Many of us are more willing to talk sports, politics and even religion before we’ll talk about money. If you’ve reached out to work with a financial advisor, then you’ve already made a big step toward making progress on your money goals.
But before meeting with an advisor for the first time to dive into all the nooks and crannies of your finances, it’s a good idea to get a sense of how he or she works and whether you’ll get the kind of insight you’re looking for. We asked Bill Taylor, vice president, financial planning and sales support for Northwestern Mutual, for questions to ask a financial advisor before you commit to a working relationship.
WHAT DO YOU CONSIDER A GOOD FINANCIAL PLAN?
If you want someone who can take a holistic approach to your finances, then you’ll want that reflected in the answer. You may want an advisor who can help you save for your kid’s college and your next home, all while helping you figure out how to pay off your debt and build a retirement nest egg. But you may not get that if, for example, the conversation focuses solely on investment options for your portfolio. “So ask [the advisor], ‘Are you putting this all together for me, or just helping me with investments?’” Taylor suggests.
HOW OFTEN DO YOU PLAN TO MEET WITH ME?
There’s no right or wrong answer because it can vary depending on your situation, but you should be sure that it’s often enough to help you stay on track with your goals or be able to adjust when changes in your life occur.
You may feel you need more frequent input from your financial advisor, such as once a quarter. Or if not much changes about your finances from month to month, then you may need just a mid-year and end-of-year check-in. Even if you don’t meet face to face with your advisor multiple times a year, make sure you would feel comfortable calling or emailing for advice if something came up.
HOW WILL YOU GET PAID?
Transparency about pay is key, says Taylor, if your financial advisor wants to earn your trust. Three of the most common ways financial advisors can get paid include charging you a fee, charging a percentage of the assets they help manage for you, or getting commission from any products or services you buy. Some advisors may even do a mix of each.
WHAT’S YOUR INVESTMENT PHILOSOPHY?
If you decide to work with a professional who’s qualified to give investing advice, make sure you understand their investment approach, Taylor says. You wouldn’t want to be pushed into riskier investments if you were really risk averse, for instance. Or you may be willing to take on risk if it makes sense for the investment goal you have, such as funding a retirement that’s decades away. Make sure that your financial advisor’s approach balances your goals, your timeline for getting there and your appetite for risk.
WHO ELSE WILL I BE WORKING WITH?
Your potential financial advisor may work with her own staff, a company or even several companies, as well as a network of other professionals she can tap when needed. “So you’re not just getting the advisor, you’re getting the team or the institution behind them,” Taylor says. That can make a big difference if you know your financial needs will evolve over time, or if you think you’ll need access to other types of specialized services, such as tax planning or estate planning.
Ask the advisor, 'Are you putting this all together for me, or just helping me with investments?'