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5 Questions to Ask a Financial Advisor

So you’re finally ready to take the plunge and retire, but first you need to hire a financial advisor to help you navigate this process. Choosing someone to manage your money is an important task that can be daunting. Wondering where to start? These five questions will help you determine if a potential advisor is right for you.

1. What type of relationship do you have with your clients? It’s important to establish in your first meeting how often you’ll be getting together face-to-face, so you don’t become just a number. A good advisor will recommend how often they think you need to meet, and determine what fits with your schedule and goals. Oftentimes people think they need to schedule more meetings in order to be a good client, but it really comes down to how often you want to meet in person and how many moving parts there are in your financial life. For the first year, you might meet four times as you make the transition into retirement. Then, once your financial house is in order and it’s about maintenance, two to three times a year may be enough. 

2. Are you an individual or do you work as a team? Many advisors will say they’re part of a team, but upon closer inspection, potential clients often find that simply means sharing office space with six other advisors and a receptionist. Follow-up questions to ask include who is handling the paperwork? Who will send me a check when I need money from my accounts? Who is managing my investment accounts and who will be involved in my planning meetings? A true team approach means gathering people in various fields of expertise to address clients’ needs.

3. Are you investments only, or are you a comprehensive financial planner? Finding out early on whether the advisor you’re hiring is an investment specialist or a more multidimensional planner could prevent uncomfortable conversations later on if you have questions your advisor isn’t prepared for. Comprehensive planning includes not only investment management, but insurance (including health, auto, home and life). In addition, areas such as estate planning, mortgage advice, tax review and monthly cash flow are common areas for review. Comprehensive planners can help you balance all of these financial areas.

4. How are you compensated? The financial world is continuing to change from one where advisors were compensated solely through upfront commissions to a hybrid model of commissions, ongoing fees for portfolio management as well as hourly fees for financial planning. Eventually we’ll probably see a complete transfer to fee-based only advice, but it’s imperative that you know exactly how your advisor gets paid. If the advisor you’re interviewing refuses to talk about fees or other compensation, that’s a huge red flag that you should walk away and find someone else.

5. How will you organize my financial life? In the investment advice industry, there’s a big gap between advisors who are just required to invest your money wisely and those who take the next step and make sure all of your financial affairs are as organized as possible. We can’t predict market ups and downs, but we can help manage their effect on your portfolio. And we can always make sure your affairs are in order so that your loved ones and beneficiaries aren’t left in the dark should something happen to you. We hear over and over from our client families how much they appreciate the fact that we help them digitally organize their financial lives. Although we are still required to send our clients paper financial documents, the days of having to keep a file cabinet of said papers and statements are long gone. There’s always a digital copy.

What questions do you have about retirement? Have your colleagues or family members brought up retirement questions or concerns recently? Give us a call and let us know so we can help.


Article by David Smyth, Senior Partner at Family Financial Partners — a financial services firm in Lexington, Kentucky.

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