The financial advisor you choose to manage your assets can make or break your retirement. Vetting potential advisors before signing a contract will weed out planners who don't have the training, skills, or experience to make your retirement dreams come true.
To help you get the best advisor for your unique situation, we’ve compiled this list of three questions you should ask every potential financial planner. We’ve also included nine follow-up questions to help you thoroughly vet candidates.
3 Questions to Ask Every Financial Advisor You Consider
- "Are you a fiduciary 100% of the time and willing to sign a written statement to attest to your legally binding commitment to prioritizing my interests?"
Fiduciaries are legally obligated to make decisions and take actions that are in the best interests of their clients. It's important to ask potential financial advisors if they always are fiduciary or if that commitment only applies to some of their work. Some operate in hybrid models where they can be fiduciary in some tasks but not all their duties. This hybrid model, often fee-based (rather than fee-only), offers less protection from conflicts of interest.
Choosing a fee-only financial advisor means you, the client, are the only one your advisor receives compensation from. Fee-only fiduciary financial advisors can not receive commission or other remuneration for placing your assets into specific funds. Fee-based models allow people to receive fees from clients and fees from other sources, such as commissions from selling financial products to clients.
Confirming an advisor is a fiduciary 100% of the time helps you weed out hybrid providers who may highlight fiduciary aspects of their practice while minimizing non-fiduciary roles.
Related follow-up questions:
How do you charge for your services, and what are your fee structures?
How do you select investments for clients?
How do you avoid conflicts of interest?
2. What types of clients and situations are you highly experienced with?
Your financial planner should customize your retirement plan based on your situation, current assets, and retirement goals. You want to work with financial advisors who specialize in cases like yours. Generalists may be willing to manage your retirement fund, but you want someone well-versed in the intricacies of tax implications, legal considerations, investment strategies, and risk management specific to your situation.
A specialized financial planner is more likely to stay up-to-date with the latest industry trends, regulations, tax implications, and best practices relevant to your situation, ensuring you receive the most accurate and appropriate guidance. Understanding a financial advisor's experience gives you peace of mind that you're partnering with someone who can maximize your retirement assets.
Related follow-up questions:
What makes you a specialist with clients like me?
What's your distribution strategy?
How will that strategy meet my unique needs?
3. What degrees, certifications, and other qualifications do you have?
Planning your retirement is not a situation where you want to settle for someone still trying to figure things out. A qualified advisor will have a solid educational background, certifications (such as CFP, CFA, or CPA), and significant experience in the financial industry.
Degrees and certifications help you find a pro by designating a financial planner's specialized training. They also indicate vast knowledge and expertise in various areas of finance, such as investment management, retirement planning, tax strategies, or estate planning. This information helps you assess the planner's level of competence and whether they have the necessary skills to handle your financial needs effectively.
Here are a few essential certifications and qualifications to look for when considering a financial planner:
- Certified Financial Planner (CFP)-The CFP designation is the most recognized certification for financial advisors. Earning it requires knowledge of financial planning topics, including investment, retirement, tax, and estate planning.
- Certified Public Accountant (CPA)-The CPA designation shows an advisor has extensive accounting and tax-related services knowledge. Combined with CFP certification, CPAs help you lower your tax liability and stay in compliance with complicated state and national regulations.
- Master of Taxation (M.Tax)-M. Tax is a specialized graduate degree program, and those who've earned it have an in-depth understanding of complex tax regulations as well as tax savings opportunities. They can help minimize your tax liability before and after you retire.
Related follow-up questions:
How recently did you obtain your certifications or degree?
What certifications and experience do others in your firm have?
Are you currently pursuing any certifications or continuing education?
Retire Confidently with Bestgate Wealth Advisors
Our team, composed of experienced CPAs and CFP® practitioners, is here to help you make more informed decisions and optimize your financial well-being. Contact us today to start planning for your best future.