Questions to Ask a Financial Advisor

March 17, 2023
Estimated Reading Time: 4 Minutes

Working with a financial advisor can be an excellent way to achieve your financial goals and improve your overall financial well-being. However, not all financial advisors are created equal, and it's important to ask the right questions to ensure you're working with the best possible advisor for your needs.

Here are some questions to ask a financial advisor before you start working with them:

What are your qualifications?

You want to work with an advisor who is qualified and experienced in the areas you need help with. Ask about their education, certifications, and licenses. Make sure they are a registered investment advisor or work for a registered investment advisory firm.

There are also many designations that advisors can achieve throughout their careers, including the Chartered Financial Analyst (CFA), which is more investment-based, and Certified Financial Planner (CFP), which is more financial-planning based. Certain designations can show an advisor’s specialization, experience, and dedication.

What is your investment philosophy?

Every financial advisor has a different investment philosophy, and it's important to understand their approach before you start working with them. Ask about their investment strategy, their risk tolerance, and how they typically invest their clients' money.

Most importantly, an advisor should be able to orient their philosophy towards what works for you and your unique situation. If it seems like an advisor won’t be able to prioritize your goals, they are probably not the right fit.

How are you compensated?

Financial advisors can be paid in a variety of ways, including commissions, fees, or a combination of both. Make sure you understand how your advisor gets paid and what fees you will be charged. If they receive commissions, there is a good chance there could be a conflict of interest between the investment vehicles they choose and what is best for your objectives. Most advisors charged a fee based on assets under management (AUM), or a percentage of the wealth that they manage for you. This way, you can ensure they are recommending strategies that are in your best interests.

How do you communicate with clients?

You want to work with an advisor who is responsive and communicates effectively. Ask how often you can expect to hear from them and what communication channels they prefer (phone, email, in-person meetings, etc.). Make sure you're comfortable with their communication style and frequency. An advisor should have a specialized knowledge of the market and financial planning strategies, but they should also be able to explain them to you so that you also have a good understanding of what they are recommending you do with your money.

How do you assess my financial situation and goals?

Along with frequent and clear communication, your financial advisor should take the time to understand your current financial situation and your long-term goals. Ask about their process for assessing your financial situation and how they will develop a customized plan for you. You will want your advisor to take into account all parts of your life path, so that they can build a plan that is tailored specifically for you.

What services do you offer?

Some financial advisors specialize in certain areas, such as retirement planning or estate planning, while others offer a wide range of services. Make sure you understand what services your advisor offers and if they align with your needs. Some clients require highly unique solutions for their situations, so it can be beneficial to work with an advisor who has experience working with other individuals who have similar backgrounds.

Most importantly, make sure you feel comfortable with the advisor. You will have to keep them informed of all your life events, so you will want to feel like you can trust them with both your money and sensitive information. Choosing a financial advisor is an important decision that can have a significant impact on your financial future. Asking these questions can help you find an advisor who is qualified, experienced, and a good fit for your needs.

Reach out to Chicago Partners to set up a meeting and assess whether we can be the right fit for you.

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