10 Key Questions to Ask When Choosing Your Financial Advisor
1. What experience do you have?
Ask for a brief description of the financial advisor’s work experience and how it relates to their current practice.
2. What are your qualifications?
Ask about the credentials the advisor holds, and learn how they stay up to date with current changes and developments in the financial planning field.
3. What financial services do you offer?
Credentials, licenses and areas of expertise are all factors that determine the services a financial planner can offer. Generally, financial planners cannot sell insurance, or securities products such as mutual funds or stocks, without proper licenses. And they cannot give investment advice unless registered with state or federal authorities.
4. What is your approach to financial planning?
Make sure the advisor’s investment philosophy matches your own and isn’t too cautious or overly aggressive for your needs. Learn how they will carry out recommendations or refer tasks to others.
5. What types of clients do you typically work with?
Make sure the advisor is a good fit for your personal financial situation. Do they have experience working with professional athletes or entertainers? Do they require you to have a certain amount of assets or net worth before offering services? Asking these questions will help you in determining if the advisor is right for you.
6. Will you be the only financial advisor working with me?
Some financial advisors work with their clients directly, and others have a team of people that work with them. Ask who will handle your account, meet them, and ask whether they work with professionals outside their own practice, such as attorneys, insurance agents or tax specialists. If yes, get a list of their names to check on their backgrounds. The NFLPA can assist you with this through our background check services offered by Hilliard Heintz.
7. How will I pay for your financial services?
Advisors can be paid in several ways: through fees, commissions, or a combination of both. As part of your written agreement, your financial advisor should make it clear how they will be paid for the services to be provided.
8. How much do you typically charge?
Although what you pay will depend on your particular needs, the advisor should be able to provide you with an estimate of possible costs based on the work to be performed. Costs should include the advisor’s hourly rates or flat fees, or the percentage of commission received on products you may purchase.
9. Do others stand to gain from the financial advice you give me?
In other words, are there any conflicts of interest that you should be made aware of? Ask the advisor to provide you with a description of any conflicts of interest in writing. For example, financial advisors who sell insurance policies, securities or mutual funds will have a business relationship with the companies that provide these financial products.
10. Have you ever been publicly disciplined for any unlawful or unethical actions in your career?
The Financial Industry Regulatory Authority (FINRA), and your state insurance and securities departments each keep records on the disciplinary history of financial advisors. Ask which organizations the planner is regulated by and contact these groups to conduct a background check.