understand if you are making the right choice with your financial advisor.
Your financial advisor should be accredited and should explain those credentials to you. Ask them what qualifies them to work for you. Most important when talking about credentials, ask your financial advisor if they are a fiduciary. A fiduciary puts their client’s needs first and will not try to “sell” you on a product, service, or stock. This may mean that you cannot take the cheapest financial advisor that you find. However, you should seek out someone who will have the best interest for you the client. You need a financial advisor with top qualifications, but also, someone who can explain exactly where your money is being invested and how it is growing.
You do not want to invest with a financial advisor whose main goal is to sell you a product. Not only is it not in your best interest, but it can doom your finances from the start. Most financial advisors charge a flat fee for their services. It can be an hourly fee or flat rate fee. According to Nerdwallet, fee-only advisors can incur a charge on assets they manage for you, which is usually around 1%. However, not all financial advisors do this. Some may try to sell you a service or push a product you don’t need. This means their incentive is not to make you money, but rather, to sell as many products or services they can. Talk upfront about the cost of your financial advisor’s services. If they can’t give you a straight answer, walk away. Try your best to find some one who uses the “fees” model.
When setting up financial goals such as retirement, saving for a house, or saving for your children’s college, each answer should be unique to your situation. Your financial advisor should be honest about how they plan to invest your money. If you have a financial advisor that is only putting your money in one stock, this is a red flag. You should be able to view your portfolio and it should be stocks and bonds from all types of companies and industries. The perfect financial advisor should tailor their investment strategy to your goals. Whether it’s mutual funds or bonds, your advisor should be able to clearly explain their strategy and minimize risk. Don’t be afraid to ask questions or for an explanation. It’s your money!
When you first meet with a financial advisor you will want to ask them how they can measure growth. Over time your stocks will begin to grow, but each year your financial advisor should tell you the growth rate. That growth rate is different every year and fluctuates. The market is ever-changing and a financial advisor should be able to adapt to it.
Most financial advisors operate with multiple areas of financial planning. You may want to talk about retirement, but find out that you can have someone handle your taxes as well. It’s always good to ask as you can get help with insurance planning, cash flow, charitable contributions, trust and estate planning, and many other areas. The right financial advisor for you can help you on multiple fronts. You never know where you might be able to save money!
Before you meet, write down your goals. Break them down into segments like 5, 10, 20, 30, and 40-year goals. This is important because you and your financial advisor can build a road map to achieve those goals. Whether it’s building your own house or saving for retirement, you need to know how much time it will take to complete the goal. This will also dictate how long you need to save for retirement or invest. Make sure you and your advisor understand how and when you will achieve your goals.
Again, it’s your money and you need to know where it is and if it is growing. Make sure you establish during the first meeting when and how to contact your financial advisor. You should also be given routine reports about your stocks and the direction of investing. Always be reaffirming that goals are being met and where to invest. Your financial advisor should establish trust and should be honest about how they operate. Don’t settle for less when your retirement is on the line.
Looking for a financial advisor or someone to manage your portfolio? Sheffield, Trackwell & Rapp have the highest quality financial advisors ready to help you. Contact us today and let’s get started on building your wealth.
STRCPA is available during this tax season to meet your needs. We are available via phone or email. Contact us