Interviewing financial advisors for this very vital role in your life can be daunting. Plus, the 21st century brings with it new threats to your finances, so your “toolbox” of questions needs to be updated as well. You are trying to achieve many objectives, such as help to plan for key life events and investing your hard earned assets in the most appropriate way. You not only need assistance in achieving your goals but you want to do so in a fashion that represents who you are. You also want peace of mind and time so you can go off and do the things that are most enjoyable to you, which encompasses the majority of your focus and attention.
Despite such a daunting and important task, I have been somewhat surprised over the years at how few questions are asked of me, and of the ones that are asked, how many of them are not relevant to whether I am up to the task to serve someone’s family. I’m a really nice guy, but this isn’t a popularity contest! You need to find someone who you think you can work with, hopefully enjoy working with and most importantly, is competent, trustworthy, transparent, open and honest!
With that, let me share with you the good stuff! The key points of information you will need to know in order to feel good about the financial advisor or financial planner you choose. I will even share a question that is always asked which you should remove from your tool box. My list starts from general qualifiers and gets more specific. If they don’t meet some of the first objectives, you can cut the meeting short and move on to the next candidate.
The above list covers the most important areas in finding a qualified candidate to help you reach your goals. While no way of doing business or credential guarantees honesty and ethics, it will go a long way to helping you weed out those who shouldn’t even be in the conversation.
In closing, I should mention that there is one question that an advisor doesn’t want to hear and may cause them to walk away if you place great importance on it. The main culprit is asking for their performance numbers or returns. While seemingly valid on the surface, if you think a great advisor beats or outperforms the market on a regular basis and that is why you are hiring them, you will be disappointed eventually 100% of the time. While no advisor wants to under-perform ever, your returns are typically going to mirror your risk level over time. Market returns are not a controllable event and all an advisor can do is offer a range of potential returns, especially if they use some of the newer risk software. Be aware that the advisor is interviewing you at the same time. If they see little focus on planning, the big picture and willingness to work with them on the areas they can control, they will likely not want to start a relationship that will be short term focused and market return based.
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Roy Larsen is a Certified Financial Planner™ practitioner and Fee Only Wealth Manager who resides outside of Atlanta, Georgia.
Roy's Financial Blog contains articles on the multiple and complex issues of living successfully in Retirement. There are additional resources on our educational website, www.successfulretirementinstitute.com.