There are many important decisions to make when choosing a financial advisor. Below are 5 questions to consider asking one if you are thinking about hiring.
1) Are you compensated by commission or assets under management? And this is important because certain advisors are paid by what products they sell. This can be this a huge conflict of interest as sometimes advisors recommend certain products for clients where they stand to make a bigger commission.
(2) How Long Have you been an FA? And how long have you been with your firm? This will allow you to get a sense of this person’s experience and also whether they hop from firm to firm all the time. You may not want to start over every few years with a different advisor.
(3) Why should I work with you? What value are you going to add ? Are you going to help with things like basic tax questions, estate planning, insurances and other things or are you just going to recommend investments and charge me a fee? In my opinion, I don’t have a FA, but if I did this would be really important to me. Anybody can recommend some funds their bosses tell them too. Discover if they are competent enough to assist with other financial questions. To be clear, I’m not saying they need to setup a will for you or walk you through your taxes step by step, but they should be able to answer general questions.
(4) What is your availability in an emergency? How can I access my funds in an emergency? This should be explained, although admittedly it is tough to know how consumer’s money will be handles in a SHTF scenario.
(5) Has there ever been any complaints against you and why? Technically, you can look this up on FINRA under the broker check section and see any complaints, but a good advisor should be upfront with you about past complaints. Also, just because they have one, doesn’t need you to necessarily need to quit on them. Hear them out and see what they say.
