Emma Thompson

Certified Financial Planner

@ FinAdvice Inc

  • Monday 8:00 AM – 5:00 PM
  • Tuesday 8:00 AM – 5:00 PM
  • Wednesday 8:00 AM – 5:00 PM
  • Thursday 8:00 AM – 5:00 PM
  • Friday 8:00 AM – 5:00 PM
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You know how to buy a refrigerator. You shop around to compare features and prices. It’s the same when you’re seeking the services of a financial advisor. So, interview two or three advisors so you can compare them.

And even if you already have an advisor, consider asking them the following questions, too – to confirm you’ve made the right choice.

After all, you can always change advisors anytime!

Here are the 11 questions you should ask advisors you’re considering.

Fiduciaries are required to place their customers’ best interests ahead of their own. Registered Investment Advisors and their representatives are required by law to adhere to a fiduciary standard. Stockbrokers and mutual fund salespeople (including those working in bank lobbies) are not required to follow that standard.

Note: Some financial advisors are “dually registered,” meaning they can act as both stockbrokers and Investment Advisor Representatives. The problem is that when they make a recommendation, you may not know which hat they are wearing. We believe you should work with individuals who are solely registered as Investment Advisor Representatives who are always held to a fiduciary standard.

However, you should keep in mind that SEC registration does not imply a certain level of skill or training, so continue to do your due diligence.

Note the specific phrasing of this question.

Don’t simply ask an advisor, “What is your fee?” – because what they earn is not the same as what you’ll pay. In addition to your advisor’s fee, you want to know the costs of buying the investments your advisor recommends to you.

The advisor should provide you this information in advance, and in writing – without you having to ask, frankly. Dismiss from consideration any advisor who does not explain all expenses you will incur openly and clearly.

Some advisors earn a commission that’s based on the products they encourage people to buy. Some mutual funds, annuities, real estate investments and other products pay higher commissions than others – and some don’t pay any commissions at all.

You want to know that your advisor’s recommendations are not influenced by compensation considerations. Salespeople who earn commissions can suffer from such a conflict of interest, and this is why many investors prefer to choose a planner who is compensated solely by a fee. (See previous question.)

One way to gain confidence that your advisor is offering you recommendations that are in your best interests is to ask if the advisor personally owns what they’re recommending. When advisors do not, you must wonder whether the recommendations are truly in your best interests.

Before you describe yourself and your circumstances, ask them to answer this question. If their typical client fits your description, the advisor could be a good fit for you. You want an advisor who has extensive experience working with people just like you.

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