Did you know that only 17% of Americans seek help from a personal financial planner?
In fact, three in four Americans manage their finances entirely on their own. While this may work for some, a good financial advisor can make the difference between a comfortable retirement — or no retirement at all.
If you’re reading this post, you’re obviously interested in planning for the future. Here are eight key questions to ask as you begin your search for a personal financial planner.
How to Find the Perfect Financial Advisor
Financial planners can help to secure your future whether you make $50,000 or $500,000 a year. Here are some important questions to ask at the interview.
1. What Qualifications Do You Have?
Make sure the person you’re meeting with is either a registered investment advisor or has a CFP designation. Check their education, accreditation, and current status on the FINRA Professional Designations site.
2. How Will I Pay You?
Each financial planner uses his or her own fee structure. Look for a “fee-only” advisor that doesn’t get commissions for selling products. Typical fee structures include a flat fee, hourly fee, or small percentage of asset management (1% is common).
3. Are You a Fiduciary?
Fiduciaries work in the best interests of their clients, making them the best choice for you. Non-fiduciaries can recommend anything they deem suitable, regardless of whether it’s the most affordable or ideal option.
4. Are There Other Fees or Costs I Need to Know About?
There will likely be other fees besides the ones you pay directly to your financial advisor. Even a 1% mutual fund fee could cost you tens of thousands in the long run, so make sure you understand the all-in costs.
5. What’s Your Personal Investment Philosophy?
Look for an investor whose ideals and philosophies align with your own. For example, are you interested in ethical or socially responsible investing? What’s their go-to plan when the market is down? Do you agree (and feel comfortable) with their answers?
6. How Will Our Professional Relationship Work?
You’ll generally meet with your personal financial planner during set appointments, but how accessible are they outside of those appointments? Can you reach them via email or phone if you have important questions? Is there an extra fee?
7. How Will You Diversify My Portfolio?
Asset allocation will be the driving force for most of your returns. Make sure the advisor thinks beyond the typical domestic big-business stocks. Ideally, you’ll also want to invest in small, mid-sized, and international companies too.
8. How Will My Investments Affect My Taxes?
Before you invest in anything, you need to know what your estimated net return should be. What will you get to keep after all the fees and taxes are paid? Make sure your advisor considers the tax implications in all their financial decisions.
Find the Right Personal Financial Planner for You
Managing finances is complicated, but a good personal financial planner can make the process easier.
Bookmark the list of questions above to refer to as you look for a financial advisor. When you find the right match, you’ll be one step closer to a solid financial future.
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