Having a professional walk you through savings, budgeting, investments, tax issues, and other aspects of financial planning can be invaluable. But if you’re not sure what you want from this relationship—or what you’re looking for in seeking assistance with your finances—you may find yourself spinning your wheels. What questions should you ask when selecting a financial professional? What do you want to know? Below, we’ll discuss four important things to know about your financial professional before you delegate control of your assets.
Whether They’re Recommended
If you know that trusted friends or family members rely on a financial professional, ask them for their recommendations. This will allow you to ask specific questions about what they gain from this relationship and what services the financial professional provides. Online reviews can be handy, but asking those you know and trust to provide you with firsthand observations is tough to top.
Whether They’re a Fiduciary
Not all financial professionals are classified as fiduciaries—that is, professionals that are required to act in your best interest, not make investment recommendations based on what will provide them with the highest fee or commission. You want someone to act as your advocate, choosing the right investments for your risk profile and monitoring tax laws to allow you to take advantage of any changes. Before selecting a financial professional, ask whether they’re a fiduciary and check their professional credentials—chartered financial analyst (CFA), certified financial planner (CFP), or otherwise.
How They’re Paid
Just as you want someone who acts in your best interest, you want someone whose pay structure is transparent. Being paid by commission isn’t necessarily a deal breaker, but proceed with caution whenever you encounter a financial professional who receives larger commissions for steering you into fee-heavy investments. You’ll also want to watch out for transaction fees—that is, when a financial professional receives an additional fee for each trade made, which can lead to “churning.”
Whether They Can Answer Your Questions
A good financial partner can answer your questions—and make you feel comfortable asking more. No one cares more about your money than you do, and it’s important to feel as though your questions are being answered to your satisfaction. If talking to your financial professional leaves you feeling confused, uneasy, or unintelligent, you may want to keep looking until you find someone with whom you “click.”
Important Disclosures:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This article was prepared by WriterAccess.
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