When it comes to factors you should consider when hiring a financial advisor, there is one thing that you should never overlook – how well do they answer your questions and how satisfied you are with the answers. A good and trustworthy professional will never beat around the bush nor will they throw hard to digest jargons in your face. They will, in fact, listen to you and go out of their way to establish trust and confidence.
The problem, however, arises when people seeking professional help are not really aware of what they are looking for and the question that matters. So, here are five most important questions to ask a financial advisor before hiring.
1. Are You A Registered Advisor?
The first thing that makes a professional worth your trust is the effort they have put behind gaining the knowledge they have. Registered advisors owe their client a fiduciary duty i.e. they will put their needs first and will try to work for your best interest, not for another party.
2. What Is the Compensation Structure?
There are different ways advisors charge their compensation. It can be an hourly or flat fee, fee based on your portfolio value, or in the form of commission for every transaction. Make sure it is all settled and agreed upon in writing.
3. What Kind of Services You Offer?
Financial advisor can offer various kinds of services. Some firms offer all under one roof while others limit themselves to certain areas of expertise. If dealing with the latter, ask them if they deal in the area that is best for your financial needs and goals. If not, they should be able to refer a professional who does.
4. Have You Worked with Similar Client?
When working with advisors who have diverse clientele and multiple areas of expertise, ask them if they have dealt with clients whose needs and goals are similar to you. They must be able to provide at least two references.
5. How Often Will We Be Interacting?
Set the record straight about the frequency of communication. Ask them how often you will meet or talk and how often will they be providing performance and transaction reports.
Make sure these questions are answered by the professional who you will be directly dealing with i.e. your financial advisor and not just someone who represents the firm.